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OMB APPROVAL
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OMB Number:3235-0307
Expires:May 31, 2000
Estimated average
burden hours per
response:212.95
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As filed with the Securities and Exchange Commission on March 18, 1999
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. 70
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 72
FORUM FUNDS
(Formerly "Forum Funds, Inc.")
Two Portland Square
Portland, Maine 04101
(207) 879-1900
Leslie K. Klenk, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
Copies to:
Anthony C.J. Nuland, Esq.
Seward & Kissel
1200 G Street, N.W.
Washington, D.C. 20005
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to Rule 485, paragraph (b)
[ ] 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)
[X] 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: BIA Small Cap Growth Fund and BIA Growth
Equity Fund.
<PAGE>
LOGO
PROSPECTUS
JUNE __, 1999
BIA SMALL-CAP GROWTH FUND
BIA GROWTH EQUITY FUND
The Funds seeks high total return by investing primarily
in equity securities.
You may purchase Fund shares without a sales charge.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED EITHER
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY.........................................
FEE TABLES..................................................
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS.................
MANAGEMENT..................................................
YOUR ACCOUNT................................................
How to Contact the Funds
General Information
Buying Shares
Selling Shares
Exchange Privileges
Retirement Accounts
OTHER INFORMATION...........................................
2
<PAGE>
RISK/RETURN SUMMARY
THE INVESTMENT GOAL OF EACH FUND - High total return
BIA SMALL-CAP GROWTH FUND
[Margin callout: CONCEPTS TO UNDERSTAND
MARKET CAPITALIZATION of a company is the value of the company's
common stock in the stock market.]
PRINCIPAL INVESTMENT STRATEGY The Fund invests primarily in the equity
securities of small domestic companies that are attractively priced compared to
their growth potential. Small companies are those companies whose MARKET
CAPITALIZATION is between $25 million and $1 billion at the time of investment.
BIA GROWTH EQUITY FUND
[Margin callout: CONCEPTS TO UNDERSTAND
GROWTH COMPANIES are companies that have exhibited an above average
increase in earnings over the past few years and that have strong,
sustainable earnings prospects and attractive stock prices.
PRINCIPAL INVESTMENT STRATEGY The Fund invests primarily in the equity
securities of domestic growth companies and relatively mature companies that are
attractively priced compared to their growth potential.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
You could lose money on your investment in a Fund, or the Fund could
underperform other investments, if any of the following occur:
o The stock market goes down
o The stock market undervalues the stocks in the Funds' portfolios
o Brown Investment Advisory & Trust Company's (the Adviser's) or
portfolio manager's judgment as to the growth potential of a stock
proves to be wrong
An investment in BIA Small-Cap Growth Fund may involve additional risk as the
stock of smaller companies is typically more volatile than the stock of large
companies.
WHO MAY WANT TO INVEST IN THE FUNDS
The Funds may be appropriate for you if you:
o Are willing to tolerate significant changes in the value of your
investment
o Are pursuing a long-term goal
o Are willing to accept higher short-term risk for higher potential
long-term returns
The Funds may NOT be appropriate for you if you:
o Want an investment that pursues market trends or focuses only on
particular sectors or industries
o Need regular income or stability of principal
o Are pursuing a short-term goal or investing emergency reserves
3
<PAGE>
FEE TABLES
The following tables describe the various gross fees and expenses that you will
bear if you invest in a Fund.
Shareholder transaction expenses are charges you pay when buying, selling or
exchanging shares of a Fund. Operating expenses, which include fees of the
Adviser and shareholder services, are paid out of a Fund's assets and are
factored into a Fund's share price rather than charged directly to shareholder
accounts.
<TABLE>
<S> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Sales Charge (Load) Imposed on Reinvested None
Distributions
Maximum Deferred Sales Charge (Load) None
Redemption Fee None
Exchange Fee None
Maximum Account Fee $0(1)
(1) IRA accounts pay an annual $25 maintenance fee.
ANNUAL FUND OPERATING EXPENSES(1) (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
BIA SMALL-CAP GROWTH FUND
Advisory fees 0.85%
Distribution (12b-1) fees None
Other expenses(2) 0.40%
Total annual fund operating expenses 1.25%
BIA GROWTH EQUITY FUND
Advisory fees 0.70%
Distribution (12b-1) fees None
Other expenses(2) 0.60%
Total annual fund operating expenses 1.30%
</TABLE>
(1) The Adviser has voluntarily undertaken to waive a portion of its
fees and assume certain expenses to the extent that total annual
fund expenses exceed 1.25% or 1.00% of the net assets of BIA
Small-Cap Growth Fund and BIA Growth Equity Fund, respectively.
(2) Based on estimate amounts for the current fiscal year ending May
31, 2000.
The following is a hypothetical example intended to help you compare the cost of
investing in each Fund to the cost of investing in other mutual funds. This
example assumes that you invest $10,000 in a Fund then redeem all of your shares
at the end of the period. The example also assumes that your investment has a 5%
annual return, that the Fund's operating expenses remain the same, and
distributions are reivested. Although your actual costs may be higher or lower,
under these assumptions your costs would be:
<TABLE>
<S> <C> <C>
------------------------ -----------------------
BIA SMALL-CAP BIA GROWTH
GROWTH FUND EQUITY FUND
----------------------- ------------------------ -----------------------
----------------------- ------------------------ -----------------------
After 1 year $127 $132
----------------------- ------------------------ -----------------------
----------------------- ------------------------ -----------------------
After 3 years $397 $412
----------------------- ------------------------ -----------------------
</TABLE>
4
<PAGE>
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
INVESTMENT OBJECTIVES
BIA SMALL-CAP GROWTH FUND seeks to achieve high total return by primarily
investing in equity securities.
BIA GROWTH EQUITY FUND seeks to achieve high total return by primarily investing
in equity securities.
INVESTMENT STRATEGIES
[Margin callout: CONCEPT TO UNDERSTAND
FUNDAMENTAL ANALYSIS is the analysis of a company's financial condition
to forecast the future value of its stock price. This analysis includes
as review of a company's balance sheet and income statement, asset
history, earnings history, product or service development, and
management productivity.]
The Adviser relies on selecting individual stocks, and does not try to predict
when the stock market might rise or fall. The Adviser uses in-house research and
information obtained from other Wall Street investment firms to conduct analyses
of prospective Fund investments. As part of this analysis, the Adviser may visit
prospective companies, their suppliers and customers.
THE ADVISER'S PROCESSES
BIA SMALL-CAP GROWTH FUND
The Adviser starts by identifying a universe of small companiesFrom these
companies, the Adviser selects those with a minimum annual growth rate of 20%
and a MARKET CAPITALIZATION of $25 million to $1 billion. The Adviser then
performs a FUNDAMENTAL ANALYSIS of these companies. The Adviser uses this data
to identify companies that have:
o Large business opportunities relative to their size
o Proprietary products, services, or distribution systems
o Management plans that are easy to understand and to monitor o
Undervalued stock prices compared to growth potential
The Fund plans to invest in these companies early in their life cycle and to
hold the investments for the long-term if they continue to satisfy the Fund's
investment criteria.
BIA GROWTH EQUITY FUND
[Margin callout: CONCEPTS TO UNDERSTAND
PRICE/EARNINGS RATIO is the price of a stock divided by the company's
earnings per share.
PRICE/SALES RATIO is the amount an investor is willing to pay for a
dollar generated from a company's operations.
DIVIDEND YIELD IS the percentage rate of return paid on common or
preferred stock in dividends.]
The Adviser starts by identifying a universe of superior companies. Superior
companies are companies that have significant market opportunities or
proprietary products, control of a particular market, and sound business plans.
From these companies, the Adviser uses in-house research and research from other
Wall Street investment firms to identify growth and mature companies that are
leaders in or could be leaders in their markets based on the following criteria:
o Defined growth factors (product cycle, product or geographic mix)
o Financial capability to fund growth
5
<PAGE>
o Changes in regulation, management, business cycle & business mix
o Industry consolidation
The Adviser then uses a range of investment techniques including PRICE/EARNINGS
RATIOS, PRICE/SALES RATIOS, and DIVIDEND YIELDS to measure the potential
downside risk of investment candidates and to isolate those companies whose
stocks are fairly valued.
The Adviser sets a price target for each investment. That is, the Adviser sets a
price at which a stock may be sold even though there has been no fundamental
change in the investment. The Adviser constantly monitors the companies in the
Funds' portfolios to determine if there have been any fundamental changes in the
company that prompted the initial purchase of its stock. The Adviser may sell a
stock if:
o It subsequently fails to meet the Adviser's initial investment
criteria
o A more attractively priced stock is found or if funds are needed for
other purposes
o It is oversized compared to other holdings
INVESTMENT RISKS
GENERALLY The value of a Fund's investments will fluctuate as the stock market
fluctuates. An investment in each Fund is not by itself a complete or balanced
investment program. Nevertheless, investing in equity securities with different
capitalizations may be important for an investor seeking a diversified
portfolio, particularly for a long-term investor able to tolerate short-term
fluctuations in a Fund's net asset value.
Because the Funds stocks that are attractively priced compared to growth
potential, there is a risk that the market will not recognize a security's
intrinsic value for an unexpectedly long time. There is also the risk that a
Fund's investments are actually priced appropriately due to intractable or
fundamental problems. A decline in investor demand for growth stocks may also
adversely affect the value of these securities.
SPECIFIC SMALL COMPANY RISKS Because investing in small companies can have more
risk than investing in larger, more established companies, an investment in BIA
Small-Cap Growth Fund may have the following additional risks:
o More limited product lines, markets and financial resources make these
companies more susceptible to economic or market setbacks
o Analysts and other investors typically follow these companies less
actively
o Information about these companies is not always readily available
o Large portions of the securities are traded in the over-the-counter
markets or on a regional securities exchange making them thinly traded
and more volatile
For these and other reasons, the prices of small capitalization securities can
fluctuate more significantly than the securities of larger companies. As a
result, the net asset value of the shares of BIA Small-Cap Growth Fund may
exhibit a higher degree of volatility than the market.
YEAR 2000 Certain computer systems may not process date-related information
properly on and after January 1, 2000. The Funds' Adviser is addressing this
matter for their systems. The Funds' other service providers have informed the
Funds that they are taking similar measures. This matter, if not corrected,
could adversely affect the services provided to the Funds or the companies in
which the Funds invest and, therefore, could lower the value of your shares.
6
<PAGE>
INVESTMENT POLICIES
Under normal conditions, BIA Small-Cap Growth Fund will primarily invest in the
equity securities of small companies while BIA Growth Equity Fund will primarily
invest in the equity securities of large companies. Equity securities may
include common and preferred stock, convertible securities and warrants. Common
stock represents an equity or ownership interest in a company. Although this
interest often gives the owner the right to vote on measures affecting the
company's organization and operations, the Funds do not intend to exercise
control over the management of companies in which each invests. Common stocks
have a history of long-term growth in value, but their prices tend to fluctuate
in the shorter term.
[Margin callout: CONCEPTS TO UNDERSTAND
PREFERRED STOCK is stock that has a preference over common stock to the
company's dividends (and thus greater potential for income) and whose
value generally fluctuates less than common stock. CONVERTIBLE SECURITY
is a security such as preferred stock or bonds that may be converted
into a specified number of shares of common stock. WARRANT is an option
to purchase an equity security at a specified price at any time during
the warrant's life.]
In order to respond to adverse market, economic, political or other conditions,
a Fund may assume a temporary defensive position and invest in prime commercial
paper and other money market instruments. The result of this action may be that
a Fund will be unable to achieve its investment objectives.
7
<PAGE>
MANAGEMENT
The Funds are two series of Forum Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and each Fund is managed under the
direction of the Board of Trustees (the "Board"). The Board formulates the
general policies of the Funds and meets periodically to review the Funds'
performance, monitor investment activities and practices, and discuss other
matters affecting the Funds. Additional information regarding the Board, as well
as executive officers, may be found in the Statement of Additional Information
("SAI").
THE ADVISER
Brown Investment Advisory & Trust Company, Furness House, 19 South Street,
Baltimore, Maryland 21202, serves as investment adviser to each Fund. The
Adviser is currently a privately owned company. Prior to June 1998, the Adviser
operated as a subsidiary of Bankers Trust Company under the name of Alex. Brown
Capital Advisory & Trust Company.
The Adviser and its predecessors have provided investment advisory and
management services to clients for over five years. As of the date of this
Prospectus, the Adviser has over $___ billion of assets under management.
Subject to the general control of the Board, the Adviser makes investment
decisions for the Funds. For its services, the Adviser receives an advisory fee
at an annual rate of 0.85% and 0.70% of the average daily net assets of BIA
Small-Cap Growth Fund and BIA Growth Equity Fund, respectfully.
PORTFOLIO MANAGERS
Frederick L. Meserve, Jr. is responsible for the day-to-day management of the
BIA Small-Cap Growth Fund while Geoffrey R.B. Carey, CFA and Jane W. Korhonen,
CFA are responsible for the day-to day management of the BIA Growth Equity Fund.
Each portfolio manager's business experience is as follows:
FREDERICK L. MESERVE, JR. Senior Portfolio Manager and head of the Emerging
Growth Group of the Adviser since 1994. Prior thereto, Mr. Meserve was Managing
Director of Alex. Brown & Sons Incorporated. Mr. Meserve has published a number
of investment strategy reports on growth stocks. Mr. Meserve received a BS&E
degree from Princeton University in 1960 and an MBA from Columbia Business
School in 1962.
GEOFFREY R.B. CAREY, CFA Senior Portfolio Manager of the Adviser since 1996. Mr.
Carey coordinates portfolio management activities for institutional and high net
worth clients and co-manages BIA Growth Equity Fund. Prior to his association
with the Adviser, Mr. Carey was a Principal of Alex. Brown & Sons Incorporated.
Prior thereto, Mr. Carey was employed as a Portfolio Manager for J.P. Morgan
Investment Management in Geneva, Switzerland. Mr. Carey received a BA degree
from Washington & Lee University in 1984 and received an MBA from the University
of North Carolina in 1989.
JANE W. KORHONEN, CFA Senior Research Analyst of the Adviser since 1994. Ms.
Korhonen covers U.S. large-cap technology and health care sectors and co-manages
BIA Growth Equity Fund. Prior to her association with the Adviser, Ms. Korhonen
was a principal of Alex. Brown & Sons Incorporated. Prior thereto, Ms. Korhonen
was an Equity Group Manager for Howard Hughes Medical Institute. Ms. Korhonen
received a BA degree from Denison University in 1979 and an MBA from
Northwestern's J.L. Kellogg Graduate School of Management in 1984.
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provide services to the Funds.
As of March 31, 1999, Forum provided administration and distribution services to
investment companies and collective investment funds with assets of
approximately $___ billion.
8
<PAGE>
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of the Funds' shares. The distributor acts as the agent of the
Trust in connection with the offering the Funds' shares. The distributor may
enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares and may, at
its own expense, compensate persons who provide services in connection with the
sale or expected sale of the Funds' shares.
Forum Shareholder Services, LLC (Transfer Agent) is the Funds' transfer agent.
FUND EXPENSES
The Funds pay for all of their expenses. Each Fund's expenses are comprised of
expenses attributable to the particular Fund as well as expenses not
attributable to any particular Fund that are allocated among the various series
of the Trust. The Adviser or other service providers may voluntarily waive all
or any portion of their fees, which are accrued daily and paid monthly. Any
waiver would have the effect of increasing a Fund's performance for the period
during which the waiver was in effect and may not be recouped at a later date.
The Adviser has undertaken to waive its fees and assume certain expenses of each
Fund in order to limit the Funds' expenses (excluding taxes, interest, portfolio
transaction expenses and extraordinary expenses) to 1.25% and 1.00% or less of
the average daily net assets of BIA Small-Cap Growth Fund and BIA Growth Equity
Fund, respectively.
9
<PAGE>
YOUR ACCOUNT
[Margin call out: HOW TO CONTACT THE FUNDS
Write to us at:
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101
Telephone us at:
(800) ______-_______ (toll free)
(207) ______-_______
Wire investments (or ACH payments) to us at:
BankBoston Boston, MA ABA #011000390 For Credit to:
Forum Shareholder Services, LLC
Account # 541-54171
Re: (Name of Your Fund)
(Your Name goes on this line)
(Your Account Number goes on this line)
(Your Social Security number or tax identification number goes
on this line)]
GENERAL INFORMATION
You pay no sales charge to purchase or sell (or redeem) shares of a Fund. You
may purchase or sell Fund shares at the next share price (net asset value or
NAV) calculated after a transaction is received in proper form by the Transfer
Agent. For instance, if the Transfer Agent receives your purchase request in
proper form after 4 p.m., your transaction will be priced at the next day's NAV.
The Funds cannot accept orders that request a particular day or price for the
transaction or any other special conditions.
The Funds do not issue share certificates.
If you purchase shares directly from a Fund, you will receive monthly statements
and a confirmation of each transaction. You should verify the accuracy of all
transactions in your account as soon as you receive your confirmations.
The Funds reserve the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED Each Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
except days when the New York Stock Exchange is closed. These days are normally,
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The time at which NAV is calculated may be changed in case of an emergency. A
Fund's NAV is determined by dividing the value of the Fund's assets by the
number of shares outstanding. A Fund values securities for which market
quotations are readily available at current market value. If market quotations
are not readily available, then a Fund values securities at estimated fair
value.
TRANSACTIONS THROUGH THIRD PARTIES If you invest through your adviser, a broker
or other financial institution, the policies and fees charged by that
institution may be different than those of the Funds.
10
<PAGE>
Banks, brokers, retirement plans and financial advisers may charge transaction
fees and may set different minimum investments or limitations on buying or
selling shares. These institutions may also provide you with certain shareholder
services such as periodic account statements and trade confirmations summarizing
your investment activity. Consult a representative of your financial institution
or retirement plan for further information.
BUYING SHARES
HOW TO MAKE PAYMENTS All investments must be in U.S. dollars and checks must be
drawn on U.S. banks.
CHECKS For individual or Uniform Gift to Minors Act ("UGMA") accounts,
the check must be made payable to "Forum Funds" or to one or more
owners of the account and endorsed to "Forum Funds." For all other
accounts, the check must be made payable on its face to "Forum Funds."
No other method of check payment is acceptable (for instance, payment
by travelers checks is prohibited).
ACH PAYMENT Instruct your financial institution to make an ACH
(automated clearinghouse) payment to us. These payments typically take
two days. Your financial institution may charge you a fee for this
service.
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for this
service.
MINIMUM INVESTMENTS The Fund accepts investments in the following minimum
amounts:
<TABLE>
<S> <C> <C>
------------------------- --------------------------
MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
Standard Minimums $5,000 $100
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
Traditional and Roth IRA Accounts $2,000 $100
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
With Automatic Investment Plans $2,000 $100
-------------------------------------- ------------------------- --------------------------
</TABLE>
<TABLE>
<CAPTION>
ACCOUNT REQUIREMENTS
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
TYPE OF ACCOUNT REQUIREMENT
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Instructions must be signed by all persons
Individual accounts are owned by one person, as are sole required to sign exactly as their names appear on
proprietorship accounts. Joint accounts the account
can have two or more owners (tenants)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a
These custodial accounts provide a way to give money custodial account under the Uniform Gift to Minors
to a child and obtain tax benefits. An individual can Act or the Uniform Transfers to Minors Act
give up to $10,000 a year per child without paying o The trustee must sign instructions in a manner
Federal gift tax. indicating trustee capacity
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
CORPORATIONS AND PARTNERSHIPS o For corporations, provide a corporate
resolution signed by an authorized person with a
signature guarantee
o For partnerships, provide a certification for
a partnership agreement, or the pages from the
partnership agreement that identify the general
partners
- ------------------------------------------------------------ ---------------------------------------------------------
11
<PAGE>
- ------------------------------------------------------------ ---------------------------------------------------------
TYPE OF ACCOUNT REQUIREMENT
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
TRUSTS o The trust must be established before an
account can be opened
o Provide a certification for trust, or the
pages from the trust document that identify the
trustees
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT PROCEDURES
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
BY CHECK BY CHECK
o Call or write us for an account application o Fill out an investment slip from a
o Complete the application confirmation or statement or write us a letter
o Mail us your application and a check o Write your account number on your check.
o Mail us the slip (or your letter) and the check
BY WIRE
o Call or write us for an account application BY WIRE
o Complete the application o Call to notify us of your incoming wire
o Call us o Instruct your bank to wire your money to us
o You will be assigned an account number
o Mail us your application BY AUTOMATIC INVESTMENt
o Instruct your bank to wire your money to us o Call or write us for an "Automatic Investment
Plan" form
BY ACH PAYMENT o Complete the form
o Call or write us for an account application o Attach a voided check to your form
o Complete the application o Mail us the form
o Call us
o We will assigned you an account number
o Mail us your application
o Make an ACH payment
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
AUTOMATIC INVESTMENTS You may invest a specified amount of money in a Fund once
or twice a month on specified dates. These payments are taken from your bank
account by ACH payment. Automatic investments must be for at least $100.
LIMITATIONS ON PURCHASES The Funds reserve the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Funds or their operations. This includes those from any individual or group
who, in the Funds' view, is likely to engage in excessive trading (usually
defined as more than four exchanges out of the Funds within a calendar year).
CANCELED OR FAILED PAYMENTS The Funds accept checks and ACH transfers at full
value subject to collection. If your payment for shares is not received or you
pay with a check or ACH transfer that does not clear, your purchase will be
canceled. You will be responsible for any losses or expenses incurred by the
Funds or the Transfer Agent, and the Funds may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Funds and their agents have the right to reject or cancel any
purchase or exchange due to nonpayment.
SELLING SHARES
Redemption orders are processed promptly. You will generally receive redemption
proceeds within a week. Delays may occur in cases of very large redemptions,
excessive trading or during unusual market
12
<PAGE>
conditions. If the Fund has not yet collected payment for the shares you are
selling, however, it may delay sending redemption proceeds for up to 15 calendar
days.
- --------------------------------------------------------------------------------
TO SELL SHARES FROM YOUR ACCOUNT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The Fund name
o The dollar amount or number of shares you want to sell
o How and where to send the redemption proceeds
o Obtain a signature guarantee (if required)
o Obtain other documentation (if required)
o Mail us your request and documentation
BY WIRE
o Wire redemptions are only available if:
o You have elected wire redemption privileges AND
o Your redemption is for $5,000 or more
o Call us with your request (if you have elected telephone redemption
privileges - See "By Telephone") Or
o Mail us your request (See "By Mail")
BY TELEPHONE
o Telephone redemptions are only available if you have elected telephone
redemption privileges
o Call us with your request
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
o Redemption proceeds will be:
o Mailed to you or
o Wired to you (if you have elected wire redemption privileges - See "By
Wire")
AUTOMATICALLY
o Call or write us for an "Automatic Redemption" form
o Attach a voided check to your form
o Mail us your form
- --------------------------------------------------------------------------------
TELEPHONE REDEMPTION PRIVILEGES You may only redeem your shares by telephone if
you elect telephone redemption privileges on your account application or by
completing a separate form. You may be responsible for any fraudulent telephone
order as long as the Transfer Agent takes reasonable measures to verify the
order.
WIRE REDEMPTION PRIVILEGES You may only redeem your shares by wire if you elect
wire redemption privileges on your account application or by completing a
separate form. The minimum amount that may be redeemed by wire is $5,000. If you
wish to request a wire redemption by telephone, you must also elect telephone
redemption privileges.
AUTOMATIC REDEMPTIONS You may redeem a specified amount of money from your
account once a month on a specified date. These payments are sent from your
account to a designated bank account by ACH payment. Automatic redemptions must
be for at least $250.
13
<PAGE>
SIGNATURE GUARANTEE REQUIREMENTS To protect you and the Funds against fraud,
signatures on certain requests must have a "signature guarantee." For requests
made in writing, a signature guarantee is required for any of the following:
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name or address
o Redemptions from an account for which the address or account
registration has changed within the last 30 days
o Sending redemption proceeds to any person, address, brokerage firm
or bank account not on record
o Sending redemption proceeds to an account with a different registration
(name or ownership) from yours
o Changes to automatic investment or redemption, distribution, telephone
redemption or exchange option or any other election in connection with
your account
A signature guarantee verifies the authenticity of your signature. You can
obtain one from most banking institutions or securities brokers, but not from a
notary public.
SMALL ACCOUNTS If the value of your account falls below $1,000 ($500 for IRAs or
accounts with an established automatic investment plan), a Fund may ask you to
increase your balance. If the account value is still below $1,000 (or $500 in
the case of IRAs or accounts with an established automatic investment plan)
after 60 days, a Fund may close your account and send you the proceeds. A Fund
will not close your account if it falls below these amounts solely as a result
of a reduction in your account's market value.
REDEMPTIONS IN KIND The Funds reserve the right to make a redemptions in kind. A
Fund makes a redemption in kind it pays redemption proceeds in portfolio
securities rather than cash. A redemption in kind usually occurs if the amount
to be redeemed is large enough to affect a Fund's operations (for example, if it
represents more than 1% of the Fund's assets).
LOST ACCOUNTS The transfer agent will consider your account lost if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address. When an account is "lost," all
distributions on the account will be reinvested in additional Fund shares. In
addition, the amount of any outstanding (unpaid for six months or more) checks
for distributions that have been returned to the Transfer Agent will be
reinvested and the checks will be canceled.
EXCHANGE PRIVILEGES
You may sell your Fund shares and buy shares of another Fund by telephone or in
writing. You may also exchange Fund shares for Investor Shares of the Trust's
money market funds. Because exchanges are treated as a sale and purchase of
shares, they may have tax consequences.
REQUIREMENTS You may make exchanges only between identically registered accounts
(name(s), address and taxpayer ID number). There is currently no limit on
exchanges, but the Funds reserve the right to limit exchanges.
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HOW TO EXCHANGE
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- --------------------------------------------------------------------------------
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The names of the Funds from which you are exchanging and into which you
are exchanging
o The dollar amount or number of shares you want to sell (and exchange)
o Open a new account and complete an account application if you are requesting
different shareholder privileges
o Mail us your request and documentation
BY TELEPHONE
o Telephone exchanges are only available if you have elected telephone
redemption privileges
o Call us with your request
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
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RETIREMENT ACCOUNTS
The Funds offer IRA accounts, including traditional and Roth IRAs. Before
investing in any IRA or other retirement plan, you should consult your tax
advisers. Whenever making an investment in an IRA, be sure to indicate the year
in which the contribution is made.
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OTHER INFORMATION
DISTRIBUTIONS
The Funds distribute their net investment income annually and realized net
capital gain at least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested. Shares
become entitled to receive distributions on the day after the shares are issued.
TAXES
Each Fund generally intends to operate in a manner such that it will not be
liable for Federal income or excise tax.
The Funds' distributions of net investment income (which include short-term
capital gains) are taxable to shareholders as ordinary income. The Funds'
distributions of long-term capital gains are taxable to shareholders as
long-term capital gains, regardless of how long a shareholder has held shares.
Distributions will reduce the net asset value of the Funds' shares by the amount
of the distribution. A distribution made shortly after the purchase of shares,
although in effect a return of capital, will be taxable to you.
You may incur a capital gain or loss when you sell your shares. The amount of
this gain or loss is calculated based on the amount paid for the shares and the
value of the shares upon redemption.
The Funds will send you information about the income tax status of distributions
paid during the year after the close of the year.
For further information about the tax effects of investing in a Fund, please see
the SAI and consult your tax adviser.
ORGANIZATION
The Trust is a Delaware business trust that is registered with the SEC as an
open-end, management investment company (a "mutual fund"). The Funds are two
series of the Trust. Shareholders' meetings are not anticipated except if
required by Federal or Delaware law. Shareholders of each series are entitled to
vote at shareholders' meetings unless a matter relates only to specific series
(such as approval of an advisory agreement for a Fund). From time to time, large
shareholders may control a Fund or the Trust.
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<TABLE>
<S> <C>
FOR MORE INFORMATION LOGO
STATEMENT OF ADDITIONAL INFORMATION ("SAI") The SAI provides
more detailed information about the Funds and is
incorporated by reference into this Prospectus. BIA SMALL-CAP
You can get a free copy of the SAI, request other information and discuss GROWTH FUND
your questions about the Funds by contacting the Funds at:
BIA GROWTH
Forum Shareholder Services, LLC EQUITY FUND
Two Portland Square
Portland, Maine 04101
800-XXX-XXXX
207-XXX-XXXX
You can also review the Funds' SAI at the Public Reference Room of the
Securities and Exchange Commission. You can get text-only copies, for a
fee, by writing to or calling the following:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-6009
Telephone: 800-SEC-0330
Free copies are available from the Commission's Internet
website at http://www.sec.gov.
Investment Company Act File No. 811-3023.
Brown Investment Advisory &
Trust Company
19 South Street
Baltimore, MD 21202
800-645-3923
410-637-1880
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JUNE ___, 1999
BIA SMALL-CAP GROWTH FUND
BIA GROWTH EQUITY FUND
FUND INFORMATION:
Forum Funds
Two Portland Square
Portland, Maine 04101
(800) ___-____
INVESTMENT ADVISER:
Brown Investment Advisory & Trust Company
Furness House
19 South Street
Baltimore, Maryland 21202
ACCOUNT INFORMATION AND SHAREHOLDER SERVICES:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04101
(207) ____-____
(800) ____-____
This Statement of Additional Information (the "SAI") supplements the Prospectus
dated June ___, 1999, as may be amended from time to time, offering shares of
BIA Small-Cap Growth Fund and BIA Growth Equity Fund (the "Funds"), two separate
series of Forum Funds, a registered, open-end management investment company (the
"Trust"). This SAI is not a prospectus and should only be read in conjunction
with the Prospectus. You may obtain the Prospectus without charge by contacting
shareholder services at the address or telephone number listed above.
<PAGE>
TABLE OF CONTENTS
Glossary ........................................................... 1
1. Investment Policies and Risks....................................... 2
A. Equity Securities...........................................2
B. Securities Ratings Information..............................3
C. Temporary Defensive Position............................... 4
D. Illiquid and Restricted Securities..........................4
E. Foreign Securities..........................................5
F. Options and Futures........................................ 5
G. Borrowing.................................................. 7
H. Core and Gateway(R)................................................. 8
I. Other Investments...........................................8
2. Investment Limitations.............................................. 8
A. Fundamental Limitations.................................... 8
B. Nonfundamental Limitations................................. 9
3. Performance Data and Advertising.................................... 10
A. Performance Data........................................... 10
B. Performance Calculations................................... 11
C. Other Matters.............................................. 13
4. Management.......................................................... 14
A. Trustees and Officers...................................... 15
B. Compensation of Trustees and Officers...................... 15
C. Investment Adviser......................................... 15
D. Distributor................................................ 16
E. Other Fund Service Providers............................... 17
5. Portfolio Transactions.............................................. 19
A. How Securities are Purchased and Sold...................... 19
B. Adviser Responsibility for Purchases and Sales............. 19
C. Securities of Regular Broker-Dealers....................... 21
6. Additional Purchase and Redemption Information...................... 21
A. General Information........................................ 21
B. Additional Purchase Information............................ 21
C. Additional Redemption Information.......................... 22
D. NAV Determination.......................................... 23
E. Distributions.............................................. 23
7. Taxation ........................................................... 23
A. Qualification as a Regulated Investment Company............ 23
B. Fund Distributions......................................... 24
C. Certain Tax Rules Applicable to the Funds Transactions..... 25
D. Federal Excise Tax ........................................ 25
E. Sale or Redemption of Shares............................... 26
F. Withholding Tax............................................ 26
G. Foreign Shareholders....................................... 26
H. State and Local Taxes...................................... 27
8. Other Matters....................................................... 27
A. The Trust and its Shareholders............................. 27
B. Fund Ownership............................................. 28
C. Limitations on Shareholders' and Trustees' Liability....... 29
D. Registration Statement..................................... 29
Appendix A - Description of Securities Ratings...............................A-1
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GLOSSARY
As used in this SAI, the following terms have the meanings listed.
"Adviser" means Brown Investment Advisory & Trust Company.
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Custodian" means the custodian of each Fund's assets.
"FAdS" means Forum Administrative Services, LLC, the administrator of
each Fund.
"Fitch" means Fitch IBCA, Inc.
"FAcS" means Forum Accounting Services, LLC, the fund accountant of
each Fund.
"FFS" means Forum Fund Services, LLC, the distributor of each Fund's
shares.
"Fund" means each of the separate series of the Trust to which this SAI
relates as identified on the cover page.
"Moody's" means Moody's Investors Service.
"NRSRO" means a nationally recognized statistical rating organization.
"NAV" means net asset value per share.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's, A Division of the McGraw Hill Companies.
"Transfer Agent" means Forum Shareholder Services, LLC, the transfer
agent of each Fund.
"Trust" means Forum Funds.
"U.S. Government Securities" means obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
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1. INVESTMENT POLICIES AND RISKS
Each Fund is a diversified series of the Trust. The following discussion
supplements the disclosure in the Prospectus for each Fund's investment
techniques, strategies and risks.
A. EQUITY SECURITIES
1. COMMON AND PREFERRED STOCK
GENERAL. Common stock represents an equity (ownership) interest in a company,
and usually possesses voting rights and earns dividends. Dividends on common
stock are not fixed but are declared at the discretion of the issuer. Common
stock generally represents the riskiest investment in a company. In addition,
common stock generally has the greatest appreciation and depreciation potential
because increases and decreases in earnings are usually reflected in a company's
stock price.
Preferred stock is a class of stock having a preference over common stock as to
the payment of dividends and the recovery of investment should a company be
liquidated, although preferred stock is usually junior to the debt securities of
the issuer. Preferred stock typically does not possess voting rights and its
market value may change based on changes in interest rates.
RISKS. The fundamental risk of investing in common and preferred stock is the
risk that the value of the stock might decrease. Stock values fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than
preferred stocks, fixed-income and money market investments. The market value of
all securities, including common and preferred stocks, is based upon the
market's perception of value and not necessarily the book value of an issuer or
other objective measure of a company's worth. If you invest in a Fund, you
should be willing to accept the risks of the stock market and should consider an
investment in the Fund only as a part of your overall investment portfolio.
2. CONVERTIBLE SECURITIES
GENERAL. Convertible securities include debt securities, preferred stock or
other securities that may be converted into or exchanged for a given amount of
common stock of the same or a different issuer during a specified period and at
a specified price in the future. A convertible security entitles the holder to
receive interest on debt or the dividend on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Convertible
securities rank senior to common stock in a company's capital structure but are
usually subordinated to comparable nonconvertible securities. Convertible
securities have unique investment characteristics in that they generally: (1)
have higher yields than common stocks, but lower yields than comparable
non-convertible securities; (2) are less subject to fluctuation in value than
the underlying stocks since they have fixed income characteristics; and (3)
provide the potential for capital appreciation if the market price of the
underlying common stock increases.
A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security is called for redemption, a Fund will be required to permit
the issuer to redeem the security, convert it into the underlying common stock
or sell it to a third perty.
RISKS. Investment in convertible securities generally entails less risk than an
investment in the issuer's common stock. Convertible securities are typically
issued by smaller capitalized companies whose stock price may be volatile.
Therefore, price of a convertible security may reflect variations in the price
of the underlying common stock in a way that nonconvertible debt does not. The
extent to which such risk is reduced, however, depends in large measure upon the
degree to which the convertible security sells above its value as a fixed income
security.
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3. WARRANTS
GENERAL. Warrants are securities, typically issued with preferred stock or
bonds, that give the holder the right to purchase a given number of shares of
common stock at a specified price and time. The price usually represents a
premium over the applicable market value of the common stock at the time of the
warrant's issuance. Warrants have no voting rights with respect to the common
stock, receive no dividends and have no rights with respect to the assets of the
issuer.
RISKS. Investments in warrants involve certain risks, including the possible
lack of a liquid market for the resale of the warrants, potential price
fluctuations due to adverse market conditions or other factors and failure of
the price of the common stock to rise. If the warrant is not exercised within
the specified time period, it becomes worthless.
4. DEPOSITARY RECEIPTS
GENERAL. The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"). ADRs typically are issued by a U.S. bank or trust company,
evidence ownership of underlying securities issued by a foreign company, and are
designed for use in U.S. securities markets. The Funds invest in depositary
receipts in order to obtain exposure to foreign securities markets.
RISKS. Unsponsored depositary receipts may be created without the participation
of the foreign issuer. Holders of these receipts generally bear all the costs of
the depositary receipt facility, whereas foreign issuers typically bear certain
costs in a sponsored depository receipt. The bank or trust company depositary of
an unsponsored depositary receipt may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through
voting rights. Accordingly, available information concerning the issuer may not
be current and the prices of unsponsored depositary receipts may be more
volatile than the prices of sponsored depositary receipts.
B. SECURITY RATINGS INFORMATION
Each Fund's investments in preferred and fixed income securities are subject to
credit risk relating to the financial condition of the issuers of the securities
that each Fund holds. To limit credit risk, each Fund invests its assets in debt
securities that are considered investment grade. Investment grade means rated in
the top four long-term rating categories or top two short-term rating categories
by an NRSRO, or unrated and determined by the Adviser to be of comparable
quality.
The lowest long-term ratings that are investment grade for convertible bonds,
are "Baa" in the case of Moody's and "BBB" in the case of S&P and Fitch; for
preferred stock are "Baa" in the case of Moody's and "BBB" in the case of S&P
and Fitch; and for short-term debt, including commercial paper, are "Prime-2"
(P-2) in the case of Moody's, "A-2" in the case of S&P and "F-2" in the case of
Fitch.
Unrated securities may not be as actively traded as rated securities. A Fund may
retain securities whose rating has been lowered below the lowest permissible
rating category (or that are unrated and determined by the Adviser to be of
comparable quality to securities whose rating has been lowered below the lowest
permissible rating category) if the Adviser determines that retaining such
security is in the best interests of the Fund. Because a downgrade often results
in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.
Moody's, S&P and other NRSROs are private services that provide ratings of the
credit quality of debt obligations, including convertible securities. A
description of the range of ratings assigned to various types of bonds and other
securities by several NRSROs is included in Appendix A to this SAI. The Funds
may use these ratings to determine whether to purchase, sell or hold a security.
Ratings are general and are not absolute standards of quality. Securities with
the same maturity, interest rate and rating may have different market prices. If
an issue of securities ceases to be rated or if its rating is reduced after it
is purchased by a Fund, the Adviser will determine whether the Fund should
continue to hold the obligation. To the extent that the ratings given by an
NRSRO may change as a result of changes in such organizations or their rating
systems, the Adviser will attempt to substitute comparable ratings. Credit
ratings attempt to evaluate the safety of principal and interest payments and do
not evaluate the risks
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of fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings. An issuer's current financial condition may be better
or worse than a rating indicates.
C. TEMPORARY DEFENSIVE POSITION
A Fund may assume a temporary defensive position and may invest without limit in
commercial paper and other money market instruments that are of prime quality.
Prime quality instruments are those instruments that are rated in one of the two
highest short-term rating categories by an NRSRO or, if not rated, determined by
the Adviser to be of comparable quality.
Money market instruments usually have maturities of one year or less and fixed
rates of return. The money market instruments in which a fund may invest include
U.S. Government Securities, time deposits, bankers acceptances and certificates
of deposit of depository institutions (such as banks), corporate notes and
short-term bonds and money market mutual funds. The Funds may only invest in
money market mutual funds to the extent permitted by the 1940 Act.
The money market instruments in which a Fund may invest may have variable or
floating rates of interest. 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. These obligations often
include the right, after a given period, to prepay the 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 7-day or shorter demand feature and there is no readily available market
for the obligation, it is treated as an illiquid security.
D. ILLIQUID AND RESTRICTED SECURITIES
1. GENERAL
No Fund may acquire securities or invest in repurchase agreements if, as a
result, more than 15% of the Fund's net assets (taken at current value) would be
invested in illiquid securities.
The term "illiquid securities" means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately the amount
at which a Fund has valued the securities. Illiquid securities include: (1)
repurchase agreements not entitling the holder to payment of principal within
seven days (2) purchased over-the-counter options; (3) securities which are not
readily marketable; and (4) except as otherwise determined by the Adviser,
securities subject to contractual or legal restrictions on resale because they
have not been registered under the 1933 Act ("restricted securities").
2. RISKS
Limitations on resale may have an adverse effect on the marketability of a
security and a Fund might also have to register a restricted security in order
to dispose of it, resulting in expense and delay. A Fund might not be able to
dispose of restricted or illiquid securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemptions. There can be no
assurance that a liquid market will exist for any security at any particular
time. Any security, including securities determined by the Adviser to be liquid,
can become illiquid.
3. DETERMINATION OF LIQUIDITY
The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid and has delegated the function of making
determinations of liquidity to the Adviser, pursuant to guidelines approved by
the Board. The Adviser determines and monitors the liquidity of the portfolio
securities and reports periodically on its decisions to the Board. The Adviser
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
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make a market in the security; and (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.
An institutional market has developed for certain restricted securities.
Accordingly, contractual or legal restrictions on the resale of a security may
not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the 1933 Act or other exemptions, the Adviser may determine that the securities
are not illiquid.
E. FOREIGN SECURITIES
Each Fund may invest in foreign securities. Investments in the securities of
foreign issuers may involve risks in addition to those normally associated with
investments in the securities of U.S. issuers. All foreign investments are
subject to risks of foreign political and economic instability, adverse
movements in foreign exchange rates, the imposition or tightening of exchange
controls or other limitations on repatriation of foreign capital, and changes in
foreign governmental attitudes towards private investment, including potential
nationalization, increased taxation or confiscation of your assets.
Dividends payable on foreign securities may be subject to foreign withholding
taxes, thereby reducing the income available for distribution to you. Commission
rates payable on foreign transactions are generally higher than in the United
States. Foreign accounting, auditing and financial reporting standards differ
from those in the United States and therefore, less information may be available
about foreign companies than is available about issuers of comparable U.S.
companies. Foreign securities also may trade less frequently and with lower
volume and may exhibit greater price volatility than United States securities.
Changes in foreign exchange rates will affect the U.S. dollar value of all
foreign currency-denominated securities held by a Fund. Exchange rates are
influenced generally by the forces of supply and demand in the foreign currency
markets and by numerous other political and economic events occurring outside
the United States, many of which may be difficult, if not impossible, to
predict.
Income from foreign securities will be received and realized in foreign
currencies, and a Fund is required to compute and distribute income in U.S.
dollars. Accordingly, a decline in the value of a particular foreign currency
against the U.S. dollar after a Fund's income has been earned and computed in
U.S. dollars may require the Fund to liquidate portfolio securities to acquire
sufficient U.S. dollars to make a distribution. Similarly, if the exchange rate
declines between the time a Fund incurs expenses in U.S. dollars and the time
such expenses are paid, the Fund may be required to liquidate additional foreign
securities to purchase the U.S. dollars required to meet such expenses.
F. OPTIONS AND FUTURES
1. GENERAL
A Fund may purchase or sell (write) put and call options to (1) enhance the
Fund's performance or (2) to hedge against a decline in the value of securities
owned by the Fund or an increase in the price of securities that the Fund plans
to purchase. A Fund may purchase or write options on securities in which it may
invest or on market indices based in whole or in part on such securities.
Options purchased or written by a Fund must be traded on an exchange or
over-the-counter.
A Fund may invest in futures contracts on market indices based in whole or in
part on securities in which the Fund may invest. A Fund may also purchase or
write put and call options on these futures contracts. Options and futures are
considered to be derivatives. Use of these instruments is subject to regulation
by the SEC, the options and futures exchanges on which futures and options are
traded or by the CFTC. No assurance can be given that any hedging or option
income strategy will achieve its intended result.
Currently, the Funds have no intention of investing in options or futures for
purposes other than hedging. If a Fund
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will be financially exposed to another party due to its investments in options
or futures, the Fund will maintain either (1) an offsetting ("covered") position
in the underlying security or an offsetting option or futures contract, or (2)
cash, receivables and liquid debt securities with a value sufficient at all
times to cover its potential obligations. A Fund will comply with SEC guidelines
with respect to coverage of these strategies and, if the guidelines require,
will set aside cash, liquid debt securities and other permissible assets
("Segregated Assets") in a segregated account with the Custodian in the
prescribed amount. Segregated Assets cannot be sold or closed out while the
hedging strategy is outstanding, unless the Segregated Assets are replaced with
similar assets. As a result, there is a possibility that the use of cover or
segregation involving a large percentage of a Fund's assets could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
2. OPTIONS AND FUTURES STRATEGIES
OPTIONS ON SECURITIES. A call option is a contract under which the purchaser of
the call option, in return for a premium paid, has the right to buy the security
(or index) underlying the option at a specified exercise price at any time
during the term of the option. The writer of the call option, who receives the
premium, has the obligation upon exercise of the option to deliver the
underlying security against payment of the exercise price. A put option gives
its purchaser, in return for a premium, the right to sell the underlying
security at a specified price during the term of the option. The writer of the
put, who receives the premium, has the obligation to buy, upon exercise of the
option, the underlying security (or a cash amount equal to the value of the
index) at the exercise price. The amount of a premium received or paid for an
option is based upon certain factors, including the market price of the
underlying security, the relationship of the exercise price to the market price,
the historical price volatility of the underlying security, the option period,
and interest rates.
OPTIONS ON STOCK INDICES. A stock index assigns relative values to the stock
included in the index, and the index fluctuates with changes in the market
values of the stocks included in the index. Stock index options operate in the
same way as the more traditional options on securities except that stock index
options are settled esclusively in cash and do not involve delivery of
securities. Thus, upon exercise of stock index options, the purchaser will
realize and the writer will pay an amount based on the differences between the
exercise price and the closing price of the stock index.
OPTIONS ON FUTURES. Options on futures contracts are similar to options on
securities except that an option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract rather than to purchase or sell stock, at a specified exercise price at
any time during the period of the option. Upon exercise of the option, the
delivery of the futures position to the holder of the option will be accompanied
by transfer to the holder of an accumulated balance representing the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
future.
FUTURES CONTRACTS AND INDEX FUTURES CONTRACTS. A futures contract is a bilateral
agreement where one party agrees to accept, and the other party agrees to make,
delivery of cash, an underlying debt security or a currency, as called for in
the contract, at a specified date and at an agreed upon price. A bond or stock
index futures contract involves the delivery of an amount of cash equal to a
specified dollar amount times the difference between the bond or stock index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the securities comprising
the index is made. Generally, these futures contracts are closed out prior to
the expiration date of the contracts.
3. LIMITATIONS ON OPTIONS AND FUTURES TRANSACTIONS
A Fund may not sell a put option if the exercise value of all put options
written by the Fund would exceed 50% of the Fund's total assets or sell a call
option if the exercise value of all call options written by the Fund would
exceed the value of the Fund's assets. A Fund may not purchase any call or put
option on a futures contract if the premiums associated with all such options
held by a Fund would exceed 5% of the Fund's total assets as of the date the
option is purchased.
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A Fund may enter into futures contracts only if the aggregate of initial margin
deposits for open futures contract positions does not exceed 5% of the Fund's
total assets. In addition positions held by a Fund may not exceed 50% of its
total assets.
3. RISKS
There are certain investment risks associated with options and futures
transactions. These risks include: (1) dependence on the Adviser's ability to
predict movements in the prices of individual securities and fluctuations in the
general securities markets; (2) imperfect correlations between movements in the
prices of options and movements in the price of the securities (or indices)
hedged or used for cover which may cause a given hedge not to achieve its
objective; (3) the fact that the skills and techniques needed to trade these
instruments are different from those needed to select the securities in which a
Fund invest; and (4) lack of assurance that a liquid secondary market will exist
for any particular instrument at any particular time, which, among other things,
may hinder a Fund's ability to limit exposures by closing its positions.
Other risks include the inability of a Fund, as the writer of covered call
options, to benefit from any appreciation of the underlying securities above the
exercise price, and the possible loss of the entire premium paid for options
purchased by the Fund. In addition, the futures exchanges may limit the amount
of fluctuation permitted in certain futures contract prices on related options
during a single trading day. A Fund may be forced, therefore, to liquidate or
close out a futures contract position at a disadvantageous price. There is no
assurance that a counterparty in an over-the-counter option transaction will be
able to perform its obligations. A Fund may use various futures contracts that
are relatively new instruments without a significant trading history. As a
result, there can be no assurance that an active secondary market in those
contracts will develop or continue to exist. A Fund's activities in the futures
and options markets may result in higher portfolio turnover rates and additional
brokerage costs, which could reduce a Fund's yield.
G. BORROWING
1. GENERAL
The Fund may borrow money in amounts up to 33 1/3 percent of the Fund's total
assets for , among other things, the purchase of securities. When a Fund borrows
money, it will set aside segregated assets to cover its obligations under the
loan. The Fund will generally borrow money to increase its returns. Typically,
if a security purchased with borrowed funds increases in value, the Fund may
sell the security, repay the loan, and secure a profit.
2. RISKS
The use of borrowing involves special risks, including magnified capital losses.
If a Fund buys securities with borrowed funds and the value of the securities
declines, a Fund may be required to provide the lender with additional funds or
liquidate its position in these securities to continue to secure or repay the
loan. A Fund may also be obligated to liquidate other portfolio positions at an
inappropriate time in order to pay off the loan or any interest payments
associated with the loan.
To the extent that the interest expense involved in a borrowing transactions
approaches the net return on a Fund's investment portfolio, the benefit of
borrowing will be reduced. If the interest expense due to a borrowing
transaction exceeds the net return on a Fund's investment portfolio, a Fund's
use of borrowing would result in a lower rate of return than if the Fund did not
borrow. The size of any loss incurred by a Fund due to borrowing will depend on
what percentage of the Fund's portfolio has been used as collateral for the
loan. The greater the percentage borrowed, the greater potential of gain or loss
to a Fund.
To help minimize the risks associated with borrowing, a Fund will set aside and
maintain, in a segregated account, segregated assets. The account's value, which
is marked to market daily, will be at least equal to the Fund's margin
commitments.
7
<PAGE>
H. CORE AND GATEWAY(R)
Each Fund may seek to achieve its investment objective by converting to a Core
and Gateway(R) structure. A Fund operating under a Core and Gateway(R) structure
holds, as its only investment, shares of another investment company having
substantially the same investment objective and policies. The Board will not
authorize conversion to a Core and Gateway(R) structure if it would materially
increase costs to a Fund's shareholders.
I. OTHER INVESTMENTS
Although the Funds do not currently plan to invest in securities other than
those referenced in the Prospectus and this SAI, they may invest in a variety of
other investments. The Funds' Prospectus and/or SAI will be supplemented, as
necessary, to include information regarding the employment of any additional
investment strategies and their associated risks.
2. INVESTMENT LIMITATIONS
For purposes of all investment policies of the Funds: (1) the term 1940 Act
includes the rules thereunder, SEC interpretations and any exemptive order upon
which the Fund may rely; and (2) the term Code includes the rules thereunder,
IRS interpretations and any private letter ruling or similar authority upon
which the Fund may rely.
Except as required by the 1940 Act or the Code, if any 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 Fund's assets or purchases and redemptions of shares will not be considered
a violation of the limitation.
A fundamental policy of a Fund and the Fund's investment objective, cannot be
changed without the affirmative vote of the lesser of: (1) 50% of the
outstanding shares of the Fund; or (2) 67% of the shares of the Fund present or
represented at a shareholders meeting at which the holders of more than 50% of
the outstanding shares of the Fund are present or represented. A nonfundamental
policy of a Fund may be changed by the Board without shareholder approval.
A. FUNDAMENTAL LIMITATIONS
Each Fund has adopted the following investment limitations, which are
fundamental policies of the Fund.
1. ISSUANCE OF SENIOR SECURITIES
A Fund may not issue senior securities except pursuant to Section 18 of the 1940
Act.
2. BORROWING MONEY
A Fund may not borrow money if, as a result, outstanding borrowings would exceed
an amount equal to 33 1/3% of the Fund's total assets.
3. UNDERWRITING ACTIVITIES
A Fund may not underwrite securities issued by other persons except, to the
extent that in connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter.
4. CONCENTRATION
A Fund may not purchase a security if, as a result, more than 25% of the Fund's
total assets would be invested in securities of issuers conducting their
principal business activities in the same industry. For purposes of this
limitation, there is no limit on: (i) investments in U.S. Government Securities,
in repurchase agreements covering
8
<PAGE>
U.S. Government Securities, in tax-exempt securities issued by the states,
territories or possessions of the United States ("municipal securities") or in
foreign government securities or (ii) investments in issuers domiciled in a
single jurisdiction. Notwithstanding anything to the contrary, to the extent
permitted by the 1940 Act, a Fund may invest in one or more investment
companies; provided that, except to the extent the Fund invests in other
investment companies pursuant to Section 12(d)(1)(A) of the 1940 Act, the Fund
treats the assets of the investment companies in which it invests as its own for
purposes of this policy.
5. PURCHASES AND SALES OF REAL ESTATE
A Fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities backed by real estate or securities of
companies engaged in the real estate business).
6. PURCHASES AND SALES OF COMMODITIES
A Fund may not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
7. MAKING LOANS
A Fund may not make loans to other parties. For purposes of this limitation,
entering into repurchase agreements, lending securities and acquiring any debt
security are not deemed to be the making of loans.
8. DIVERSIFICATION
A Fund is "diversified" as that term is defined in the 1940 Act. A Fund may not,
with respect to 75% of its assets, purchase a security (other than a U.S.
Government Security or security of an investment company) if, as a result: (1)
more than 5% of the Fund's total assets would be invested in the securities of a
single issuer; or (2) the Fund would own more than 10% of the outstanding voting
securities of a single issuer.
B. NONFUNDAMENTAL LIMITATIONS
Each Fund has adopted the following investment limitations, which are not
fundamental policies of the Fund.
1. SHORT SALES
A Fund may not sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short (short
sales "against the box"), and provided that transactions in futures contracts
and options are not deemed to constitute selling securities short.
2. PURCHASES ON MARGIN
A Fund may not purchase securities on margin, except that the Fund may use
short-term credit for the clearance of the Fund's transactions, and provided
that initial and variation margin payments in connection with futures contracts
and options on futures contracts shall not constitute purchasing securities on
margin.
3. ILLIQUID SECURITIES
A Fund may not invest more than 15% of its net assets in illiquid assets such
as: (i) securities that cannot be disposed of within seven days at their
then-current value, (ii) repurchase agreements not entitling the holder to
payment of principal within seven days and (iii) securities subject to
restrictions on the sale of the securities to the public without registration
under the 1933 Act ("restricted securities") that are not readily marketable.
The Funds may treat certain restricted securities as liquid pursuant to
guidelines adopted by the Board.
9
<PAGE>
4. BORROWING
A Fund may not purchase or otherwise acquire any security if, the total of
borrowings would exceed 5% of the value of its total assets.
5. OPTION CONTRACTS
A Fund may not invest in options contracts regulated by the CFTC except for (i)
bona fide hedging purposes within the meaning of the rules of the CFTC and (ii)
for other purposes if, as a result, no more than 5% of the Fund's net assets
would be invested in initial margin and premiums (excluding amounts
"in-the-money") required to establish the contracts.
A Fund (i) will not hedge more than 50% of its total assets by buying put
options, and writing call options (so called "short positions"), (ii) will not
buy futures contracts or write put options whose underlying value exceeds 25% of
the Fund's total assets, and (iii) will not buy call options with a value
exceeding 5% of the Fund's total assets.
6. EXERCISING CONTROL OF ISSUERS
A Fund may not make investments for the purpose of exercising control of an
issuer. Investments by the Fund in entities created under the laws of foreign
countries solely to facilitate investment in securities in that country will not
be deemed the making of investments for the purpose of exercising control.
7. SECURITIES OF INVESTMENT COMPANIES
A Fund may invest in the securities of any investment company except to the
extent permitted by the 1940 Act.
3. PERFORMANCE DATA AND ADVERTISING
A. PERFORMANCE DATA
A Fund may quote performance in various ways. All performance information
supplied in advertising, sales literature, shareholder reports or other
materials is historical and is not intended to indicate future returns.
A Fund may compare any of its performance information with:
o Data published by independent evaluators such as Morningstar, Inc.,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc., CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Fund Tracking Companies").
o The performance of other mutual funds.
o The performance of recognized stock, bond and other indices, including
but not limited to the Standard & Poor's 500(R) Index, the Russell
2000(R) Index, the Russell MidcapTM Index, the Russell 1000(R) Value
Index, the Russell 2500(R) Index, the Morgan Stanley - Europe,
Australian and Far East Index, the Dow Jones Industrial Average, the
Salomon Brothers Bond Index, the Shearson Lehman Bond Index, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index
as published by the U.S. Department of Commerce.
Performance information may be presented numerically or in a table, graph, or
similar illustration.
10
<PAGE>
Indices are not used in the management of a Fund but rather are standards by
which the Fund's Adviser and shareholders may compare the performance of the
Fund to an unmanaged composite of securities with similar, but not identical,
characteristics as the Fund.
A Fund may refer to: (1) general market performances over past time periods such
as those published by Ibbotson Associates (for instance, its "Stocks, Bonds,
Bills and Inflation Yearbook"); (2) mutual fund performance rankings and other
data published by Fund Tracking Companies; and (3) material and comparative
mutual fund data and ratings reported in independent periodicals, such as
newspapers and financial magazines.
A Fund's performance will fluctuate in response to market conditions and other
factors.
B. PERFORMANCE CALCULATIONS
A Fund's performance may be quoted in terms of yield or total return.
1. SEC YIELD
Standardized SEC yields for a Fund used in advertising are computed by dividing
the Fund's interest income (in accordance with specific standardized rules) for
a given 30 day or one month period, net of expenses, by the average number of
shares entitled to receive income distributions during the period, dividing this
figure by the Fund's net asset value per share at the end of the period and
annualizing the result (assuming compounding of income in accordance with
specific standardized rules) in order to arrive at an annual percentage rate.
Capital gains and losses generally are excluded from these calculations.
Income calculated for the purpose of determining a Fund's 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 Fund may differ from the rate of
distribution of income from the Fund over the same period or the rate of income
reported in the Fund's financial statements.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that a Fund's yield fluctuates
from day to day and that the Fund's 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. Financial intermediaries may charge their customers that
invest in a Fund fees in connection with that investment. This will have the
effect of reducing the Fund's after-fee yield to those shareholders.
The yields of a Fund are not fixed or guaranteed, and an investment in a Fund is
not insured or guaranteed. Accordingly, yield information should not be used to
compare shares of a 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 to compare a Fund's yield information directly to similar
information regarding investment alternatives which are insured or guaranteed.
Yield quotations are based on amounts invested in a Fund net of any applicable
sales charges that may be paid by an investor. A computation of yield that does
not take into account sales charges paid by an investor would be higher than a
similar computation that takes into account payment of sales charges.
The Funds charge no sales charges.
11
<PAGE>
Yield is calculated according to the following formula:
a - b
Yield = 2[(------ + 1)6 - 1]
cd
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
2. TOTAL RETURN CALCULATIONS
A Fund's total return shows its overall change in value, including changes in
share price and assuming all of the Fund's distributions are reinvested.
Total return figures may be based on amounts invested in a Fund net of sales
charges that may be paid by an investor. A computation of total return that does
not take into account sales charges paid by an investor would be higher than a
similar computation that takes into account payment of sales charges.
The Funds charge no sales charges.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is calculated using a
formula prescribed by the SEC. To calculate standard average annual total
returns a Fund: (1) determines the growth or decline in value of a hypothetical
historical investment in a Fund over a stated period; and (2) calculates 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. For
example, a cumulative return of 100% over ten years would produce an average
annual total return of 7.18%. While average annual returns are a convenient
means of comparing investment alternatives, investors should realize that
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 Fund.
Average annual total return is calculated 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
Because average annual returns tend to smooth out variations in the Fund's
returns, shareholders should recognize that they are not the same as actual
year-by-year results.
OTHER MEASURES OF TOTAL RETURN. Standardized total return quotes may be
accompanied by non-standardized total return figures calculated by alternative
methods.
A Fund may quote unaveraged or cumulative total returns which reflect a
Fund's performance over a stated period of time.
Total returns may be stated in 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.
12
<PAGE>
Any total return 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 quoted with or without
taking into consideration a Fund's front-end sales charge or contingent deferred
sales charge (if applicable).
Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total
return above
C. OTHER MATTERS
A Fund may also include various information in its advertising, sales
literature, shareholder reports or other materials including, but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity; (2) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents; (3)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quarterly or daily); (4) information
relating to inflation and its effects on the dollar; (for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively); (5) information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar-cost
averaging; (6) biographical descriptions of the Fund's portfolio managers and
the portfolio management staff of the Fund's investment adviser, summaries of
the views of the portfolio managers with respect to the financial markets, or
descriptions of the nature of the Adviser's and its staff's management
techniques; (7) the results of a hypothetical investment in the Fund over a
given number of years, including the amount that the investment would be at the
end of the period; (8) the effects of investing in a tax-deferred account, such
as an individual retirement account or Section 401(k) pension plan; (9) the net
asset value, net assets or number of shareholders of the Fund as of one or more
dates; and (10) a comparison of the Fund's operations to the operations of other
funds or similar investment products, such as a comparison of the nature and
scope of regulation of the products and the products' weighted average maturity,
liquidity, investment policies, and the manner of calculating and reporting
performance.
As an example of compounding, $1,000 compounded annually at 9.00% will grow to
$1,090 at the end of the first year (an increase in $90) and $1,118 at the end
of the second year (an increase in $98). The extra $8 that was earned on the $90
interest from the first year is the compound interest. One thousand dollars
compounded annually at 9.00% will grow to $2,367 at the end of ten years and
$5,604 at the end of 20 years. Other examples of compounding are as follows: at
7% and 12% annually, $1,000 will grow to $1,967 and $3,106, respectively, at the
end of ten years and $3,870 and $9,646, respectively, at the end of twenty
years. These examples are for illustrative purposes only and are not indicative
of a Fund's performance.
A Fund may advertise information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar cost
averaging. In a dollar-cost averaging program, an investor invests a fixed
dollar amount in a Fund at periodic intervals, thereby purchasing fewer shares
when prices are high and more shares when prices are low. While such a strategy
does not insure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
had been purchased at those intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares through periods of
low price levels. For example, if an investor invests $100 a month for a period
of six months in a Fund the following will be the relationship between average
cost per share ($14.35 in the example given) and average price per share:
13
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC SHARE SHARES
PERIOD INVESTMENT PRICE PURCHASED
------ ---------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- ----
TOTAL AVERAGE TOTAL
INVESTED $600 PRICE $15.17 SHARES 41.81
</TABLE>
In connection with its advertisements, a Fund may provide "shareholder's
letters" which serve to provide shareholders or investors with an introduction
into the Fund's, the Trust's or any of the Trust's service provider's policies
or business practices.
4. MANAGEMENT
A. TRUSTEES AND OFFICERS
The names of the Trustees and officers of the Trust, their positions with the
Trust, address, date of birth and 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 (*).
<TABLE>
<S> <C>
- ------------------------------------------- -----------------------------------------------------------------------
NAME, POSITION WITH THE TRUST, PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS PAST 5 YEARS
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
John Y. Keffer*,Chairman & President President, Forum Financial Group, LLC (a mutual fund services holding
Born: July 15, 1942 company)
Two Portland Square President, Forum Fund Services, LLC. (Trust's underwriter)
Portland, Maine 04101 Chairman & President*, Core Trust (Delaware) (registered investment
company)
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
Costas Azariadas, Trustee Professor of Economics, University of California-Los Angeles
Born: February 15, 1943 Trustee, Core Trust (Delaware)
Department of Economics
University of California
Los Angeles, CA 90024
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
James C. Cheng, Trustee President, Technology Marketing Associates
Born: July 26, 1942 (marketing company for small and medium size businesses in New
27 Temple Street England)
Belmont, MA 02718 Trustee, Core Trust (Delaware)
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
J. Michael Parish, Trustee Partner-Reid & Priest LLP (law firm) since 1995
Born: November 9, 1943 Partner-Winthrop, Stimson, Putnam & Roberts (law firm) from 1989-1995
40 West 57th Street Trustee, Core Trust (Delaware)
New York, NY 10019
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
Mark D. Kaplan, Vice President Director, Investments, Forum Financial Group, LLC since 1995
Born: August 28, 1955 Previously, Managing Director and Director of Research, H.M. Payson
Two Portland Square & Co. (investment firm)
Portland, Maine 04101
- ------------------------------------------- -----------------------------------------------------------------------
14
<PAGE>
- ------------------------------------------- -----------------------------------------------------------------------
NAME, POSITION WITH THE TRUST, PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS PAST 5 YEARS
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
Stacey Hong, Treasurer Director, Fund Accounting, Forum Financial Group, LLC
Born: May 10, 1966 Treasurer, Core Trust (Delaware)
Two Portland Square
Portland, Maine 04101
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
Leslie K. Klenk, Secretary Assistant Counsel, Forum Financial Group, LLC since 1998
Born: August 24, 1964 Vice President/Associate General Counsel, Smith Barney Inc.
Two Portland Square (brokerage firm) from 1993 through 1998
Portland, Maine 04101
- ------------------------------------------- -----------------------------------------------------------------------
- ------------------------------------------- -----------------------------------------------------------------------
Pamela Stutch, Asst. Secretary Fund Administrator, Forum Financial Group, LLC since 1998
Born: June 29, 1967 Law Student, Temple University from 1994-1997
Two Portland Square
Portland, Maine 04101
- ------------------------------------------- -----------------------------------------------------------------------
</TABLE>
B. COMPENSATION OF TRUSTEES AND OFFICERS
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 audit committee
meeting attended on a date when a Board meeting is not held. In addition to the
$1,000 for each Board meeting attended, each Trustee is paid $100 per active
portfolio of the Trust. To the extent a meeting relates to only certain
portfolios of the Trust, Trustees are paid the $100 fee only with respect to
those portfolios. Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Board.
Trustees that are affiliated with the Adviser receive no compensation for their
services or reimbursement for their associated expenses. No officer of the Trust
is compensated by the Trust.
The following table sets forth the fees to paid to each Trustee by the Trust for
the fiscal year ended May 31, 2000.
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
Compensation Total Compensation from Trust
Trustee from Trust(1) Benefits Retirement and Fund Complex(1)
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
John Y. Keffer
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
Costas Azariadis
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
James C. Cheng
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
J. Michael Parish
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
</TABLE>
C. INVESTMENT ADVISER
1. SERVICES OF ADVISER
The Adviser serves as investment adviser to each Fund pursuant to an investment
advisory agreement with the Trust. Under that agreement, the Adviser furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing a Fund's investments and effecting portfolio
transactions for a Fund.
15
<PAGE>
2. OWNERSHIP OF ADVISER
The Adviser is a fully owned subsidiary of Brown Capital Holdings Incorporated,
a holding company incorporated under the laws of Maryland in 1998. The Adviser
is a trust company operating under the laws of Maryland.
3. FEES
The Adviser's fee is calculated as a percentage of the applicable Fund's average
net assets. The fee is accrued daily by the Funds and is paid monthly based on
average net assets for the previous month.
In addition to receiving its advisory fee from each Fund, the Adviser may also
act and be compensated as investment manager for its clients with respect to
assets they invested in a Fund. If you have a separately managed account with
the Adviser with assets invested in a Fund, the Adviser will credit an amount
equal to all or a portion of the fees received by the Adviser against any
investment management fee received from the client.
4. OTHER PROVISIONS OF ADVISER'S AGREEMENT
The Adviser's agreement remains in effect for a period of two years from the
date of its effectiveness. Subsequently, the Adviser's agreement must be
approved at least annually by the Board or by majority vote of the shareholders,
and in either case by a majority of the Trustees who are not parties to the
agreement or interested persons of any such party.
The Adviser's agreement is terminable without penalty by the Trust regarding a
Fund on 60 days' written notice when authorized either by vote of the Fund's
shareholders or by a majority vote of the Board, or by the Adviser on 60 days'
written notice to the Trust. The Agreement terminates immediately upon
assignment.
Under its agreement, the Adviser is not liable for any error of judgment,
mistake of law, or in any event whatsoever except for willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreement.
D. DISTRIBUTOR
1. DISTRIBUTOR; SERVICES AND COMPENSATION OF DISTRIBUTOR
FFS, the distributor (also known as principal underwriter) of the shares of each
Fund, is located at Two Portland Square, Portland, Maine 04101. FFS is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
FFS, FAdS, FAcS and the Transfer Agent are each controlled indirectly by Forum
Financial Group, LLC. Forum Financial Group, LLC is controlled by John Y.
Keffer.
Under its agreement with the Trust, FFS acts as the agent of the Trust in
connection with the offering of shares of the Funds. FFS continually distributes
shares of the Funds on a best efforts basis. FFS has no obligation to sell any
specific quantity of Fund shares.
FFS receives no compensation for its distribution services. Shares are sold with
no sales commission; accordingly, FFS receives no sales commissions. FFS may
enter into arrangements with various financial institutions through which you
may purchase or redeem shares. FFS may, at its own expense and from its own
resources, compensate certain persons who provide services in connection with
the sale or expected sale of shares of the Funds.
16
<PAGE>
2. OTHER PROVISIONS OF DISTRIBUTOR'S AGREEMENT
FFS's distribution agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party.
FFS's agreement is terminable without penalty by the Trust with respect to a
Fund on 60 days' written notice when authorized either by vote of the Fund's
shareholders or by a majority vote of the Board, or by FFS on 60 days'
written notice to the Trust.
Under its agreement, FFS is not liable to the Trust or the Trust's shareholders
for any error of judgment or mistake of law, for any loss arising out of any
investment or for any act or omission in the performance of its duties to a
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the agreement.
Under its agreement, FFS and certain related parties (such as FFS's officers and
persons that control FFS) are indemnified by the Trust against all claims and
expenses in any way related to alleged untrue statements of material fact
contained in a Fund's Registration Statement or any alleged omission of a
material fact required to be stated in the Registration Statement to make
statements contained therein not misleading. The Trust, however, will not
indemnify FSS for any such misstatements or omissions if they were made in
reliance upon information provided in writing by FSS in connection with the
preparation of the Registration Statement.
E. OTHER FUND SERVICE PROVIDERS
1. ADMINISTRATOR
As administrator, pursuant to an agreement with the Trust, FAdS is responsible
for the supervision of the overall management of the Trust, providing the Trust
with general office facilities and providing persons satisfactory to the Board
to serve as officers of the Trust.
For its services, FAdS receives a fee from a Fund at an annual rate as follows:
(1) 0.10% of the average daily net assets of the Fund for the first $100 million
of Fund assets and (2) 0.075% of the average daily net assets of the Fund for
remaining fund assets. FadS charges a minimum fee of $40,000 for its services.
The fee is accrued daily by the Funds and is paid monthly based on average net
assets for the previous month.
FAdS's administration agreement must be approved at least annually by the Board
or by majority vote of the shareholders, and in either case by a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party. FAdS's agreement is terminable without penalty by the Trust or by FAdS
with respect to a Fund on 60 days' written notice.
Under the agreement, FAdS is not liable to the Trust or the Trust's shareholders
for any act or omission, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under the agreement. Under the agreement, FAdS and
certain related parties (such as FadS's officers and persons who control FAdS)
are indemnified by the Trust against any and all claims and expenses related to
FAdS's actions or omissions that are consistent with FAdS's contractual standard
of care.
2. FUND ACCOUNTANT
As fund accountant, pursuant to an agreement with the Trust, FAcS provides fund
accounting services to each Fund. These services include calculating the NAV per
share of each Fund (and class) and preparing the Funds' financial statements and
tax returns.
For its services, FAcS receives a fee from each Fund at an annual rate of
$39,000 ($3,000 for preparation of tax returns) and certain surcharges based
upon the number and type of a Fund's portfolio transactions and positions.
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The fee is accrued daily by the Funds and is paid monthly based on the
transactions and positions for the previous month.
FAcS's accounting agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party. FAcS's agreement is terminable without penalty by the Trust or by FAcS
with respect to a Fund on 60 days' written notice.
Under the agreement, FAcS is not liable for any action or omission in the
performance of its duties to a Fund, except for willful misfeasance, bad faith ,
gross negligence or by reason of reckless disregard of its obligations and
duties under the agreement. Under the agreement, FAcS and certain related
parties (such as FacS's officers and persons who control FAcS) are indemnified
by the Trust against any and all claims and expenses related to FAcS's actions
or omissions that are consistent with FAcS's contractual standard of care.
Under the agreement, in calculating a Fund's NAV per share, FAcS is deemed not
to have committed an error if the NAV per share it calculates is (1) within 1/10
of 1% of the actual NAV per share (after recalculation). The agreement also
provides that FacS will not be liable to a shareholder for any loss incurred due
to an NAV difference if such difference is less than or equal 1/2 of 1% or less
than or equal to $10.00. In addition, FAcS is not liable for the errors of
others, including the companies that supply securities prices to FAcS and the
Funds.
3. TRANSFER AGENT
As transfer agent and distribution paying agent, pursuant to an agreement with
the Trust, the Transfer Agent maintains an account for each shareholder of
record of a Fund and is responsible for processing purchase and redemption
requests and paying distributions to shareholders of record. The Transfer Agent
is located at Two Portland Square, Portland, Maine 04101 and is registered as a
transfer agent with the SEC.
For its services, the Transfer Agent receives a fee from each Fund at an annual
rate of $18,000 and $25 per shareholder account. The fee is accrued daily by the
Funds and is paid monthly.
The Transfer Agent agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party. The Transfer Agent's agreement is terminable without penalty by the Trust
or by the Transfer Agent with respect to a Fund on 60 days' written notice.
Under the agreement, the Transfer Agent is not liable for any act in the
performance of its duties to a Fund, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties under the agreement. Under
the agreement, the Transfer Agent and certain related parties (such as the
Transfer Agent's officers and persons who control the Transfer Agent) are
indemnified by the Trust against any and all claims and expenses related to
FAdS's actions or omissions that are consistent with FAdS's contractual standard
of care.
4. CUSTODIAN
As custodian, pursuant to an agreement with the Trust, Forum Trust LLC
safeguards and controls the Funds' cash and securities, determines income and
collects interest on Fund investments. The Custodian may employ subcustodians to
provide custody of a Fund's domestic and foreign assets. The Custodian is
located at Two Portland Square, Portland, Maine 04101.
For its services, the Custodian receives an annualized percentage of the average
daily net assets of a Fund. Each Fund also pays an annual domestic custody fee
as well as certain other transaction fees. These fees are accrued daily by the
Funds and are paid monthly based on average net assets and transactions for the
previous month.
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5. LEGAL COUNSEL
Legal matters in connection with the issuance of shares of the Trust are passed
upon by Seward & Kissel, 1200 G Street, N.W., Washington, D.C. 20005.
6. INDEPENDENT AUDITORS
(Name of Independent Auditor), (Address of Independent Auditor), independent
auditors, have been selected as auditors for each Fund. The auditors audit the
annual financial statements of the Funds and provide the Funds with an audit
opinion. The auditors also review certain regulatory filings of the Funds and
the Funds' tax returns.
5. PORTFOLIO TRANSACTIONS
A. HOW SECURITIES ARE PURCHASED AND SOLD
Purchases and sales of portfolio securities that are fixed income securities
(for instance, money market instruments and bonds, notes and bills) usually are
principal transactions. In a principal transaction, the party from whom the Fund
purchases or to whom the Fund sells is acting on its own behalf (and not as the
agent of some other party such as its customers). These securities normally are
purchased directly from the issuer or from an underwriter or market maker for
the securities. There usually are no brokerage commissions paid for these
securities.
Purchases and sales of portfolio securities that are equity securities (for
instance common stock and preferred stock) are generally effected; (1) if the
security is traded on an exchange, through brokers who charge commissions; and
(2) if the security is traded in the "over-the-counter" markets, in a principal
transaction directly from a market maker. In transactions on stock exchanges,
commissions are negotiated. When transactions are executed in an
over-the-counter market, the Adviser will seek to deal with the primary market
makers; but when necessary in order to obtain best execution, the Adviser will
utilize the services of others.
Purchases of securities from underwriters of the securities include a disclosed
fixed 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 price.
In the case of fixed income and equity securities traded in the over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup.
B. ADVISER RESPONSIBILITY FOR PURCHASES AND SALES
The Adviser places orders for the purchase and sale of securities with brokers
and dealers selected by and in the discretion of the Adviser. No Fund has any
obligation to deal with any specific broker or dealer in the execution of
portfolio transactions. Allocations of transactions to brokers and dealers and
the frequency of transactions are determined by the Adviser in its best judgment
and in a manner deemed to be in the best interest of each Fund rather than by
any formula.
The Adviser seeks "best execution" for all portfolio transactions. This means
that the Adviser seeks the most favorable price and execution available. The
Adviser's primary consideration in executing transactions for a Fund is prompt
execution of orders in an effective manner and at the most favorable price
available.
1. CHOOSING BROKER-DEALERS
The Funds may not always pay the lowest commission or spread available. Rather,
in determining the amount of commissions (including certain dealer spreads) paid
in connection with securities transactions, the Adviser takes into account
factors such as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the research services described below)
and any risk assumed by the executing broker.
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Consistent with applicable rules and the Adviser's duties, the Adviser may: (1)
consider sales of shares of the Funds as a factor in the selection of
broker-dealers to execute portfolio transactions for a Fund; and (2) take into
account payments made by brokers effecting transactions for a Fund (these
payments may be made to the Fund or to other persons on behalf of the Fund for
services provided to the Fund for which those other persons would be obligated
to pay.
2. OBTAINING RESEARCH FROM BROKERS
The Adviser may give consideration to research services furnished by brokers to
the Adviser for its use and may cause a Fund to pay these brokers a higher
amount of commission than may be charged by other brokers. This research is
designed to augment the Adviser's own internal research and investment strategy
capabilities. This research may be used by the Adviser in connection with
services to clients other than the Funds, and not all research services may be
used by the Adviser in connection with the Funds. The Adviser's fees are not
reduced by reason of the Adviser's receipt of research services.
The Adviser has full brokerage discretion. It evaluates the range and quality of
a broker's services in placing trades including securing best price,
confidentiality, clearance and settlement capabilities, promptness of execution
and the financial stability of the broker-dealer. Under certain circumstances,
the value of research provided by a broker-dealer may be a factor in the
selection of a broker. This research would include reports that are common in
the industry. Typically, the research will be used to service all of the
Adviser's accounts although a particular client may not benefit from all the
research received on each occasion. The nature of the services purchased for
clients include industry research reports and periodicals, quotation systems,
software for portfolio management and formal data bases.
Occasionally, the Adviser may do a transaction with a broker and pay a slightly
higher commission than another might charge. If this is done it will be because
of the Adviser's need for specific research, for specific expertise a firm may
have in a particular type of transaction (due to factors such as size or
difficulty), or for speed/efficiency in execution. Since most of the Adviser's
brokerage commissions for research are for economic research on specific
companies or industries, and since the Adviser is involved with a limited number
of securities, most of the commission dollars spent for industry and stock
research directly benefit the clients.
There are occasions on which portfolio transactions may be executed as part of
concurrent authorizations to purchase or sell the same securities for more than
one account served by the Adviser, some of which accounts may have similar
investment objectives. Although such concurrent authorizations potentially could
be either advantageous or disadvantageous to any one or more particular
accounts, they will be effected only when the Adviser believes that to do so
will be in the best interest of the affected accounts. When such concurrent
authorizations occur, the objective will be to allocate the execution in a
manner equitable to the accounts involved. Clients are typically allocated
securities with prices averaged on a per-share or per-bond basis.
3. COUNTERPARTY RISK
The Adviser monitors the creditworthiness of counterparties to each Fund's
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal and appropriate credit risks.
4. TRANSACTIONS THROUGH AFFILIATES
The Adviser may effect brokerage transactions through affiliates of the Adviser
(or affiliates of those persons) pursuant to procedures adopted by the Trust.
5. OTHER ACCOUNTS OF THE ADVISER
Investment decisions for the Funds are made independently from those for any
other account or investment company that is or may in the future become managed
by the Adviser or its affiliates. Investment decisions are the product of many
factors, including basic suitability for the particular client involved. Thus, a
particular security
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may be bought or sold for certain clients even though it could have been bought
or sold for other clients at the same time. Likewise, a particular security may
be bought for one or more clients when one or more clients are selling the
security. In some instances, one client may sell a particular security to
another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as is possible, averaged as to price
and allocated between such clients in a manner which, in the Adviser's opinion,
is equitable to each and in accordance with the amount being purchased or sold
by each. There may be circumstances when purchases or sales of a portfolio
security for one client could have an adverse effect on another client that has
a position in that security. In addition, when purchases or sales of the same
security for a Fund and other client accounts managed by the Adviser occurs
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
6. PORTFOLIO TURNOVER
The frequency of portfolio transactions of a Fund (the portfolio turnover rate)
will vary from year to year depending on many factors. From time to time a Fund
may engage in active short-term trading to take advantage of price movements
affecting individual issues, groups of issues or markets. An annual portfolio
turnover rate of 100% would occur if all of the securities in a Fund were
replaced once in a period of one year. Higher portfolio turnover rates may
result in increased brokerage costs to a Fund and a possible increase in
short-term capital gains or losses.
C. SECURITIES OF REGULAR BROKER-DEALERS
From time to time a Fund may acquire and hold securities issued by its "regular
brokers and dealers" or the parents of those brokers and dealers. For this
purpose, regular brokers and dealers means the 10 brokers or dealers that: (1)
received the greatest amount of brokerage commissions during the Fund's last
fiscal year; (2) engaged in the largest amount of principal transactions for
portfolio transactions of the Fund during the Fund's last fiscal year; or (3)
sold the largest amount of the Fund's shares during the Fund's last fiscal year.
6. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
A. GENERAL INFORMATION
You may effect purchases or redemptions or request any shareholder privilege in
person at the Transfer Agent's offices located at Two Portland Square, Portland,
Maine 04101.
The Funds accept orders for the purchase or redemption of shares on any weekday
except days when the New York Stock Exchange is closed.
B. ADDITIONAL PURCHASE INFORMATION
Shares of each Fund are sold on a continuous basis by the distributor at net
asset value ("NAV") per share without any sales charge. Accordingly, the
offering price per share is the same as the NAV per share.
The Funds reserve the right to refuse any purchase request.
Fund shares are normally issued for cash only. In the Adviser's discretion,
however, a Fund may accept portfolio securities that meet the investment
objective and policies of a Fund as payment for Fund shares. A Fund will only
accept securities that: (1) are not restricted as to transfer by law and are not
illiquid; and (2) have a value which is readily ascertainable (and not
established only by valuation procedures).
1. IRAS
All contributions into an IRA through the automatic investing service are
treated as IRA contributions made during the year the investment is received.
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2. UGMAS/UTMAS
If the trustee's name is not in the account registration of a gift or transfer
to minor ("UGMA/UTMA") account, the investor must provide a copy of the trust
document.
3. PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Funds.
If you purchase shares through a financial institution, you will be subject to
the institution's procedures, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable when you invest in a Fund directly. When you purchase a Fund's shares
through a financial institution, you may or may not be the shareholder of record
and, subject to your institution's procedures, you may have Fund shares
transferred into your name. There is typically a three-day settlement period for
purchases and redemptions through broker-dealers. Certain financial institutions
may also enter purchase orders with payment to follow.
You may not be eligible for certain shareholder services when you purchase
shares through a financial institution. Contact your institution for further
information. If you hold shares through a financial institution, the Funds may
confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. The Funds are not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of the Funds through a financial institution should
read any materials and information provided by the financial institution to
acquaint themselves with its procedures and any fees that the institution may
charge.
C. ADDITIONAL REDEMPTION INFORMATION
A Fund may redeem shares involuntarily to reimburse the Fund for any loss
sustained by reason of the failure of a shareholder to make full payment for
shares purchased by the shareholder or to collect any charge relating to
transactions effected for the benefit of a shareholder which is applicable to a
Fund's shares as provided in the Prospectus.
1. SUSPENSION OF RIGHT OF REDEMPTION
The right of redemption may not be suspended, except for any period during
which: (1) the New York Stock Exchange, Inc. is closed (other than customary
weekend and holiday closings) or during which the Securities and Exchange
Commission determines that trading thereon is restricted; (2) an emergency (as
determined by the SEC) exists as a result of which disposal by a Fund of its
securities is not reasonably practicable or as a result of which it is not
reasonably practicable for a Fund fairly to determine the value of its net
assets; or (3) the SEC may by order permit for the protection of the
shareholders of a Fund.
2. REDEMPTION-IN-KIND
Redemption proceeds normally are paid in cash. Payments may be made wholly or
partly in portfolio securities, however, if the Board determines conditions
exist which would make payment in cash detrimental to the best interests of a
Fund. If redemption proceeds are paid wholly or partly in portfolio securities,
brokerage costs may be incurred by the shareholder in converting the securities
to cash. The Trust has filed an election with the SEC pursuant to which a Fund
may only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.
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D. NAV DETERMINATION
In determining a Fund's NAV per share, securities for which market quotations
are readily available are valued at current market value using the last reported
sales price. If no sale price is reported, the average of the last bid and ask
price is used. If no average price is available, the last bid price is used. If
market quotations are not readily available, then securities are valued at fair
value as determined by the Board (or its delegate).
E. DISTRIBUTIONS
Distributions of net investment income will be reinvested at a Fund's NAV per
share as of the last day of the period with respect to which the distribution is
paid. Distributions of capital gain will be reinvested at the NAV per share of a
Fund on the payment date for the distribution. Cash payments may be made more
than seven days following the date on which distributions would otherwise be
reinvested.
7. TAXATION
The tax information set forth in the Prospectus and the information in this
section relates solely to U.S. federal income tax law and assumes that each Fund
qualifies as a regulated investment company (as discussed below). Such
information is only a summary of certain key federal income tax considerations
affecting each Fund and its shareholders that are not described in the
prospectus. No attempt has been made to present a complete explanation of the
federal tax treatment of the Funds or the implications to shareholders. The
discussions here and in the prospectus are not intended as substitutes for
careful tax planning.
This "Taxation" section is based on the Code and applicable regulations in
effect on the date hereof. Future legislative or administrative changes or court
decisions may significantly change the tax rules applicable to the Funds and
their shareholders. Any of these changes or court decisions may have a
retroactive effect.
ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX PROVISIONS APPLICABLE TO THEM.
A. QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund intends for each tax year to qualify as a "regulated investment
company" under the Code. This qualification does not involve governmental
supervision of management or investment practices or policies of a Fund.
The tax year end of each Fund is May 31 (the same as the Fund's fiscal year
end).
1. MEANING OF QUALIFICATION
As a regulated investment company, a Fund will not be subject to federal income
tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of long-term capital gains over long-term capital
losses) that it distributes to shareholders. In order to qualify as a regulated
investment company a Fund must satisfy the following requirements:
o The Fund must distribute at least 90% of its investment company taxable
income (i.e., net investment income and capital gain net income) for
the tax year. (Certain distributions made by a Fund after the close of
its tax year are considered distributions attributable to the previous
tax year for purposes of satisfying this requirement.)
o The Fund must derive at least 90% of its gross income from certain
types of income derived with respect to its business of investing.
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o The Fund must satisfy the following asset diversification test at the
close of each quarter of the Fund's tax year: (1) at least 50% of the
value of the Fund's assets must consist of cash and cash items, U.S.
government securities, securities of other regulated investment
companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in
securities of the issuer and as to which the Fund does not hold more
than 10% of the outstanding voting securities of the issuer); and (2)
no more than 25% of the value of the Fund's total assets may be
invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which
are engaged in the same or similar trades or businesses.
2. FAILURE TO QUALIFY
If for any tax year a Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) will be subject to
tax at regular corporate rates without any deduction for dividends to
shareholders, and the dividends will be taxable to the shareholders as ordinary
income to the extent of a Fund's current and accumulated earnings and profits. A
portion of these distributions generally may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Failure to qualify as a regulated investment company would thus have a negative
impact on a Fund's income and performance. It is possible that a Fund will not
qualify as a regulated investment company in any given tax year.
B. FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its net investment
income for each tax year. These distributions are taxable to you ordinary
income. These distributions may qualify for the 70% dividends-received deduction
for corporate shareholders.
Each Fund anticipates distributing substantially all of its net capital gain for
each tax year. These distributions generally are made only once a year, usually
in November or December, but the Funds may make additional distributions of net
capital gain at any time during the year. These distributions are taxable to you
as long-term capital gain, regardless of how long you have held shares.
Each Fund may have capital loss carryovers (unutilized capital losses from prior
years). These capital loss carryovers (which can be used for up to eight years)
may be used to offset any current capital gain (whether short- or long-term).
All capital loss carryovers are listed in the Funds' financial statements. Any
such losses may not be carried back.
Distributions by a Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital. Return of capital
distributions reduces your tax basis in the shares and are treated as gain from
the sale of the shares to the extent your basis would be reduced below zero.
All distributions by a Fund will be treated in the manner described above
regardless of whether the distribution is paid in cash or reinvested in
additional shares of the Fund (or of another Fund). If you receive distribution
in the form of additional share, it will be treated as receiving a distribution
in an amount equal to the fair market value of the shares received, determined
as of the reinvestment date.
You may purchase shares whose net asset value at the time reflects undistributed
net investment income or recognized capital gain, or unrealized appreciation in
the value of the assets of a Fund. Distributions of these amounts are taxable
toyou in the manner described above, although the distribution economically
constitutes a return of capital to you.
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If you purchase shares of a Fund just prior to the ex-dividend date of a
distribution, you will be taxed on the entire amount of the distribution
received, even though the net asset value per share on the date of the purchase
reflected the amount of the distribution.
If you hold shares for six months or less and redeems shares at a loss after
receiving a capital gain distribution, the loss will be treated as a long-term
capital loss to the extent of the distribution.
Ordinarily, you are required to take distributions by a Fund into account in the
year in which they are made. A distribution declared in October, November or
December of any year and payable to you on a specified date in those months,
however, is deemed to be received by you (and made by the Fund) on December 31
of that calendar year if the distribution is actually paid in January of the
following year.
You will be advised annually as to the U.S. federal income tax consequences of
distributions made (or deemed made) to them during the year.
C. CERTAIN TAX RULES APPLICABLE TO THE FUNDS TRANSACTIONS
For federal income tax purposes, when put and call options purchased by a Fund
expire unexercised, the premiums paid by a Fund give rise to short- or long-term
capital losses at the time of expiration (depending on the length of the
respective exercise periods for the options). When put and call options written
by a Fund expire unexercised, the premiums received by the Fund give rise to
short-term capital gains at the time of expiration. When a Fund exercises a
call, the purchase price of the underlying security is increased by the amount
of the premium paid by a Fund. When a Fund exercises a put, the proceeds from
the sale of the underlying security are decreased by the premium paid. When a
put or call written by a Fund is exercised, the purchase price (selling price in
the case of a call) of the underlying security is decreased (increased in the
case of a call) for tax purposes by the premium received.
Certain listed options, regulated futures contracts and forward currency
contracts are considered "Section 1256 contracts" for federal income tax
purposes. Section 1256 contracts held by a Fund at the end of each tax year are
"marked to market" and treated for federal income tax purposes as though sold
for fair market value on the last business day of the tax year. Gains or losses
realized by a Fund on Section 1256 contracts generally is considered 60%
long-term and 40% short-term capital gains or losses. Each Fund can elect to
exempt its Section 1256 contracts which are part of a "mixed straddle" (as
described below) from the application of Section 1256.
Any option, futures contract, or other position entered into or held by a Fund
in conjunction with any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. A straddle of which at least one,
but not all, the positions are Section 1256 contracts, may constitute a "mixed
straddle". In general, straddles are subject to certain rules that may affect
the character and timing of a Fund's gains and losses with respect to straddle
positions by requiring, among other things, that: (1) the loss realized on
disposition of one position of a straddle may not be recognized to the extent
that the Fund has unrealized gains with respect to the other position in such
straddle; (2) the Fund's holding period in straddle positions be suspended while
the straddle exists (possibly resulting in gain being treated as short-term
capital gain rather than long-term capital gain); (3) the losses recognized with
respect to certain straddle positions which are part of a mixed straddle and
which are non-Section 1256 positions be treated as 60% long-term and 40%
short-term capital loss; (4) losses recognized with respect to certain straddle
positions which would otherwise constitute short-term capital losses be treated
as long-term capital losses; and (5) the deduction of interest and carrying
charges attributable to certain straddle positions may be deferred. Various
elections are available to a Fund which may mitigate the effects of the straddle
rules, particularly with respect to mixed straddles. In general, the straddle
rules described above do not apply to any straddles held by a Fund all of the
offsetting positions of which consist of Section 1256 contracts.
D. FEDERAL EXCISE TAX
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to: (1) 98% of
ordinary its taxable income for the calendar year; and (2) 98% of its
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capital gain net income for the one-year period ended on October 31 of the
calendar year. If the Fund changes its tax year end to November 30 or December
31, it may elect to use that date instead of the October 31 date in making this
calculation. The balance of the Fund's income must be distributed during the
next calendar year. A Fund will be treated as having distributed any amount on
which it is subject to income tax for any tax year ending in a calendar year.
For purposes of calculating the excise tax, each Fund: (1) reduces its capital
gain net income (but not below its net capital gain) by the amount of any net
ordinary loss for the calendar year and (2) excludes foreign currency gains and
losses incurred after October 31 of any year (or November 30 or December 31 if
it has made the election described above) in determining the amount of ordinary
taxable income for the current calendar year. The Fund will include foreign
currency gains and losses incurred after October 31 in determining ordinary
taxable income for the succeeding calendar year.
Each Fund intends to make sufficient distributions of its ordinary taxable
income and capital gain net income prior to the end of each calendar year to
avoid liability for the excise tax. Investors should note, however, that a Fund
may in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
E. SALE OR REDEMPTION OF SHARES
In general, a shareholder will recognize gain or loss on the sale or redemption
of shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption (a so called "wash sale"). In general, any gain or loss arising from
the sale or redemption of shares of a Fund will be considered capital gain or
loss and will be long-term capital gain or loss if the shares were held for
longer than one year. Any capital loss arising from the sale or redemption of
shares held for six months or less, however, is treated as a long-term capital
loss to the extent of the amount of capital gain distributions received on such
shares. For this purpose, the special holding period rules of Code Section
246(c) (3) and (4) generally will apply in determining the holding period of
shares. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
F. WITHHOLDING TAX
A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of distributions, and the proceeds of redemptions of shares, paid
to any shareholder: (1) who has failed to provide correct tax payer
identification number; (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly; or (3)
who has failed to certify to a Fund that it is not subject to backup withholding
or that it is a corporation or other "exempt recipient."
G. FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from a Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
If the income from a Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income distributions paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower applicable treaty rate) upon the gross amount of the distribution.
The foreign shareholder generally would be exempt from U.S. federal income tax
on gain realized on the sale of shares of a Fund, capital gain distributions
from a Fund and amounts retained by a Fund that are designated as undistributed
capital gain.
26
<PAGE>
If the income from a Fund is effectively connected with a U.S. trade or business
carried on by a foreign shareholder, then ordinary income distributions, capital
gain distributions, and any gain realized upon the sale of shares of a Fund will
be subject to U.S. federal income tax at the rates applicable to U.S. citizens
or U.S. corporations.
In the case of a noncorporate foreign shareholder, a Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes the Fund with proper notification of its foreign
status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.
The tax rules of other countries with respect to distributions from a Fund can
differ from the rules for U.S. federal income taxation described above. These
foreign rules are not discussed herein. Foreign shareholders are urged to
consult their own tax advisers as to the consequences of foreign tax rules with
respect to an investment in a Fund, distributions from a Fund, the applicability
of foreign taxes and related matters.
H. STATE AND LOCAL TAXES
The tax rules of the various states of the U.S. and their local jurisdictions
with respect to distributions from a Fund can differ from the rules for U.S.
federal income taxation described above. These state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
consequences of state and local tax rules with respect to an investment in a
Fund, distributions from a Fund, the applicability of state and local taxes and
related matters.
8. OTHER MATTERS
A. THE TRUST AND ITS SHAREHOLDERS
1. GENERAL INFORMATION
Forum Funds 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.
The Trust is registered as an open-end, management investment company under the
1940 Act. The Trust offers shares of beneficial interest in its series. As of
the date hereof, the Trust consisted of the following shares of beneficial
interest:
<TABLE>
<S> <C>
Investors Bond Fund Oak Hall Small Cap Contrarian Fund
TaxSaver Bond Fund Austin Global Equity Fund
Investors High Grade Bond Fund Polaris Global Value Fund
Maine Municipal Bond Fund Investors Equity Fund
New Hampshire Bond Fund Equity Index Fund
Daily Assets Government Fund(1) Small Company Opportunities Fund
Daily Assets Treasury Obligations Fund(1) International Equities Fund
Daily Assets Cash Fund(1) Emerging Markets Fund
Daily Assets Government Obligations Fund(1) Investors Growth Fund
Daily Assets Municipal Fund(1) BIA Small-Cap Growth Fund
Payson Value Fund BIA Growth Equity Fund
Payson Balanced Fund
</TABLE>
(1) The Trust offers shares of beneficial interest in an institutional,
institutional service, and investor share class of these series.
27
<PAGE>
The Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate series and may divide series into classes of
shares; the costs of doing so will be borne by the Trust.
The Trust and each Fund will continue indefinitely until terminated.
2. SERIES AND CLASSES OF THE TRUST
Each series or class of the Trust may have a different expense ratio and each
class' performance will be affected by its expenses. For more information on any
other class of shares of the Fund, investors may contact the Transfer Agent.
3. SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency, shareholder service 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 pertains to the class and other matters
for which separate class voting is appropriate under applicable law. Generally,
shares will be voted separately by individual series except if (1) the 1940 Act
requires shares to be voted in the aggegrate and not by individual series and
(2) when the Trustees determine that the matter affect more than one series and
all affected series must vote. The Trustees may also determine that a matter
only affects certain classes of the Trust and thus only those such classes are
entitled to vote on the matter. 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.
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.
A shareholder in a series is entitled to the shareholder's pro rata share of all
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.
Shareholders representing 10% or more of the Trust's (or a series') outstanding
shares may, as set forth in the Trust Instrument, call meetings of the Trust (or
series) for any purpose related to the Trust (or series), including, in the case
of a meeting of the Trust, the purpose of voting on removal of one or more
Trustees.
4. CERTAIN REORGANIZATION TRANSACTIONS
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 a Fund. The Trustees may, without prior shareholder
approval, change the form of organization of the Trust by merger, consolidation
or incorporation. 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 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.
B. FUND OWNERSHIP
As of May __, 1999, the officers and trustees of the Trust as a group owned less
than 1% of the shares of each Fund.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote. As of May __,
28
<PAGE>
1999, and prior to the public offering of the Funds, Forum Financial Group, LLC,
beneficially owned 100% of and may be deemed to control each Fund. It is
unlikely, however, that Forum Financial Group, LLC, a limited liability company
organized under the laws of Delaware, will continue to control each Fund.
"Control" for these purpose is the ownership of 25% or more of a Fund's voting
securities.
C. LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY
Delaware law provides that Fund shareholders are entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. In the past, the Trust believes that 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's Trust
Instrument (the document that governs the operation of the Trust contains an
express disclaimer of shareholder liability for the debts, liabilities,
obligations and expenses of the Trust. The Trust's 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 provides that the Trustees shall not be liable to any
person other than the Trust and its shareholders. In addition, the Trust
Instrument provides that 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 be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
D. REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered hereby. The registration statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by, reference to the copy of such contract or other documents
filed as exhibits to the registration statement.
29
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
A. CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
1. MOODY'S INVESTORS SERVICE
AAA Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edged." 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.
AA 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 risk
appear somewhat larger than the Aaa securities.
A 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.
BAA Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
BA Bonds, which are rated Ba, are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
CAA Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest. Ca Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
NOTE
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
a ranking in the lower end of that generic rating category.
A-1
<PAGE>
2. STANDARD AND POOR'S CORPORATION
AAA An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
NOTE Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics. BB indicates the least degree
of speculation and C the highest. While such obligations will likely
have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse
conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or
willingness to meet its financial commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In
the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial
commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments
on this obligation are being continued.
D An obligation rated D is in payment default. The D rating category is
used when payments on an obligation are not made on the date due even
if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace
period. The D rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation
are jeopardized.
NOTE Plus (+) or minus (-). The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
The "r" symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or
volatility of expected returns which are not addressed in the credit
rating. Examples include: obligations linked or indexed to equities,
currencies, or commodities; obligations exposed to severe prepayment
risk-such as interest-only or principal-only mortgage securities; and
obligations with unusually risky interest terms, such as inverse
floaters.
A-2
<PAGE>
3. DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+
AA High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+
A, A- Protection factors are average but adequate. However, risk factors are
more variable in periods of greater economic stress.
BBB+
BBB
BBB- Below-average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.
BB+
BB
BB- Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according
to industry conditions. Overall quality may move up or down frequently
within this category.
B+
B, B- Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP Preferred stock with dividend arrearages.
4. FITCH IBCA, INC.
INVESTMENT GRADE
AAA Highest credit quality. `AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
A-3
<PAGE>
BBB Good credit quality. `BBB' ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.
SPECULATIVE GRADE
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse economic
change over time; however, business or financial alternatives may be
available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit risk
is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
CCC
CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating indicates
that default of some kind appears probable. `C' ratings signal imminent
default.
DDD
DD, D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For U.S.
corporates, for example, `DD' indicates expected recovery of 50% - 90%
of such outstandings, and `D' the lowest recovery potential, i.e. below
50%.
A-4
<PAGE>
B. PREFERRED STOCK
1. MOODY'S INVESTORS SERVICE
AAA An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
AA An issue which is rated "aa" is considered a high- grade preferred
stock. This rating indicates that there is a reasonable assurance the
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
A An issue which is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater then in
the "aaa" and "aa" classification, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
BAA An issue which is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured. Earnings
and asset protection appear adequate at present but may be questionable
over any great length of time.
BA An issue which is rated "ba" is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse
periods. Uncertainty of position characterizes preferred stocks in this
class.
B An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
CAA An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the
future status of payments.
CA An issue which is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual
payments.
C This is the lowest rated class of preferred or preference stock. Issues
so rated can thus be regarded as having extremely poor prospects of
ever attaining any real investment standing.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification: the modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.
2. STANDARD & POOR'S
AAA This is the highest rating that may be assigned by Standard & Poor's to
a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
AA A preferred stock issue rated AA also qualifies as a high-quality,
fixed-income security. The capacity to pay preferred stock obligations
is very strong, although not as overwhelming as for issues rated AAA.
A An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.
BBB An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the
A category.
A-5
<PAGE>
BB
B, CCC Preferred stock rated BB, B, and CCC is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
preferred stock obligations. BB indicates the lowest degree of
speculation and CCC the highest. While such issues will likely have
some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
CC The rating CC is reserved for a preferred stock issue that is in
arrears on dividends or sinking fund payments, but that is currently
paying.
C A preferred stock rated C is a nonpaying issue.
D A preferred stock rated D is a nonpaying issue with the issuer in
default on debt instruments.
N.R. This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard &
Poor's does not rate a particular type of obligation as a matter of
policy.
NOTE Plus (+) or minus (-). To provide more detailed indications of
preferred stock quality, ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
C. SHORT TERM RATINGS
1. MOODY'S INVESTORS SERVICE
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) 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.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above 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.
PRIME-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
NOT
PRIME Issuers rated Not Prime do not fall within any of the Prime rating
categories.
A-6
<PAGE>
2. STANDARD AND POOR'S
A-1 A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, certain
obligations are designated with a plus sign (+). This indicates that
the obligor's capacity to meet its financial commitment on these
obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than obligations in higher rating categories. However, the obligor's
capacity to meet its financial commitment on the obligation is
satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation.
B A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to
meet its financial commitment on the obligation; however, it faces
major ongoing uncertainties which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to nonpayment
and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the
obligation.
D A short-term obligation rated D is in payment default. The D rating
category is used when payments on an obligation are not made on the
date due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such
grace period. The D rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
3. FITCH IBCA, INC.
F1 Obligations assigned this rating have the highest capacity for timely
repayment under Fitch IBCA's national rating scale for that country,
relative to other obligations in the same country. This rating is
automatically assigned to all obligations issued or guaranteed by the
sovereign state. Where issues possess a particularly strong credit
feature, a "+" is added to the assigned rating.
F2 Obligations supported by a strong capacity for timely repayment
relative to other obligors in the same country. However, the relative
degree of risk is slightly higher than for issues classified as `A1'
and capacity for timely repayment may be susceptible to adverse change
sin business, economic, or financial conditions.
F3 Obligations supported by an adequate capacity for timely repayment
relative to other obligors in the same country. Such capacity is more
susceptible to adverse changes in business, economic, or financial
conditions than for obligations in higher categories.
B Obligations for which the capacity for timely repayment is uncertain
relative to other obligors in the same country. The capacity for timely
repayment is susceptible to adverse changes in business, economic, or
financial conditions.
C Obligations for which there is a high risk of default to other obligors
in the same country or which are in default.
A-7
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant dated August 29, 1995 (see Note 1).
(b) By-Laws of Registrant (see Note 2).
(c) See the Sections 2.04 and 2.07 of the Trust Instrument filed as Exhibit (a).
(d) (1) Investment Advisory Agreement between Registrant and H.M. Payson & Co.
relating to Payson Value Fund and Payson Balanced Fund dated December
18, 1995 (see Note 3).
(2) Investment Advisory Agreement between Registrant and Quadra Capital
Partners, L.P. relating to Quadra Growth Fund dated as of December 20,
1996 (see Note 4).
(3) Investment Advisory Agreement between Registrant and Austin Investment
Management, Inc. relating to Austin Global Equity Fund dated as of June
14, 1996 (see Note 3).
(4) Investment Advisory Agreement between Registrant and Oak Hall Capital
Advisors, Inc. relating to Oak Hall Small Cap Contrarian Fund dated as
of June 14, 1996 (see Note 3).
(5) Investment Advisory Agreement between Registrant and Forum Investment
Advisors, LLC relating to Investors Bond Fund, Investors Growth Fund,
Investors High Grade Bond Fund, Maine Municipal Bond Fund, New
Hampshire Bond Fund and TaxSaver Bond Fund dated as of January 2, 1998
(see Note 5).
(6) Investment Subadvisory Agreement between Quadra Capital Partners, L.P.
and Smith Asset Management Group, L.P. relating to Quadra Growth Fund
dated as of November 1, 1997 (see Note 6).
(7) Investment Advisory Agreement between Registrant and Polaris Capital
Management, Inc. dated as of June 1, 1998 (see Note 7).
(8) Investment Advisory Agreement between Registrant and H.M. Payson & Co.
relating to Investors Equity Fund dated as of December 5, 1997 (see
Note 8).
(9) Investment Subadvisory Agreement between H.M. Payson & Co. and Peoples
Heritage Bank relating to Investors Equity Fund dated as of December 5,
1997 (see Note 9).
(10) Investment Advisory Agreement between Registrant and Forum Investment
Advisors, LLC relating to Small Company Opportunities Fund dated as of
March 30, 1998 (see Note 8).
(11) Form of Investment Advisory Agreement between Registrant and Brown
Investment Advisory & Trust Company relating to BIA Small-Cap Growth
Fund and BIA Growth Equity Fund, undated (filed herewith).
(e) (1) Form of Selected Dealer Agreement between Forum Financial Services,
Inc. and securities brokers (see Note 3).
(2) Form of Bank Affiliated Selected Dealer Agreement between Forum
Financial Services, Inc. and bank affiliates (see Note 3).
(3) Distribution Agreement between Registrant and Forum Financial Services,
Inc. relating to Austin Global Equity Fund, Investors Bond Fund,
Investors Growth Fund, Investors High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap Contrarian Fund,
Payson Balanced Fund, Payson Value Fund, Polaris Global Value Fund, and
TaxSaver Bond Fund dated as of June 19, 1997 (see Note 3).
(4) Form of Distribution Agreement undated between Registrant and Forum
Fund Services, LLC relating to Austin Global Equity Fund, Investors
Bond Fund, Investors Growth Fund, Investors High Grade Bond Fund, Maine
Municipal Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap
Contrarian Fund, Payson Balanced Fund, Payson Value Fund, Polaris
Global Value Fund, and TaxSaver Bond Fund, undated (see Note 10).
<PAGE>
(5) Distribution Agreement between Registrant and Forum Fund Services, LLC
relating to Emerging Markets Fund, Equity Index Fund, International
Equity Fund, Investors Equity Fund, Small Company Opportunities Fund,
and Investor Shares, Institutional Shares and Institutional Service
Shares of Daily Assets Government Fund, Daily Assets Treasury
Obligations Fund, Daily Assets Government Obligations Fund, Daily
Assets Cash Fund and Daily Assets Municipal Fund dated as of February
28, 1999 (filed herewith).
(6) Form of Distribution Agreement undated between Registrant and Forum
Fund Services, LLC relating to BIA Small-Cap Growth Fund and BIA Growth
Equity Fund, undated (filed herewith).
(f) None.
(g) (1) Custodian Agreement between Registrant and Investors Bank & Trust
Company relating to Austin Global Equity Fund, Equity Index Fund,
Emerging Markets Fund, International Equity Fund, Investors Bond Fund,
Investors Equity Fund, Investors Growth Fund, Investors High Grade Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund, Oak Hall
Small Cap Contrarian Fund, Payson Balanced Fund, Payson Value Fund,
Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets Government Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations
Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund dated as
of February 16, 1999 (filed herewith).
(2) Form of Custodian Agreement between Registrant and Forum Trust undated
relating to Austin Global Equity Fund, BIA Small-Cap Growth Fund, BIA
Growth Equity Fund, Equity Index Fund, Emerging Markets Fund,
International Equity Fund, Investors Bond Fund, Investors Equity Fund,
Investors Growth Fund, Investors High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap Contrarian Fund,
Payson Balanced Fund, Payson Value Fund, Polaris Global Value Fund,
Quadra Growth Fund, Small Company Opportunities Fund and Investor
Shares, Institutional Shares and Institutional Service Shares of Daily
Assets Government Fund, Daily Assets Treasury Obligations Fund, Daily
Assets Government Obligations Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund, undated (filed herewith).
(3) Form of Master Custodian Agreement between Forum Trust and Bankers
Trust Company relating to Austin Global Equity Fund, BIA Small-Cap
Growth Fund, BIA Growth Equity Fund, Equity Index Fund, Emerging
Markets Fund, International Equity Fund, Investors Bond Fund, Investors
Equity Fund, Investors Growth Fund, Investors High Grade Bond Fund,
Maine Municipal Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap
Contrarian Fund, Payson Balanced Fund, Payson Value Fund, Polaris
Global Value Fund, Quadra Growth Fund, Small Company Opportunities Fund
and Investor Shares, Institutional Shares and Institutional Service
Shares of Daily Assets Government Fund, Daily Assets Treasury
Obligations Fund, Daily Assets Government Obligations Fund, Daily
Assets Cash Fund and Daily Assets Municipal Fund, undated (filed
herewith).
(h) (1) Administration Agreement between Registrant and Forum
Administrative Services, LLC relating to Austin Global Equity Fund,
Equity Index Fund, Emerging Markets Fund, International Equity Fund,
Investors Bond Fund, Investors Equity Fund, Investors Growth Fund,
Investors High Grade Bond Fund, Maine Municipal Bond Fund, New
Hampshire Bond Fund, Oak Hall Small Cap Contrarian Fund, Payson
Balanced Fund, Payson Value Fund, Polaris Global Value Fund, Quadra
Growth Fund, Small Company Opportunities Fund and Investor Shares,
Institutional Shares and Institutional Service Shares of Daily Assets
Government Fund, Daily Assets Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily Assets
Municipal Fund dated as of June 19, 1997 and amended as of December 5,
1997 (see Note 3).
(2) Form of Administration Agreement between Registrant and Forum
Administrative Services, LLC relating to BIA Small-Cap Growth Fund
and BIA Growth Equity Fund, undated (filed herewith).
(3) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC relating to Austin Global Equity Fund, Equity Index Fund,
Emerging Markets Fund, International Equity Fund, Investors Bond Fund,
Investors Equity Fund, Investors Growth Fund, Investors High Grade Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund, Oak Hall
Small Cap Contrarian Fund, Payson Balanced Fund, Payson Value Fund,
Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets Government Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations
<PAGE>
Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund dated as
of June 19, 1997, as amended December 5, 1997 (filed herewith).
(4) Form of Fund Accounting Agreement between Registrant and Forum
Accounting Services, LLC relating to BIA Small-Cap Growth Fund and BIA
Growth Equity Fund, undated (filed herewith)
(5) Transfer Agency and Services Agreement between Registrant and Forum
Shareholder Services, LLC relating to Austin Global Equity Fund, Equity
Index Fund, Emerging Markets Fund, International Equity Fund, Investors
Bond Fund, Investors Equity Fund, Investors Growth Fund, Investors High
Grade Bond Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund,
Oak Hall Small Cap Contrarian Fund, Payson Balanced Fund, Payson Value
Fund, Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets Government Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations
Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund dated as
of May 19, 1998 (see Note 3).
(6) Form of Transfer Agency and Services Agreement between Registrant and
Forum Shareholder Services, LLC relating to BIA Small-Cap Growth Fund
and BIA Growth Equity Fund, undated (filed herewith).
(7) Shareholder Service Plan of Registrant relating to Quadra Growth Fund
dated June 19, 1997, amended September 22, 1997 and Form of Shareholder
Service Agreement relating to Quadra Growth Fund (see Note 11).
(8) Shareholder Service Plan of Registrant dated December 5, 1997 and Form
of Shareholder Service Agreement relating to the Daily Assets
Government Obligations Fund, Daily Assets Cash Fund, Daily Assets
Government Fund, Daily Assets Municipal Fund and Daily Assets Treasury
Obligations Fund (see Note 12).
(9) Shareholder Service Plan of Registrant dated March 18, 1998 and Form of
Shareholder Service Agreement relating to Polaris Global Value Fund
(see Note 8).
(10) Shareholder Service Plan of Registrant dated December 5, 1997 and Form
of Shareholder Service Agreement relating to Oak Hall Small Cap
Contrarian Fund (see Note 8).
(i) Opinion of Seward & Kissel dated January 5, 1996 (see Note 13).
(j) Not Applicable.
(k) None.
(l) Investment Representation letter of Reich & Tang, Inc. as original
purchaser of shares of Registrant (see Note 3).
(m) (1) Rule 12b-1 Plan adopted by the Investor Shares of Daily Assets
Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, Daily Asset Cash Fund, and Daily Assets
Municipal Fund dated December 5, 1997 (see Note 14).
(2) Rule 12b-1 Plan effective January 1, 1999 adopted by the Investor
Shares of Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund, Daily Assets Government Obligations Fund, Daily Asset
Cash Fund, and Daily Assets Municipal Fund (see Note 14).
(n) Financial Data Schedules (filed herewith).
(o) 18f-3 plan adopted by Registrant (see Note 3).
Other Exhibits:
Power of Attorney for James C. Cheng (see Note 1).
Power of Attorney for Costas Azariadis (see Note 1).
Power of Attorney for J. Michael Parish (see Note 1).
Power of Attorney for John Y. Keffer (see Note 8).
- ---------------
<PAGE>
Note:
(1) Exhibit incorporated by reference as filed in post-effective amendment No.
34 via EDGAR on May 9, 1996, accession number 0000912057-96-008780.
(2) Exhibit incorporated by reference as filed in post-effective amendment No.
43 via EDGAR on July 31, 1997, accession number 0000912057-97-025707.
(3) Exhibit incorporated by reference as filed in post-effective amendment No.
62 via EDGAR on May 26, 1998, accession number 0001004402-98-000307.
(4) Exhibit incorporated by reference as filed in post-effective amendment No.
41 via EDGAR on December 31, 1996, accession number 0000912057-96-030646.
(5) Exhibit incorporated by reference as filed in post-effective amendment No.
56 via EDGAR on December 31, 1997, accession number 0001004402-97-000281.
(6) Exhibit incorporated by reference as filed in post-effective amendment No.
48 via EDGAR on October 31, 1997, accession number 0001004402-97-000152.
(7) Exhibit incorporated by reference as filed in post-effective amendment No.
63 via EDGAR on June 8, 1998, accession number 0001004402-98-000339.
(8) Exhibit incorporated by reference as filed in post-effective amendment No.
65 via EDGAR on September 30, 1998, accession number 0001004402-98-000530.
(9) Exhibit incorporated by reference as filed in post-effective amendment No.
64 via EDGAR on July 31, 1998, accession number 0001004402-98-000421.
(10) Exhibit incorporated by reference as filed in post-effective amendment No.
68 via EDGAR on November 30, 1998, accession number 0001004402-98-000620.
(11) Exhibit incorporated by reference as filed in post-effective amendment No.
49 via EDGAR on November 5, 1997, accession number 0001004402-97-000163.
(12) Exhibit incorporated by reference as filed in post-effective amendment No.
50 via EDGAR on November 12, 1997, accession number 0001004402-97-000189.
(13) Exhibit incorporated by reference as filed in post-effective amendment No.
33 via EDGAR on January 5, 1996, accession number 0000912057-96-000216.
(14) Exhibit incorporated by reference as filed in post-effective amendment No.
69 via EDGAR on December 15, 1998, accession number 0001004402-98-000648.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH FUNDS
Daily Assets Treasury Obligations Fund, Daily Assets Government Fund,
and Daily Assets Municipal Fund may be deemed to control Treasury Cash
Portfolio, Government Portfolio, and Municipal Cash Portfolio,
respectively, each a series of Core Trust (Delaware).
ITEM 25. INDEMNIFICATION
In accordance with Section 3803 of the Delaware Business Trust Act,
Section 10.02 of Registrant's Trust Instrument provides as follows:
"10.02. 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
<PAGE>
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
<PAGE>
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."
With respect to indemnification of an adviser to the Trust, the
Investment Advisory Agreements between the Trust and Austin Investment
Management, Inc., H.M. Payson & Co., Oak Hall Capital Advisors, Inc.
and Quadra Capital Partners, Inc. provide as follows:
"Section 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."
With respect to indemnification of an adviser to the Trust, the
Investment Advisory Agreements between the Trust and Forum Investment
Advisors, LLC and Polaris provide as follows:
SECTION 5. STANDARD OF CARE. (a) The Trust shall expect of the Adviser,
and the Adviser will give the Trust the benefit of, the Adviser's best
judgment and efforts in rendering its services to the Trust. The
Adviser shall not be liable hereunder for error of judgment or mistake
of law or in any event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to
protect, the Adviser against any liability to the Trust or to the
Trust's security holders to which the Adviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence
in the performance of the Adviser's duties hereunder, or by reason of
the Adviser's reckless disregard of its obligations and duties
hereunder. (b) The Adviser 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
(other than those related to the Adviser's employees), fire, mechanical
breakdowns, flood or catastrophe, acts of God, insurrection, war, riots
or failure of the mails, transportation, communication or power supply.
With respect to indemnification of the underwriter of the Trust,
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
<PAGE>
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
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC (investment adviser
to Investors High Grade Bond Fund, Investors Bond Fund, TaxSaver Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund, Small Company
Opportunities Fund, Investors Growth Fund, and the Institutional,
Institutional Service, and Investor classes of Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund, and Daily Assets Municipal
Fund) contained in Parts A and B of PEA #67 and #69 to the Trust's
Registration Statement (accession numbers 0001004402-98-000589 and
0001004402-98-000648, respectively), 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. I. and Forum Trust are controlled indirectly
by John Y. Keffer, Chairman and President of the Registrant. Mr. Keffer
is President of Forum Trust and Forum Financial Group, LLC. Mr. Keffer
is also a director and/or officer of various registered investment
companies for which the various Forum Financial Group's operating
subsidiaries provide services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial nature.
Each officer may serve as an officer of various registered investment
companies for which the Forum Financial Group provides services.
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC.
------------------------------------- ----------------------------------
Chief Financial Officer Forum Financial Group, LLC.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Officer Other Forum affiliated companies
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David I. Goldstein Secretary Forum Investment Advisors, LLC.
------------------------------------- ----------------------------------
General Counsel Forum Financial Group, LLC.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Officer Other Forum affiliated companies
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Mark D. Kaplan Director Forum Investment Advisors, LLC.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(b) H.M. Payson & Co.
The description of H.M. Payson & Co.(investment adviser to Payson Value
Fund, Payson Balanced Fund and Investors Equity Fund) contained in
Parts A and B of PEA #64 and #67 to the Trust's Registration Statement
(accession numbers 0001004402-98-000421 and 0001004402-98-000589,
respectively) 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.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Peter E. Robbins Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John H. Walker Managing Director, President H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Teresa M. Esposito Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John C. Knox Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Harold J Dixon Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Laura McDill Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Michael R. Currie Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
<PAGE>
----------------------------------- ------------------------------------- ----------------------------------
William O. Hall, III Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(c) Austin Investment Management, Inc.
The description of Austin Investment Management, Inc. (investment
adviser to Austin Global Equity Fund) contained in Parts A and B of PEA
#64 to the Trust's Registration Statement (accession number
0001004402-98-000421), 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 (investment adviser
to Oak Hall Small Cap Contrarian Fund) contained in Parts A and B of
PEA #64 to the Trust's Registration statement (accession number
0001004402-98-000421) are incorporated by reference herein.
The following are the directors and principal executive officers of Oak
Hall Capital Advisors, Inc. 122 East 42nd Street, New York, New York
10168, including their business connections which are of a substantial
nature.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Alexander G. Anagnos Director, Portfolio Manager Oak Hall Capital Advisors, LLP
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Consultant American Securities and
affiliates
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Financial Advisor WR Family Associates
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Ed M. Cimilluca Co-Chief Executive, Co-Portfolio Oak Hall Capital Advisors, LLP
Manager
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John W. Morosani Co- Chief Executive, Co- Portfolio Oak Hall Capital Advisors, LLP
Manager
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Charles D. Klein Portfolio Manager Oak Hall Capital Advisors, LLP
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director American Securities and
affiliates
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Financial Advisor WR Family Associates
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David P. Steinmann Executive Vice President, Director Oak Hall Capital Advisors, LLP
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Secretary, Treasurer American Securities and
affiliates
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Administrator WR Family Associates
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(e) Smith Asset Management Group, L.P.
The description of Smith Asset Management Group, L.P. (investment
sub-adviser to Quadra Growth Fund and Small Company Stock Portfolio of
Core Trust (Delaware) contained in Parts A and B of PEA # 64 and #67 to
the Trust's Registration Statement (accession numbers
0001004402-98-000421 and 0001004402-98-000589), are incorporated by
reference herein.
<PAGE>
The following are the directors and principal executive officers of
Smith Asset Management Group, L.P., including their business
connections, which are of a substantial nature.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Stephen S. Smith Chief Executive Officer Smith Asset Management Group
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Partner Discovery Management
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Stephen J. Summers Partner Smith Asset Management Group
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chief Executive Officer Discovery Management
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Sarah C. Castleman Partner/Portfolio Manager Smith Asset Management Group
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Partner/Portfolio Manager Discovery Management
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John D. Brim Vice President/Portfolio Manager Smith Asset Management Group
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Vice President/Portfolio Manager Discovery Management
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(f) Norwest Investment Management, Inc.
The description of Norwest Investment Management, Inc. ("NIM")
(investment adviser to Index Portfolio, Small Company Stock Portfolio,
Small Company Value Portfolio, Small Cap Value Portfolio, and Small Cap
Index Portfolio, each a series of Core Trust (Delaware)) contained in
PEA # 67 of the Trust's Registration Statement (accession number
0001004402-98-000589), are incorporated by reference herein.
The following are the directors and principal executive officers of
NIM, including their business connections, which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), which is the parent of NIM, is
Norwest Center, Sixth Street and Marquette Avenue, Minneapolis, MN
55479. Unless otherwise indicated below, the principal business address
of any company with which the directors and principal executive
officers are connected is also Sixth Street and Marquette Avenue,
Minneapolis, MN 55479.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
P. Jay Kiedrowski Chairman, Chief Executive 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 Senior Vice President, Chief Norwest Investment Management,
Invest Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard C. Villars Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
----------------------------------- ------------------------------------- ----------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Eileen A. Kuhry Investment Compliance Specialist Norwest Investment Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(g) Schroder Capital Management International Inc.
The description of Schroder Capital Management International Inc.
("SCMI") (investment adviser to International Portfolio, a series of
Core Trust (Delaware) and EM Schroder Core, a series of Schroder
Capital Funds) contained in Parts A and B of PEA #67 of the Trust's
Registration Statement (accession number 0001004402-98-000589), are
incorporated by reference herein.
The following are the directors and principal officers of SCMI,
including their business connections of a substantial nature. The
address of each company listed, unless otherwise noted, is 787 Seventh
Avenue, 34th Floor, New York, New York 10019. Schroder Capital
Management International Limited ("Schroder Ltd.") is a United Kingdom
affiliate of SCMI, which provides investment management services to
international clients, located principally in the United States.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David M. Salisbury Chairman, Director SCMI
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Schroders plc.*
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Trustee and Officer Schroder Series Trust II
----------------------------------- ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroders Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director, Senior Vice President Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc.
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Principal, Senior Portfolio Manager Weiss, Peck & Greer LLC
resigned 12/96
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
*Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London
EC2V 7QA, United Kingdom.
(h) Polaris Capital Management, Inc.
The description of Polaris Capital Management, Inc. ("Polaris")
(investment adviser to Polaris Global Value Fund) contained in Parts A
and B of PEA # 64 of the Trust's Registration Statement (accession
number 0001004402-98-000421), 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>
(i) Quadra Capital Partners, L.P.
The description of Quadra Capital Partners, L.P. ("Quadra") (investment
adviser to Quadra Growth Fund) contained in Parts A and B of PEA # 64
to the Trust's Registration Statement (accession number
0001004402-98-000421), are incorporated by reference herein.
The following are the principals of Quadra, including their business
connections of a substantial nature. The address of the company is 270
Congress Street, Boston, MA 02210.
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Eileen Delasandro Chief Executive Officer Quadra Capital Partners, Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Donald Levi Chief Operating Officer Quadra Capital Partners, Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Howard Stevenson Chairman Quadra Capital Partners, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Sarofim-Rock Professor Harvard Business School
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Philip Hamilton Director of Strategic Planning, Quadra Capital Partners, Inc.
Compliance Officer
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(j) Peoples Heritage Bank
The description of Peoples Heritage Bank ("Peoples") (investment
sub-adviser to Investors Equity Fund) contained in Parts A and B of PEA
#67 to the Trust's Registration Statement (accession number
0001004402-98-000589), are incorporated by reference herein.
The following are the officers of Peoples Trust and Investment Group,
including their business connections, which are of a substantial
nature, who provide investment advisory related services. Unless
otherwise indicated below, the principal business address of Peoples
with which these are connected is One Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Gary L. Robinson Senior Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Dorothy M. Wentworth Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Stephen L. Eddy Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Dana R. Mitiguy Chief Investment Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Larry D. Pelletier Vice President Peoples
217 Main Street
Lewiston, Maine 04240
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Carolyn B. May Vice President Peoples
217 Main Street
Lewiston, Maine 04240
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Kevin K. Brown Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Donald W. Smith Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John W. Gibbons Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Joseph M. Pratt Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Lucy L. Tucker Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
<PAGE>
----------------------------------- ------------------------------------- ----------------------------------
Nancy W. Bard Assistant Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Douglas P. Adams Trust Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Melanie L. Bishop Trust Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jeffrey Oldfield Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Janet E. Milley Assistant Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(k) Peregrine Capital Management, Inc.
The description of Peregrine Capital Management, Inc.
("Peregrine")(investment sub-adviser to Small Company Value Portfolio,
a series of Core Trust (Delaware) contained in Parts A and B of PEA #67
to the Trust's Registration Statement (accession number
0001004402-98-000589), are incorporated by reference herein.
The following are the directors and principal executive officers of
Peregrine, including their business connections, which are of a
substantial nature. The address of Peregrine is LaSalle Plaza, 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
James R. Campbell Director Peregrine Capital Management,
Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
President, Chief Executive Officer, Norwest Bank
Director Sixth and Marquette Ave.
Minneapolis, MN 55479-0116
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Patricia D. Burns Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Tasso H. Coin Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John S. Dale Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Julie M. Gerend Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
William D. Giese Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Daniel J. Hagen Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Ronald G. Hoffman Senior Vice President, Secretary Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
<PAGE>
----------------------------------- ------------------------------------- ----------------------------------
Frank T. Matthews Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jeannine McCormick Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Barbara K. McFadden Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management,
Executive Officer Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Gary E. Nussbaum Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
James P. Ross Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jay H. Strohmaier Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Paul E. von Kuster Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Janelle M. Walter Assistant Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Paul R. Wurm Senior Vice President Peregrine Capital Management,
Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
J. Daniel Vendermark Vice President Peregrine Capital Management,
Inc.
Sixth and Marquette Avenue
Minneapolis, MN 55479-1013
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Albert J. Edwards Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Vice President/Marketing U.S. Trust Company of California
(prior to June 9, 1997)
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(a) Brown Investment Advisory & Trust Company
The description of Brown Investment Advisory & Trust Company
("Brown")(investment adviser to BIA Small-Cap Growth Fund and BIA
Growth Equity Fund) contained in Parts A and B of this filing are
incorporated by reference herein.
The following are the directors and principal executive officers of
Brown, including their business connections, which are of a substantial
nature. The address of Brown is Furness House, 19 South Street,
Baltimore, Maryland 21202 and, unless otherwise indicated below, that
address is the principal business address of any company with which the
directors and principal executive officers are connected.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael D. Hankin President, Chief Executive Brown
Officer, Trustee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
President The Maryland Zoological Society
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Valleys Planning Council
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David L. Hopkins, Jr. Chairman Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Westvaco Corporation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Metropolitan Opera Association
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Chairman, Finance Episcopal Church Foundation
Committee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Maryland Historical Society
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Charles W. Cole, Jr. Vice Chairman of the Board of Brown
Trustees
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Flag Investors Mutual Funds
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Provident Bankshares Corporation
and Provident Bank of Maryland
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director, Chairman of Investment The University of Maryland
Committee Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Regents The University of Maryland
Systems
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Member The Governor's Committee on
School Funding
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Member Investment Committee of Helix
Health System
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman of Investment Committee France-Merrick Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Chairman Baltimore Council on Foreign
Affairs
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Truman T. Semans Vice Chairman of the Board of Brown
Trustees
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee, Member and Former Duke University
Chairman of Investment Committee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee, Chairman of Finance Lawrenceville School
Committee and Member of Investment
and Executive Committees
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors, Member of Chesapeake Bay Foundation
Investment and Executive Committees
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Flag Investors Mutual Funds
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Committee Member Mercy Medical Center
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Committee Member St. Mary's Seminary
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Committee Member Archdiocese of Baltimore
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Committee Member Robert E. Lee Memorial Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Committee Member W. Alton Jones Foundation
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
William C. Baker Trustee Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
President and Chief Executive Chesapeake Bay Foundation
Officer
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee John Hopkins Hospital
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Member Washington College Board of
Visitors and Governors
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Baltimore Community Foundation
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Jack S. Griswold Trustee Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Managing Director Armata Partners
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Alex. Brown Realty
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Baltimore Community
Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Chesapeake Bay Foundation
Living Classrooms
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Maryland Historical Society
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Member Washington College Board of
Visitors and Governors
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Treasurer Washington College
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chair Campaign for Washington's College
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Earl L. Linehan Trustee Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
President Woodbrook Capital, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Strescon Industries
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman UMBC Board of Visitors
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Investment Committee Gilman School
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member Stoneridge, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member Sagemaker, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member Medical Mutual Liability
Insurance Society of Maryland
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member Heritage Properties, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member St. Mary's Seminary & University
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member St. Ignatius Loyola Academy
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member University of Notre Dame
Advisory Council
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Walter D. Pinkard, Jr. Trustee Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
President and Chief Executive Colliers Pinkard
Officer
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman The Americas region of Colliers
International
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President France Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman The Baltimore Community
Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Directors Member France-Merrick Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The John Hopkins University
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Greater Baltimore Committee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Gilman School
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Calvert School
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Baltimore Community
Foundation
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The East Baltimore Community
Development Bank
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Greater Baltimore Alliance
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Baltimore Reads, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Downtown Baltimore District
Authority
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Yale University Development
Board
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee The Maryland Business Roundtable
for Education
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John J.F. Sherrerd Trustee Brown
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Provident Mutual Life Insurance
Company
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director C. Brewer and Company
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee, Vice Chairman of Princeton University
Executive Committee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee, Chairman of Investment The Robertson Foundation
Committee
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee GESU School
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director and Executive Committee Princeton Investment Management
Member
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Board of Overseers University of Pennsylvania
Wharton School.
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
David M. Churchill, CPA Chief Financial Officer Brown
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael D. Hankin Chief Executive Officer Brown
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Financial Services, Inc., Registrant's underwriter, or its
affiliate, Forum Fund Services, LLC, serve as underwriter for the
following investment companies registered under the Investment Company
Act of 1940,as amended:
The CRM Funds Monarch Funds
The Cutler Trust Norwest Advantage Funds
Forum Funds Norwest Select Funds
Memorial Funds Sound Shore Fund, Inc.
(b) The following directors and officers of Forum Financial Services, Inc.
or Forum Fund Services, LLC, Registrant's underwriters, 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 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained at the offices of Forum
Administrative Services, LLC and Forum Shareholder Services, LLC, Two
Portland Square, Portland, Maine 04101. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts
and deliveries of securities and receipts and disbursements of cash are
maintained at the offices of the Registrant's custodian, BankBoston,
100 Federal Street, Boston, Massachusetts 02106. The records required
to be maintained under Rule 31a-1(b)(5), (6) and (9) are maintained at
the offices of the Registrant's adviser or subadviser, as listed in
Item 26 hereof.
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
Registrant undertakes to furnish each person, to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof, to which the
prospectus relates upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
post-effective amendment number 70 to Registrant's registration statement to be
signed on its behalf by the undersigned, duly authorized in the City of
Portland, State of Maine on March 15, 1999.
FORUM FUNDS
By: /s/ John Y. Keffer
-----------------------------
John Y. Keffer, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on March
15, 1999.
(a) Principal Executive Officer
/s/ John Y. Keffer
----------------------------
John Y. Keffer
President and Chairman
(b) Principal Financial Officer
/s/ Stacey Hong
----------------------------
Stacey Hong
Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
----------------------------
John Y. Keffer
Trustee
James C. Cheng, Trustee
J. Michael Parish, Trustee
Costas Azariadis, Trustee
By: /s/ John Y. Keffer
---------------------------
John Y. Keffer
Attorney in Fact*
* Pursuant to powers of attorney filed as Other Exhibits to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
Exhibit 23(d)(11) Form of Investment Advisory Agreement between
Registrant and Brown Investment Advisory and Trust Company
regarding BIA Small-Cap Growth Fund and BIA Growth Equity
Fund, undated.
Exhibit 23(e)(5) Distribution Agreement between Registrant and Forum
Fund Services, LLC relating to Emerging Markets Fund, Equity
Index Fund, International Equity Fund, Investors Equity Fund,
Small Company Opportunities Fund, and Investor Shares,
Institutional Shares and Institutional Service Shares of Daily
Assets Government Fund, Daily Assets Treasury Obligations
Fund, Daily Assets Government Obligations Fund, Daily Assets
Cash Fund and Daily Assets Municipal Fund dated as of February
28, 1999 (filed herewith).
Exhibit 23(e)(6) Form of Distribution Agreement between Registrant and
Forum Fund Services, LLC regarding BIA Small-Cap Growth Fund
and BIA Growth Equity Fund, undated.
Exhibit 23(g)(1) Custodian Agreement between Registrant and Investors
Bank & Trust Company relating to Austin Global Equity Fund,
Equity Index Fund, Emerging Markets Fund, International Equity
Fund, Investors Bond Fund, Investors Equity Fund, Investors
Growth Fund, Investors High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap
Contrarian Fund, Payson Balanced Fund, Payson Value Fund,
Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares
and Institutional Service Shares of Daily Assets Government
Fund, Daily Assets Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund dated February 16, 1999.
Exhibit 23(g)(2) Form of Custodian Agreement between Registrant and
Forum Trust, LLC regarding Austin Global Equity Fund, BIA
Small-Cap Growth Fund, BIA Growth Equity Fund, Equity Index
Fund, Emerging Markets Fund, International Equity Fund,
Investors Bond Fund, Investors Equity Fund, Investors Growth
Fund, Investors High Grade Bond Fund, Maine Municipal Bond
Fund, New Hampshire Bond Fund, Oak Hall Small Cap Contrarian
Fund, Payson Balanced Fund, Payson Value Fund, Polaris Global
Value Fund, Quadra Growth Fund, Small Company Opportunities
Fund and Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets Government Fund,
Daily Assets Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund, undated.
Exhibit 23(g)(3) Form of Master Custodian Agreement between Forum Trust,
LLC and Bankers Trust Company regarding Austin Global Equity
Fund, BIA Small-Cap Growth Fund, BIA Growth Equity Fund,
Equity Index Fund, Emerging Markets Fund, International Equity
Fund, Investors Bond Fund, Investors Equity Fund, Investors
Growth Fund, Investors High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap
Contrarian Fund, Payson Balanced Fund, Payson Value Fund,
Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares
and Institutional Service Shares of Daily Assets Government
Fund, Daily Assets Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund, undated.
Exhibit 23(h)(2) Form of Administration Agreement between Registrant and
Forum Administrative Services, LLC regarding BIA Small-Cap
Growth Fund and BIA Growth Equity Fund, undated
Exhibit 23(h)(3) Fund Accounting Agreement between Registrant and Forum
Accounting Services, LLC regarding Austin Global Equity Fund,
Equity Index Fund, Emerging Markets Fund, International Equity
Fund, Investors Bond Fund, Investors Equity Fund, Investors
Growth Fund, Investors High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Oak Hall Small Cap
Contrarian Fund, Payson Balanced Fund, Payson Value Fund,
Polaris Global Value Fund, Quadra Growth Fund, Small Company
Opportunities Fund and Investor Shares, Institutional Shares
<PAGE>
and Institutional Service Shares of Daily Assets Government
Fund, Daily Assets Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund dated June 19, 1997, as amended December
5, 1997.
Exhibit 23(h)(4) Form of Fund Accounting Agreement between Registrant
and Forum Accounting Services, LLC regarding BIA Small-Cap
Growth Fund and BIA Growth Equity Fund, undated.
Exhibit 23(h)(5) Form of Transfer Agency and Services Agreement between
Registrant and Forum Shareholder Services, LLC regarding BIA
Small-Cap Growth Fund and BIA Growth Equity Fund.
Exhibit (n) Financial Data Schedules.
EXHIBIT 23(D)(11)
FORM OF
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ___ day of June, 1999, 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 Brown
Investment Advisory & Trust Company, a Maryland corporation, with its principal
office and place of business at 19 South Street, Baltimore, Maryland 21202 (the
"Adviser").
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
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix 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, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby employs the Adviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of the assets in
each Fund and, without limiting the generality of the foregoing, to provide
other services as specified herein. The Adviser accepts this employment and
agrees to render its services for the compensation set forth herein.
(b) In connection therewith, the Trust has delivered to the Adviser
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 Prospectuses and Statements of Additional Information of each
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"); and (iv) all procedures adopted by the Trust with respect to the
Funds (i.e., repurchase agreement procedures), and shall promptly furnish the
Adviser with all amendments of or supplements to the foregoing. The Trust shall
deliver to the Adviser: (x) a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing the Adviser and authorizing the
execution and delivery of this Agreement; (y) a copy of all proxy statements and
related materials relating to the Funds; and (z) any other documents, materials
or information that the Adviser shall reasonably request to enable it to perform
its duties pursuant to this Agreement.
(c) The Adviser has delivered, or will deliver within 45 days, to the
Trust: (i) a copy of its Form ADV as most recently filed with the SEC; and (ii)
a copy of its code of ethics complying with the requirements of Rule 17j-1 under
the 1940 Act (the "Code"). The Adviser shall promptly furnish the Trust with all
amendments of or supplements to the foregoing at least annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services required by this
Agreement, the Trust: (i) shall cause all service providers to the Trust to
furnish information to the Adviser and to assist the Adviser as may be required;
and (ii) shall ensure that the Adviser has reasonable access to all records and
documents maintained by the Trust or any service provider to the Trust.
<PAGE>
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser will make decisions with respect to all purchases and
sales of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities and other
investments 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.
Consistent with Section 28(e) of the Securities and Exchange Act of
1934, as amended, the Adviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Adviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Adviser or its affiliates.
Whenever the Adviser simultaneously places orders to purchase or sell the same
asset on behalf of a Fund and one or more other accounts advised by the Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable over time to each account.
(b) The Adviser will report to the Board at each meeting thereof as
requested by the Board all material changes in each Fund since the prior report,
and will also keep the Board informed of important developments affecting the
Trust, the Funds and the Adviser, and on its own initiative, will furnish the
Board from time to time with such information as the Adviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Funds' holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Funds maintain investments, or otherwise. The Adviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Funds as the Adviser may believe appropriate or as the
Board reasonably may request. In making purchases and sales of securities and
other investment assets for the Funds, the Adviser will bear in mind the
policies set from time to time by the Board as well as the limitations imposed
by the Organic Documents and Registration Statement, the limitations in the 1940
Act, the Securities Act, the Internal Revenue Code of 1986, as amended, and
other applicable laws and the investment objectives, policies and restrictions
of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser will report to the Board all material matters related
to the Adviser. On an annual basis, the Adviser shall report on its compliance
with its Code to the Board and upon the written request of the Trust, the
Adviser shall permit the Trust, or its representatives to examine the reports
required to be made to the Adviser under the Code. The Adviser will notify the
Trust of any change of control of the Adviser and any changes in the key
personnel who are either the portfolio manager(s) of the Fund or senior
management of the Adviser, in each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders as are required to
be maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Adviser or the Trust
pursuant to applicable law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or its 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 its representatives.
(f) The Adviser will cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to those accountants for the performance of the accountants' duties.
<PAGE>
(g) The Adviser will provide the Funds' custodian and fund accountant
on each business day with such information relating to all transactions
concerning the Funds' assets as the custodian and fund accountant may reasonably
require. In accordance with procedures adopted by the Board, the Adviser is
responsible for assisting in the fair valuation of all Fund assets and will use
its reasonable efforts to arrange for the provision of prices from parties who
are not affiliated persons of the Adviser for each asset for which the Funds'
fund accountant does not obtain prices in the ordinary course of business.
(h) The Adviser shall authorize and permit any of its directors,
officers and employees who may be duly elected as Trustees or officers of the
Trust to serve in the capacities in which they are elected.
(i) The Adviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period in which the Fund invests all (or substantially
all) of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of Fund, a fee at an annual rate as listed in Appendix A
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 hereunder during the prior calendar month. 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 the Adviser such
compensation as shall be payable prior to the effective date of termination.
(b) The Adviser shall reimburse expenses of each Fund or waive its fees
to the extent necessary to maintain a Fund's expense ratio at an agreed-upon
amount for a period of time specified in a separate letter of agreement. The
Adviser's reimbursement of a Fund's expenses shall be estimated and paid to the
Trust monthly in arrears, at the same time as the Trust's payment to the Adviser
for such month.
(c) No fee shall be payable hereunder with respect to a Fund during any
period in which the Fund invests all (or substantially all) of its investment
assets in a registered, open-end, management investment company, or separate
series thereof, in accordance with Section 12(d)(1)(E) under the 1940 Act.
(d) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (i) the fee payable under this
Agreement; (ii) the fees payable to each administrator under an agreement
between the administrator and the Trust; (iii) expenses of issue, repurchase and
redemption of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, its trustees and officers,
and fidelity bond premiums; (vi) fees and expenses of third parties, including
the Trust's independent public accountant, custodian, transfer agent, dividend
disbursing agent and fund accountant; (vii) fees of pricing, interest, dividend,
credit and other reporting services; (viii) costs of membership in trade
associations; (ix) telecommunications expenses; (x) funds' transmission
expenses; (xi) auditing, legal and compliance expenses; (xii) costs of forming
the Trust and maintaining its existence; (xiii) 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; (xiv) expenses of meetings of
shareholders and proxy solicitations therefor; (xv) 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; (xvi) costs of reproduction, stationery, supplies and postage; (xvii)
fees and expenses of the Trust's trustees and officers; (xviii) the costs of
personnel (who may be employees of the Adviser, an administrator or their
respective affiliated persons) performing services for the Trust; (xix) costs of
Board, Board committee, shareholder and other corporate meetings; (xx) SEC
registration fees and related expenses; (xxi) state, territory or foreign
securities laws registration fees and related expenses; and (xxii) all fees and
expenses paid by the Trust in accordance with any distribution or service plan
or agreement related to similar matters.
<PAGE>
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust. The Adviser shall not be liable hereunder for error
of judgment or mistake of law or in any event whatsoever, except for lack of
good faith, provided that nothing herein shall be deemed to protect, or purport
to protect, the Adviser against any liability to the Trust or to the Trust's
security holders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties hereunder, or by reason of the Adviser's reckless disregard of
its obligations and duties hereunder.
(b) The Adviser 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 (other than those related to the Adviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) Upon approval by a majority of the outstanding voting securities of
a Fund, this Agreement shall become effective with respect to a Fund immediately
after the Exchange as provided in the Agreement and Plan of Reorganization by
and among the Trust, the Adviser, and Global Value Limited Partnership dated May
22, 1998.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive annual periods with respect to the Fund; provided that
such continuance is specifically approved at least annually: (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case; (ii) by a majority of the Trust's trustees who are not parties
to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if the continuation of
this Agreement is not approved as to a Fund, the Adviser may continue to render
to that Fund the services described herein in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
(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 immediately upon its assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's directors, officers or employees 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 8. REPRESENTATIONS OF ADVISER.
The Adviser represents and warrants that: (i) it is either registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act") (and will continue to be so registered for so long as this
Agreement remains in effect) or exempt from registration under the Advisers Act;
(ii) is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement; (iii) has met, and will seek to
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement; and (iv) will promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise.
<PAGE>
SECTION 9. SUBADVISERS
At its own expense, the Adviser may carry out any of its obligations
under this Agreement by employing, subject to the direction and control of the
Board, one or more persons who are registered as investment advisers pursuant to
the Advisers Act or who are exempt from registration thereunder ("Subadvisers").
Each Subadviser's employment will be evidenced by a separate written agreement
approved by the Board and, if required, by the shareholders of the applicable
Fund. The Adviser shall not be liable hereunder for any act or omission of any
Subadviser, except to exercise good faith in the employment of the Subadviser
and except with respect to matters as to which the Adviser assumes
responsibility in writing.
SECTION 10. 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 Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the shareholders of the
Funds.
SECTION 11. RIGHTS TO NAME
If the Adviser ceases to act as investment adviser to the Trust or any Fund
whose name includes "BIA", 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 BIA. 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 Mark or any variation thereof, as the
Adviser deems appropriate. Upon the Adviser's request in writing, the Trust
shall cease to use any such mark or symbol at any time. The Trust acknowledges
that any rights in or to the Mark 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 Mark in their names without the consent of the Trust. The Trust shall not
use the Mark in conducting any business other than that of an investment company
registered under the 1940 Act without the permission of the Adviser.
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the 1940 Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) No amendment to this Agreement or the termination of this Agreement
with respect to a Fund shall affect this Agreement as it pertains to any other
Fund, nor shall any such amendment require the vote of the shareholders of any
other Fund.
(c) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(d) 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.
(e) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement between those parties with respect to
the subject matter hereof, whether oral or written.
(f) 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.
(g) 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
<PAGE>
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.
(h) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(i) 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.
(j) 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) No affiliated person, employee, agent, director, officer or manager
of the Adviser shall be liable at law or in equity for the Adviser's obligations
under this Agreement.
(l) The terms "vote of a majority of the outstanding voting
securities", "interested person", "affiliated person," "control" and
"assignment" shall have the meanings ascribed thereto in the 1940 Act.
(m) 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.
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
___________________________
John Y. Keffer
President
BROWN INVESTMENT ADVISORY &
TRUST COMPANY
___________________________
Name
Title
<PAGE>
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
Appendix A
FEE AS A % OF THE ANNUAL
FUNDS OF THE TRUST AVERAGE DAILY NET ASSETS OF THE FUND
BIA Small-Cap Growth Fund 0.85%
BIA Growth Equity Fund 0.70%
EXHIBIT 23(E)(5)
FORUM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 28th day of February 1999, by and between
Forum Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Fund Services, LLC, a Delaware limited liability company with its principal
office and place of business at Two Portland Square, Portland, Maine 04101
("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and
WHEREAS, the Distributor is registered under the Securities Exchange
Act of 1934, as amended ("1934 Act"), as a broker-dealer and is engaged in the
business of selling shares of registered investment companies either directly to
purchasers or through other financial intermediaries;
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and the Trust may in
the future offer shares of various classes of each Fund as listed in Appendix A
hereto (each such class together with all other classes subsequently established
by the Trust in a Fund being herein referred to as a "Class," and collectively
as the "Classes"); and
WHEREAS, the Trust desires that the Distributor offer, as principal
underwriter, the Shares of each Fund and Class thereof to the public and the
Distributor is willing to provide those services on the terms and conditions set
forth in this Agreement in order to promote the growth of the Funds and
facilitate the distribution of the Shares;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement.
(b) In connection therewith, the Trust has delivered to the Distributor
copies of (i) the Trust's Trust Instrument and Bylaws (collectively, as amended
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current prospectuses and statements of additional information of each Fund and
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
<PAGE>
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.
<PAGE>
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 limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
(ii) It is empowered under applicable laws and by its Operating
Agreement to enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
<PAGE>
(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Distributor, enforceable
against the Distributor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
secured parties;
(vi) It is registered under the 1934 Act with the SEC as a
broker-dealer, it is a member in good standing of the NASD, it will
abide by the rules and regulations of the NASD, and it will notify the
Trust if its membership in the NASD is terminated or suspended; and
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Operating
Agreement.
(e) Notwithstanding anything in this Agreement, including the
Appendices, to the contrary, the Distributor makes no warranty or representation
as to the number of selected dealers or selected agents with which it has
entered into agreements in accordance with Section 11 hereof, as to the
availability of any Shares to be sold through any selected dealer, selected
agent or other intermediary or as to any other matter not specifically set forth
herein.
SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall furnish to the Distributor copies of all financial
statements and other documents to be delivered to shareholders or investors at
least two Fund business days prior to such delivery and shall furnish the
Distributor copies of all other financial statements, documents and other papers
or information which the Distributor may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
the Distributor the number of copies of the Funds' Prospectuses as the
Distributor shall reasonably request.
(b) The Trust shall take, from time to time, subject to the approval of
the Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.
(c) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all
actions that may be reasonably necessary and cooperate with the Distributor in
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;
<PAGE>
(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
<PAGE>
(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.
<PAGE>
(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).
<PAGE>
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable statute or
regulation or shall require the Distributor to take any action contrary to any
provision of its Operating Agreement or any applicable statute or regulation;
provided, however, that neither the Trust nor the Distributor may amend their
Organic Documents or Operating Agreement and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made in this
Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 7 of this Agreement.
SECTION 9. NOTIFICATION BY THE TRUST
The Trust shall advise the Distributor immediately: (i) of any request
by the SEC for amendments to the Trust's Registration Statement or Prospectus or
for additional information; (ii) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the Trust's Registration Statement or
any Prospectus or the initiation of any proceedings for that purpose; (iii) of
the happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the Commission under the 1940 Act or the Securities Act.
SECTION 10. COMPENSATION; EXPENSES
(a) In consideration of the Distributor's services in connection with
the distribution of Shares of each Fund and Class thereof, the Distributor shall
receive: (i) any applicable sales charge assessed upon investors in connection
with the purchase of Shares; (ii) from the Trust, any applicable contingent
deferred sales charge ("CDSC") assessed upon investors in connection with the
redemption of Shares; (iii) from the Trust, the distribution service fees with
respect to the Shares of those Classes as designated in Appendix A for which a
Plan is effective (the "Distribution Fee"); and (iv) from the Trust, the
shareholder service fees with respect to the Shares of those Classes as
designated in Appendix A for which a Service Plan is effective (the "Shareholder
Service Fee"). The Distribution Fee and Shareholder Service Fee shall be accrued
daily by each applicable Fund or Class thereof and shall be paid monthly as
promptly as possible after the last day of each calendar month but in any event
on or before the fifth (5th) Fund business day after month-end, at the rate or
in the amounts set forth in Appendix A and, as applicable, the Plan(s). The
Trust grants and transfers to the Distributor a general lien and security
interest in any and all securities and other assets of a Fund now or hereafter
maintained in an account at the Fund's custodian on behalf of the Fund to secure
any Distribution Fees and Shareholder Service Fees owed the Distributor by the
Trust under this Agreement.
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.
(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).
<PAGE>
(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 a Fund on the
later of (i) the date first above written or (ii) the date on which the Trust's
Registration Statement relating to Shares of a Fund becomes effective. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund for
a period of one year from its effectiveness and thereafter shall continue in
effect with respect to a Fund until terminated; provided, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Trustees of the Trust (I) who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust) and
(II) with respect to each class of a Fund for which there is an effective Plan,
who do not have any direct or indirect financial interest in any such Plan
applicable to the class or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on such approval.
<PAGE>
(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.
<PAGE>
(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
FORUM FUND SERVICES, LLC
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 FEBRUARY 28, 1999
Investors Equity Fund
Equity Index Fund
Small Company Opportunities Fund
International Equity Fund
Emerging Markets 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
EXHIBIT 23(E)(6)
FORM OF
FORUM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the ___th day of _____________ 1999, by and
between Forum Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Fund Services, LLC, a Delaware limited liability company with its
principal office and place of business at Two Portland Square, Portland, Maine
04101 ("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and
WHEREAS, the Distributor is registered under the Securities Exchange
Act of 1934, as amended ("1934 Act"), as a broker-dealer and is engaged in the
business of selling shares of registered investment companies either directly to
purchasers or through other financial intermediaries;
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and the Trust may in
the future offer shares of various classes of each Fund as listed in Appendix A
hereto (each such class together with all other classes subsequently established
by the Trust in a Fund being herein referred to as a "Class," and collectively
as the "Classes"); and
WHEREAS, the Trust desires that the Distributor offer, as principal
underwriter, the Shares of each Fund and Class thereof to the public and the
Distributor is willing to provide those services on the terms and conditions set
forth in this Agreement in order to promote the growth of the Funds and
facilitate the distribution of the Shares;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement.
(b) In connection therewith, the Trust has delivered to the Distributor
copies of (i) the Trust's Trust Instrument and Bylaws (collectively, as amended
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current prospectuses and statements of additional information of each Fund and
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
<PAGE>
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.
<PAGE>
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 limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
(ii) It is empowered under applicable laws and by its Operating
Agreement to enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
<PAGE>
(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Distributor, enforceable
against the Distributor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
secured parties;
(vi) It is registered under the 1934 Act with the SEC as a
broker-dealer, it is a member in good standing of the NASD, it will
abide by the rules and regulations of the NASD, and it will notify the
Trust if its membership in the NASD is terminated or suspended; and
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Operating Agreement.
(e) Notwithstanding anything in this Agreement, including the
Appendices, to the contrary, the Distributor makes no warranty or representation
as to the number of selected dealers or selected agents with which it has
entered into agreements in accordance with Section 11 hereof, as to the
availability of any Shares to be sold through any selected dealer, selected
agent or other intermediary or as to any other matter not specifically set forth
herein.
SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall furnish to the Distributor copies of all financial
statements and other documents to be delivered to shareholders or investors at
least two Fund business days prior to such delivery and shall furnish the
Distributor copies of all other financial statements, documents and other papers
or information which the Distributor may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
the Distributor the number of copies of the Funds' Prospectuses as the
Distributor shall reasonably request.
(b) The Trust shall take, from time to time, subject to the approval of
the Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.
(c) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all
actions that may be reasonably necessary and cooperate with the Distributor in
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;
<PAGE>
(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
<PAGE>
(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.
<PAGE>
(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).
<PAGE>
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable statute or
regulation or shall require the Distributor to take any action contrary to any
provision of its Operating Agreement or any applicable statute or regulation;
provided, however, that neither the Trust nor the Distributor may amend their
Organic Documents or Operating Agreement and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made in this
Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 7 of this Agreement.
SECTION 9. NOTIFICATION BY THE TRUST
The Trust shall advise the Distributor immediately: (i) of any request
by the SEC for amendments to the Trust's Registration Statement or Prospectus or
for additional information; (ii) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the Trust's Registration Statement or
any Prospectus or the initiation of any proceedings for that purpose; (iii) of
the happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the Commission under the 1940 Act or the Securities Act.
SECTION 10. COMPENSATION; EXPENSES
(a) In consideration of the Distributor's services in connection with
the distribution of Shares of each Fund and Class thereof, the Distributor shall
receive: (i) any applicable sales charge assessed upon investors in connection
with the purchase of Shares; (ii) from the Trust, any applicable contingent
deferred sales charge ("CDSC") assessed upon investors in connection with the
redemption of Shares; (iii) from the Trust, the distribution service fees with
respect to the Shares of those Classes as designated in Appendix A for which a
Plan is effective (the "Distribution Fee"); and (iv) from the Trust, the
shareholder service fees with respect to the Shares of those Classes as
designated in Appendix A for which a Service Plan is effective (the "Shareholder
Service Fee"). The Distribution Fee and Shareholder Service Fee shall be accrued
daily by each applicable Fund or Class thereof and shall be paid monthly as
promptly as possible after the last day of each calendar month but in any event
on or before the fifth (5th) Fund business day after month-end, at the rate or
in the amounts set forth in Appendix A and, as applicable, the Plan(s). The
Trust grants and transfers to the Distributor a general lien and security
interest in any and all securities and other assets of a Fund now or hereafter
maintained in an account at the Fund's custodian on behalf of the Fund to secure
any Distribution Fees and Shareholder Service Fees owed the Distributor by the
Trust under this Agreement.
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.
(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).
<PAGE>
(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 a Fund on the
later of (i) the date first above written or (ii) the date on which the Trust's
Registration Statement relating to Shares of a Fund becomes effective. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund for
a period of one year from its effectiveness and thereafter shall continue in
effect with respect to a Fund until terminated; provided, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Trustees of the Trust (I) who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust) and
(II) with respect to each class of a Fund for which there is an effective Plan,
who do not have any direct or indirect financial interest in any such Plan
applicable to the class or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on such approval.
<PAGE>
(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.
<PAGE>
(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:________________________
Mark D. Kaplan
Vice President
FORUM FUND SERVICES, LLC
By:________________________
John Y. Keffer
President
NOTE: THIS AGREEMENT NOT TO BE USED
FOR CDSC FUNDING (B SHARE) FINANCING
<PAGE>
FORUM FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF ______________, 1999
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
EXHIBIT 23(G)(1)
CUSTODIAN AGREEMENT
FORUM FUNDS
THIS AGREEMENT made as of this 16th day of February, 1999, 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
Investors Bank & Trust Company, a Massachusetts trust company 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.
<PAGE>
(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.
<PAGE>
(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
<PAGE>
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).
<PAGE>
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
Attachment 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;
<PAGE>
(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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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: 200 Clarendon Street
16th Floor
Boston, MA 02116
(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/ Leslie K. Klenk
----------------------------------
Leslie K. Klenk, Secretary
INVESTORS BANK & TRUST COMPANY
By: /s/ Martin J. Sullivan
----------------------------------
Name: Martin J. Sullivan
Title: Senior Director
<PAGE>
CUSTODIAN AGREEMENT
FORUM FUNDS
APPENDIX A
FUNDS OF THE TRUST
(A) MONEY MARKET FUNDS
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) EQUITY FUNDS
Austin Global Equity Fund
Emerging Markets Fund
Equity Index Fund
International Equity Fund
Investors Equity Fund
Investors Growth Fund
Oak Hall Small Cap Contrarian Fund
Payson Value Fund
Payson Balanced Fund
Polaris Global Value Fund
Quadra Growth Fund
Small Company Opportunities Fund
<PAGE>
CUSTODIAN AGREEMENT
FORUM FUNDS
APPENDIX B
SUBCUSTODIANS FOR WHICH THE CUSTODIAN IS LIABLE
<TABLE>
<S> <C>
COUNTRY SUBCUSTODIAN
Australia National Australia Bank
Austria Creditanstalt AG
Belgium Paribas Brussels
Canada Royal Bank of Canada
Colombia Cititrust Colombia S.A.
Denmark Unibank A.S.
Finland Cedel/Agent Merita Bank, Helsinki
France Paribas
Germany Paribas Frankfurt
Greece Paribas Greece
Hong Kong Standard Chartered Bank, Hong Kong
Hungary Citibank Budapest Rt
Indonesia Standard Chartered Bank, Jakarta
Ireland Bank of Ireland Securities Services, Dublin
Italy Paribas Milan
Japan Standard Chartered Bank, Tokyo
Malaysia Standard Chartered Bank Malaysia Berhad
Mexico Bancomer, S.A.
Netherlands MeesPierson
New Zealand National Nominees Limited
Norway Union Bank of Norway
Peru Citibank, N.A. (Peru)
Portugal Banco Espirito Santo e Commercial de Lisbon
Singapore Standard Chartered Bank, Singapore
South Africa Standard Bank of South Africa Ltd.
South Korea Standard Chartered Bank, Seoul
Spain Paribas Madrid
Sweden Svenska Handelsbanken
Switzerland Bank Leu Ltd.
Transnational Cedel, S.A.
United Kingdom Midland Bank
FIRST CHICAGO CLEARING CENTRE
United States Investors Bank & Trust Company
</TABLE>
<PAGE>
<TABLE>
<S> <C>
COUNTRY SUBCUSTODIAN
Venezuela Citibank, N.A. (Caracas)
Argentina, Brazil, Chile, and Uruguay Bank Boston, N.A.
</TABLE>
EXHIBIT 23(G)(2)
FORM OF
CUSTODIAN AGREEMENT
AGREEMENT dated as of ______________, between Forum Trust, LLC (the
"Custodian"), a limited liability company organized under the laws of the State
of Maine doing business as a nondepository trust company, and Forum Funds, a
business trust organized under the laws of the State of Delaware (the
"Customer").
WHEREAS, the Customer is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act") and
may offer one or more series of shares, each of which shall represent an
interest in a separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter listed on
Exhibit A being hereafter referred to individually as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, Custodian has entered into a certain Master Subcustodian
Agreement with Bankers Trust Company ("Bankers Trust") dated as of
__________________,1999 (the "Master Subcustodian Agreement") under which
Bankers Trust provides certain sub-custody services on behalf of the Portfolios
to Custodian; and
WHEREAS, Customer wishes to retain Custodian to provide certain
custodial services to Customer for the benefit of the Portfolios, and Custodian
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. Customer, on behalf of each Portfolio,
hereby employs Custodian as custodian of all assets of each Portfolio that are
delivered to and accepted by Custodian or any Subcustodian (as that term is
defined in Section 4) (the "Property") pursuant to the terms and conditions set
forth herein. For purposes of this Agreement, "delivery" of Property shall
include the acquisition by Customer of a security entitlement (as that term is
defined in the New York Uniform Commercial Code ("UCC")). Without limitation,
such Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that Custodian shall have the right, in its
sole discretion, to refuse to accept as Property any property of a Portfolio
that Custodian considers not to be appropriate or in proper form for deposit for
any reason. Custodian shall not be responsible for any property of a Portfolio
held or received by Customer or others and not delivered to Custodian or any
Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions (as hereinafter defined in Section 15),
Customer shall direct Custodian to (a) settle Securities transactions and
maintain Cash in the country or other jurisdiction in which the principal
trading market for such Securities is located, where such Securities are to be
presented for payment or where such Securities are acquired and (b) maintain
Cash in such countries in amounts reasonably necessary to effect Customer's
transactions in such Securities. Instructions to settle Securities transactions
in any country shall be deemed to authorize the holding of such Securities and
Cash in that country.
3. Custody Account. Custodian agrees to establish and maintain one or
more custody accounts on its books each in the name of Customer on behalf of a
Portfolio (each, an "Account") for any and all Property from time to time
received and accepted by Custodian or any Subcustodian for the account of such
Portfolio. Upon delivery by Customer to Custodian of any acceptable Property
belonging to a Portfolio, Customer shall, by Instructions , specifically
indicate in which Portfolio such Property belongs or if such Property belongs to
more than one Portfolio shall allocate such Property to the appropriate
Portfolios, and Custodian shall allocate such Property to the Accounts in
accordance with the Instructions. Customer, on behalf of each Portfolio,
acknowledges (i) its responsibility as a principal for all of its obligations to
Custodian arising under or in connection with this Agreement, notwithstanding,
that it may be acting on behalf of other persons, and (ii) warrants its
authority to deposit in the appropriate Account any Property received therefor
<PAGE>
by Custodian or a Subcustodian and to give, and authorize others to give,
instructions relative thereto. Custodian may deliver securities of the same
class in place of those deposited in the Account.
Custodian shall hold, keep safe and protect as custodian for each
Account all Property in such Account and, to the extent such Property
constitutes "financial assets" as defined in the UCC, shall maintain those
financial assets in such Account as security entitlements in favor of the
Portfolio in whose name the Account is maintained. All transactions, including,
but not limited to, foreign exchange transactions, involving the Property shall
be executed or settled solely in accordance with Instructions (which shall
specifically reference the Account for which such transaction is being settled),
except that until Custodian receives Instructions to the contrary, Custodian
will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account that are
called, redeemed or retired or otherwise become payable and
all coupons and other income items that call for payment upon
presentation to the extent that Custodian or Subcustodian is
actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for Custodian to
take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for Custodian to take timely action
or if actual notice of such actions was received too late to
seek Instructions, sell in the discretion of Custodian (which
sale Customer hereby authorizes Custodian to make) such rights
entitlement or fractional interest and credit the Account with
the net proceeds of such sale;
(e) execute in Customer's name for an Account, whenever Custodian
deems it appropriate, such ownership and other certificates as
may be required to obtain the payment of income from the
Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
Custodian shall notify Customer of the amount of the shortfall
and Customer may, or may cause the Portfolio to, at its
option, deposit additional Cash in such Account or take steps
to have sufficient Cash available. Customer, on behalf of the
Portfolios agrees, when and if requested by Custodian and
required in connection with the payment of any such taxes, to
cooperate with Custodian in furnishing information, executing
documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of Custodian or any
Subcustodian.
Custodian shall provide cash management services to Customer as
provided for in Exhibit E hereto.
4. Subcustodians and Securities Systems. Customer authorizes and
instructs Custodian to maintain the Property in each Account directly in one of
its United States ("U.S.") branches or indirectly through custody accounts that
have been established by Custodian with the following other securities
intermediaries: (a) another U.S. bank or trust company (including Bankers Trust
pursuant to the Master Subcustodian Agreement) or branch thereof located in the
U.S. that is itself qualified under the 1940 Act, to act as custodian, or a
non-U.S. branch of Custodian or of any U.S. Subcustodian, or a U.S. securities
<PAGE>
depository or clearing agency or system in which Custodian or a U.S.
Subcustodian participates (individually, a "U.S. Securities System") or (b) one
of Custodian's majority-owned non-U.S. subsidiaries, a majority-owned subsidiary
of a U.S. Subcustodian or a non-U.S. bank or trust company, acting as custodian
(individually, a "non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S. depository or
clearing agency or system in which Custodian or any Subcustodian participates
(individually, a "non-U.S. Securities System"; U.S. Securities System and
non-U.S. Securities System, collectively, "Securities System"), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
each such Subcustodian or Securities System shall have been approved by
Instructions; provided further that in each case in which a non-U.S.
Subcustodian or non-U.S. Securities System is employed, (a) such Subcustodian or
Securities System either is (i) a "qualified U.S. bank" as defined by Rule 17f-5
under the 1940 Act ("Rule 17f-5") or (ii) an "eligible foreign custodian" within
the meaning of Rule 17f-5 or such Subcustodian or Securities System is the
subject of an order granted by the U.S. Securities and Exchange Commission
("SEC") exempting such agent or the subcustody arrangements thereto from all or
part of the provisions of Rule 17f-5 and (b) the identity of the non-U.S.
Subcustodian and the agreement between Custodian and such non-U.S. Subcustodian
has been approved by Instructions; it being understood that Custodian shall have
no liability or responsibility for determining whether the approval of any
Subcustodian or Securities System by Instructions is proper under the 1940 Act
or any rule or regulation thereunder. Exhibit D attached hereto lists all
Subcustodians and Securities Systems that have been approved by Instructions.
Notwithstanding Section 20 hereof or any other provision hereof to the contrary,
Exhibit D may be amended solely by the delivery to Custodian of Instructions
pursuant to Section 15 hereof.
Upon receipt of Instructions from Customer, Custodian agrees to cease
the employment of any Subcustodian or Securities System with respect to
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or securities system in accordance with the provisions of this Section. In
addition, Custodian may, at any time in its discretion, upon written
notification to Customer, terminate the employment of any Subcustodian or
Securities System.
Custodian shall deliver to Customer annually a certificate stating: (a)
the identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of Custodian and the name and address of the governmental
agency or other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
Customer's Board of Trustees to directly approves its foreign custody
arrangements, such other information relating to such non-U.S. Subcustodians and
non-U.S. Securities Systems as may reasonably be requested by Customer to ensure
compliance with Rule 17f-5. If the Customer's Board of Trustees or the Board of
Trustees responsible for any Portfolio directly approves its foreign custody
arrangements, Custodian also shall furnish annually to Custodian information
concerning such non-U.S. Subcustodians and non-U.S. Securities Systems similar
in kind and scope as that furnished to Customer in connection with the initial
approval of this Agreement. Custodian agrees to promptly notify Customer if, in
the normal course of its custodial activities, Custodian learns of a material
adverse change in the financial condition of a non-U.S. Subcustodian or a
non-U.S. Securities System suffers a material loss of Property, or Custodian has
reason to believe that any non-U.S. Subcustodian or non-U.S. Securities System
has ceased to be a qualified U.S. bank or an eligible foreign custodian each
within the meaning of Rule 17f-5 or has ceased to be subject to an exemptive
order from the SEC.
5. Use of Subcustodian. With respect to Property in an Account that is
maintained by Custodian through a Subcustodian employed pursuant to Section 4:
(a) Custodian will identify on its books as belonging to Customer on
behalf of a Portfolio, any Property maintained through such
Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in an
account holding only assets for customers of Custodian.
(d) Any agreement Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall require
that (i) the Account will be adequately indemnified or its losses
adequately insured; (ii) the Securities so maintained are not
subject to any right, charge, security interest, lien or claim of
<PAGE>
any kind in favor of such Subcustodian or its creditors except a
claim for payment in accordance with such agreement for their
safe custody or administration; (iii) beneficial ownership of
such Securities be freely transferable without the payment of
money or value other than for safe custody or administration;
(iv) adequate records will be maintained identifying the Property
maintained pursuant to such Agreement as belonging to Custodian,
on behalf of its customers; (v) to the extent permitted by
applicable law, officers of or auditors employed by, or other
representatives of or designated by, Custodian including the
independent public accountants of or designated by, Customer be
given access to the books and records of such Subcustodian
relating to Property or confirmation of the contents of those
records; and (vi) Custodian on behalf of Customer will receive
periodic reports with respect to the safekeeping of the Property,
including but not limited to notification of any transfer of
Property into or out of an Account.
6. Use of Securities System. With respect to Property in the Account(s)
that is maintained by Custodian or any Subcustodian through a Securities System
employed pursuant to Section 4:
(a) Custodian shall, and the Subcustodian will be required by its
agreement with Custodian to, identify on its books such Property
as being maintained for the account of Custodian or Subcustodian
for its customers.
(b) Any Property maintained through a Securities System for the
account of Custodian or a Subcustodian will be subject only to
the instructions of Custodian or such Subcustodian, as the case
may be.
(c) Property deposited with a Securities System will be maintained in
an account holding only assets for customers of Custodian or
Subcustodian, as the case may be, unless precluded by applicable
law, rule, or regulation.
(d) Custodian shall provide Customer with any report obtained by
Custodian or Subcustodian on the Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
7. Agents. Custodian may at any time or times in its sole discretion
appoint (or remove), as its agent to carry out such of the provisions of this
Agreement as Custodian may from time to time direct any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as custodian,
including Bankers Trust, ; provided, however, that the appointment of any agent
shall not relieve Custodian of its responsibilities or liabilities hereunder.
Custodian shall provide reasonable notice to Customer of the appointment or
removal of any agent.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property, whether maintained directly by
Custodian or indirectly through a Subcustodian or a Securities System as
authorized herein, shall be clearly recorded on Custodian's books as belonging
to the appropriate Account and not to the Custodian.. Custodian shall keep
accurate and detailed accounts of all investments, receipts, disbursements and
other transactions for each Account. All accounts, books and records of
Custodian relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person designated by
Customer. All such accounts shall be maintained and preserved in the form
reasonably requested by Customer. Custodian will supply to Customer from time to
time, as mutually agreed upon, a statement in respect to any Property in an
Account maintained by Custodian or by a Subcustodian. In the absence of the
filing in writing with Custodian by Customer of exceptions or objections to any
such statement within sixty (60) days of the mailing thereof, Customer shall be
deemed to have approved such statement and in such case or upon written approval
of Customer of any such statement, such statement shall be presumed to be for
all purposes correct with respect to all information set forth therein.
(b) Custodian shall take all reasonable action as Customer may request
to obtain from year to year favorable opinions from Customer's independent
certified public accountants with respect to Custodian's activities hereunder in
connection with the preparation of Customer's registration statement on Form
N-1A and Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
<PAGE>
(c) At the request of Customer, Custodian shall deliver, and shall
cause the Subcustodians to deliver, to Customer a written report prepared by
Custodian's independent certified public accountants with respect to the
services provided by Custodian under this Agreement, including, without
limitation, Custodian's accounting system, internal accounting control and
procedures for safeguarding Cash and Securities, including Cash and Securities
deposited and/or maintained in a securities system or with a Subcustodian. Such
report shall be of sufficient scope and in sufficient detail as may reasonably
be required by Customer and as may reasonably be obtained by Custodian.
(d) Customer may elect to participate in any of the electronic on-line
service and communications systems offered by Custodian or a Subcustodian that
can provide Customer, on a daily basis, with the ability to view on-line or to
print in hard copy various reports of Account activity and of Securities and/or
Cash being held in any Account. To the extent that such service shall include
market values of Securities in an Account, Customer hereby acknowledges that
Custodian or such Subcustodian now obtains and may in the future obtain
information on such values from outside sources that Custodian or such
Subcustodian considers to be reliable, and Customer agrees that Custodian and
such Subcustodian (i) does not verify or represent or warrant either the
reliability of such service nor the accuracy or completeness of any such
information furnished or obtained by or through such service and (ii) shall be
without liability in selecting and utilizing such service or furnishing any
information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account that
are maintained by Custodian or any Subcustodian may be held directly by such
entity in the name of Customer or in bearer form or maintained, on behalf of a
Portfolio, in Custodian's or Subcustodian's name or in the name of Custodian's
or Subcustodian's nominee. Securities that are maintained through a Subcustodian
or which are eligible for deposit in a Securities System as provided above may
be maintained with the Subcustodian or the Securities System in an account for
Custodian's or Subcustodian's customers, unless prohibited by law, rule, or
regulation. Custodian or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by Custodian or Subcustodian as fiduciary or as a custodian. In
the event that any Securities in the name of Custodian or its nominee or held by
a Subcustodian and registered in the name of such Subcustodian or its nominee
are called for partial redemption by the issuer of such Security, Custodian may,
subject to the rules or regulations pertaining to allocation of any Securities
System in which such Securities have been deposited, allot, or cause to be
allotted, the called portion of the respective beneficial holders of such class
of security in any manner Custodian deems to be fair and equitable. Securities
maintained with a Securities System shall be maintained subject to the rules of
that Securities System governing the rights and obligations among the Securities
System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications pertaining to any of the Securities in any Account,
Custodian shall perform such services and only such services as are (i) set
forth in Section 3 of this Agreement, (ii) described in the applicable Service
Standards (the "Proxy Service") and (iii) as may otherwise be agreed upon
between Custodian and Customer. The liability and responsibility of Custodian in
connection with the Proxy Service referred to in (ii) of the immediately
preceding sentence and in connection with any additional services which
Custodian and Customer may agree upon as provided in (iii) of the immediately
preceding sentence shall be as set forth in the description of the Proxy Service
and as may be agreed upon by Custodian and Customer in connection with the
furnishing of any such additional service and shall not be affected by any other
term of this Agreement. Neither Custodian nor its nominees or agents shall vote
upon or in respect of any of the Securities in an Account, execute any form of
proxy to vote thereon, or give any consent or take any action (except as
provided in Section 3) with respect thereto except upon the receipt of
Instructions.
11. Segregated Account. To assist Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, Custodian
shall, upon receipt of Instructions, establish and maintain a segregated account
or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by Custodian or a Subcustodian upon receipt by Custodian of
Instructions that include all information required by Custodian. Settlement and
payment for Securities received for an Account and delivery of Securities out of
such Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities from such purchaser
or dealer, as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of Custodian in effect from
<PAGE>
time to time for that jurisdiction or market. Custodian shall not be liable for
any loss which results from effecting transactions in accordance with the
customary or established securities trading or securities processing practices
and procedures in the applicable jurisdiction or market.
Custodian or a Subcustodian may settle purchases and sales against, or
credit income to, an Account, and Custodian may, at its sole option, reverse
such credits or debits to the appropriate Account in the event that the
transaction does not settle, or the income is not received in a timely manner,
and Customer agrees to hold Custodian harmless from any losses that may result
therefrom. With respect to the activities of Bankers Trust as Subcustodian under
the Master Subcustodian Agreement, such credits and reversals, if any, shall be
on a contractual basis, as outlined in the Bankers Trust Service Standards, as
described below and provided to Customer by Custodian.
The applicable Service Standards mean the Global Guide, the Policies
and Standards Manual, and any other documents issued by the Custodian, Bankers
Trust and other Subcustodians from time to time specifying the procedures for
communicating with a customer, the terms of any additional services to be
provided to a customer, and such other matters as may be agreed between the
parties time to time. Copies of the current Service Standards have been
delivered to Customer.
13. CONDITIONAL CREDITS.
(a) Notwithstanding any other provision of this Agreement, Custodian or
a Subcustodian shall not be required to comply with any Instructions to settle
the purchase of any securities for the Account unless there are sufficient
immediately available funds in the relevant currency in the Account, provided
that, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have become
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which Custodian has received
Instructions to settle on that date ("Settlement Date"), Custodian, upon
settlement, shall credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, the amount of immediately available funds in a given
currency in such Account are less than the aggregate purchase price in such
currency of all securities for which Custodian has received Instructions to
settle on the Settlement Date, Custodian, upon settlement, may credit the
securities to the Account by making a conditional entry on its books and records
("Conditional Credit"), pending receipt of sufficient immediately available
funds in the relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account,
Custodian shall make the Conditional Credit a final entry on its books and
records. In such case, Customer shall be liable to Custodian only for late
charges at a rate that Custodian customarily charges for similar extensions of
credit.
(d) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not deposited in the Account, or (ii) any Proceeding (as
defined below) shall occur, Custodian may sell such of the Securities subject to
the Conditional Credit as it selects in its sole discretion and shall apply the
net proceeds of such sale to cover such Debit, including related late charges,
and any remaining proceeds shall be credited to the Account. If such proceeds
are insufficient to satisfy such Debit in full, Customer shall continue to be
liable to Custodian for any shortfall. Custodian shall make the Conditional
Credit a final entry on its books as to the Securities not required to be sold
to satisfy such Debit. Pending payment in full by Customer of the purchase price
for Securities subject to a Conditional Credit, and Custodian's making a
Conditional Credit a final entry on its books, and, unless consented to by
Custodian, Customer shall have no right to give further Instructions in respect
of Securities subject to a Conditional Credit. Custodian shall have the sole
discretion to determine which Securities shall be deemed to have been paid for
by Customer out of funds available in the Account. Any such Conditional Credit
may be reversed (and any corresponding Debit shall be canceled) by Custodian
unless and until Custodian makes a final entry on its books crediting such
Securities to the Account. The term "Proceeding" shall mean any insolvency,
<PAGE>
bankruptcy, receivership, reorganization or similar proceeding relating to
Customer, whether voluntary or involuntary.
(e) Customer agrees that it will not use the Account to facilitate the
purchase of securities without sufficient funds in the Account (which funds
shall not include the expected proceeds of the sale of the purchased
securities).
14. Permitted Transactions. Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 (but subject to Section 3) and only for the purposes
listed below.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed or in
order to satisfy requirements for additional or substitute
collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any
restrictions applicable to Customer.
(i) For the purpose of redeeming shares of the capital stock of
Customer against delivery of the shares to be redeemed to
Custodian, a Subcustodian or Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of Customer against
delivery of the shares to be redeemed to Custodian, a
Subcustodian or Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement
among Customer, on behalf of a Portfolio, the Portfolio's
investment adviser and a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc., relating to compliance
with the rules of The Options Clearing Corporation, the
Commodities Futures Trading Commission or of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by Customer.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to Custodian of monies for the premium
due and a receipt for the Securities which are to be held in
escrow. Upon exercise of the option, or at expiration, Custodian
will receive the Securities previously deposited from broker.
Custodian will act strictly in accordance with Instructions in
the delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not
returned promptly when due other than to make proper request for
such return.
(m) For spot or forward foreign exchange transactions to facilitate
security trading or receipt of income from Securities related
transactions.
(n) Upon the termination of this Agreement as set forth in Section
21.
<PAGE>
(o) For other proper purposes.
Customer agrees that Custodian and any Subcustodian shall have no
obligation to verify the purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from
Customer in respect of any of Custodian's duties hereunder that have been
received by Custodian at its address set forth in Section 22 below (i) in
writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as Customer shall
have from time to time authorized in writing to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with Custodian, or (ii) which have been transmitted
electronically through an electronic on-line service and communications system
offered by Custodian or other electronic instruction system acceptable to
Custodian, or (iii) a telephonic or oral communication by one or more persons as
Customer shall have from time to time authorized to give the particular class of
Instructions in question and whose name has been filed with Custodian; or (iv)
upon receipt of such other form of instructions as Customer may from time to
time authorize in writing and which Custodian has agreed in writing to accept.
Instructions in the form of oral communications shall be confirmed by Customer
by tested telex or writing in the manner set forth in clause (i) above, but the
lack of such confirmation shall in no way affect any action taken by Custodian
in reliance upon such oral instructions prior to Custodian's receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
Custodian shall have the right to assume in the absence of notice to
the contrary from Customer that any person whose name is on file with Custodian
pursuant to this Section has been authorized by Customer to give the
Instructions in question and that such authorization has not been revoked.
Custodian may act upon and conclusively rely on, without any liability to
Customer or any other person or entity for any losses resulting therefrom, any
Instructions reasonably believed by it to be furnished by the proper person or
persons as provided above.
16. Standard of Care. Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to Custodian that are not contrary to the provisions of this
Agreement. Custodian will use reasonable care and diligence with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care and diligence,
Custodian shall not be responsible for the title, validity or genuineness of any
Property or other property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon, and may conclusively rely on, without liability for any loss resulting
therefrom, any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed or furnished by the
proper party or parties, including, without limitation, Instructions, and shall
be indemnified by Customer for any losses, damages, costs and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by Custodian and arising out of action taken or omitted with reasonable
care by Custodian hereunder or under any Instructions. Custodian shall be liable
to Customer for any act or omission to act of any Subcustodian to the same
extent as if Custodian committed such act itself. With respect to a Securities
System, Custodian shall only be responsible or liable for losses arising from
employment of such Securities System caused by Custodian's own failure to
exercise reasonable care; provided that in the event of any such loss, Custodian
shall take all reasonable steps to enforce such claims as it may have against
the Securities System to protect the interests of the Customer.
In the event of any loss to Customer by reason of the failure of
Custodian or a Subcustodian to utilize reasonable care, Custodian shall be
liable to Customer to the extent of Customer's actual damages at the time such
loss was discovered without reference to any special conditions or circumstances
(including, without limitation, reasonable fees and expenses of counsel). In no
event shall Custodian be liable for any consequential or special damages.
Custodian shall be entitled to rely, and may act, on advice of counsel
(who may be counsel for Custodian or Customer) on all matters and shall be
without liability for any action reasonably taken or omitted in good faith
pursuant to such advice, provided that with respect to the performance of any
action or omission of any action upon such advice, the Custodian shall be
required to conform to the standard of care set forth in this Section 16.
In the event Customer subscribes to an electronic on-line service and
communications system offered by Custodian, Customer shall be fully responsible
for the security of its connecting terminal, access thereto and the proper and
<PAGE>
authorized use thereof and the initiation and application of continuing
effective safeguards with respect thereto and agrees to defend and indemnify
Custodian and hold Custodian harmless from and against any and all losses,
damages, costs and expenses (including the fees and expenses of counsel)
incurred by Custodian as a result of any improper or unauthorized use of such
terminal by Customer or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of Customer.
Subject to the exercise of reasonable care, Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
Custodian or by a Subcustodian of any payment, redemption or other transaction
regarding Securities in each Account in respect of which Custodian has agreed to
take action as provided in Section 3 hereof. Custodian shall not be liable for
any loss resulting from, or caused by, or resulting from acts of governmental
authorities (whether de jure or de facto), including, without limitation,
nationalization, expropriation, and the imposition of currency restrictions;
devaluations of or fluctuations in the value of currencies; changes in laws and
regulations applicable to the banking or securities industry; market conditions
that prevent the orderly execution of securities transactions or affect the
value of Property; acts of war, terrorism, insurrection or revolution; strikes
or work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of Custodian; hurricane,
cyclone, earthquake, volcanic eruption, nuclear fusion, fission or
radioactivity, or other acts of God.
Custodian shall have no liability in respect of any loss, damage or
expense suffered by Customer, insofar as such loss, damage or expense arises
from the performance of Custodian's duties hereunder by reason of Custodian's
reliance upon records that were maintained for Customer by entities other than
Custodian prior to Custodian's employment under this Agreement.
If Custodian does not exercise reasonable care, Custodian shall
indemnify Customer for any losses, damages, costs and expenses (including,
without limitation, the fees and expenses of counsel) incurred by Customer and
arising out of action taken or omitted without reasonable care by Custodian
hereunder or under any Instructions.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. Neither Custodian nor any Subcustodians shall be liable to Customer
or a Portfolio and Customer agrees to indemnify Custodian, all Subcustodians and
their nominees, for any loss, damage or expense suffered or incurred by
Custodian, any Subcustodian or their nominees arising out of any violation of
any investment restriction or other restriction or limitation applicable to
Customer or any Portfolio pursuant to any contract or any law or regulation.
18. Fees and Expenses. Customer agrees to pay to Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) reasonable legal fees as described
herein and/or deemed necessary in the judgment of Custodian to keep safe or
protect the Property in the Account. The initial fee schedule is attached hereto
as Exhibit B. Such fees will not be abated by, nor shall Custodian be required
to account for, any profits or commissions received by Custodian in connection
with its provision of custody services under this agreement. Customer hereby
agrees to hold Custodian harmless from any liability or loss resulting from any
taxes or other governmental charges, and any expense related thereto, which may
be imposed, or assessed with respect to any Property in an Account and also
agree to hold Custodian, its Subcustodians, and their respective nominees
harmless from any liability as a record holder of Property in such Account.
Custodian is authorized to charge the applicable Account for such items, and
Custodian shall have a lien on the Property in the applicable Account for any
amount payable to Custodian under this Agreement, including but not limited to
amounts payable pursuant to Section 13 and pursuant to indemnities granted by
Customer under this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account,
Custodian shall perform such services with respect thereto as are described in
the applicable Service Standards and shall in connection therewith be subject to
the standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit D may be amended as provided in Section 4 hereof and
Exhibit B may be amended as provided for therein). In addition, any amendment to
<PAGE>
Sections 8(c), 8(d), 16, 17, 24 and 28 of this Agreement shall require the
written consent of Bankers Trust. No waiver of any provision hereto shall be
deemed a continuing waiver unless it is so designated. No failure or delay on
the part of either party in exercising any power or right under this Agreement
operates as a waiver, nor does any single or partial exercise of any power or
right preclude any other or further exercise thereof or the exercise of any
other power or right.
21. Termination.
(a) This Agreement may be terminated by Customer or Custodian by ninety
(90) days' written notice to the other; provided that notice by Customer shall
specify the names of the persons to whom Custodian shall deliver the Securities
in each Account and to whom the Cash in such Account shall be paid. If notice of
termination is given by Custodian, Customer shall, within ninety (90) days
following the giving of such notice, deliver to Custodian a written notice
specifying the names of the persons to whom Custodian shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid.
In either case, Custodian will deliver such Property to the persons so
specified, after deducting therefrom any amounts that Custodian determines to be
owed to it hereunder. In addition, Custodian may in its discretion withhold from
such delivery such Property as may be necessary to settle transactions pending
at the time of such delivery. Customer grants to Custodian a lien and right of
setoff against the Account and all Property held therein from time to time in
the full amount of the foregoing obligations. If within ninety (90) days
following the giving of a notice of termination by Custodian, Custodian does not
receive the aforementioned written notice specifying the names of the persons to
whom Custodian shall deliver the Securities in each Account and to whom the Cash
in such Account shall be paid, Custodian, at its election, may deliver such
Securities and pay such Cash to a bank or trust company doing business in the
State of New York to be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to Custodian, provided that from and after the
ninetieth day Custodian's obligations shall be limited to safekeeping.
(b) This Agreement may be terminated by Customer or Custodian as to one
or more Portfolios (but less than all of the Portfolios) by delivery of an
amended Exhibit A deleting such Portfolios, in which case termination as to such
deleted Portfolios shall take effect ninety (90) days after the date of such
delivery, or such earlier time as mutually agreed. The execution and delivery of
an amended Exhibit A that deletes one or more Portfolios shall constitute a
termination of this Agreement only with respect to such deleted Portfolio(s),
shall be governed by Section 21(a) as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of Custodian
and Customer hereunder with respect to the other Portfolios set forth in Exhibit
A, as amended from time to time.
(c) Sections 16, 17, 18, 27 and 30 shall survive the termination of
this Agreement as to one or more or all Portfolios.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though Customer
had separately contracted with Custodian by separate written instrument with
respect to each Portfolio and its related Accounts.
24. Security for Payment. To secure payment of all obligations due
hereunder, Customer hereby grants to Custodian a continuing security interest in
and right of setoff against each Account and all Property held therein from time
to time in the full amount of such obligations; provided that, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account or the Portfolio related to such Account, such
security interest and right of setoff will be limited to Property held for that
Account only and its related Portfolio. Should Customer fail to pay promptly any
amounts owed hereunder, Custodian shall be entitled to use available Cash in the
<PAGE>
Account or applicable Account, as the case may be, and to dispose of Securities
in the Account or such applicable Account as is necessary. In any such case and
without limiting the foregoing, Custodian shall be entitled to take such other
actions or exercise such other options, powers and rights as Custodian now or
hereafter has as a secured creditor under the UCC or any other applicable law,
including, without limitation, granting to any Subcustodian a security interest
in such Accounts on terms similar to those set forth in this Section 24.
25. Representations and Warranties.
(a) Customer hereby represents and warrants to Custodian that:
(i) the employment of Custodian and the allocation of
fees, expenses and other charges to any Account as
herein provided, is not prohibited by law or any
governing documents or contracts to which it is
subject;
(ii) the terms of this Agreement do not violate any
obligation by which Customer is bound, whether
arising by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Customer and each Portfolio in
accordance with its terms; and
(iv) it will deliver to Custodian a duly executed
Secretary's Certificate in the form of Exhibit C
hereto or such other evidence of such authorization
as Custodian may reasonably require, whether by way
of a certified resolution or otherwise.
(b) Custodian hereby represents and warrants to Customer that:
(i) the terms of this Agreement do not violate any
obligation by which Custodian is bound, whether
arising by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Custodian in accordance with its
terms;
(iii) it will deliver to Customer such evidence of such
authorization as Customer may reasonably require,
whether by way of a certified resolution or
otherwise; and
(iv) it is qualified as a custodian under Section 26(a)
of the 1940 Act and that it will remain so qualified
or upon ceasing to be so qualified shall promptly
notify Customer in writing.
26. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of Customer and
Custodian.
27. Third-Party Beneficiary. Customer hereby acknowledges and agrees
that with respect to the Accounts:
(a) Custodian is authorized toappoint Bankers Trust as a master
Subcustodian pursuant to the Master Subcustodian Agreement.
(b) As an inducement to Bankers Trust to act as a master
Subcustodian, Customer authorizes the Custodian to bind the
Customer to those terms of the Master Subcustodian Agreement,
including Section 23 thereof, which will obligate the Customer to
pay obligations of each Portfolio for Property custodied pursuant
to the Master Subcustodian Agreement.
(c) Bankers Trust may rely, as fully as if it were a party hereto and
named as "Custodian" herein, on the representations, warranties,
covenants and indemnities of Customer set forth in Sections 8(d),
16, 17, 24 and 28 of this Agreement.
<PAGE>
28. Representative Capacity and Binding Obligation. A copy of the
Declaration of Trust of Customer is on file with the Secretary of State of the
State of Delaware (and a copy of the Trust Instrument of Customer is on file
with Customer's secretary). Notice is hereby given that this Agreement is not
executed on behalf of the Trustees of Customer as individuals, and the
obligations of this Agreement are not binding upon any of the Trustees, officers
or shareholders of Customer individually but are binding only upon the assets
and property of the Portfolios.
Custodian agrees that no shareholder, trustee or officer of Customer
may be held personally liable or responsible for any obligations of Customer
arising out of this Agreement.
29. Submission to Jurisdiction. Any suit, action or proceeding arising
out of this Agreement may be instituted in any State or Federal court sitting in
the City of New York, State of New York, United States of America, and Custodian
and Customer each irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that such suit, action or proceeding was brought in an
inconvenient forum.
30. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of Custodian, Customer, or
any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.
31. Severability. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
32. Entire Agreement. This Agreement together with its Exhibits,
contains the entire agreement between the parties relating to the subject matter
hereof and supersedes any oral statements and prior writings with respect
thereto.
33. Headings. The headings of the sections hereof are included for
convenience of reference only and do not form a part of this Agreement.
34. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
FORUM TRUST, LLC
By:____________________________
Name:__________________________
Title:_________________________
FORUM FUNDS
By:____________________________
Name:__________________________
Title:_________________________
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
Austin Global Equity Fund
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
Emerging Markets Fund
Equity Index Fund
International Equity Fund
Investors Equity Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Oak Hall Small Cap Contrarian Fund
Payson Balanced Fund
Payson Value Fund
Polaris Global Value Fund
Quadra Growth Fund
Small Company Opportunities Fund
TaxSaver Bond Fund
INVESTOR SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
INSTITUTIONAL SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
INSTITUTIONAL SERVICE SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
<PAGE>
FORUM TRUST, LLC
By: ____________________________
Name:___________________________
Title:__________________________
FORUM FUNDS
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Custodian of a new Exhibit B to
Customer and acceptance thereof by Customer and shall be effective as of the
date of acceptance by Customer or a date agreed upon between Custodian and
Customer.
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT C
FORM OF SECRETARY'S CERTIFICATE
I, [Name], hereby certify that I am the Secretary of Forum Funds, a
business trust organized under the laws of the State of Delaware (the
"Company"), and as such I am duly authorized to, and do hereby, certify that:
1. Organizational Documents. The Company's organizational documents,
and all amendments thereto, have been filed with the appropriate governmental
officials of Delaware, the Company continues to be in existence and is in good
standing, and no action has been taken to repeal such organizational documents,
the same being in full force and effect on the date hereof.
2. Bylaws. The Company's Bylaws have been duly adopted and no action
has been taken to repeal such Bylaws, the same being in full force and
effect.
3. Resolutions. Resolutions have been duly adopted on behalf of the
Company, which resolutions (i) have not in any way been revoked or rescinded,
(ii) have been in full force and effect since their adoption, to and including
the date hereof, and are now in full force and effect, and (iii) are the only
corporate proceedings of the Company now in force relating to or affecting the
matters referred to therein, including, without limitation, confirming that the
Company is duly authorized to enter into a certain custody agreement with Forum
Trust, LLC (the "Agreement"), and that certain designated officers, including
those identified in paragraph 4 of this Certificate, are authorized to execute
said Agreement on behalf of the Company, in conformity with the requirements of
the Company's organizational documents, Bylaws, and other pertinent documents to
which the Company may be bound.
4. Incumbency. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Company holding those offices
set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind the Company, as a legal matter,
with respect to all matters pertaining to the Agreement, and to execute and
deliver said Agreement on behalf of the Company, and the signatures set forth
opposite the respective names and titles of said officers are their true,
authentic signatures:
Name Title Signature
---- ----- ---------
[Name] [Position] _______________________
[Name] [Position] _______________________
[Name] [Position] _______________________
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_______, 19__.
Forum Funds
By:___________________________
Name:__________________________
Title: Secretary
<PAGE>
I, [Name of Confirming Officer], [Title] of the Company, hereby certify
that on this ___ day of ________, 19__, [Name of Secretary] is the duly elected
Secretary of the Company and that the signature above is his genuine signature.
Forum Funds
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT E
CASH MANAGEMENT
1. Until Custodian receives Instructions to the contrary, Custodian will
[TO BE DEVELOPED]
EXHIBIT 23(G)(3)
FORM OF
MASTER SUBCUSTODY AGREEMENT
AGREEMENT dated as of ______________, between Bankers Trust Company
(the "Bank") and Forum Trust, LLC ("Forum" or the "Forum").
WHEREAS, Forum provides custodial services to certain open-end,
management investment companies registered under the Investment Company Act of
1940 (the "1940 Act") pursuant to custodian agreements entered into between
Forum and such companies (each a "Registrant"); and
WHEREAS, such investment companies may offer one or more series of
shares, each of which shall represent an interest in a separate portfolio of
Securities and Cash (each as hereinafter defined)(all such existing and
additional series now or hereafter listed on Exhibit A being hereafter referred
to individually as a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, Forum wishes to retain the Bank to provide certain
sub-custodian services to Forum for the benefit of the Portfolios, and the Bank
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of the Bank. Forum, on behalf of each Portfolio, hereby
employs the Bank as custodian of all Securities and Cash of each Portfolio that
are delivered to and accepted by the Bank or any Subcustodian (as that term is
defined in Section 4) (the "Property") pursuant to the terms and conditions set
forth herein. For purposes of this Agreement, "delivery" of Property shall
include the acquisition by Forum of a security entitlement (as that term is
defined in the New York Uniform Commercial Code ("UCC")) . Without limitation,
such Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that the Bank shall have the right, in its
sole discretion, to refuse to accept as Property any property of a Portfolio
that the Bank considers not to be appropriate or in proper form for deposit for
any reason. The Bank shall not be responsible for any property of a Portfolio
held or received by Forum or others and not delivered to the Bank or any
Subcustodian.
2. Maintenance of Securities and Cash at the Bank and Subcustodian
Locations. Pursuant to Instructions (as hereinafter defined in Section 15),
Forum shall direct the Bank to (a) settle Securities transactions and maintain
Cash in the country or other jurisdiction in which the principal trading market
for such Securities is located, where such Securities are to be presented for
payment or where such Securities are acquired and (b) maintain Cash in such
countries in amounts reasonably necessary to effect Forum's transactions in such
Securities. Instructions to settle Securities transactions in any country shall
be deemed to authorize the holding of such Securities and Cash in that country.
3. Custody Account. The Bank agrees to establish and maintain one or
more custody accounts on its books each in the name of a Portfolio or in the
name of Forum on behalf of a Portfolio (each, an "Account") for any and all
Property from time to time received and accepted by the Bank or any Subcustodian
for the account of such Portfolio. Upon delivery by Forum to the Bank of any
acceptable Property belonging to a Portfolio, Forum shall, by Instructions,
specifically indicate in which Portfolio such Property belongs or if such
Property belongs to more than one Portfolio shall allocate such Property to the
appropriate Portfolios, and the Bank shall allocate such Property to the
Accounts in accordance with the Instructions. Forum, on behalf of each
Portfolio, acknowledges (i) its responsibility as a principal for all of its
obligations to the Bank arising under or in connection with this Agreement,
notwithstanding that it may be acting on behalf of other persons, and (ii)
warrants its authority to deposit in the appropriate Account any Property
received therefor by the Bank or a Subcustodian and to give, and authorize
others to give, instructions relative thereto. The Bank may deliver securities
of the same class in place of those deposited in the Account.
<PAGE>
The Bank shall hold, keep safe and protect as custodian for each
Account all Property in such Account and, to the extent such Property
constitutes "financial assets" as defined in the UCC, shall maintain those
financial assets in such Account as security entitlements in favor of the
Portfolio in whose name the Account is maintained. All transactions, including,
but not limited to, foreign exchange transactions, involving the Property shall
be executed or settled solely in accordance with Instructions (which shall
specifically reference the Account for which such transaction is being settled),
except that until the Bank receives Instructions to the contrary, the Bank will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account that are
called, redeemed or retired or otherwise become payable and
all coupons and other income items that call for payment upon
presentation to the extent that the Bank or Subcustodian is
actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Bank to
take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Bank to take timely action or
if actual notice of such actions was received too late to seek
Instructions, sell in the discretion of the Bank (which sale
the Bank hereby authorizes the Bank to make) such rights
entitlement or fractional interest and credit the Account with
the net proceeds of such sale;
(e) execute in Forum's name for an Account, whenever the Bank
deems it appropriate, such ownership and other certificates as
may be required to obtain the payment of income from the
Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Bank shall notify Forum of the amount of the shortfall and
Forum may, or may cause the Portfolio to, at its option,
deposit additional Cash in such Account or take steps to have
sufficient Cash available. Forum, on behalf of the Portfolios
agrees, when and if requested by the Bank and required in
connection with the payment of any such taxes, to cooperate
with the Bank in furnishing information, executing documents
or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Bank or any
Subcustodian.
Custodian shall provide cash management services to Forum as provided
for in Exhibit E hereto.
4. Subcustodians and Securities Systems. Forum authorizes and
instructs the Bank to maintain the Property in each Account directly in one of
its United States ("U.S.") branches or indirectly through custody accounts that
have been established by the Bank with the following other securities
intermediaries: (a) another U.S. bank or trust company or branch thereof located
in the U.S. that is itself qualified under the 1940 Act, to act as custodian, or
a non-U.S. branch of the Bank or of any U.S. Subcustodian, or a U.S. securities
depository or clearing agency or system in which the Bank or a U.S. Subcustodian
participates (individually, a "U.S. Securities System") or (b) one of
Custodian's majority-owned non-U.S. subsidiaries, a majority-owned subsidiary of
a U.S. Subcustodian or a non-U.S. bank or trust company, acting as custodian
<PAGE>
(individually, a "non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S. depository or
clearing agency or system in which the Bank or any Subcustodian participates
(individually, a "non-U.S. Securities System"; U.S. Securities System and
non-U.S. Securities System, collectively, "Securities System"), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
each such Subcustodian or Securities System shall have been approved by
Instructions; provided further that in each case in which a non-U.S.
Subcustodian or non-U.S. Securities System is employed, (a) such Subcustodian or
Securities System either is (i) a "qualified U.S. bank" as defined by Rule 17f-5
under the 1940 Act ("Rule 17f-5") or (ii) an "eligible foreign custodian" within
the meaning of Rule 17f-5 or such Subcustodian or Securities System is the
subject of an order granted by the U.S. Securities and Exchange Commission
("SEC") exempting such agent or the subcustody arrangements thereto from all or
part of the provisions of Rule 17f-5 and (b) the identity of the non-U.S.
Subcustodian and the agreement between the Bank and such non-U.S. Subcustodian
has been approved by Instructions; it being understood that the Bank shall have
no liability or responsibility for determining whether the approval of any
Subcustodian or Securities System by Instructions is proper under the 1940 Act
or any rule or regulation thereunder. Exhibit D attached hereto and incorporated
herein by reference lists all Subcustodians and Securities Systems that have
been approved by Instructions with respect to each Portfolio. Notwithstanding
Section 20 hereof or any other provision hereof to the contrary, Exhibit D may
be amended solely by the delivery to the Bank of Instructions pursuant to
Section 15 hereof.
Upon receipt of Instructions, the Bank agrees to cease the employment
of any Subcustodian or Securities System with respect to Forum, and if desirable
and practicable, appoint a replacement Subcustodian or securities system in
accordance with the provisions of this Section. In addition, the Bank may, at
any time in its discretion, upon written notification to Forum, terminate the
employment of any Subcustodian or Securities System.
The Bank shall deliver to Forum annually a certificate stating: (a) the
identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of the Bank and the name and address of the governmental agency
or other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
Forum's Board of Directors, or the Board of Trustees responsible for any
Portfolio covered by this Agreement, directly approves its foreign custody
arrangements, such other information relating to such non-U.S. Subcustodians and
non-U.S. Securities Systems as may reasonably be requested by Forum to ensure
compliance with Rule 17f-5. If Forum's Board of Directors or the Board of
Trustees responsible for any Portfolio directly approves its foreign custody
arrangements, the Bank also shall furnish annually to the Bank information
concerning such non-U.S. Subcustodians and non-U.S. Securities Systems similar
in kind and scope as that furnished to Forum in connection with the initial
approval of this Agreement. Custodian agrees to promptly notify Forum if, in the
normal course of its custodial activities, the Bank learns of a material adverse
change in the financial condition of a non-U.S. Subcustodian or a non-U.S.
Securities System suffers a material loss of Property, or the Bank has reason to
believe that any non-U.S. Subcustodian or non-U.S. Securities System has ceased
to be a qualified U.S. bank or an eligible foreign custodian each within the
meaning of Rule 17f-5 or has ceased to be subject to an exemptive order from the
SEC.
5. Use of Subcustodian. With respect to Property in an Account that
is maintained by the Bank through a Subcustodian employed pursuant to
Section 4:
(a) The Bank will identify on its books as belonging to Forum on
behalf of a Portfolio, any Property maintained through such
Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Bank or its agents.
(c) Property deposited with a Subcustodian will be maintained in an
account holding only assets for Forums of the Custodian.
(d) Any agreement the Bank shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall require
that (i) the Account will be adequately indemnified or its losses
adequately insured; (ii) the Securities so maintained are not
subject to any right, charge, security interest, lien or claim of
any kind in favor of such Subcustodian or its creditors except a
claim for payment in accordance with such agreement for their
safe custody or administration; (iii) beneficial ownership of
<PAGE>
such Securities be freely transferable without the payment of
money or value other than for safe custody or administration;
(iv) adequate records will be maintained identifying the Property
maintained pursuant to such Agreement as belonging to the
Custodian, on behalf of its Forums; (v) to the extent permitted
by applicable law, officers of or auditors employed by, or other
representatives of or designated by, the Bank including the
independent public accountants of or designated by, Forum be
given access to the books and records of such Subcustodian
relating to Property or confirmation of the contents of those
records; and (vi) the Bank on behalf of Forum will receive
periodic reports with respect to the safekeeping of the Property,
including but not limited to notification of any transfer of
Property into or out of an Account.
6. Use of Securities System. With respect to Property in the Account(s)
that is maintained by the Bank or any Subcustodian through a Securities System
employed pursuant to Section 4:
(a) The Bank shall, and the Subcustodian will be required by its
agreement with the Bank to, identify on its books such
Property as being maintained for the account of the Bank or
Subcustodian for its Forums.
(b) Any Property maintained through a Securities System for the
account of the Bank or a Subcustodian will be subject only to
the instructions of the Bank or such Subcustodian, as the case
may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for Forums of the Bank or
Subcustodian, as the case may be, unless precluded by
applicable law, rule, or regulation.
(d) The Bank shall provide the Bank with any report obtained by
the Bank or Subcustodian on the Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
7. Agents. The Bank may at any time or times in its sole discretion
appoint (or remove) as its agent to carry out such of the provisions of this
Agreement as the Bank may from time to time direct any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as custodian;
provided, however, that the appointment of any agent shall not relieve the Bank
of its responsibilities or liabilities hereunder. Custodian shall provide
reasonable notice to Forum of the appointment or removal of any agent.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property, whether maintained directly by the
Bank or indirectly through a Subcustodian or a Securities System as authorized
herein, shall be clearly recorded on the Bank's books as belonging to the
appropriate Account and not to the Custodian. The Bank shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions for each Account. All accounts, books and records of the Bank
relating thereto shall be open to inspection and audit at all reasonable times
during normal business hours by any person designated by Forum. All such
accounts shall be maintained and preserved in the form reasonably requested by
Forum. The Bank will supply to Forum from time to time, as mutually agreed upon,
a statement in respect to any Property in an Account maintained by the Bank or
by a Subcustodian. In the absence of the filing in writing with the Bank by
Forum of exceptions or objections to any such statement within sixty (60) days
of the mailing thereof, Forum shall be deemed to have approved such statement
and in such case or upon written approval of Forum of any such statement, such
statement shall be presumed to be for all purposes correct with respect to all
information set forth therein.
(b) The Bank shall take all reasonable action as Forum may request to
obtain from year to year favorable opinions from each Portfolio's independent
certified public accountants with respect to the Bank's activities hereunder in
connection with the preparation of the applicable Registrant's registration
statement on Form N-1A and the Portfolio's Form N-SAR or other periodic reports
to the SEC and with respect to any other requirements of the SEC.
(c) At the request of Forum, the Bank shall deliver to Forum a written
report prepared by the Bank's independent certified public accountants with
respect to the services provided by the Bank under this Agreement, including,
without limitation, the Custodian's accounting system, internal accounting
<PAGE>
control and procedures for safeguarding Cash and Securities, including Cash and
Securities deposited and/or maintained in a securities system or with a
Subcustodian. Such report shall be of sufficient scope and in sufficient detail
as may reasonably be required by Forum and as may reasonably be obtained by the
Bank. The bank authorizes Forum to deliver copies of such reports to the
applicable Registrants.
(d) Forum may elect to participate in any of the electronic on-line
service and communications systems offered by the Bank that can provide Forum,
on a daily basis, with the ability to view on-line or to print on hard copy
various reports of Account activity and of Securities and/or Cash being held in
any Account. To the extent that such service shall include market values of
Securities in an Account, Forum hereby acknowledges that the Bank now obtains
and may in the future obtain information on such values from outside sources
that the Bank considers to be reliable and Forum agree that the Bank (i) does
not verify or represent or warrant either the reliability of such service nor
the accuracy or completeness of any such information furnished or obtained by or
through such service and (ii) shall be without liability in selecting and
utilizing such service or furnishing any information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account that
are maintained by the Bank or any Subcustodian may be held directly by such
entity in the name of Forum or in bearer form or maintained, on behalf of a
Portfolio, in the Custodian's or Subcustodian's name or in the name of the
Custodian's or Subcustodian's nominee. Securities that are maintained through a
Subcustodian or which are eligible for deposit in a Securities System as
provided above may be maintained with the Subcustodian or the Securities System
in an account for the Bank's or Subcustodian's Forums, unless prohibited by law,
rule, or regulation. The Bank or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by Custodian or Subcustodian as fiduciary or as a custodian. In
the event that any Securities in the name of the Bank or its nominee or held by
a Subcustodian and registered in the name of such Subcustodian or its nominee
are called for partial redemption by the issuer of such Security, the Bank may,
subject to the rules or regulations pertaining to allocation of any Securities
System in which such Securities have been deposited, allot, or cause to be
allotted, the called portion of the respective beneficial holders of such class
of security in any manner the Bank deems to be fair and equitable. Securities
maintained with a Securities System shall be maintained subject to the rules of
that Securities System governing the rights and obligations among the Securities
System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications pertaining to any of the Securities in any Account, the
Bank shall perform such services and only such services as are (i) set forth in
Section 3 of this Agreement, (ii) described in the applicable Service Standards
(the "Proxy Service") and (iii) as may otherwise be agreed upon between the Bank
and Forum. The liability and responsibility of the Bank in connection with the
Proxy Service referred to in (ii) of the immediately preceding sentence and in
connection with any additional services which the Bank and Forum may agree upon
as provided in (iii) of the immediately preceding sentence shall be as set forth
in the description of the Proxy Service and as may be agreed upon by the Bank
and Forum in connection with the furnishing of any such additional service and
shall not be affected by any other term of this Agreement. Neither the Bank nor
its nominees or agents shall vote upon or in respect of any of the Securities in
an Account, execute any form of proxy to vote thereon, or give any consent or
take any action (except as provided in Section 3) with respect thereto except
upon the receipt of Instructions.
11. Segregated Account. To assist Forum in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, the Bank
shall, upon receipt of Instructions, establish and maintain a segregated account
or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by the Bank or a Subcustodian upon receipt by the Bank of Instructions
that include all information required by the Custodian. Settlement and payment
for Securities received for an Account and delivery of Securities out of such
Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities from such purchaser
or dealer, as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of the Bank in effect from
time to time for that jurisdiction or market. The Bank shall not be liable for
any loss which results from effecting transactions in accordance with the
customary or established securities trading or securities processing practices
and procedures in the applicable jurisdiction or market.
<PAGE>
Notwithstanding that the Bank may settle purchases and sales against,
or credit income to, an Account, on a contractual basis, as outlined in the
applicable Service Standards as defined below and provided to Forum by the
Custodian, the Bank may, at its sole option, reverse such credits or debits to
the appropriate Account in the event that the transaction does not settle, or
the income is not received in a timely manner, and Forum agrees to hold the Bank
harmless from any losses that may result therefrom.
The applicable Service Standards shall be defined as the Global Guide,
the Policies and Standards Manual, and any other documents issued by the Bank
from time to time specifying the procedures for communicating with Forum, the
terms of any additional services to be provided to Forum, and such other matters
as may be agreed between Forum and the Bank from time to time. Copies of the
current term standards have been delivered to the Custodian.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement, the Bank
shall not be required to comply with any Instructions to settle the purchase of
any securities for the Account unless there are sufficient immediately available
funds in the relevant currency in the Account, provided that, if, after all
expenses, debits and withdrawals of Cash in the relevant currency ("Debits")
applicable to the Account have been made and if after all Conditional Credits,
as defined below, applicable to the Account have become final entries as set
forth in (c) below, the amount of immediately available funds of the relevant
currency in such Account is at least equal to the aggregate purchase price of
all securities for which the Bank has received Instructions to settle on that
date ("Settlement Date"), the Custodian, upon settlement, shall credit the
Securities to the Account by making a final entry on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, the amount of immediately available funds in a given
currency in such Account are less than the aggregate purchase price in such
currency of all securities for which the Bank has received Instructions to
settle on the Settlement Date, the Custodian, upon settlement, may credit the
securities to the Account by making a conditional entry on its books and records
("Conditional Credit"), pending receipt of sufficient immediately available
funds in the relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account, the Bank
shall make the Conditional Credit a final entry on its books and records. In
such case, Forum shall be liable to the Bank only for late charges at a rate
that the Bank customarily charges for similar extensions of credit.
(d) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not deposited in the Account, or (ii) any Proceeding (as
defined below) shall occur, the Bank may sell such of the Securities subject to
the Conditional Credit as it selects in its sole discretion and shall apply the
net proceeds of such sale to cover such Debit, including related late charges,
and any remaining proceeds shall be credited to the Account. If such proceeds
are insufficient to satisfy such Debit in full, Forum shall continue to be
liable to the Bank for any shortfall. The Bank shall make the Conditional Credit
a final entry on its books as to the Securities not required to be sold to
satisfy such Debit. Pending payment in full by Forum of the purchase price for
Securities subject to a Conditional Credit, and the Custodian's making a
Conditional Credit a final entry on its books, and, unless consented to by the
Custodian, Forum shall have no right to give further Instructions in respect of
Securities subject to a Conditional Credit. The Bank shall have the sole
discretion to determine which Securities shall be deemed to have been paid for
by Forum out of funds available in the Account. Any such Conditional Credit may
be reversed (and any corresponding Debit shall be canceled) by the Bank unless
and until the Bank makes a final entry on its books crediting such Securities to
the Account. The term "Proceeding" shall mean any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating to Forum, whether
voluntary or involuntary.
(e) Forum agrees that it will not use the Account to facilitate the
purchase of securities without sufficient funds in the Account (which funds
shall not include the expected proceeds of the sale of the purchased
securities).
<PAGE>
14. Permitted Transactions. Forum agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 (but subject to Section 3) and only for the purposes
listed below.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by Forum requiring a pledge of
Securities, but only against receipt of amounts borrowed or in
order to satisfy requirements for additional or substitute
collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any
restrictions applicable to Forum.
(i) For the purpose of redeeming shares of the capital stock of Forum
against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or Forum's transfer agent.
(j) For the purpose of redeeming in kind shares of Forum against
delivery of the shares to be redeemed to the Custodian, a
Subcustodian or Forum's transfer agent.
(k) For delivery in accordance with the provisions of any agreement
among Forum, on behalf of a Portfolio, the Portfolio's investment
adviser and a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc., relating to compliance with the rules
of The Options Clearing Corporation, the Commodities Futures
Trading Commission or of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by Forum.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to the Bank of monies for the premium
due and a receipt for the Securities which are to be held in
escrow. Upon exercise of the option, or at expiration, the Bank
will receive the Securities previously deposited from broker. The
Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not
returned promptly when due other than to make proper request for
such return.
(m) For spot or forward foreign exchange transactions to facilitate
security trading or receipt of income from Securities related
transactions.
(n) Upon the termination of this Agreement as set forth in Section
21.
(o) For other proper purposes.
Forum agrees that the Bank shall have no obligation to verify the
purpose for which a transaction is being effected.
<PAGE>
15. Instructions. The term "Instructions" means instructions from Forum
in respect of any of the Bank's duties hereunder that have been received by the
Bank at its address set forth in Section 22 below (i) in writing (including,
without limitation, facsimile transmission) or by tested telex signed or given
by such one or more person or persons as Forum shall have from time to time
authorized in writing to give the particular class of Instructions in question
and whose name and (if applicable) signature and office address have been filed
with the Custodian, or (ii) which have been transmitted electronically through
an electronic on-line service and communications system offered by the Bank or
other electronic instruction system acceptable to the Custodian, or (iii) a
telephonic or oral communication by one or more persons as Forum shall have from
time to time authorized to give the particular class of Instructions in question
and whose name has been filed with the Custodian; or (iv) upon receipt of such
other form of instructions as Forum may from time to time authorize in writing
and which the Bank has agreed in writing to accept. Instructions in the form of
oral communications shall be confirmed by Forum by tested telex or writing in
the manner set forth in clause (i) above, but the lack of such confirmation
shall in no way affect any action taken by the Bank in reliance upon such oral
instructions prior to the Bank's receipt of such confirmation. Instructions may
relate to specific transactions or to types or classes of transactions, and may
be in the form of standing instructions.
The Bank shall have the right to assume in the absence of notice to the
contrary from Forum that any person whose name is on file with the Bank pursuant
to this Section has been authorized by Forum to give the Instructions in
question and that such authorization has not been revoked. The Bank may act upon
and conclusively rely on, without any liability to Forum or any other person or
entity for any losses resulting therefrom, any Instructions reasonably believed
by it to be furnished by the proper person or persons as provided above.
16. Standard of Care. The Bank shall be responsible for the performance
of only such duties as are set forth herein or contained in Instructions given
to the Bank that are not contrary to the provisions of this Agreement. The Bank
will use reasonable care and diligence with respect to the safekeeping of
Property in each Account and, except as otherwise expressly provided herein, in
carrying out its obligations under this Agreement. So long as and to the extent
that it has exercised reasonable care and diligence, the Bank shall not be
responsible for the title, validity or genuineness of any Property or other
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and shall be held harmless in acting upon, and may
conclusively rely on, without liability for any loss resulting therefrom, any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by Forum
for any losses, damages, costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by the Bank and arising out of
action taken or omitted with reasonable care by the Bank hereunder or under any
Instructions. The Bank shall be liable to Forum for any act or omission to act
of any Subcustodian to the same extent as if the Bank committed such act itself.
With respect to a Securities System, the Bank shall only be responsible or
liable for losses arising from employment of such Securities System caused by
the Bank's own failure to exercise reasonable care; provided that in the event
of any such loss, Custodian shall take all reasonable steps to enforce such
claims as it may have against the Securities System to protect the interests of
Forum.
In the event of any loss to Forum by reason of the failure of the Bank
or a Subcustodian to utilize reasonable care, the Bank shall be liable to Forum
to the extent of Forum's actual damages at the time such loss was discovered
without reference to any special conditions or circumstances (including, without
limitation, reasonable fees and expenses of counsel). In no event shall the Bank
be liable for any consequential or special damages.
The Bank shall be entitled to rely, and may act, on advice of counsel
(who may be counsel for the Bank or Forum) on all matters and shall be without
liability for any action reasonably taken or omitted in good faith pursuant to
such advice, provided that with respect to the performance of any action or
omission of any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth in this Section 16.
In the event Forum subscribes to an electronic on-line service and
communications system offered by the Custodian, Forum shall be fully responsible
for the security of its connecting terminal, access thereto and the proper and
authorized use thereof and the initiation and application of continuing
effective safeguards with respect thereto and agrees to defend and indemnify the
Bank and hold the Bank harmless from and against any and all losses, damages,
costs and expenses (including the fees and expenses of counsel) incurred by the
Bank as a result of any improper or unauthorized use of such terminal by Forum
or by any others.
<PAGE>
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of Forum.
Subject to the exercise of reasonable care, the Bank shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Bank or by a Subcustodian of any payment, redemption or other transaction
regarding Securities in each Account in respect of which the Bank has agreed to
take action as provided in Section 3 hereof. The Bank shall not be liable for
any loss resulting from, or caused by, or resulting from acts of governmental
authorities (whether de jure or de facto), including, without limitation,
nationalization, expropriation, and the imposition of currency restrictions;
devaluations of or fluctuations in the value of currencies; changes in laws and
regulations applicable to the banking or securities industry; market conditions
that prevent the orderly execution of securities transactions or affect the
value of Property; acts of war, terrorism, insurrection or revolution; strikes
or work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of the Custodian; hurricane,
cyclone, earthquake, volcanic eruption, nuclear fusion, fission or
radioactivity, or other acts of God.
The Bank shall have no liability in respect of any loss, damage or
expense suffered by Forum, insofar as such loss, damage or expense arises from
the performance of the Custodian's duties hereunder by reason of the Bank's
reliance upon records that were maintained for Forum by entities other than the
Bank prior to the Custodian's employment under this Agreement.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Bank shall not be liable to Forum, a Registrant or a Portfolio
for any loss, damage or expense suffered or incurred by the Bank or its nominees
arising out of any violation of any investment restriction or other restriction
or limitation applicable to a Registrant or any Portfolio pursuant to any
contract or any law or regulation.
18. Fees and Expenses. Forum agrees to pay to the Bank such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Bank s reasonable out-of-pocket
or incidental expenses in connection with the performance of this Agreement,
including (but without limitation) reasonable legal fees as described herein
and/or deemed necessary in the judgment of the Bank to keep safe or protect the
Property in the Account. The initial fee schedule is attached hereto as Exhibit
B. Such fees will not be abated by, nor shall the Bank be required to account
for, any profits or commissions received by the Bank in connection with its
provision of custody services under this agreement. Forum hereby agrees to hold
the Bank harmless from any liability or loss resulting from any taxes or other
governmental charges, and any expense related thereto, which may be imposed, or
assessed with respect to any Property in an Account and also agree to hold the
Custodian, its Subcustodians, and their respective nominees harmless from any
liability as a record holder of Property in such Account. The Bank is authorized
to charge the applicable Account for such items, and the Bank shall have a lien
on the Property in the applicable Account for any amount payable to the Bank
under this Agreement, including but not limited to amounts payable pursuant to
Section 13 and pursuant to indemnities granted by Forum under this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account, the
Bank shall perform such services with respect thereto as are described in the
applicable Service Standards and shall in connection therewith be subject to the
standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit D may be amended as provided in Section 4 hereof and
Exhibit B may be amended as provided for therein). No waiver of any provision
hereto shall be deemed a continuing waiver unless it is so designated. No
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right.
21. Termination.
(a) This Agreement may be terminated by Forum or the Bank by ninety
(90) days' written notice to the other; provided that notice by Forum shall
specify the names of the persons to whom the Bank shall deliver the Securities
in each Account and to whom the Cash in such Account shall be paid. If notice of
termination is given by the Custodian, Forum shall, within ninety (90) days
following the giving of such notice, deliver to the Bank a written notice
<PAGE>
specifying the names of the persons to whom the Bank shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid.
In either case, the Bank will deliver such Property to the persons so specified,
after deducting therefrom any amounts that the Bank determines to be owed to it
hereunder. In addition, the Bank may in its discretion withhold from such
delivery such Property as may be necessary to settle transactions pending at the
time of such delivery. Forum grants to the Bank a lien and right of setoff
against the Account and all Property held therein from time to time in the full
amount of the foregoing obligations. If within ninety (90) days following the
giving of a notice of termination by the Custodian, the Bank does not receive
the aforementioned written notice specifying the names of the persons to whom
the Bank shall deliver the Securities in each Account and to whom the Cash in
such Account shall be paid, the Custodian, at its election, may deliver such
Securities and pay such Cash to a bank or trust company doing business in the
State of New York to be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to the Custodian, provided that from and after
the ninetieth day the Bank's obligations shall be limited to safekeeping.
(b) This Agreement may be terminated by Forum or the Bank as to one or
more Portfolios (but less than all of the Portfolios) by delivery of an amended
Exhibit A deleting such Portfolios, in which case termination as to such deleted
Portfolios shall take effect ninety (90) days after the date of such delivery,
or such earlier time as mutually agreed. The execution and delivery of an
amended Exhibit A that deletes one or more Portfolios shall constitute a
termination of this Agreement only with respect to such deleted Portfolio(s),
shall be governed by the preceding provisions of Section 21 as to the
identification of a successor custodian and the delivery of Cash and Securities
of the Portfolio(s) so deleted to such successor custodian, and shall not affect
the obligations of the Bank and Forum hereunder with respect to the other
Portfolios set forth in Exhibit A, as amended from time to time.
(c) Sections 16, 17, 18, 27 and 30 shall survive the termination of
this Agreement as to one or more or all Portfolios.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of Forum on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Bank shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though Forum had
separately contracted with the Bank by separate written instrument with respect
to each Portfolio and its related Accounts. Forum represents and warrants to the
Bank that it has entered into an agreement with each Portfolio which obligates
each Portfolio to pay to the Bank any obligations arising out of the Property
custodied hereunder.
24. Security for Payment. To secure payment of all obligations due
hereunder, Forum hereby grants to the Bank a continuing security interest in and
right of setoff against each Account and all Property held therein from time to
time in the full amount of such obligations; provided that, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account or the Portfolio related to such Account, such
security interest and right of setoff will be limited to Property held for that
Account only and its related Portfolio. Should Forum fail to pay promptly any
amounts owed hereunder, the Bank shall be entitled to use available Cash in the
Account or applicable Account, as the case may be, and to dispose of Securities
in the Account or such applicable Account as is necessary. In any such case and
without limiting the foregoing, the Bank shall be entitled to take such other
actions or exercise such other options, powers and rights as the Bank now or
hereafter has as a secured creditor under the UCC or any other applicable law.
25. Representations and Warranties.
(a) Forum hereby represents and warrants to the Bank in its own
capacity as Custodian and on behalf of each Registrant that:
<PAGE>
(i) the employment of the Bank and the allocation of
fees, expenses and other charges to any Account as
herein provided, is not prohibited by law or any
governing documents or contracts to which it is
subject;
(ii) the terms of this Agreement do not violate any
obligation by which Forum is bound, whether arising
by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Forum and each Portfolio in
accordance with its terms; and
(iv) it will deliver to the Bank such evidence of such
authorization as the Bank may reasonably require,
whether by way of a certified resolution or
otherwise;
(v) it has delivered to Custodian a true and correct copy
of each custodian agreement between it and each
Registrant and each amendment to each such agreement;
(vi) the Bank may rely, as fully as if it were a party
thereto, on the representations, warranties,
covenants and indemnities of each Registrant, on
behalf of the applicable Portfolios, set forth in
Sections 8(d), 16, 17, 24 and 28 of each agreement
referred to in the foregoing representation;
(vii) it will deliver to the Bank a duly executed
Secretary's Certificate in the form provided for in
each custody agreement between Forum and each
Registrant or such other evidence of such
authorization as the Bank may reasonably require,
whether by way of a certified resolution or
otherwise; and
(viii) it is qualified as a custodian under Section 26(a) of
the 1940 Act and warrants that it will remain so
qualified or upon ceasing to be so qualified shall
promptly notify the Bank in writing.
(b) The Bank hereby represents and warrants to Forum that:
(i) the terms of this Agreement do not violate any
obligation by which Bank is bound, whether arising by
contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Bank in accordance with its
terms;
(iii) it will deliver to Forum such evidence of such
authorization as Forum may reasonably require,
whether by way of a certified resolution or
otherwise; and
(iv) it is qualified as a custodian under Section 26(a)
of the 1940 Act and warrants that it will remain so
qualified or upon ceasing to be so qualified shall
promptly notify Forum in writing.
26. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of Forum and the
Custodian.
27. Publicity. Forum shall furnish to Custodian prior to any
distribution thereof, copies of any material prepared by each Registrant for
distribution to any persons other than Registrant, Registrant's service
providers, Forum and Custodian that refer in any way to the Custodian. Forum
shall not distribute or permit the distribution of such materials if Custodian
reasonably objects in writing within five (5) business days of receipt thereof
(or such other time as may be mutually agreed) after receipt thereof; provided,
however, that Forum shall be permitted to include the name of Custodian and its
position as subcustodian to each Portfolio in each Registrant's registration
statement and other filings with the SEC.
<PAGE>
28. Submission to Jurisdiction. Any suit, action or proceeding arising
out of this Agreement may be instituted in any State or Federal court sitting in
the City of New York, State of New York, United States of America, and the Bank
and Forum each irrevocably submits to the non-exclusive jurisdiction of any such
court in any such suit, action or proceeding and waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in such a court and any
claim that such suit, action or proceeding was brought in an inconvenient forum.
29. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Forum, or
any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.
30. Severability. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
31. Entire Agreement. This Agreement together with any Exhibits
attached hereto, contains the entire agreement between the parties relating to
the subject matter hereof and supersedes any oral statements and prior writings
with respect thereto.
32. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
33. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
BANKERS TRUST COMPANY
By:___________________________________
Name:_________________________________
Title:________________________________
FORUM TRUST, LLC for itself and as agent
for Forum Funds
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
Forum Funds
Austin Global Equity Fund
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
Emerging Markets Fund
Equity Index Fund
International Equity Fund
Investors Equity Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Oak Hall Small Cap Contrarian Fund
Payson Balanced Fund
Payson Value Fund
Polaris Global Value Fund
Quadra Growth Fund
Small Company Opportunities Fund
TaxSaver Bond Fund
Investor, Institutional, and Institutional
Service Shares of:
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
BANKERS TRUST COMPANY
By:________________________________
Name:______________________________
Title:_____________________________
FORUM TRUST, LLC
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Custodian of a new Exhibit B to
Forum and acceptance thereof by Forum and shall be effective as of the date of
acceptance by Forum or a date agreed upon between Custodian and Forum.
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT C
INTENTIONALLY LEFT BLANK
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT E
CASH MANAGEMENT
1. Until the Bank receives Instructions to the contrary, the Bank will
(a) hold with Subcustodians, in deposit accounts maintained for the benefit of
Forum's clients, all Cash received for the Account, (b) credit such interest, if
any, on Cash in the Account as the Bank shall from time to time determine and
(c) receive compensation out of any amounts paid by Subcustodians in respect of
Cash in the Account.
2. The bank may (on an overnight or other short-term basis) move
certain, or all, currencies of Cash in the Account from any Subcustodian and
place it, as deposits or otherwise, with one or more other Subcustodians
(including branches and affiliates of the Bank). The Bank will notify Forum of
any placement procedures it implements and will move Cash in accordance with
such procedures until it notifies Forum otherwise or receives Instructions to
the contrary. The Bank may credit interest and receive compensation as described
in 1 above with respect to any Cash moved. If any Cash is held in an investment
fund managed by the Bank, it will notify the fund (as opposed to Forum) as
provided herein with respect to such Cash.
3. Forum acknowledges that it has received and reviewed the current
policies of the Bank regarding cash management services, which are part of
this Exhibit.
<PAGE>
GLOBAL CUSTODY CASH MANAGEMENT PROGRAM
In the Global Custody cash management program, currencies on which
Bankers Trust pays interest are divided into two categories: (1) currencies on
which we pay interest based on a market benchmark rate for overnight deposits,
and (2) currencies on which we pay interest based on a rate paid by the London
branch of Bankers Trust Company or the local subcustodian.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A MARKET BENCHMARK RATE FOR
OVERNIGHT DEPOSITS (WHICH WE CALL "BENCHMARK RATE CURRENCIES"):
o For each of these currencies, the interest rate we pay is
based on a specific market benchmark (such as Effective Fed
Funds) and is calculated by taking an average of the benchmark
rate and subtracting a spread. (See Schedule A)
o Currently, the only Benchmark Rate Currency is the U.S.
Dollar. Over time we will be considering additional currencies
to include in this category.
o Operationally, most balances in Benchmark Rate Currencies are
swept overnight into deposits at the London branch of Bankers
Trust Company. Where you have selected a short-term investment
fund, your U.S. Dollar balances in the U.S. will be swept
overnight in accordance with your instructions.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A RATE PAID BY THE LONDON
BRANCH OF BANKERS TRUST COMPANY OR THE LOCAL SUBCUSTODIAN (WHICH WE CALL "BASE
RATE CURRENCIES"):
o For each of these currencies, the interest rate we pay is
based on the rate paid by the London branch or the local
subcustodian on overnight deposits in the currency. In either
case, interest is calculated by using the overnight rate
(which will be the actual overnight, a weekly average, or
monthly average rate, depending on the currency) and
subtracting a spread. (See Schedule A)
o Currencies that are part of the sweep program will earn
interest based on the base rate, which will be the higher of
the rate offered by the London branch of Bankers Trust Company
or the local subcustodian.
o Currencies that are not part of the sweep program will
generally earn interest based on the rate paid by the local
subcustodian. We may at times be able to sweep certain
currency balances into deposits of Bankers Trust Company's
London branch in order to be able to earn a higher rate for
you. On those days, any such currency will be treated as part
of the sweep program, and you will earn interest on all of
your balances in that currency at the higher rate for that
day.
o Currently, there are 2 Base Rate Currencies, 10 of which are
included in our sweep program to the London branch.
o Operationally, most balances in Base Rate Currencies that are
part of our sweep program are swept overnight into deposits at
the London branch, while balances in Base Rate Currencies that
are not part of our sweep program remain with the local
subcustodian.
FOR EACH CURRENCY ON WHICH WE PAY INTEREST:
o We will notify you periodically in writing of changes in
spreads and updates to the cash management program. These
program updates also will be available through Global Custody
Flash Notices.
o For markets where we maintain one or more omnibus cash
accounts, you earn interest at the calculated rate on your
entire contractual balance without any action on your part and
<PAGE>
without any minimum balance requirements. This is the case
regardless of whether we are able to invest your balances at
or near the applicable benchmark or base rate and regardless
of whether your contractual balance may exceed your actual
balance.
o For markets where we maintain one or more omnibus cash
accounts, the minimum rate paid is 0.50%, except for the
Japanese Yen (for which the minimum rate of 0.05% has been
suspended for the time being due to market conditions) and the
Singapore Dollar (for which the minimum rate is 0.25%). Please
note that this is also subject to change as appropriate for
any currency. Notwithstanding the foregoing, in no event will
interest be negative.
o For the currencies of "client specific markets," those markets
where for regulatory or other reasons we do not maintain
omnibus accounts for client cash, on which we pay credit
interest (which at this time are the Hungarian Forint, Israeli
Shekel, Polish Zloty, Korean Won and Taiwanese Dollar), we
will no longer be taking a spread for providing interest on
cash balances. The credit interest you earn on overnight
balances will be based on actual balances, as opposed to
contractual balances, and the minimum credit interest rate
will no longer be applied.
o You will have continuous access through Globe*View, BTWorld,
or Globe*Link or other agreed electronic on-line system to the
interest rate earned during the previous "rate averaging
period". Because we may use weekly or monthly average rates to
calculate the interest you earn, we do not know the actual
interest rate until the weekly or monthly period is completed.
o Our program generally requires that overnight balances in each
currency remain with (or are swept to) a subcustodian we
designate for that currency. Nevertheless, we pay our stated
rate of interest on any balances that, because of transactions
in your account, are held overnight with an alternate
subcustodian if we receive interest on that currency from that
subcustodian. If the alternate subcustodian does not pay
interest, however, these balances are excluded from our
program.
o For swept currencies, from time to time we may not be able to
sweep the full amount of your balances to the London branch
because of operational constraints or because your balance on
a contractual basis temporarily exceeds your actual balance.
You will, however, always receive credit for interest based on
your entire contractual balance. To the extent you would have
earned a lower rate on balances not swept, we will make up the
difference. To the extent that actual balances are higher than
contractually posted balances due to purchase fails or
otherwise, we will retain the interest earned as compensation.
o The effective rate we pay on overnight balances will generally
differ from the effective rate we receive (whether from the
London branch or the local subcustodian). Any difference
between the effective rate we receive and the effective rate
we pay (which may be positive or negative, but is generally
positive) is kept by us and covers our fee for running the
cash management program and the related costs we absorb.
Obviously, there will be currencies on which we will not pay interest
because of local regulations, insufficient scale, or other reasons. However, we
hope to identify additional currencies where we can begin paying interest and we
will announce those to you as soon as practical.
Currently most cash balances in our overnight sweep program are swept
into deposits at the London branch of Bankers Trust Company. We reserve the
right to utilize other branches or affiliates for the overnight sweep program.
In the event of such change, we will notify you in writing, which may be through
Global Custody Flash Notice.
As you know, overdrafts are not permitted in the normal course of
business in any currency. Should they occur in any currency, your account will
be charged a fee to settle transactions in advance of receipt of funds. If the
overdraft is not promptly cured (and in any event upon the expiration of 30
days) after the investment manager has been notified of the outstanding
overdraft, the account's home currency will be used to cure the overdraft and
<PAGE>
the associated foreign exchange will be done by Bankers Trust at market rates.
(Other currencies may be utilized to the extent the home currency is
insufficient.) Investment managers that have not cured overdrafts within such
period will be deemed to have directed such foreign exchange transaction.
Accounts subject to ERISA will be deemed to have engaged in the transaction
under the authority of the class exemptions available to qualified professional
asset managers and in-house investment managers. To the extent that the
overdraft is less than the U.S. dollar equivalent of $50,000, Bankers Trust's
foreign exchange desk will bundle the transaction with other small amounts for
other clients.
EXHIBIT 23(H)(2)
FORM OF
FORUM FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the ___th day of______, 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:
<PAGE>
(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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By:______________________________________
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM ADMINISTRATIVE SERVICES, LIMITED
LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: _____________________________________
John Y. Keffer
President
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
MAY __, 1999
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY __, 1999
<TABLE>
(I) ADMINISTRATIVE SERVICE FEES
<S> <C>
- -------------------------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- -------------------------------------------------------------------------- -------------------------------------------
- -------------------------------------------------------------------------- -------------------------------------------
BIA Small-Cap Growth Fund 0.10% of the first $100 million, 0.075 BIA Growth
Equity Fund over $100 million (minimum fee of $40,000)
- -------------------------------------------------------------------------- -------------------------------------------
</TABLE>
<TABLE>
(II) OTHER SERVICES
<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 23(H)(3)
FORUM FUNDS
FUND ACCOUNTING 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 Accounting 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 fund accounting
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
fund accountant 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") 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
(a) Forum and the Trust's administrator, Forum Administrative Services,
LLC, (the "Administrator"), may from time to time adopt such procedures as they
agree upon to implement the terms of this Section. With respect to each Fund,
Forum shall perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
<PAGE>
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers to
the Trust and the Board and provide information to the Administrator,
investment advisers to the Trust and other appropriate persons with
respect to questions of Fund compliance;
<PAGE>
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xiv) periodically reconcile all appropriate data with each Fund's
custodian;
(xv) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for
each security; and
(xvi) 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.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. 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 or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume 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.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, 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
<PAGE>
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; 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(c)(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) 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;
(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.
(d) 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.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
<PAGE>
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) 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 Portfolio to act in contravention of a Portfolio's
Offering Document 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.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) 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) 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 Clause (iv) of 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.
<PAGE>
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. 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) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
<PAGE>
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.
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.
<PAGE>
(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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By: /s/ Mark D. Kaplan
-------------------------------------
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM ACCOUNTING SERVICES, LIMITED
LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
------------------------------------
John Y. Keffer
President
<PAGE>
FORUM FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF MARCH 18, 1998
Austin Global Equity Fund
Emerging Markets Fund
Equity Index Fund
International Equity Fund
Investors Bond Fund
Investors Equity Fund
Investors Growth Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Oak Hall Small Cap Contrarian Fund
Payson Value Fund
Polaris Global Value Fund
Quadra Growth Fund
Small Company Opportunities Fund
TaxSaver 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
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
<TABLE>
<S> <C>
(I) BASE FEE
Standard Fee
Fee per Fund................................................................... $3,000/month
Fee for each additional Class of the Fund above one............................ $1,000/month
Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million................... $500/month
Portfolios with asset levels exceeding $250 million................... $1000/month
Portfolios with asset levels exceeding $500 million................... $1,500/month
Portfolios with asset levels exceeding $1,000 million................. $2,000/month
(ii) Portfolios requiring international custody............................ $1,000/month
(iii) Portfolios with more than 30 international positions ................. $1,000/month
(iv) Tax free money market Funds........................................... $1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities............................................... $1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities............................................... $2,000/month
(vii) Portfolios with more than 100 security positions...................... $1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater............................................................ $1,000/month
Standard Fee per Feeder Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund.......................................................... $1,000/month
Standard Fee per Fund that invests in more than one security................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Additional surcharges do not apply
Standard Fee per Fund of Funds Gateway Fund (a Fund operating pursuant
to Section 12(d)(1)(H) of the 1940 Act or a similar structure)
Standard Fee per Fund.......................................................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Plus additional surcharges as described above if the Fund invests
in securities other than investment companies (calculated as if the
securities were the Fund's only assets)
Note 1: Surcharges are determined based upon the total assets, security
positions or other factors as of the end of the prior month and on the
portfolio turnover rate for the prior month. Portfolio turnover rate
shall have the meaning ascribed thereto in SEC Form N-1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1997. On January 1, 1998, and on each successive January 1, the
rates may be adjusted automatically by Forum without action of the
Trust to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of
Labor Statistics. Forum shall notify the Trust each year of the new
rates, if applicable.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(II) START-UP FEE
Fund Start-Up Fee ......................................................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
1999 Fiscal Years (1998 Excise Tax for March and May Year Ends)
---------------------------------------------------------------
Preparation of tax returns: (i) state income, (ii) Federal income
and (iii) Federal excise, including extensions and amendments
Money Funds (Standard) $1,750/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $1,250/fiscal period/Fund
Other Funds (Standard) $2,200/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $2,200/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $2,200/fiscal period/Fund
Preparation of tax returns: (i) state income and (ii) Federal
income; and preparation, execution and filing of tax returns:
(i) Federal excise, including extensions and amendments
Money Funds (Standard) $2,400/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $1,900/fiscal period/Fund
Other Funds (Standard) $2,900/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $2,900/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $2,900/fiscal period/Fund
Preparation, execution and filing of of tax returns: (i) state income,
(ii) Federal income and (iii) Federal excise, including extensions
and amendments
Money Funds (Standard) $3,000/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $2,250/fiscal period/Fund
Other Funds (Standard) $4,600/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $4,000/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $4,000/fiscal period/Fund
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable Fund
</TABLE>
EXHIBIT 23(H)(4)
FORM OF
FORUM FUNDS
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of the th day of ____, 1999, 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
Accounting 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 fund accounting
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 fund accountant 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") 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
(a) Forum and the Trust's administrator, Forum Administrative Services,
LLC, (the "Administrator"), may from time to time adopt such procedures as they
agree upon to implement the terms of this Section. With respect to each Fund,
Forum shall perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
<PAGE>
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum in the
case of securities for which information and market price or yield
quotations are readily available and based upon evaluations conducted
in accordance with the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers to
the Trust and the Board and provide information to the Administrator,
investment advisers to the Trust and other appropriate persons with
respect to questions of Fund compliance;
<PAGE>
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xiv) periodically reconcile all appropriate data with each Fund's
custodian;
(xv) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for
each security; and
(xvi) 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.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. 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 or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume 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.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, 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
<PAGE>
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 3. STANDARD OF CARE; 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(c)(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) 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;
(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.
(d) 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.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
<PAGE>
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) 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 Portfolio to act in contravention of a Portfolio's
Offering Document 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.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) 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) 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 Clause (iv) of 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.
<PAGE>
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. 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) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
<PAGE>
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.
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.
<PAGE>
(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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By:____________________________________
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM ACCOUNTING SERVICES, LIMITED
LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By:____________________________________
John Y. Keffer
President
<PAGE>
FORUM FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF MAY __, 1999
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
<PAGE>
FORUM FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
<TABLE>
<S> <C>
(I) BASE FEE
Standard Fee
Fee per Fund................................................................... $3,000/month
Fee for each additional Class of the Fund above one............................ $1,000/month
Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million................... $500/month
Portfolios with asset levels exceeding $250 million................... $1000/month
Portfolios with asset levels exceeding $500 million................... $1,500/month
Portfolios with asset levels exceeding $1,000 million................. $2,000/month
(ii) Portfolios requiring international custody............................ $1,000/month
(iii) Portfolios with more than 30 international positions ................. $1,000/month
(iv) Tax free money market Funds........................................... $1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities............................................... $1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities............................................... $2,000/month
(vii) Portfolios with more than 100 security positions...................... $1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater............................................................ $1,000/month
Standard Fee per Feeder Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund.......................................................... $1,000/month
Standard Fee per Fund that invests in more than one security................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Additional surcharges do not apply
Standard Fee per Fund of Funds Gateway Fund (a Fund operating pursuant
to Section 12(d)(1)(H) of the 1940 Act or a similar structure)
Standard Fee per Fund.......................................................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Plus additional surcharges as described above if the Fund invests
in securities other than investment companies (calculated as if the
securities were the Fund's only assets)
</TABLE>
Note 1: Surcharges are determined based upon the total assets,
security positions or other factors as of the end of the prior month
and on the portfolio turnover rate for the prior month. Portfolio
turnover rate shall have the meaning ascribed thereto in SEC Form
N-1A.
Note 2: On each successive January 1, the rates may be adjusted
automatically by Forum without action of the Trust to reflect changes
in the Consumer Price Index for the preceding calendar year, as
published by the U.S. Department of Labor, Bureau of Labor Statistics.
Forum shall notify the Trust each year of the new rates, if
applicable.
<PAGE>
<TABLE>
<S> <C>
(II) START-UP FEE
Fund Start-Up Fee ......................................................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
1999 Fiscal Years (1998 Excise Tax for March and May Year Ends)
Preparation of tax returns: (i) state income, (ii) Federal income
and (iii) Federal excise, including extensions and amendments
Money Funds (Standard) $1,750/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $1,250/fiscal period/Fund
Other Funds (Standard) $2,200/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $2,200/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $2,200/fiscal period/Fund
Preparation of tax returns: (i) state income and (ii) Federal
income; and preparation, execution and filing of tax returns:
(i) Federal excise, including extensions and amendments
Money Funds (Standard) $2,400/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $1,900/fiscal period/Fund
Other Funds (Standard) $2,900/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $2,900/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $2,900/fiscal period/Fund
Preparation, execution and filing of of tax returns: (i) state income,
(ii) Federal income and (iii) Federal excise, including extensions
and amendments
Money Funds (Standard) $3,000/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $2,250/fiscal period/Fund
Other Funds (Standard) $4,600/fiscal period/Fund
Other Funds (Feeder Gateway Fund) $4,000/fiscal period/Fund
Other Funds (Fund of Funds Gateway Fund) $4,000/fiscal period/Fund
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable Fund
</TABLE>
EXHIBIT 23(H)(5)
FORM OF
FORUM FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the _____________________ by and between Forum
Funds, a Delaware Business Trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
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:
<PAGE>
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
<PAGE>
(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.
(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
(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
<PAGE>
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.
<PAGE>
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:
<PAGE>
(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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
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.
<PAGE>
(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: __________________________________
John Y. Keffer, President
FORUM SHAREHOLDER SERVICES, LLC
By:___________________________________
David I. Goldstein, Secretary
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF MAY __, 1999
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX B
Fees
Transfer Agency Fee as % of the Average
<TABLE>
<S> <C>
BIA Small-Cap Growth Fund $18,000 per year plus annual shareholder
BIA Growth Equity Fund account fees of $25 per shareholder account
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORUM
FUNDS SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 017
<NAME> AUSTIN GLOBAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,013,808
<INVESTMENTS-AT-VALUE> 16,040,854
<RECEIVABLES> 286,640
<ASSETS-OTHER> 41,711
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,369,205
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,890
<TOTAL-LIABILITIES> 39,890
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,635,609
<SHARES-COMMON-STOCK> 1,095,878
<SHARES-COMMON-PRIOR> 945,268
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 42,216
<ACCUMULATED-NET-GAINS> 708,875
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,027,047
<NET-ASSETS> 16,329,315
<DIVIDEND-INCOME> 155,120
<INTEREST-INCOME> 19,888
<OTHER-INCOME> 0
<EXPENSES-NET> 217,224
<NET-INVESTMENT-INCOME> (42,216)
<REALIZED-GAINS-CURRENT> 387,473
<APPREC-INCREASE-CURRENT> (1,983,159)
<NET-CHANGE-FROM-OPS> (1,637,902)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 159,293
<NUMBER-OF-SHARES-REDEEMED> 8,683
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 950,353
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 321,402
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130,256
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 217,224
<AVERAGE-NET-ASSETS> 17,320,059
<PER-SHARE-NAV-BEGIN> 16.27
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (1.33)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.90
<EXPENSE-RATIO> 2.50
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> INVESTORS BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 81,338,144
<INVESTMENTS-AT-VALUE> 84,035,454
<RECEIVABLES> 1,279,717
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,315,171
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 557,715
<TOTAL-LIABILITIES> 557,715
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 81,569,155
<SHARES-COMMON-STOCK> 7,881,551
<SHARES-COMMON-PRIOR> 8,097,617
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,904
<ACCUMULATED-NET-GAINS> 495,895
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,697,310
<NET-ASSETS> 84,757,456
<DIVIDEND-INCOME> 127,563
<INTEREST-INCOME> 2,759,322
<OTHER-INCOME> 0
<EXPENSES-NET> 297,023
<NET-INVESTMENT-INCOME> 2,589,862
<REALIZED-GAINS-CURRENT> 223,866
<APPREC-INCREASE-CURRENT> 1,225,028
<NET-CHANGE-FROM-OPS> 4,038,756
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,589,862
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 617,424
<NUMBER-OF-SHARES-REDEEMED> 863,604
<SHARES-REINVESTED> 30,114
<NET-CHANGE-IN-ASSETS> (840,575)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 272,029
<OVERDISTRIB-NII-PRIOR> 4,904
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 169,758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 446,563
<AVERAGE-NET-ASSETS> 84,646,989
<PER-SHARE-NAV-BEGIN> 10.57
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> .32
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.75
<EXPENSE-RATIO> 0.70
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> INVESTORS GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 16,964,058
<INVESTMENTS-AT-VALUE> 30,032,191
<RECEIVABLES> 87,717
<ASSETS-OTHER> 12,815
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,132,723
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 110,882
<TOTAL-LIABILITIES> 110,882
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,367,977
<SHARES-COMMON-STOCK> 2,967,225
<SHARES-COMMON-PRIOR> 2,987,037
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 11
<ACCUMULATED-NET-GAINS> 585,742
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,068,133
<NET-ASSETS> 30,021,841
<DIVIDEND-INCOME> 238,231
<INTEREST-INCOME> 60,696
<OTHER-INCOME> 0
<EXPENSES-NET> 182,469
<NET-INVESTMENT-INCOME> 116,458
<REALIZED-GAINS-CURRENT> 585,742
<APPREC-INCREASE-CURRENT> (4,239,055)
<NET-CHANGE-FROM-OPS> (3,536,855)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 204,931
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 163,804
<NUMBER-OF-SHARES-REDEEMED> 183,625
<SHARES-REINVESTED> 9
<NET-CHANGE-IN-ASSETS> (3,877,097)
<ACCUMULATED-NII-PRIOR> 88,462
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107,774
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 245,151
<AVERAGE-NET-ASSETS> 33,070,507
<PER-SHARE-NAV-BEGIN> 11.35
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> (1.20)
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 1.10
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 025
<NAME> INVESTORS HIGH GRADE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 34,180,416
<INVESTMENTS-AT-VALUE> 35,574,975
<RECEIVABLES> 282,435
<ASSETS-OTHER> 4,603
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,862,013
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 238,222
<TOTAL-LIABILITIES> 238,222
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,892,509
<SHARES-COMMON-STOCK> 3,451,694
<SHARES-COMMON-PRIOR> 3,415,730
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 336,723
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,394,559
<NET-ASSETS> 35,623,791
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,110,751
<OTHER-INCOME> 0
<EXPENSES-NET> 121,664
<NET-INVESTMENT-INCOME> 989,087
<REALIZED-GAINS-CURRENT> 336,723
<APPREC-INCREASE-CURRENT> 898,972
<NET-CHANGE-FROM-OPS> 2,224,782
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 989,087
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 175,089
<NUMBER-OF-SHARES-REDEEMED> 139,186
<SHARES-REINVESTED> 61
<NET-CHANGE-IN-ASSETS> 1,586,894
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 69,545
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 199,882
<AVERAGE-NET-ASSETS> 34,677,304
<PER-SHARE-NAV-BEGIN> 9.96
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> .29
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.32
<EXPENSE-RATIO> 0.70
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 008
<NAME> MAINE MUNICIPAL BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 27,890,639
<INVESTMENTS-AT-VALUE> 29,476,102
<RECEIVABLES> 569,985
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,046,087
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42,378
<TOTAL-LIABILITIES> 42,378
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,287,628
<SHARES-COMMON-STOCK> 2,668,057
<SHARES-COMMON-PRIOR> 2,552,646
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 130,618
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,585,463
<NET-ASSETS> 30,003,709
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 734,136
<OTHER-INCOME> 0
<EXPENSES-NET> 86,729
<NET-INVESTMENT-INCOME> 647,407
<REALIZED-GAINS-CURRENT> 100,897
<APPREC-INCREASE-CURRENT> 421,564
<NET-CHANGE-FROM-OPS> 1,169,868
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 647,407
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323,213
<NUMBER-OF-SHARES-REDEEMED> 252,826
<SHARES-REINVESTED> 45,024
<NET-CHANGE-IN-ASSETS> 1,807,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 29,721
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 57,834
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 197,058
<AVERAGE-NET-ASSETS> 28,838,083
<PER-SHARE-NAV-BEGIN> 11.05
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> .25
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.25
<EXPENSE-RATIO> 0.60
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NEW HAMPSHIRE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,482,401
<INVESTMENTS-AT-VALUE> 14,099,569
<RECEIVABLES> 264,448
<ASSETS-OTHER> 25,072
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,389,089
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53,143
<TOTAL-LIABILITIES> 53,143
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,639,540
<SHARES-COMMON-STOCK> 1,308,033
<SHARES-COMMON-PRIOR> 1,202,463
<ACCUMULATED-NII-CURRENT> 489
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 78,749
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 617,168
<NET-ASSETS> 14,335,946
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 334,861
<OTHER-INCOME> 0
<EXPENSES-NET> 40,705
<NET-INVESTMENT-INCOME> 294,156
<REALIZED-GAINS-CURRENT> 66,662
<APPREC-INCREASE-CURRENT> 228,220
<NET-CHANGE-FROM-OPS> 589,038
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 294,156
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 164,533
<NUMBER-OF-SHARES-REDEEMED> 85,646
<SHARES-REINVESTED> 26,683
<NET-CHANGE-IN-ASSETS> 1,428,019
<ACCUMULATED-NII-PRIOR> 489
<ACCUMULATED-GAINS-PRIOR> 12,087
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,145
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 106,426
<AVERAGE-NET-ASSETS> 13,535,311
<PER-SHARE-NAV-BEGIN> 10.73
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> .23
<PER-SHARE-DIVIDEND> .23
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.96
<EXPENSE-RATIO> .60
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 016
<NAME> OAK HALL SMALL CAP CONTRARIAN FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 5,148,814
<INVESTMENTS-AT-VALUE> 4,286,332
<RECEIVABLES> 80,568
<ASSETS-OTHER> 17,003
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,383,903
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 54,686
<TOTAL-LIABILITIES> 54,686
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,648,529
<SHARES-COMMON-STOCK> 280,762
<SHARES-COMMON-PRIOR> 348,816
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 19,431
<ACCUMULATED-NET-GAINS> 562,601
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (862,482)
<NET-ASSETS> 4,329,217
<DIVIDEND-INCOME> 17,202
<INTEREST-INCOME> 7,887
<OTHER-INCOME> 0
<EXPENSES-NET> 44,520
<NET-INVESTMENT-INCOME> (19,431)
<REALIZED-GAINS-CURRENT> 563,193
<APPREC-INCREASE-CURRENT> (2,138,837)
<NET-CHANGE-FROM-OPS> (1,595,075)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,925
<NUMBER-OF-SHARES-REDEEMED> 77,979
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,878,708)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 592
<GROSS-ADVISORY-FEES> 22,223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 98,011
<AVERAGE-NET-ASSETS> 5,910,000
<PER-SHARE-NAV-BEGIN> 20.66
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> (5.17)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.42
<EXPENSE-RATIO> 1.50
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 007
<NAME> PAYSON BALANCED FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 21,004,760
<INVESTMENTS-AT-VALUE> 20,005,695
<RECEIVABLES> 116,671
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,122,366
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103,398
<TOTAL-LIABILITIES> 103,398
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,976,511
<SHARES-COMMON-STOCK> 1,658,065
<SHARES-COMMON-PRIOR> 1,652,819
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,990
<ACCUMULATED-NET-GAINS> 1,044,512
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (999,065)
<NET-ASSETS> 20,018,968
<DIVIDEND-INCOME> 155,390
<INTEREST-INCOME> 246,905
<OTHER-INCOME> 0
<EXPENSES-NET> 131,604
<NET-INVESTMENT-INCOME> 270,691
<REALIZED-GAINS-CURRENT> (342,064)
<APPREC-INCREASE-CURRENT> (4,197,174)
<NET-CHANGE-FROM-OPS> (4,268,547)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 270,612
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,507
<NUMBER-OF-SHARES-REDEEMED> 84,009
<SHARES-REINVESTED> 12,748
<NET-CHANGE-IN-ASSETS> (4,420,867)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,386,576
<OVERDISTRIB-NII-PRIOR> 3,069
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 68,580
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 172,781
<AVERAGE-NET-ASSETS> 22,797,425
<PER-SHARE-NAV-BEGIN> 14.79
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> (2.72)
<PER-SHARE-DIVIDEND> .16
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.07
<EXPENSE-RATIO> 1.15
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> PAYSON VALUE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 14,207,314
<INVESTMENTS-AT-VALUE> 16,675,053
<RECEIVABLES> 52,382
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,727,435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64,373
<TOTAL-LIABILITIES> 64,373
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,912,165
<SHARES-COMMON-STOCK> 952,608
<SHARES-COMMON-PRIOR> 919,046
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 15,727
<ACCUMULATED-NET-GAINS> 1,298,885
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,467,739
<NET-ASSETS> 16,663,062
<DIVIDEND-INCOME> 160,699
<INTEREST-INCOME> 14,275
<OTHER-INCOME> 0
<EXPENSES-NET> 138,719
<NET-INVESTMENT-INCOME> 36,255
<REALIZED-GAINS-CURRENT> 354,428
<APPREC-INCREASE-CURRENT> (4,322,888)
<NET-CHANGE-FROM-OPS> (3,932,205)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 36,222
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 81,597
<NUMBER-OF-SHARES-REDEEMED> 49,244
<SHARES-REINVESTED> 1,209
<NET-CHANGE-IN-ASSETS> (3,255,295)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 944,457
<OVERDISTRIB-NII-PRIOR> 15,760
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 76,449
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 168,368
<AVERAGE-NET-ASSETS> 19,060,148
<PER-SHARE-NAV-BEGIN> 21.67
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> (4.18)
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.49
<EXPENSE-RATIO> 1.45
<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 QUADRA
FUNDS SEPTEMBER 30, 1998. FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> QUADRA GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 6,108,848
<INVESTMENTS-AT-VALUE> 5,526,159
<RECEIVABLES> 376,645
<ASSETS-OTHER> 24,550
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,927,354
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,274,481
<TOTAL-LIABILITIES> 1,274,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,171,513
<SHARES-COMMON-STOCK> 458,697
<SHARES-COMMON-PRIOR> 325,950
<ACCUMULATED-NII-CURRENT> 495
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 63,554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (582,689)
<NET-ASSETS> 4,652,873
<DIVIDEND-INCOME> 32,730
<INTEREST-INCOME> 8,722
<OTHER-INCOME> 0
<EXPENSES-NET> 31,656
<NET-INVESTMENT-INCOME> 9,796
<REALIZED-GAINS-CURRENT> 71,045
<APPREC-INCREASE-CURRENT> (844,244)
<NET-CHANGE-FROM-OPS> (763,403)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,900
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 276,265
<NUMBER-OF-SHARES-REDEEMED> 144,719
<SHARES-REINVESTED> 1,201
<NET-CHANGE-IN-ASSETS> 930,976
<ACCUMULATED-NII-PRIOR> 3,599
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 7,490
<GROSS-ADVISORY-FEES> 31,619
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 97,429
<AVERAGE-NET-ASSETS> 6,306,504
<PER-SHARE-NAV-BEGIN> 11.42
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> (1.33)
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.14
<EXPENSE-RATIO> 1.00
<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 QUADRA
FUNDS SEPTEMBER 30, 1998 FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 020
<NAME> QUADRA VALUE EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 5,083,059
<INVESTMENTS-AT-VALUE> 4,263,123
<RECEIVABLES> 1,115,430
<ASSETS-OTHER> 21,017
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,399,570
<PAYABLE-FOR-SECURITIES> 64,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,057,570
<TOTAL-LIABILITIES> 1,121,959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,368,609
<SHARES-COMMON-STOCK> 420,821
<SHARES-COMMON-PRIOR> 277,950
<ACCUMULATED-NII-CURRENT> 3,414
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 274,476
<ACCUM-APPREC-OR-DEPREC> (819,936)
<NET-ASSETS> 4,277,611
<DIVIDEND-INCOME> 85,283
<INTEREST-INCOME> 5,403
<OTHER-INCOME> 0
<EXPENSES-NET> 29,252
<NET-INVESTMENT-INCOME> 61,434
<REALIZED-GAINS-CURRENT> (274,476)
<APPREC-INCREASE-CURRENT> (1,040,150)
<NET-CHANGE-FROM-OPS> (1,253,192)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 72,327
<DISTRIBUTIONS-OF-GAINS> 8,678
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 234,173
<NUMBER-OF-SHARES-REDEEMED> 99,098
<SHARES-REINVESTED> 7,796
<NET-CHANGE-IN-ASSETS> 719,963
<ACCUMULATED-NII-PRIOR> 14,307
<ACCUMULATED-GAINS-PRIOR> 8,678
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,478
<AVERAGE-NET-ASSETS> 5,825,635
<PER-SHARE-NAV-BEGIN> 12.80
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> (2.92)
<PER-SHARE-DIVIDEND> .14
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.16
<EXPENSE-RATIO> 1.00
<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 SEPTEMBER 30, 1998 SEMI-ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> TAXSAVER BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 38,273,559
<INVESTMENTS-AT-VALUE> 39,973,852
<RECEIVABLES> 1,207,537
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,181,389
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 127,127
<TOTAL-LIABILITIES> 127,127
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,686,544
<SHARES-COMMON-STOCK> 3,747,863
<SHARES-COMMON-PRIOR> 3,645,233
<ACCUMULATED-NII-CURRENT> 8,267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 659,158
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,700,293
<NET-ASSETS> 41,054,262
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,000,358
<OTHER-INCOME> 0
<EXPENSES-NET> 117,200
<NET-INVESTMENT-INCOME> 883,158
<REALIZED-GAINS-CURRENT> 242,960
<APPREC-INCREASE-CURRENT> 499,544
<NET-CHANGE-FROM-OPS> 1,625,662
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 883,158
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 467,344
<NUMBER-OF-SHARES-REDEEMED> 382,625
<SHARES-REINVESTED> 17,911
<NET-CHANGE-IN-ASSETS> 1,850,955
<ACCUMULATED-NII-PRIOR> 8,267
<ACCUMULATED-GAINS-PRIOR> 416,198
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 225,540
<AVERAGE-NET-ASSETS> 38,970,925
<PER-SHARE-NAV-BEGIN> 10.75
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> .24
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.95
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
