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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 June 16, 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. 72
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 74
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:
[X] immediately upon filing pursuant to Rule 485, paragraph (b)
[ ] on _________________ pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(1)
[ ] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of BIA Small-Cap Growth Fund and
BIA Growth Equity Fund.
<PAGE>
LOGO
Prospectus
June 15, 1999
BIA Small-Cap Growth Fund
BIA Growth Equity Fund
Each Fund seeks capital appreciation
by investing primarily in equity securities.
You may purchase Fund shares without a sales charge
and the Funds do not incur Rule 12b-1 (distribution) fees.
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
BIA SMALL-CAP GROWTH FUND
[Margin callout: Concepts to Understand
COMMON STOCK means an equity or ownership interest in a company
MARKET CAPITALIZATION of a company means the value of the company's
common stock in the stock market]
INVESTMENT OBJECTIVE Capital appreciation
PRINCIPAL INVESTMENT STRATEGY The Fund invests primarily in the common stock of
small domestic growth companies. 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. The
Fund primarily invests in small companies whose market capitalization is between
$25 million and $1 billion at the time of investment.
BIA GROWTH EQUITY FUND
INVESTMENT OBJECTIVE Capital appreciation
PRINCIPAL INVESTMENT STRATEGY The Fund invests primarily in the common stock of
large domestic 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. The Fund may also invest in companies
that do not have particularly strong earnings histories but do have other
attributes that may contribute to accelerated growth in the forseeable future.
The Fund primarily invests in large companies whose market capitalization is
$2.5 billion or greater at the time of investment.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
GENERAL RISKS You could lose money on your investment in a Fund, or the Fund
could under perform other investments, if any of the following occur:
o The stock market does not recognize the growth potential of the stocks
in the Fund's portfolio
o Brown Investment Advisory & Trust Company's (the "Adviser") or the
portfolio manager's judgment as to the growth potential of a stock
proves to be wrong
o The stock market goes down
3
<PAGE>
RISKS OF SMALL COMPANIES 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 Analysts and other investors typically follow these companies less
actively and therefore information about these companies is not always
readily available
o Securities of many small companies are traded in the over-the-counter
markets or on a regional securities exchange making them thinly
traded, less liquid and their prices more volatile than the prices of
the securities of larger companies
o Changes in the value of small company stocks may not mirror the
fluctuation of the general market
o More limited product lines, markets and financial resources make these
companies more susceptible to economic or market setbacks
For these and other reasons, the prices of small capitalization securities can
fluctuate more significantly than the securities of larger companies. The
smaller the company, the greater effect these risks may have on that company's
operations and performance. As a result, an investment in BIA Small-Cap Growth
Fund may exhibit a higher degree of volatility than the general domestic
securities market.
WHO MAY WANT TO INVEST IN THE FUNDS
A Fund 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
A Fund 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
4
<PAGE>
FEE TABLES
The following tables describe the various fees and expenses that you will bear
if you invest in a Fund.
Shareholder fees are charges you pay when buying, selling or exchanging shares
of a Fund. Operating expenses, which include fees of the Adviser, are paid out
of a Fund's assets and are factored into a Fund's share price rather than
charged directly to shareholder accounts.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed
on Purchases None
Maximum Sales Charge (Load) Imposed on
Reinvested Distributions None
Maximum Deferred Sales Charge (Load) None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)
BIA SMALL-CAP GROWTH FUND
Management Fees 1.00%
Distribution (12b-1) Fees None
Other Expenses(1) 0.40%
TOTAL ANNUAL FUND OPERATING EXPENSES(2) 1.40%
BIA GROWTH EQUITY FUND
Management Fees 0.75%
Distribution (12b-1) Fees None
Other Expenses(1) 0.60%
TOTAL ANNUAL FUND OPERATING EXPENSES(2) 1.35%
(1) Based on estimated amounts for the current fiscal year ending May 31,
2000.
(2) 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% of the net assets of BIA Small-Cap Growth Fund
or 1.00% of the net assets of BIA Growth Equity Fund.
5
<PAGE>
EXAMPLE
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 that
distributions are reinvested. 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 $143 $137
----------------------- ------------------------ -----------------------
----------------------- ------------------------ -----------------------
After 3 years $443 $428
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</TABLE>
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
INVESTMENT OBJECTIVES
BIA SMALL-CAP GROWTH FUND seeks to achieve capital appreciation by primarily
investing in equity securities.
BIA GROWTH EQUITY FUND seeks to achieve capital appreciation by primarily
investing in equity securities.
INVESTMENT STRATEGIES
[Margin callout: Concept to Understand
FUNDAMENTAL ANALYSIS means the analysis of a company's financial
condition used to help forecast the future value of its stock price.
This analysis includes a 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
other sources 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 - PURCHASING PORTFOLIO SECURITIES
BIA SMALL-CAP GROWTH FUND The Adviser starts by identifying a universe of small
companies. From 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 these data to identify companies that have:
o Significant business opportunities relative to their operating history
and size
o Proprietary products, services or distribution systems
o Management plans that are easy to understand and to monitor
o Attractively priced stocks compared to their growth potential
6
<PAGE>
The Adviser 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.
[Margin callout: Concepts to Understand
PRICE/EARNINGS RATIO means the price of a stock divided by the
company's earnings per share
PRICE/SALES RATIO means the amount an investor is willing to pay for a
dollar of revenue
PRICE/CASH FLOW means the price of a stock divided by free cash flow
per share]
BIA GROWTH EQUITY FUND The Adviser first uses in-house research and other
sources to identify a universe of superior companies across a range of
industries. Superior companies are businesses that have:
o Significant market opportunities (both in terms of magnitude and
duration) where the companies are leaders or potential leaders in
their respective markets
o Proprietary products and services, new product development and product
cycle leadership that sustains a strong brand franchise
o A strong management team that is proactive, consistently executes
effectively and anticipates and adapts to change
The Adviser then focuses on those companies that have the ability to grow at
above average rates over several years, given the Adviser's belief that superior
investment returns are better achieved by low portfolio turnover. Factors
considered include:
o Product cycles, pricing flexibility and product or geographic mix
o Cash flow and financial strength to fund growth
o Catalysts for growth such as changes in regulation, management,
business cycle, business mix and industry consolidation
The Adviser then uses a range of valuation techniques including analyses of
price/earnings ratios, price/sales ratios and price/cash flow to identify those
companies whose stocks are attractively valued relative to the market, their
peer groups and their own price history. Valuation techniques also permit the
Adviser to mitigate the potential downside risk of an investment candidate by
demonstrating the difference in the estimated value of a company's stock
compared to its market price.
7
<PAGE>
THE ADVISER'S PROCESSES - SELLING PORTFOLIO SECURITIES
The Adviser monitors the companies in a Fund's portfolio to determine if there
have been any fundamental changes in the companies. The Adviser may sell a stock
if:
o It subsequently fails to meet the Adviser's initial investment
criteria
o A more attractively priced company is found or if funds are needed for
other purpose
o It becomes overvalued relative to the long term expectation for the
stock price
INVESTMENT POLICIES
Under normal conditions, BIA Small-Cap Growth Fund will primarily invest (at
least 65%) all of its total assets in common stock of small domestic companies
and BIA Growth Equity Fund will primarily invest (at least 65%) all of its total
assets in common stock of larger domestic companies. Although common stock often
gives the owner the right to vote on measures affecting the company's
organization and operations, neither Fund intends to exercise control over the
management of companies in which it invests. Common stocks have a history of
long-term growth in value, but their prices tend to fluctuate over the shorter
term.
TEMPORARY DEFENSIVE POSITION 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 objective.
INVESTMENT RISKS
GENERALLY The value of a Fund's investments will fluctuate as the stock market
fluctuates. An investment in a Fund is not by itself a complete or balanced
investment program. Nevertheless, investing in equity securities with different
capitalizations may be important for investors seeking a diversified portfolio,
particularly for long-term investors able to tolerate short-term fluctuations in
the value of their investments.
Because each Fund invests in growth stocks, there is a risk that the stocks will
not continue to grow at expected rates, thus causing the price of the stock to
decline. There is also the risk that the market will not recognize the growth
potential of a stock. A decline in investor demand for growth stocks may also
adversely affect the value of these securities.
SPECIFIC RISKS OF SMALL COMPANIES 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 Analysts and other investors typically follow these companies less
actively and information about these companies is not always readily
available
o Securities of many small companies are traded in the over-the-counter
markets or on a regional securities exchange making them thinly
traded, less liquid and their prices more volatile than the prices of
the securities of larger companies
o Changes in the value of small company stocks may not mirror the
fluctuations of the general market
o More limited product lines, markets and financial resources make these
companies more susceptible to economic or market setbacks
8
<PAGE>
For these and other reasons, the prices of small capitalization securities can
fluctuate more significantly than the securities of larger companies. The
smaller the company, the greater effect these risks may have on that company's
operations and performance. As a result, an investment in BIA Small-Cap Growth
Fund may exhibit a higher degree of volatility than the general domestic
securities market.
YEAR 2000 Certain computer systems may not process date-related information
properly on and after January 1, 2000. The Adviser is addressing this matter for
its systems. Each Fund's other service providers have informed the Fund that
they are taking similar measures. Investments in small companies are
particularly vulnerable to Year 2000 risk because small companies may not have
the financial resources, technology or personnel needed to address Year 2000
readiness concerns. This matter, if not corrected, could adversely affect the
services provided to each Fund or the companies in which the Fund invests and
therefore, could lower the value of your Fund shares.
MANAGEMENT
Each Fund is a series of Forum Funds (the "Trust"), an open-end, management
investment company (mutual fund). 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 each Fund and meets periodically to review
the Fund's performance, monitor investment activities and practices and discuss
other matters affecting the Fund. Additional information regarding the Board, as
well as the Trust's 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 six years. As of the date of this
Prospectus, the Adviser has over $3.5 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 1.00% of the average daily net assets of BIA Small-Cap
Growth Fund and 0.75% of the average daily net assets of BIA Growth Equity Fund.
9
<PAGE>
PORTFOLIO MANAGERS
Frederick L. Meserve, Jr. is responsible for the day-to-day management of 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 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. Mr. Meserve has published a number of
investment strategy reports on growth stocks. He received a B.S. & E. degree
from Princeton University in 1960 and an M.B.A. 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. Prior thereto, Mr. Carey was a Portfolio Manager for J.P. Morgan
Investment Management in Geneva, Switzerland. He received a B.A. degree from
Washington and Lee University in 1984 and an M.B.A. degree 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 thereto, Ms. Korhonen was an Equity Group Manager
for Howard Hughes Medical Institute. She received a B.A. degree from Denison
University in 1979 and an M.B.A. degree from Northwestern University's J.L.
Kellogg Graduate School of Management in 1984.
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provide services to each Fund.
As of March 31, 1999, Forum provided administration and distribution services to
investment companies and collective investment funds with assets of
approximately $70 billion.
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of each Fund's shares. The distributor acts as the agent of the
Trust in connection with the offering of each Fund's 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 each Fund's shares.
Forum Shareholder Services, LLC ("Transfer Agent") is each Fund's transfer
agent.
10
<PAGE>
FUND EXPENSES
Each Fund pays for all of its expenses. Each Fund's expenses are comprised of
its own expenses as well as Trust expenses 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% or less of the average
daily net assets of BIA Small-Cap Growth Fund and 1.00% or less of the average
daily net assets of BIA Growth Equity Fund.
11
<PAGE>
YOUR ACCOUNT
[Margin call out: HOW TO CONTACT THE FUNDS
Write to us at:
BIA Funds
P.O. Box 446
Portland, Maine 04112
Telephone us at:
(800) 540-6807 (toll free) or
(207) 879-0001
Wire investments (or ACH payments) to us at:
Bankers Trust Company
New York, New York
ABA #021001033 For Credit to:
BIA Funds
Account # 01-465-547
Re: (Name of Your Fund)
(Your Name)
(Your Account Number)]
GENERAL INFORMATION
You pay no sales charge to purchase or sell (redeem) shares of a Fund. You may
purchase or sell Fund shares at the net asset value per share (NAV) next
calculated after the Transfer Agent receives your request in proper form. 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. A Fund
cannot accept orders that request a particular day or price for the transaction
or any other special conditions.
Neither Fund issues share certificates.
You will receive statements at least quarterly and a confirmation of each
transaction. You should verify the accuracy of all transactions in your account
as soon as you receive your confirmations.
Each Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
12
<PAGE>
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. The time at which NAV is
calculated may be changed in case of an emergency. A Fund's NAV is determined by
taking the market value of all securities owned by the Fund (plus all other
assets such as cash), subtracting all liabilities and then dividing the result
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 a broker or other
financial institution, the policies and fees charged by that institution may be
different than those of the Funds. Financial institutions 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
for more 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 accounts, the check
must be made payable to "BIA Funds" or to one or more owners of the
account and endorsed to "BIA Funds." For all other accounts, the check
must be made payable on its face to "BIA Funds." No other method of
check payment is acceptable (for instance, you may not pay by travelers
check).
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.
13
<PAGE>
MINIMUM INVESTMENTS Each Fund accepts investments in the following minimum
amounts:
<TABLE>
<S> <C> <C>
------------------------- --------------------------
Minimum Initial Minimum Additional
Investment Investment
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
Standard Minimum Accounts $5,000 $100
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
Traditional and Roth IRA Accounts $2,000 $100
-------------------------------------- ------------------------- --------------------------
-------------------------------------- ------------------------- --------------------------
Accounts With Automatic Investment $2,000 $100
Plans
-------------------------------------- ------------------------- --------------------------
</TABLE>
ACCOUNT REQUIREMENTS
<TABLE>
<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
proprietorship accounts. Joint accounts on 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 custodial account under the Uniform Gift to
money to a child and obtain tax benefits. Minors Act or the Uniform Transfers to Minors Act
An individual can give up to $10,000 a year per
child without paying Federal gift tax. o The trustee must sign instructions
in a manner 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
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
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>
14
<PAGE>
INVESTMENT PROCEDURES
<TABLE>
<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 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 and you will be assigned an account number o Instruct your bank to wire your money to us
o Mail us your application
o Instruct your bank to wire your money to us BY AUTOMATIC INVESTMENT
o Call or write us for an "Automatic Investment
BY ACH PAYMENT Plan" form
o Call or write us for an account application o Complete the form
o Complete the application o Attach a voided check to your form
o Call us and you will be assigned an account number o Mail us the form
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 Each Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in a Fund's view, is likely to engage in excessive trading (usually defined
as more than four redemptions or exchanges out of the Fund within a calendar
year).
CANCELED OR FAILED PAYMENTS Each Fund accepts checks and ACH transfers at full
value subject to collection. If a Fund does not receive your payment for shares
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 a
Fund or the Transfer Agent, and the Fund may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. Each Fund and its agents have the right to reject or cancel any
purchase or exchange due to nonpayment.
15
<PAGE>
SELLING SHARES
Redemption orders are processed promptly. Generally, a Fund will send redemption
proceeds to you within a week. Delays may occur in cases of very large
redemptions, excessive trading or during unusual market conditions. Each Fund
may delay sending redemption proceeds until it has collected payment for the
shares you are selling, which may take 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 your redemption is for $5,000 or
more and you declined wire redemption privileges on your account
application
o Call us with your request (unless you declined telephone redemption
privileges - See "By Telephone") or
o Mail us your request (See "By Mail")
BY TELEPHONE
o Call us with your request (unless you do not authorize telephone redemption
privileges on your account application)
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 (unless you declined 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 redeem your shares by telephone unless
you declined telephone redemption privileges on your account application. You
may be responsible for any fraudulent telephone order as long as the Transfer
Agent takes reasonable measures to verify the order.
16
<PAGE>
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined 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.
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.
SIGNATURE GUARANTEE REQUIREMENTS To protect you and each Fund against fraud,
signatures on certain requests must have a "signature guarantee." 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.
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
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 changes in market value.
REDEMPTIONS IN KIND Each Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash. These redemptions "in kind" usually occur
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.
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EXCHANGE PRIVILEGES
You may exchange your Fund shares for shares of the other 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 each Fund reserves the right to limit exchanges. You may exchange
your shares by mail or telephone, unless you declined telephone redemption
privileges on your account application. You may be responsible for any
fraudulent telephone order as long as the Transfer Agent takes reasonable
measures to verify the order.
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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 Obtain a signature guarantee if required
o Mail us your request and documentation
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
- --------------------------------------------------------------------------------
RETIREMENT ACCOUNTS
Each Fund offers both traditional and Roth IRAs accounts. 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.
OTHER INFORMATION
DISTRIBUTIONS
Each Fund distributes its net investment income quarterly and 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.
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TAXES
Each Fund generally intends to operate in a manner such that it will not be
liable for Federal income or excise tax.
A Fund's distribution of net income (or short-term capital gain) is taxable to
you as ordinary income. A Fund's distribution of long-term capital gain is
taxable to you as long-term capital gain.
If you buy shares just before a Fund makes a distribution, you will pay the full
price for the shares and then receive a portion of the price back as a taxable
distribution. The sale or exchange of Fund shares is a taxable transaction for
income tax purposes.
Your Fund will send you information about the income tax status of distributions
paid during the year shortly after December 31 of each year.
For further information about the tax effects of investing in a Fund, please see
the SAI and consult your tax adviser. You should also consult your tax adviser
regarding any state and local taxes that may apply to a Fund's distributions.
ORGANIZATION
The Trust is a Delaware business trust. Neither Fund expects to hold
shareholders' meetings unless 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
Annual/Semi Annual Reports
Additional information about each Fund's investments will be contained in
the Fund's annual and semi-annual reports to shareholders. In a Fund's BIA SMALL-CAP
annual report, you will find a discussion of the market conditions and GROWTH FUND
investment strategies that significantly affected the Fund's performance
during its last year. BIA GROWTH
EQUITY FUND
Statement of Additional Information ("SAI") The SAI provides
more detailed information about the Funds and is
incorporated by reference into this Prospectus.
You can get a free copy of the SAI, request other information and discuss
your questions about the Funds by contacting the Funds at:
BIA Funds
P.O. Box 446
Portland, Maine 04112
800-540-6807 (toll free)
207-879-0001
You can also review the Funds' reports and 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
800-SEC-0330 (toll free)
Free copies are available from the Commission's Internet website at BIA Funds
http://www.sec.gov. Two Portland Square
Portland, Maine 04101
800-540-6807
207-879-0001
Investment Company Act File No. 811-3023.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JUNE 15, 1999
BIA SMALL-CAP GROWTH FUND
BIA GROWTH EQUITY FUND
FUND INFORMATION:
BIA Funds
Two Portland Square
Portland, Maine 04101
(800) 540-6807
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 04112
(207) 879-0001
(800) 540-6807
This Statement of Additional Information (the "SAI") supplements the Prospectus
dated June 15, 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........................ 4
C. Temporary Defensive Position.......................... 4
D. Illiquid and Restricted Securities.................... 5
E. Foreign Securities.................................... 6
F. Options and Futures................................... 7
G. Borrowing............................................. 9
H. Core and Gateway(R)............................................10
I. Other Investments.....................................10
2. Investment Limitations.........................................10
A. Fundamental Limitations...............................11
B. Nonfundamental Limitations............................12
3. Performance Data and Advertising...............................13
A. Performance Data......................................13
B. Performance Calculations..............................14
C. Other Matters.........................................17
4. Management.....................................................18
A. Trustees and Officers.................................18
B. Compensation of Trustees and Officers.................19
C. Investment Adviser....................................20
D. Distributor...........................................21
E. Other Fund Service Providers..........................22
5. Portfolio Transactions.........................................24
A. How Securities are Purchased and Sold.................24
B. Adviser Responsibility for Purchases and Sales........25
C. Securities of Regular Broker-Dealers..................27
6. Additional Purchase and Redemption Information.................28
A. General Information...................................28
B. Additional Purchase Information.......................28
C. Additional Redemption Information.....................29
D. NAV Determination.....................................30
E. Distributions.........................................30
7. Taxation ......................................................30
A. Qualification as a Regulated Investment Company.......30
B. Fund Distributions....................................32
C. Certain Tax Rules Applicable to the Funds Transactions32
D. Federal Excise Tax ...................................33
E. Sale or Redemption of Shares..........................34
F. Withholding Tax.......................................34
G. Foreign Shareholders..................................34
H. State and Local Taxes.................................35
8. Other Matters..................................................36
A. The Trust and its Shareholders........................36
B. Fund Ownership........................................38
C. Limitations on Shareholders' and Trustees' Liability..38
D. Registration Statement................................38
Appendix A - Description of Securities Ratings..........................A-1
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1. 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 BIA Small-Cap Growth Fund or BIA Growth Equity Fund.
"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 measures 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
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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 party.
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, the 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.
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. Each Fund 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. Each Fund may 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.
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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. Each Fund
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 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,
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time deposits, bankers acceptances and certificates of deposit corporate notes
and short-term bonds and money market mutual funds.
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) securities subject to contractual or legal
restrictions on resale because they have not been registered under the 1933 Act,
except as otherwise determined by the Adviser ("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 redemption requests. 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 make a market in the security; and (4) the nature of the
marketplace trades,
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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: (1) foreign political and economic instability; (2) adverse
movements in foreign exchange rates; (3) the imposition or tightening of
exchange controls or other limitations on repatriation of foreign capital; and
(4) changes in foreign governmental attitudes towards private investment,
including potential nationalization, increased taxation or confiscation of a
Fund's 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 U.S. 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.
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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, each Fund has no intention of investing in options or futures for
purposes other than hedging. If a Fund 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
underlying the option at a specified 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 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.
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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 exclusively 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 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 at the price designated by the futures
contract. 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 buy 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.
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, the current market value of open futures positions
held by a Fund may not exceed 50% of its total assets
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4. 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. The
potential loss to a Fund from investing in certain types of futures transactions
is unlimited.
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 from a bank in amounts up to 33 1/3 percent of the
Fund's total assets for, among other things, the purchase of securities. 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 transaction
approaches the net return on a Fund's investment portfolio, the benefit of
borrowing will be reduced. If the interest
9
<PAGE>
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 the amount borrowed. The greater the percentage
borrowed, the greater potential of gain or loss to a Fund.
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 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 structure if it would materially
increase costs to a Fund's shareholders.
I. OTHER INVESTMENTS
Although neither Fund currently plans to invest in securities other than those
referenced in the Prospectus and this SAI, it may invest in a variety of other
investments.
2. INVESTMENT LIMITATIONS
For purposes of all investment policies of each Fund: (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.
10
<PAGE>
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 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) or (F) 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
11
<PAGE>
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.
Each Fund may treat certain restricted securities as liquid pursuant to
guidelines adopted by the Board.
12
<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 a 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 not 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.
13
<PAGE>
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.
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.
14
<PAGE>
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.
Neither Fund charges a sales charges.
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.
Neither Fund charges a 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
15
<PAGE>
example, a cumulative return of 100% over ten years would produce an average
annual total return of 7.18%. While average annual total 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 total 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, a
the end of the applicable period, of a
hypothetical $1,000 payment made at the
beginning of the applicable period
Because average annual total 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.
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.
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
16
<PAGE>
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
17
<PAGE>
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:
<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
DATE OF BIRTH AND ADDRESS PAST 5 YEARS
- -------------------------------------------- -----------------------------------------------------------------------
- -------------------------------------------- -----------------------------------------------------------------------
John Y. Keffer*,Chairman and 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, ME 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
- -------------------------------------------- -----------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------- -----------------------------------------------------------------------
NAME, POSITION WITH THE TRUST, PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS PAST 5 YEARS
- -------------------------------------------- -----------------------------------------------------------------------
- -------------------------------------------- -----------------------------------------------------------------------
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,Thelen 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
- -------------------------------------------- -----------------------------------------------------------------------
- -------------------------------------------- -----------------------------------------------------------------------
David I. Goldstein, Vice President General Counsel, Forum Financial Group LLC
Born: August 3, 1961 Secretary, Forum Fund Services, LLC (Trust's underwriter)
Two Portland Square
Portland, ME 04101
- -------------------------------------------- -----------------------------------------------------------------------
- -------------------------------------------- -----------------------------------------------------------------------
Stacey Hong, Treasurer Director, Fund Accounting, Forum Financial Group, LLC
Born: May 10, 1966 Treasurer, Core Trust (Delaware)
Two Portland Square
Portland, Me 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, Me 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, Me 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.
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<PAGE>
The following table sets forth the fees paid to each Trustee by the Trust for
the fiscal year ended May 31, 1999.
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------- ------------------ -------------- --------------- -------------------------------
Compensation Total Compensation from Trust
Trustee from Trust(1) Benefits Retirement and Fund Complex(1)
- -------------------------- ------------------ -------------- --------------- -------------------------------
- -------------------------- ------------------ -------------- --------------- -------------------------------
John Y. Keffer $0 $0 $0 $0
- -------------------------- ------------------ -------------- --------------- -------------------------------
- -------------------------- ------------------ -------------- --------------- -------------------------------
Costas Azariadis $13,300 $0 $0 $23,800
- -------------------------- ------------------ -------------- --------------- -------------------------------
- -------------------------- ------------------ -------------- --------------- -------------------------------
James C. Cheng $14,800 $0 $0 $25,300
- -------------------------- ------------------ -------------- --------------- -------------------------------
- -------------------------- ------------------ -------------- --------------- -------------------------------
J. Michael Parish $14,800 $0 $0 $25,300
- -------------------------- ------------------ -------------- --------------- -------------------------------
</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.
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 each Fund 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.
20
<PAGE>
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, which 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 each Fund. FFS continually distributes
shares of each Fundon 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 of each Fund. 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 each Fund.
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.
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<PAGE>
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 each Fund 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.
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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 Fund's 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. The
fee is accrued daily by each Fund 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 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 to 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 each
Fund.
3. TRANSFER AGENT
As transfer agent and distribution paying agent, pursuant to an agreement with
the Trust, FSS 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. FSS is located at Two Portland Square,
Portland, Maine 04101 and is registered as a transfer agent with the SEC.
For its services, FSS receives a fee from each Fund at an annual rate of $18,000
and $25 per shareholder account. The fee is accrued daily by each Fund and is
paid monthly.
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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, FSS 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, FSS
and certain related parties (such as FSS's officers and persons who control FSS)
are indemnified by the Trust against any and all claims and expenses related to
FSS's actions or omissions that are consistent with FSS's contractual standard
of care.
4. CUSTODIAN
As custodian, pursuant to an agreement with the Trust, Forum Trust LLC
safeguards and controls each Fund's 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 each
Fund and are paid monthly based on average net assets and transactions for the
previous month.
5. LEGAL COUNSEL
Legal matters in connection with the issuance of shares of the Trust are passed
upon by Seward & Kissel LLP, 1200 G Street, N.W., Washington, D.C. 20005.
6. INDEPENDENT AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, 02110,
independent auditors, have been selected as indpendent auditors for each Fund.
The auditors audit the annual financial statements of each Fund and provide each
Fund with an audit opinion. The auditors also review certain regulatory filings
of the Funds and each Fund's 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 a Fund
purchases or to whom a Fund sells is acting on its own
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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. Neither Fund has
any obligation to deal with a 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
A Fund 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.
Consistent with applicable rules and the Adviser's duties, the Adviser may: (1)
consider sales of shares of eache Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the 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
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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 obtained for
clients include industry research reports and periodicals, quotation systems,
software for portfolio management and formal data bases.
Occasionally, the Adviser may effect a transaction through 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 follows 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. 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.
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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 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 a Fund 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 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. 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
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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.
Each Fund accepts 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.
Each Fund reserves 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.
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 a Fund.
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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, each Fund may
confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. A Fund is not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of a Fund 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 is closed (other than customary weekend
and holiday closings) or during which the SEC 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,
you may incur brokerage costs 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 (unless you elect to receive distributions in cash) as of the last day of
the period with respect to which the distribution is paid. Distributions of
capital gain will be reinvested at a Fund's NAV per share (unless you elect to
receive distributions in cash) 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 tax 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).
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1. MEANING OF QUALIFICATION
As a regulated investment company, a Fund will not be subject to federal income
tax on the portion of its investment company taxable income (that is, taxable
interest, dividends, net short-term capital gains and other taxable ordinary
income, net of expenses) and net capital gain (that is, the excess of net
long-term capital gains over net short-term capital losses) that it distributes
to shareholders. In order to qualify to be taxed 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 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 in
securities.
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.
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B. FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment company
taxable income for each tax year. These distributions are taxable to you as
ordinary income. A portion of 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 a Fund 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. These
distributions do not qualify for the dividends-received deduction.
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 reduce 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 a
distribution in the form of additional shares, you 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 to
you in the manner described above, although the distribution economically
constitutes a return of capital to you.
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.
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 shareholders of record 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) 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
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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
gain 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 are considered 60%
long-term and 40% short-term capital gains or losses. Each Fund can elect to
exempt its Section 1256 contracts that 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 if all of the
offsetting positionsconsist 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 its
ordinary taxable income for the calendar year; and (2) 98% of its capital gain
net income for the one-year period ended on October 31 of the calendar year. 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.
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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 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, you 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 your adjusted tax basis in the shares. All or a portion of any
loss so recognized may be disallowed if you purchase (for example, by
reinvesting dividends) other shares of the Fund within 30 days before or after
the sale or redemption (a so called "wash sale"). If disallowed, the loss will
be reflected in an upward adjustment to the basis of the shares purchased. 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. In determining the holding
period of such shares for this purpose, any period during which your risk of
loss is offset by means of options, short sales or similar transactions is not
counted. 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 its correct taxpayer
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." Backup withholding is
not an additional tax; any amounts so withheld may be credited against a
shareholder's federal income tax liability or refunded.
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
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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, distributions of ordinary income
(and short-term capital gains) 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 and distributions of net capital gain from a Fund.
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 U.S. federal income taxation rules 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.
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 U.S. federal
income taxation rules 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.
35
<PAGE>
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 Payson Value Fund
TaxSaver Bond Fund Payson Balanced Fund
Investors High Grade Bond Fund Oak Hall Small Cap Contrarian Fund
Maine Municipal Bond Fund Austin Global Equity Fund
New Hampshire Bond Fund Polaris Global Value Fund
Daily Assets Government Fund(1) Investors Equity Fund
Daily Assets Treasury Obligations Fund(1) Equity Index Fund
Daily Assets Cash Fund(1) Investors Growth Fund
Daily Assets Government Obligations Fund(1) BIA Small-Cap Growth Fund
Daily Assets Municipal Fund(1) BIA Growth Equity Fund
</TABLE>
(1) The Trust offers shares of beneficial interest in an institutional,
institutional service, and investor share class of these series.
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.
36
<PAGE>
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 aggregate and not by individual series; and
(2) when the Trustees determine that the matter affects 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 or certain series, including a Fund, 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.
37
<PAGE>
B. FUND OWNERSHIP
As of June 1, 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 June 14, 1999, and prior to
the public offering of each Fund, Forum Financial Group, LLC or its affiliates,
beneficially owned 100% of and may be deemed 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. The Trust believes that the securities regulators of
some states, however, have indicated that they and the courts in their states
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.
38
<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.
A-1
<PAGE>
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.
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
A-2
<PAGE>
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.
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-3
<PAGE>
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
A-4
<PAGE>
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
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%.
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-5
<PAGE>
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-6
<PAGE>
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.
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.
A-7
<PAGE>
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.
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.
A-8
<PAGE>
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-9
<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 Austin Investment
Management, Inc. relating to Austin Global Equity Fund dated as of
June 14, 1996 (see Note 3).
(3) 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).
(4) 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).
(5) Investment Advisory Agreement between Registrant and Polaris Capital
Management, Inc. dated as of June 1, 1998 (see Note 7).
(6) Investment Advisory Agreement between Registrant and H.M. Payson & Co.
relating to Investors Equity Fund dated as of December 5, 1997 (see
Note 8).
(7) 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).
(8) 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).
(9) 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 (see Note 10).
(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 11).
(5) Distribution Agreement between Registrant and Forum Fund Services, LLC
relating to BIA Growth Equity Fund, BIA Small-Cap Growth Fund, Equity
Index Fund, Investors Equity 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).
<PAGE>
(6) Sub-Distribution Agreement between Forum Fund Services, LLC and Forum
Financial Services, Inc. dated March 1, 1999 (filed herewith)
(f) None.
(g) (1) 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, 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 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).
(2) 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, , 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 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, BIA Growth Equity
Fund, BIA Small-Cap Growth Fund, Equity Index 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 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
(filed herewith).
(2) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC relating to Austin Global Equity Fund, BIA Growth Equity
Fund, BIA Small-Cap Growth Fund, Equity Index 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 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, as amended December 5, 1997 (filed
herewith).
(3) Transfer Agency and Services Agreement between Registrant and Forum
Shareholder Services, LLC relating to Austin Global Equity Fund, BIA
Growth Equity Fund, BIA Small-Cap Growth 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 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).
(4) 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 13).
<PAGE>
(5) Shareholder Service Plan of Registrant dated March 18, 1998 and Form
of Shareholder Service Agreement relating to Polaris Global Value Fund
(see Note 8).
(6) 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 LLP dated January 5, 1996 (see Note 14).
Ratification of Seward & Kissel LLP's January 5, 1996 opinion dated June
1999 (filed herewith).
(j) Consent of Independent Auditors (filed herewith).
(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 15).
(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 15).
(n) Financial Data Schedules (see Note 10).
(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).
- ---------------
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.
<PAGE>
(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.
70 via EDGAR on March 18, 1999, accession number 0001004402-99-000185.
(11) Exhibit incorporated by reference as filed in post-effective amendment No.
68 via EDGAR on November 30, 1998, accession number 0001004402-98-000620.
(12) Exhibit incorporated by reference as filed in post-effective amendment No.
49 via EDGAR on November 5, 1997, accession number 0001004402-97-000163.
(13) Exhibit incorporated by reference as filed in post-effective amendment No.
50 via EDGAR on November 12, 1997, accession number 0001004402-97-000189.
(14) Exhibit incorporated by reference as filed in post-effective amendment No.
33 via EDGAR on January 5, 1996, accession number 0000912057-96-000216.
(15) 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
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,
<PAGE>
"(A) By the court or other body approving the
settlement;
"(B) By at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
"(C) By written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.
"(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 5.2 may be paid by the Trust
or Series from time to time prior to final disposition thereof upon
receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him to the Trust or Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 5.2; provided, however, that either (a) such Covered
Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Section 5.2.
"(e) Conditional advancing of indemnification monies under this Section
5.2 for actions based upon the 1940 Act may be made only on the
following conditions: (i) the advances must be limited to amounts used,
or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or
on behalf of, the recipient to repay that amount of the advance which
exceeds that amount which it is ultimately determined that he is
entitled to receive from the Trust by reason of indemnification; and
(iii) (a) such promise must be secured by a surety bond, other suitable
insurance or an equivalent form of security which assures that any
repayments may be obtained by the Trust without delay or litigation,
which bond, insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be
found entitled to indemnification.
"(f) In case any Holder or former Holder of any Series shall be held to
be personally liable solely by reason of the Holder or former Holder
being or having been a Holder of that Series and not because of the
Holder or former Holder acts or omissions or for some other reason, the
Holder or former Holder (or the Holder or former Holder's heirs,
executors, administrators or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust, on behalf of
the affected Series, shall, upon request by the Holder, assume the
defense of any claim made against the Holder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the
Series."
<PAGE>
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
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
<PAGE>
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, #69 and #71 to the Trust's
Registration Statement (accession numbers 0001004402-98-000589 ,
0001004402-98-000648 and 0001004402-99-000292, respectively), is
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
----------------------------------- ------------------------------------- ----------------------------------
</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, #67 and #71 to the Trust's Registration
Statement (accession numbers 0001004402-98-000421, 0001004402-98-000589
and 0001004402-99-000292, respectively) is 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.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
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.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Michael R. Currie Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
William O. Hall, III Managing Director H.M. Payson & Co.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(c) Austin Investment Management, Inc.
The description of Austin Investment Management, Inc. (investment
adviser to Austin Global Equity Fund) contained in Parts A and B of PEA
#71 to the Trust's Registration Statement (accession number
0001004402-99-000292) is incorporated by reference herein.
<PAGE>
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 #71 to the Trust's Registration Statement (accession number
0001004402-99-000292) is 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
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
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>
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), is 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
<PAGE>
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 Executive Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Dorothy M. Wentworth Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Stephen L. Eddy Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Dana R. Mitiguy Chief Investment Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Larry D. Pelletier Vice President Peoples
217 Main Street
Lewiston, Maine 04240
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Carolyn B. May Vice President Peoples
217 Main Street
Lewiston, Maine 04240
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Kevin K. Brown Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Donald W. Smith Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John W. Gibbons Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Joseph M. Pratt Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Lucy L. Tucker Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Nancy W. Bard Assistant Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Douglas P. Adams Trust Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Melanie L. Bishop Trust Officer Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Jeffrey Oldfield Vice President Peoples
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Janet E. Milley Assistant Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Kathryn Dion Vice President Peoples
217 Main Street
Lewiston, Maine 04240
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
<PAGE>
(f) 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 is 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
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
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
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
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
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
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.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
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
Memorial Funds Norwest Select Funds
Sound Shore Fund, Inc.
(b) The following director of Forum Financial Services, Inc. and officer of
Forum Fund Services, LLC, the Registrant's underwriters, holds the
following positions with the Registrant. His 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.
<PAGE>
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>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this post-effective amendment number 72 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 June 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 June
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
(e)(5) Distribution Agreement between Registrant and Forum Fund Services, LLC
dated February 28, 1999 relating to BIA Growth Equity Fund, BIA
Small-Cap Growth Fund, Equity Index Fund, Investors Equity 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.
(e)(6) Sub-Distribution Agreement between Forum Fund Services, LLC and Forum
Financial Services, Inc. dated March 1, 1999.
(g)(1) Custodian Agreement between Registrant and Forum Trust dated May 12,
1999 relating to Austin Global Equity Fund, BIA Small-Cap Growth Fund,
BIA Growth Equity Fund, Equity Index 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 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.
(g)(2) Master Custodian Agreement between Forum Trust and Bankers Trust
Company dated April 20, 1999 relating to Austin Global Equity Fund, BIA
Small-Cap Growth Fund, BIA Growth Equity Fund, Equity Index 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 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.
(h)(1) Administration Agreement between Registrant and Forum Administrative
Services, LLC dated Juen 19, 1997, as amended December 5, 1997,
relating to Austin Global Equity Fund, BIA Growth Equity Fund, BIA
Small-Cap Growth Fund, Equity Index 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 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.
(h)(2) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated Juen 19, 19997, as amended December 5,
1997,relating to Austin Global Equity Fund, BIA Growth Equity Fund, BIA
Small-Cap Growth Fund, Equity Index 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 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.
(h)(3) Transfer Agency and Services Agreement between Registrant and Forum
Shareholder Services, LLC dated May 19, 1998 relating to Austin Global
Equity Fund, BIA Growth Equity Fund, BIA Small-Cap Growth 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 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.
<PAGE>
(i) Opinion of Seward & Kissel dated June 11. 1999.
(j) Opinion of Independent Auditors dated June 7, 1999.
EXHIBIT (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
<PAGE>
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current prospectuses and statements of additional information of each Fund and
Class thereof (collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), (iv) each current plan of distribution or
similar document adopted by the Trust under Rule 12b-1 under the 1940 Act
("Plan") and each current shareholder service plan or similar document adopted
by the Trust ("Service Plan"); and (iv) all procedures adopted by the Trust with
respect to the Funds (e.g., repurchase agreement procedures), and shall promptly
furnish the Distributor with all amendments of or supplements to the foregoing.
The Trust shall deliver to Forum a certified copy of the resolution of the Board
of Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2. EXCLUSIVE NATURE OF DUTIES
The Distributor shall be the exclusive representative of the Trust to
act distributor of the Funds except that the rights given under this Agreement
to the Distributor shall not apply to: (i) Shares issued in connection with the
merger, consolidation or reorganization of any other investment company or
series or class thereof with a Fund or Class thereof; (ii) a Fund's acquisition
by purchase or otherwise of all or substantially all of the assets or stock of
any other investment company or series or class thereof; (iii) the reinvestment
in Shares by a Fund's shareholders of dividends or other distributions; or (iv)
any other offering by the Trust of securities to its shareholders (collectively
"exempt transactions").
SECTION 3. OFFERING OF SHARES
(a) The Distributor shall have the right to buy from the Trust the
Shares needed to fill unconditional orders for unsold Shares of the Funds as
shall then be effectively registered under the Securities Act placed with the
Distributor by investors or selected dealers or selected agents (each as defined
in Section 11 hereof) acting as agent for their customers or on their own
behalf. Alternatively, the Distributor may act as the Trust's agent, to offer,
and to solicit offers to subscribe to, unsold Shares of the Funds as shall then
be effectively registered under the Securities Act. The Distributor will
promptly forward all orders and subscriptions to the Trust. The price that the
Distributor shall pay for Shares purchased from the Trust shall be the net asset
value per Share, determined as set forth in Section 3(c) hereof, used in
determining the public offering price on which the orders are based. Shares
purchased by the Distributor are to be resold by the Distributor to investors at
the public offering price, as set forth in Section 3(b) hereof, or to selected
dealers or selected agents acting as agent for their customers that have entered
into agreements with the Distributor pursuant to Section 11 hereof or acting on
their own behalf. The Trust reserves the right to sell Shares directly to
investors through subscriptions received by the Trust, but no such direct sales
shall affect the sales charges due to the Distributor hereunder.
(b) The public offering price of the Shares of a Fund, i.e., the price
per Share at which the Distributor or selected dealers or selected agents may
<PAGE>
sell Shares to the public or to those persons eligible to invest in Shares as
described in the applicable Prospectus, shall be the public offering price
determined in accordance with the then currently effective Prospectus of the
Fund or Class thereof under the Securities Act relating to such Shares. The
public offering price shall not exceed the net asset value at which the
Distributor, when acting as principal, is to purchase such Shares, plus, in the
case of Shares for which an initial sales charge is assessed, an initial charge
equal to a specified percentage or percentages of the public offering price of
the Shares as set forth in the current Prospectus relating to the Shares. In the
case of Shares for which an initial sales charge may be assessed, Shares may be
sold to certain classes of persons at reduced sales charges or without any sales
charge as from time to time set forth in the current Prospectus relating to the
Shares. The Trust will advise the Distributor of the net asset value per Share
at each time as the net asset value per Share shall have been determined by the
Trust and at such other times as the Distributor may reasonably request.
(c) The net asset value per Share of each Fund or Class thereof shall
be determined by the Trust, or its designated agent, in accordance with and at
the times indicated in the applicable Prospectus on each Fund business day in
accordance with the method set forth in the Prospectus and guidelines
established by the Trust's Board of Trustees (the "Board").
(d) The Trust reserves the right to suspend the offering of Shares of a
Fund or of any Class thereof at any time in the absolute discretion of the
Board, and upon notice of such suspension the Distributor shall cease to offer
Shares of the Funds or Classes thereof specified in the notice.
(e) The Trust, or any agent of the Trust designated in writing to the
Distributor by the Trust, shall be promptly advised by the Distributor of all
purchase orders for Shares received by the Distributor and all subscriptions for
Shares obtained by the Distributor as agent shall be directed to the Trust for
acceptance and shall not be binding until accepted by the Trust. Any order or
subscription may be rejected by the Trust; provided, however, that the Trust
will not arbitrarily or without reasonable cause refuse to accept or confirm
orders or subscriptions for the purchase of Shares. The Trust or its designated
agent will confirm orders and subscriptions upon their receipt, will make
appropriate book entries and, upon receipt by the Trust or its designated agent
of payment thereof, will issue such Shares in certificated or uncertificated
form pursuant to the instructions of the Distributor. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Trust
or its designated agent.
SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST
(a) Any of the outstanding Shares of a Fund or Class thereof may be
tendered for redemption at any time, and the Trust agrees to redeem or
repurchase the Shares so tendered in accordance with its obligations as set
forth in the Organic Documents and the Prospectus relating to the Shares. The
price to be paid to redeem or repurchase the Shares of a Fund of Class thereof
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(b) hereof less, in the case of Shares for which a
deferred sales charge is assessed, a deferred sales charge equal to a specified
percentage or percentages of the net asset value of those Shares as from time to
time set forth in the Prospectus relating to those Shares or their cost,
<PAGE>
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.
<PAGE>
(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;
(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.
<PAGE>
(b) The Trust shall take, from time to time, subject to the approval of
the Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.
(c) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all
actions that may be reasonably necessary and cooperate with the Distributor in
taking any action as may be necessary to register or qualify Shares for sale
under the securities laws of the various states of the United States and other
jurisdictions ("States") as the Distributor shall designate (subject to approval
by the Trust); provided that the Distributor shall not be required to register
as a broker-dealer or file a consent to service of process in any State and
neither the Trust nor any Fund or Class thereof shall be required to qualify as
a foreign corporation, trust or association in any State. Any registration or
qualification may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Trust
in connection with such registration or qualification.
(d) The Trust represents and warrants to the Distributor that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) All proceedings required by the Organic Documents have been taken
to authorize it to enter into and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered with
the SEC under the 1940 Act;
(v) All Shares, when issued, shall be validly issued, fully paid and
non-assessable;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties;
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Articles of
Incorporation.
(viii) The Registration statement is currently effective and will
remain effective with respect to all Shares of the Funds and Classes
thereof being offered for sale;
<PAGE>
(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
<PAGE>
misfeasance or gross negligence in the performance of the Distributor's duties
or obligations under this Agreement or by reason or the Distributor's reckless
disregard of its duties and obligations under this Agreement
(b) The Distributor shall not be liable for any action taken or failure
to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to the Distributor;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (the Distributor
shall have no duty or obligation to make any inquiry or effort of
certification of such oral instruction);
(iii) any written instruction or certified copy of any resolution of
the Board, and the Distributor may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by the
Distributor to have been validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
the Distributor to be genuine and to have been signed or presented by
the Trust or other proper party or parties;
and the Distributor shall not be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which the Distributor reasonably believes in
good faith to be genuine.
(c) The Distributor shall not be responsible or liable for any failure
or delay in performance of its obligations under this agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of god, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent the
Distributor's obligations hereunder are to oversee or monitor the activities of
third parties, the Distributor shall not be liable for any failure or delay in
the performance of the Distributor's duties caused, directly or indirectly, by
the failure or delay of such third parties in performing their respective duties
or cooperating reasonably and in a timely manner with the Distributor.
SECTION 8. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold the Distributor, its
employees, agents, directors and officers and any person who controls the
Distributor within the meaning of section 15 of the Securities Act or section 20
of the 1934 Act ("Distributor Indemnitees") free and harmless from and against
any and all claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
<PAGE>
nature and character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable counsel fees
incurred in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectuses or arising out of or based upon any
alleged omission to state a material fact required to be stated in any one
thereof or necessary to make the statements in any one thereof not misleading,
unless such statement or omission was made in reliance upon, and in conformity
with, information furnished in writing to the Trust in connection with the
preparation of the Registration Statement or exhibits to the Registration
Statement by or on behalf of the Distributor ("Distributor Claims").
After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee free and
harmless from and against any Distributor Claim; provided, that the term
Distributor Claim for purposes of this sentence shall mean any Distributor Claim
related to the matters for which the Distributor has requested amendment to the
Registration Statement and for which the Trust has not filed a Required
Amendment, regardless of with respect to such matters whether any statement in
or omission from the Registration Statement was made in reliance upon, or in
conformity with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the Trust
and approved by the Distributor, which approval shall not be withheld
unreasonably. The Trust shall advise the Distributor that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Trust assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Trust does not assume the defense of
any such suit, or if Distributor does not approve of counsel chosen by the Trust
or has been advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust will
reimburse any Distributor Indemnitee named as defendant in such suit for the
reasonable fees and expenses of any counsel that person retains. A Distributor
Indemnitee shall not settle or confess any claim without the prior written
consent of the Trust, which consent shall not be unreasonably withheld or
delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"), free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character (including the cost of
investigating or defending such claims, demands, actions, suits or liabilities
and any reasonable counsel fees incurred in connection therewith), but only to
the extent that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses
result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
<PAGE>
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen by the
Distributor and approved by the Trust, which approval shall not be withheld
unreasonably. The Distributor shall advise the Trust that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Distributor assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Distributor does not assume the
defense of any such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or claims
that are not available to or conflict with those available to the Distributor,
the Distributor will reimburse any Trust Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person retains. A
Trust Indemnitee shall not settle or confess any claim without the prior written
consent of the Distributor, which consent shall not be unreasonably withheld or
delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a Distributor
Indemnitee or Trust Indemnitee, respectively, by the person against whom such
action is brought within twenty (20) days after the summons or other first legal
process is served. Such notice shall refer to the person or persons against whom
the action is brought. The failure to provide such notice shall not relieve the
party entitled to such notice of any liability that it may have to any
Distributor Indemnitee or Trust Indemnitee except to the extent that the ability
of the party entitled to such notice to defend such action has been materially
adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Distributor
Indemnitee or Trust Indemnitee and shall survive the sale and redemption of any
Shares made pursuant to subscriptions obtained by the Distributor. The
indemnification provisions of this Section will inure exclusively to the benefit
of each person that may be a Distributor Indemnitee or Trust Indemnitee at any
time and their respective successors and assigns (it being intended that such
persons be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.
<PAGE>
(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.
<PAGE>
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.
(c) Except as specified in Sections 8 and 10(a), the Distributor shall
be entitled to no compensation or reimbursement of expenses for the services
provided by the Distributor pursuant to this Agreement.
(d) The Trust shall be responsible and assumes the obligation for
payment of all the expenses of the Funds, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of the
Registration Statement and Prospectuses (including but not limited to the
expense of setting in type the Registration Statement and Prospectuses and
printing sufficient quantities for internal compliance, regulatory purposes and
for distribution to current shareholders).
(e) The Trust shall bear the cost and expenses (i) of the registration
of the Shares for sale under the Securities Act; (ii) of the registration or
qualification of the Shares for sale under the securities laws of the various
States; (iii) if necessary or advisable in connection therewith, of qualifying
the Trust, the Funds or the Classes thereof (but not the Distributor) as an
issuer or as a broker or dealer, in such States as shall be selected by the
Trust and the Distributor pursuant to Section 6(c) hereof; and (iv) payable to
each State for continuing registration or qualification therein until the Trust
decides to discontinue registration or qualification pursuant to Section 6(c)
hereof. The Distributor shall pay all expenses relating to the Distributor's
broker-dealer qualification.
SECTION 11. SELECTED DEALER AND SELECTED AGENT AGREEMENTS
The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") and
selected agent agreements with depository institutions and other financial
intermediaries of its choice ("selected agents") for the sale of Shares and to
fix therein the portion of the sales charge, if any, that may be allocated to
the selected dealers or selected agents; provided, that the Trust shall approve
the forms of agreements with selected dealers or selected agents and shall
review the compensation set forth therein. Shares of each Fund or Class thereof
shall be resold by selected dealers or selected agents only at the public
offering price(s) set forth in the Prospectus relating to the Shares. Within the
United States, the Distributor shall offer and sell Shares of the Funds only to
such selected dealers as are members in good standing of the NASD.
<PAGE>
SECTION 12. CONFIDENTIALITY
The Distributor agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Distributor may:
(i) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(iii) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld;
provided, however, that the Distributor may release any information regarding
the Trust without the consent of the Trust if the Distributor reasonably
believes that it may be exposed to civil or criminal legal proceedings for
failure to comply, when requested to release any information by duly constituted
authorities or when so requested by the Trust.
SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
later of (i) the date first above written or (ii) the date on which the Trust's
Registration Statement relating to Shares of a Fund becomes effective. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund for
a period of one year from its effectiveness and thereafter shall continue in
effect with respect to a Fund until terminated; provided, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Trustees of the Trust (I) who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust) and
(II) with respect to each class of a Fund for which there is an effective Plan,
who do not have any direct or indirect financial interest in any such Plan
applicable to the class or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated at any time with respect to a
Fund, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund or, with respect to
each class of a Fund for which there is an effective Plan, a majority of
Trustees of the Trust who do not have any direct or indirect financial interest
in any such Plan or in any agreements related to the Plan, on 60 days' written
notice to the Distributor or (ii) by the Distributor on 60 days' written notice
to the Trust.
<PAGE>
(d) This Agreement shall automatically terminate upon its assignment
and upon the termination of the Distributor's membership in the NASD.
(e) If the Trust shall not file a Required Amendment within fifteen
days following receipt of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement immediately.
(f) The obligations of Sections 5(d), 6(d), 8, 9 and 10 shall survive
any termination of this Agreement.
SECTION 14. NOTICES
Any notice required or permitted to be given hereunder by either party
to the other shall be deemed sufficiently given if personally delivered or sent
by telegram, facsimile or registered, certified or overnight mail, postage
prepaid, addressed by the party giving such notice to the other party at the
last address furnished by the other party to the party giving such notice, and
unless and until changed pursuant to the foregoing provisions hereof each such
notice shall be addressed to the Trust or the Distributor, as the case may be,
at their respective principal places of business.
SECTION 15. ACTIVITIES OF THE DISTRIBUTOR
Except to the extent necessary to perform the Distributor's obligations
hereunder, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of the Distributor's employees, agents, officers or
directors who may also be a trustee, officer or employee of the Trust, or
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
SECTION 16. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Distributor agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Distributor's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.
SECTION 17. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
<PAGE>
(b) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of New York.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund are separate and distinct
from the assets and liabilities of each other Fund and that no Fund shall be
liable or shall be charged for any debt, obligation or liability of any other
Fund, whether arising under this Agreement or otherwise.
(i) No affiliated person, employee, agent, officer or director of the
Distributor shall be liable at law or in equity for the Distributor's
obligations under this Agreement.
(j) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof.
(k) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By: /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 MAY 31, 1999
BIA Equity Growth Fund
BIA Small-Cap Growth Fund
Equity Index Fund
Investors Equity Fund
INVESTORS 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
EXHIBIT (E)(6)
SUB-DISTRIBUTION AGREEMENT
Dear Sir or Madam:
Forum Fund Services, LLC is one of the principal underwriters of Forum
Funds (the "Trust") and distributes shares of certain of the series of the Trust
(each a "Fund" and collectively the "Funds") pursuant to our Distribution
Services Agreement with the Trust and, in the case of certain other classes of
shares of certain of the Funds, pursuant to a distribution plan adopted by each
of those Funds (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"). We are authorized to act as agent of the Trust, on
behalf of each Fund, to offer, and to solicit offers to subscribe to, unsold
shares of the Funds. We intend to act solely in that agent capacity for purposes
hereof, but under no circumstances are you authorized to act as agent of the
Funds. You shall instead act as our agent as provided herein.
We invite you to participate in the distribution of the shares of the
Funds, subject to the terms of this Agreement. In addition, as our agent we
authorize you to solicit and enter into Selected Dealer Agreements ("SDA") with
broker-dealers in the form attached hereto as Exhibit A (each an "SDA Broker").
1. You are to offer and sell shares of a Fund only at the public
offering price, which shall be currently in effect in accordance with the terms
of the then current prospectus of the Fund. You agree to act only as principal
in such transactions and shall not have authority to execute trades as agent for
the Fund, for us, or for any other dealer in any respect. All orders are subject
to acceptance by us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge
and discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
<PAGE>
3. Pursuant to this Agreement you are hereby authorized (i) to place
orders with each Fund for its shares to be resold by us to you subject to the
applicable terms and conditions set forth in the Fund's then current prospectus
governing the placement of orders by us and compensation and (ii) to tender
shares directly to the Fund or its agent for redemption subject to the
applicable terms and conditions set forth in the Fund's then current prospectus.
In addition, you are hereby authorized by us to answer phones for, and respond
to, customer inquiries regarding the Funds and to distribute the Funds'
prospectuses to the general public and SDA Brokers.
4. Repurchases of shares will be made at the net asset value of such
shares and subject to any applicable contingent deferred sales charge in
accordance with the Fund's then current prospectus.
5. You represent and warrant that you are a registered broker or dealer
pursuant to the Securities and Exchange Act of 1934 ("1934 Act"), and a member
of the National Association of Securities Dealers, Inc. (the "NASD"), and that
you will maintain such registration and membership and abide by the Conduct
Rules, the Constitution and Bylaws of the NASD and all other rules and
regulations that are now or may become applicable to you and your activities
hereunder.
6. You represent and warrant that you are registered or qualified to
act as a broker or dealer (or are exempt from being required to register and
qualify as such) in the states or other jurisdictions where you transact
business. You agree that you will maintain such registrations or qualifications
in full force and effect throughout the terms of this Agreement (and if an
exemption becomes no longer available, to immediately so qualify or register).
You agree to comply with all applicable federal, state and local laws,
including, without limiting the generality of the foregoing, the Securities Act
of 1933 ("1933 Act"), the 1934 Act and the Act, and all the applicable rules or
regulations thereunder. You agree to offer and sell Shares only in the states
and other jurisdictions in which we have indicated that such offers and sales
can be made in which you are qualified to so act. You further agree not to offer
or sell Shares outside of the several states, territories and possessions of the
United States.
7. This Agreement is in all respects subject to Rule 2830 of the NASD
Conduct Rules, which shall control any provisions to the contrary in this
Agreement.
8. You agree:
(a) To immediately send to us copies by fax of executed SDAs.
(b) To purchase shares only from us or only from your customers.
<PAGE>
(c) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide investment.
(d) That you will not purchase any shares from your customers at prices
lower than the redemption or repurchase prices then quoted by the Fund.
You shall, however, be permitted to sell shares for the account of your
customer's record owners to the Fund at the repurchase prices currently
established for such shares and may charge the owner a fair commission
for handling the transaction.
9. We shall not accept from you any conditional orders for shares.
Delivery of certificates for shares purchased and book-entry recording on the
books of the Fund for shares purchased (if certificates have not been requested)
shall be made by the Fund only against receipt of the purchase price, subject to
deduction for any discount reallowed to you and our portion of any sales charge
applicable to such sale. Payment for the Fund shares by you shall be made on or
before the settlement date specified in our confirmation at the office of our
clearing agent or, at such time and place as you and we may agree form time to
time. Payment for Fund shares shall be by check or wire payable to the order of
Trust, which reserves the right to delay issuance or transfer of shares until
such payment is available in investable Federal Funds. If such payment is not
received by us, we reserve the right, without notice, forthwith either to cancel
the sale, or, at our option, to sell the shares ordered back to the Fund, and in
either case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by the Fund resulting from your failure to make payment as
aforesaid.
10. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable Federal and
State securities laws, including any applicable requirements to deliver
confirmations to your customers, and in connection with sales and offers to sell
shares you will furnish to each person to whom any such sale or offer is made, a
copy of the Fund's then current prospectus. Nothing herein contained however,
shall be deemed to be a condition, stipulation or provision binding any persons
acquiring any securities to waive compliance with any provision of the 1933 Act,
the 1934 Act or the Rules and Regulations of the Securities and Exchange
Commission or to relieve the parties hereto from any liability arising under the
1933 Act. We shall advise you as to the states or other jurisdictions in which
shares of the Fund have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of such states and jurisdictions.
11. From time to time during the term of this Agreement, and subject to
the provisions of this Section 11, we shall make payments to you pursuant to the
Plan in consideration, with respect to the B Shares of each Fund (or such other
shares as may be sold subject to contingent deferred sales charges), of your
furnishing distribution services hereunder and providing other services to
shareholder accounts. We have no obligation to make any such payments and you
waive the right to any such payment until we receive monies therefor from the
<PAGE>
Fund. Any such payments made pursuant to this Section 11 shall be subject to the
following terms and conditions:
(a) Any such payments shall be in such amounts as we may from time to
time advise you in writing but in any event not in excess of the
amounts permitted by the Plan in effect with respect to a Fund. Any
such payments shall be in addition to the selling concession, if any,
allowed to you pursuant to this Agreement. Such payments shall include
a maintenance fee in an amount equal to 0.25 of 1% per annum of the
average daily net assets representing the B Shares of certain Funds
attributable to your clients. Any such maintenance fee shall be paid to
you solely for service to shareholder accounts.
(b) The provisions of this Section 11 relate to the Plan. In accordance
with Rule 12b-1, any person authorized to direct the disposition of
monies paid or payable by a Fund pursuant to this Section 11 shall
provide the Trust's Board of Trustees, and the Trustees shall review,
at least quarterly, a written report of the amounts so expended and the
purposes of which such expenditures were made.
(c) The provisions of this Section 11 shall automatically terminate in
the event of the assignment (as defined in the Act) of this Agreement,
in the event the Plan terminates or is not continued or in the event
this Agreement terminates or ceases to remain in effect. In addition,
the provisions of this Section 11 may be terminated at any time,
without penalty, by either party on not more than 60 days' nor less
than 30 days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
12. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
13. In connection with your distribution of shares of a Fund, you
shall conform to such written compliance standards as we may from time to
time provide to you.
14. This agreement shall terminate if we cease serving as principal
underwriter of the Trust, and we shall provide you prior written notice of the
<PAGE>
date of any such termination. In addition, either party to this Agreement may
cancel this agreement by giving written notice to the other. Such notice shall
be deemed to have been given on the date on which it was either delivered
personally to the other party or any officer or member thereof or was mailed
postpaid or delivered in a telegraph office for transmission to the other party
at his or its address as shown below. This Agreement may be amended by us at any
time, any such amendment to be effective upon delivery to you, and your placing
of an order after the effective date of any such amendment shall constitute your
acceptance thereof.
15. Both we and you hereby agree and represent that each of our
information technology systems will be Year 2000 compliant in accordance with
the Year 2000 compliance requirements of the SEC and the National Association of
Securities Dealers ("NASD"). Each party shall notify the other if there is a
material adverse change in the status of their informational technology systems
or upon having a reasonable basis for believing that their informational
technology systems will not be Year 2000 Compliant.
"Year 2000 Compliant" or "Year 2000 Compliance" shall mean that the
systems or software in question shall be able to accurately process date or
date-related data, without creating any logical or mathematical inconsistencies,
from, into and between the twentieth and twenty-first centuries, when used in
accordance with the specifications set forth for such systems or software;
provided, however, that neither party shall be responsible for any failure of
its systems or software to be Year 2000 Compliant which is caused by or related
to the interaction or interface of such systems or software with the systems or
software of a third party which are not Year 2000 Compliant.
16. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
17. (a) You agree to indemnify the Trust, its Transfer Agent and us for any
losses, claims, damages or expenses arising out of or in connection with any
wrongful act or omission by you or your representatives not in accordance with
this Agreement, provided that such losses, claims, damages or expenses were not
caused by the indemnitees' willful misfeasance, bad faith or negligence.
(b) We agree to indemnify you for any losses, claims, damages or
expenses arising out of or in connection with any wrongful act or omission by us
or our representatives not in accordance with this Agreement, provided that such
losses, claims, damages or expenses were not caused by the indemnitees' willful
misfeasance, bad faith or negligence.
(c) The agreement of the parties in this Paragraph to indemnify
each other is conditioned upon the party entitled to indemnification
("Indemnified Party") giving notice to the party required to provide
indemnification ("Indemnifying Party") promptly after the summons or other first
<PAGE>
legal process for any claim as to which indemnity may be sought is served on the
Indemnified Party. The Indemnified Party shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting from it,
provided that counsel for the Indemnifying Party (which approval shall not
unreasonably be withheld), shall conduct the defense of such claim or any
litigation resulting from it, and that the Indemnified Party may participate in
such defense at its expense. The failure of the Indemnified Party to give notice
as provided in this paragraph (c) shall not relieve, the Indemnifying Party from
any liability other than its indemnity obligation under this Paragraph. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
without the consent of the Indemnified Party, consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim or litigation.
18. The provisions of Sections 5, 6, 11, 15, and 17 shall survive any
termination of this Agreement.
Very truly yours,
FORUM FUND SERVICES, LLC
By: /s/ Nanette K. Chern
---------------------------
Nanette K. Chern
Chief Compliance Officer
<PAGE>
EXHIBIT A
FORUM FINANCIAL SERVICES, INC.
FORM OF
SELECTED DEALER AGREEMENT
FORUM FUNDS
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
We are the principal underwriter of Forum Funds ("Forum Funds") and
distribute shares of certain of the separate investment portfolios of Forum
Funds (each a "Fund" and collectively the "Funds") at their net asset value plus
applicable sales charges pursuant to our Distribution Services Agreement with
Forum Funds. We hereby invite you to participate as a principal in the
distribution of shares of the Funds upon the following terms and conditions:
1. You are to offer and sell shares of a Fund only at the public offering
price which shall be currently in effect in accordance with the terms of the
then current prospectus of the Fund. You agree to act only as principal in such
transactions and shall not have authority to act as agent for the Fund, for us,
or for any other dealer in any respect. All orders are subject to acceptance by
us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge and
discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
3. As a selected dealer, you are hereby authorized (i) to place orders with
the Fund for its shares to be resold by us to you subject to the applicable
terms and conditions set forth in the Fund's then current prospectus governing
the placement of orders by us and compensation and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Fund's then current prospectus.
<PAGE>
4. Repurchases of shares will be made at the net asset value of such shares
in accordance with the Fund's then current prospectus.
5. Both parties represent that they are members in good standing of the
National Association of Securities Dealers, Inc. and both parties agree to abide
by the Rules of Fair Practice of this association. Both parties represent that
they are qualified to act as a broker-dealer in the states or other
jurisdictions where they transact business, and agree to maintain such
registrations, qualifications and membership in good standing in full force and
effect throughout the term of this Agreement. Our obligations under this
Agreement are subject to all of the provisions of the Distribution Services
Agreement between us and Forum Funds.
6. This Agreement is in all respects subject to Rule 26 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. which
shall control any provisions to the contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or only from your customers.
(b) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide
investment.
(c) That you will not purchase any shares from your customers at
prices lower than the redemption or repurchase prices then quoted
by the Fund. You shall, however, be permitted to sell shares for
the account of their record owners to the Fund at the repurchase
prices currently established for such shares and may charge the
owner a fair commission for handling the transaction.
(d) That if any shares confirmed to you hereunder are redeemed or
repurchased by the Fund within seven business days after such
confirmation of your original order, you shall forthwith refund
to us the full discount reallowed to you on such sales. We shall
forthwith pay to the Fund both our share of the sales charge on
the original sale and the refund from you as herein provided. We
shall notify you of such redemption or repurchase within ten (10)
days from the date of the redemption or repurchase. Termination
or cancellation of this Agreement shall not relieve you or us
from the requirements of this subparagraph.
8. We shall not accept from you any conditional orders for shares.
Delivery of certificates for shares purchased and book-entry recording on the
books of the Fund for shares purchased (if certificates have not been requested)
shall be made by the Fund only against receipt of the purchase price, subject to
deduction for the discount reallowed to you and our portion of the sales charge
on such sale. Payment for the Fund shares by you shall be made on or before the
<PAGE>
settlement date specified in our confirmation at the office of our clearing
agent or, at such time and place as you and we may agree from time to time.
Payment for Fund shares shall be by check or wire payable to the order of Forum
Funds, which reserves the right to delay issuance or transfer of shares until
such payment is available in investable Federal Funds. If such payment is not
received by us, we reserve the right, without notice, forthwith either to cancel
the sale, or, at our option, to sell the shares ordered back to the Fund, and in
either case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by the Fund resulting from your failure to make payment as
aforesaid.
9. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable Federal and
State securities laws, as well as with all undertakings made by any Fund with
any state in connection with the sale of shares in such state to the extent such
undertakings are communicated to you, including any applicable requirements to
deliver confirmations to your customers, and in connection with sales and offers
to sell shares you will furnish to each person to whom any such sale or offer is
made, a copy of the Fund's then current prospectus and statement of additional
information, if requested. We shall be under no liability to you except for lack
of good faith and for obligations expressly assumed by us herein. Nothing herein
contained however, shall be deemed to be a condition, stipulation or provision
binding any persons acquiring any securities to waive compliance with any
provision of the Securities Act of 1933, the Securities Exchange Act of 1934 or
the Rules and Regulations of the Securities and Exchange Commission or to
relieve the parties hereto from any liability arising under the Securities Act
of 1933. We shall advise you as to the states or other jurisdictions in which
shares of the Fund have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of such states and jurisdictions
and any undertakings made by any Fund with any state in connection with the sale
of shares in such states.
10. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
You agree to hold us harmless and indemnify the Funds and us in the event
that you, or any of your sales representatives, violates any federal or state
law, rule or regulation or any provision of this agreement which may result in
any damage, liability or expense to the Funds or their trustees, or to us.
11. Either party to this Agreement may cancel this agreement by giving
written notice to the other. Such notice shall be deemed to have been given on
<PAGE>
the date on which it was either delivered personally to the other party or any
officer or member thereof or was mailed postpaid or delivered in a telegraph
office for transmission to the other party at his or its address as shown below.
This Agreement may be amended by us at any time, any such amendment to be
effective upon delivery to you, and your placing of an order after the effective
date of any such amendment shall constitute your acceptance thereof.
12. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
13. Any notice or communication to Forum shall be duly given if mailed,
telegraphed, telecopied or hand delivered to Forum Financial Services, Inc. at
the following address:
Forum Financial Services, Inc.
Attention: Legal Department
Two Portland Square
Portland, Maine 04101
Very truly yours,
FORUM FINANCIAL SERVICES, INC.
By: _________________________________
John Y. Keffer
President
Firm Name ____________________________________________________________________
Address ____________________________________________________________________
City ____________________________ State __________ Zip Code __________
ACCEPTED BY (signature) ______________________________________________________
Name _____________________________ Title ________________________________
Date _____________________________
EXHIBIT (G)(1)
CUSTODIAN AGREEMENT
AGREEMENT dated as of May 12, 1999 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 April 20,
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 and cash equivalents in such countries in amounts reasonably necessary to
effect Customer's transactions in such Securities. Instructions to settle
<PAGE>
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 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;
<PAGE>
(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;
(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; and
(h) in the event of any loss of Securities or Cash, use its best
efforts to ascertain the circumstances relating to such loss
and promptly report the same to Customer.
Custodian shall provide cash management services to Customer.
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
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
<PAGE>
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
Custodian shall notify Customer of the appointment of such U.S. Subcustodian or
U.S. Securities System; 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
requested by Customer's Board of Trustees or if the Board of Trustees
responsible for any Portfolio 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 requested by the Customer's Board of Trustees or
if the Board of Trustees 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.
<PAGE>
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 Property so maintained is 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 its safe
custody or administration; (iii) beneficial ownership of
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 Customer or
as being held by Custodian, on behalf of Customer or all 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.
<PAGE>
(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.
(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.
<PAGE>
(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
subject to the standard of care set forth in Section 16 of this Agreement 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.
<PAGE>
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
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 upon written
notice to Customer, 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
<PAGE>
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 any 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,
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).
<PAGE>
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.
<PAGE>
(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.
(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.
<PAGE>
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 (including, without limitation, reasonable fees and expenses
of counsel) without reference to any special conditions or circumstances. 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
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.
<PAGE>
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
<PAGE>
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
Sections 8(c), 8(d), 16, 17, 24, 27 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
<PAGE>
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
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:
<PAGE>
(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;
(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; and
(v) it is taking steps (a) believed by it in good faith
to be reasonably designed to address the risk that
critical computer systems and equipment containing
the embedded microchips that it uses relating to its
operations (the "Systems") may be unable to process
properly and calculate date-related information
and data from and after January 1, 2000 (the "Year
2000 Problem"), and (b) to obtain assurances deemed
reasonable by Custodian that its material service
providers, including each Subcustodian, Securities
System, agent or other financial institution employed
by Custodian to provide services to Customer under
this Agreement, are taking reasonable steps to
<PAGE>
address the Year 2000 Problem. Custodian reasonably
expects that the effects of the Year 2000 Problem
should not result in a material adverse effect on
the business, financial condition or ability to
timely perform any of its material obligations under
this Agreement (a "Material Adverse Effect"). In
addition, Custodian agrees to notify Customer
promptly if it has reason to believe that a Material
Adverse Effect is likely to result from a Year 2000
Problem with respect to Custodian or its material
service providers.
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 to appoint 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.
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
<PAGE>
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: /s/ John Y. Keffer
----------------------------
Name: John Y. Keffer
Title: President
FORUM FUNDS
By: /s/ Mark D. Kaplan
----------------------------
Name: Mark D. Kaplan
Title: Vice President
<PAGE>
CUSTODIAN AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
Investors Bond Fund Investors Equity Fund
Investors High Grade Bond Fund Investors Growth Fund
TaxSaver Bond Fund Small Company Opportunities Fund
Maine Municipal Bond Fund Oak Hall Small Cap Contrarian Fund
New Hampshire Bond Fund Austin Global Equity Fund
Payson Value Fund Polaris Global Value Fund
Payson Balanced Fund BIA Growth Equity Fund
BIA Small-Cap Growth Fund
FORUM TRUST, LLC
By: /s/ John Y. Keffer
------------------------------
Name: John Y. Keffer
Title: President
FORUM FUNDS
By: /s/ Mark D. Kaplan
-----------------------------
Name: Mark D. Kaplan
Title: Vice President
<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.
1. ACCOUNT MAINTENANCE FEES
DOMESTIC CUSTODY ACCOUNTS $3,600 PER ACCOUNT PER YEAR
GLOBAL CUSTODY ACCOUNTS $8,000 PER ACCOUNT PER YEAR
2. DOMESTIC CUSTODY FEES
A. SAFEKEEPING CHARGES
Assets Annual
UNDER CUSTODY ASSET FEE
$0 - $1 Billion 1 Basis Point
$1 - $2 Billion 0.75 Basis Points
$2 - $6 Billion 0.50 Basis Points
$6 Billion + 0.25 Basis Points
b. Transaction Charges
Cost Per
Transaction Type Transaction
---------------- -----------
DTC $12
Federal Book Entry $10
PTC $10
Physicals $25
Maturities (Depository) $10
Maturities (Physical) $25
P&I Payments (Book Entry) $3
P&I Payments (Physical) $10
Fed Wires (from Custody account) $8
SHE (Shares Held Elsewhere) Trades $25
Forum Money Market Funds $3
<PAGE>
3. GLOBAL CUSTODY FEES (SAFEKEEPING & TRANSACTION CHARGES BY MARKET)
ANNUAL RECEIVE AND DELIVER
COUNTRY ASSET FEE TRANSACTIONS
------- --------- ------------
Argentina 40 Basis Points $100
Australia 4 Basis Points $50
Austria 7 Basis Points $75
Bangladesh 45 Basis Points $150
Belgium 5 Basis Points $60
Botswana 55 Basis Points $150
Brazil 35 Basis Points $70
Canada 4 Basis Points $20
Cedel/Euroclear 4 Basis Points $20
Chile 35 Basis Points $80
China 35 Basis Points $75
Colombia 40 Basis Points $100
Czech Republic 25 Basis Points $70
Denmark 5 Basis Points $50
Ecuador 50 Basis Points $100
Egypt 50 Basis Points $80
Finland 12 Basis Points $75
France 7 Basis Points $50
Germany 4 Basis Points $30
Ghana 55 Basis Points $150
Greece 40 Basis Points $120
Hong Kong 7 Basis Points $30
Hungary 50 Basis Points $150
India (Physical) 65 Basis Points $200
India (Dematerialized) 30 Basis Points $140
Indonesia 10 Basis Points $35
Ireland 7 Basis Points $50
Israel 45 Basis Points $50
Italy 4 Basis Points $50
Japan 4 Basis Points $35
Jordan 35 Basis Points $100
Kenya 55 Basis Points $150
Luxembourg 5 Basis Points $60
Malaysia 9 Basis Points $50
Mauritius 55 Basis Points $140
Mexico 7 Basis Points $30
Morocco 35 Basis Points $130
Netherlands 5 Basis Points $45
New Zealand 5 Basis Points $50
<PAGE>
3. GLOBAL CUSTODY FEES (SAFEKEEPING & TRANSACTION CHARGES BY MARKET)(CONTINUED)
ANNUAL RECEIVE AND DELIVER
COUNTRY ASSET FEE TRANSACTIONS
------- --------- ------------
Norway 7 Basis Points $50
Pakistan 35 Basis Points $150
Peru 55 Basis Points $100
Philippines 10 Basis Points $30
Poland 50 Basis Points $100
Portugal 5 Basis Points $75
Russia 55 Basis Points $300
Singapore 9 Basis Points $50
Slovakia 30 Basis Points $100
South Africa 7 Basis Points $30
South Korea 20 Basis Points $50
Spain 8 Basis Points $50
Sri Lanka 14 Basis Points $60
Sweden 5 Basis Points $50
Switzerland 4 Basis Points $60
Taiwan 20 Basis Points $100
Thailand 9 Basis Points $100
Tunisia 50 Basis Points $50
Turkey 20 Basis Points $50
United Kingdom 3 Basis Points $15
United States 1 Basis Point $15
Venezuela 40 Basis Points $100
Zambia 55 Basis Points $150
Zimbabwe 55 Basis Points $150
4. NOTES
The standard global custody service includes: (i) asset safekeeping,
(ii) trade settlement, (iii) income collection, (iv) corporate action
processing (including proxy voting) and (v) tax reclaims (where
applicable.)
Contractual settlement of trades and posting of income will not be
offered in Russia due to the uncertainty of transaction settlement
efficiencies in the market. Contractual posting of income is not
offered in India, Bangladesh, Pakistan or Turkey due to local market
practice.
Strictly domestic accounts (I.E., U.S. assets only) utilize actual
settlement and are subject to the guidelines indicated in the Bankers
Trust POLICIES AND STANDARDS manual.
All domestic receipts and tax reclaim refunds are credited to client
accounts net of agent's collection fees (where applicable).
<PAGE>
The above fee schedule includes the cost of time spent on the
installation of the bank's proprietary software (Globeview, etc.), and
one day of training on the system. The fee schedule does not include
the cost of any hardware, or the daily communication charges, which
will be incurred by using these systems. These costs are borne by
Forum.
Foreign Exchange transactions conducted outside Bankers Trust will be
charged $50 per wire transfer.
Out-of-pocket expenses are borne by Customer. Out-of-pocket expenses
include, but are not limited to, stamp charges, duties, application
and/or registration fees incurred outside of the United States, the
cost of building and/or setting up an interface with your (1)
investment managers, or (2) other vendors, as well as postage and legal
fees. These charges are passed on at cost.
<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] ____________________
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_______, 19__.
Forum Funds
By: ____________________________
Name: ____________________________
Title: __Secretary_________________
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
BANKERS TRUST COMPANY
EXHIBIT (G)(2)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of April 20, 1999, between Bankers Trust Company
(the "Bank") and Forum Trust, LLC ("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.
<PAGE>
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 and cash
equivalents 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.
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
<PAGE>
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.
Bank 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 such other bank or trust company
(individually, a "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 Bank's majority-owned
non-U.S. subsidiaries, a majority-owned subsidiary of a U.S. Subcustodian or a
<PAGE>
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
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 incorporates by reference all Subcustodians and
Securities Systems approved by the parties as of the date 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
requested by Forum's Board of Directors, or if the Board of Trustees responsible
for any Portfolio, 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 requested by Forum's Board of Directors or if the Board of
Trustees responsible for any Portfolio directly approves its foreign custody
arrangements, the Bank also shall furnish annually to Forum 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. Bank 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 if a non-U.S.
Securities System suffers a material loss of Property, or if 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.
<PAGE>
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 clients of the Bank.
<PAGE>
(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
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 Bank,
on behalf of its clients; (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 clients.
(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 clients of the Bank, 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. Bank shall provide reasonable
notice to Forum of the appointment or removal of any agent.
<PAGE>
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 Bank. 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 Bank'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 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 agrees 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.
<PAGE>
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 Bank's or Subcustodian's name or in the name of the Bank'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
Forum, 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 Bank 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 Bank. 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
<PAGE>
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.
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 Bank,
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 Forum.
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 Bank, 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 any Settlement Date, the Bank, 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
<PAGE>
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 Bank's making a Conditional
Credit a final entry on its books, and, unless consented to by the Bank, 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).
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.
<PAGE>
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by a Portfolio or 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 a Portfolio or Forum.
(i) For the purpose of redeeming shares of the capital stock of a
Portfolio against delivery of the shares to be redeemed to the
Bank, a Subcustodian, Forum or a Portfolio's transfer agent.
(j) For the purpose of redeeming in kind shares of a Portfolio
against delivery of the shares to be redeemed to the Bank, a
Subcustodian, Forum, or a Portfolio'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 a Portfolio.
(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 Bank, 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 Bank, 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 Bank; 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, Bank shall take all reasonable steps to enforce such claims as
<PAGE>
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
(including, without limitation, reasonable fees and expenses of counsel) without
reference to any special conditions or circumstances. 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 Bank 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 Bank, 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.
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 Bank; 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
<PAGE>
the performance of the Bank'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 Bank'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
Bank, 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 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
<PAGE>
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 Bank, Forum shall, within ninety (90) days following
the giving of such notice, deliver to the Bank a 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. 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 Bank, 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 Bank, 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 Bank, 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, 28 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 that
<PAGE>
it has been authorized by each Registrant under its Custodian Agreement or
Custodial Services Agreement with such Registrant to enter into an agreement
with the Bank which will obligate such Registrant to be liable to the Bank for
any and all obligations of any Portfolio whose securities are offered by such
Registrant arising out of Property of such Portfolio 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 to the
extent applicable to each Registrant that:
(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;
(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 Bank a true and correct copy of
each custodian agreement or custodial services
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
<PAGE>
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 custodian agreement or custodial services
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. Year 2000 Readiness Disclosure.
(a) The Bank warrants that the Bank's Software which is used to
perform the services provided by the Bank under this Agreement is
Year 2000 Compliant (as defined below). The term Bank's Software
shall mean AIMS, MARS, BTWorld, Globe*View, Globenet and Polaris.
Third party software which is also used as part of the services
provided by the Bank under this Agreement has been tested at the
Bank and found to function in a Year 2000 compliant manner at the
Bank; however the Bank does not warrant or assume any
responsibility for the Year 2000 compliance of the third party
software. Any Year 2000 Compliance determination is made to the
Bank's best belief and ability to so determine, based on testing
of the Bank's Software within the Bank's own environment as well
as scenarios designed to duplicate certain industry environments.
Forum acknowledges that to the extent that Forum's system
utilizes other software applications, programs and codes, as well
as interfaces and data from sources other than the Bank, and to
<PAGE>
the extent that the Bank uses software from third parties, it may
affect the performance of the Bank's Software and there is no
assurance that the Bank's Software will operate on Forum's system
in a manner that is Year 2000 Compliant.
(b) For purposes of this Section, "Year 2000 Compliant" or "Year 2000
Compliance" shall mean that the Bank's Software shall be able to
process date data, without creating any material logical or
mathematical inconsistencies, from, into and between 1999 and
2000 and the twentieth and twenty-first centuries.
(c) If the Bank is in breach of any of its obligations under
subsection (a) of this Section, then Forum may, as its sole
remedies (1) terminate this Agreement and (2) with respect to any
such breach, Forum shall have the right to seek repayment of any
service fees paid over the previous six months. The Bank shall
have absolutely no liability to Forum for any direct, indirect,
incidental or consequential damages (even if advised of the
possibility of same), or punitive damages, in connection with the
failure of the services provided to be Year 2000 Compliant.
27. 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 Bank.
28. Publicity. Forum shall furnish to Bank 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
Bank that refer in any way to the Bank. Forum shall not distribute or permit the
distribution of such materials if Bank 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 Bank and its position as subcustodian to each Portfolio
in each Registrant's registration statement and other filings with the SEC.
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 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.
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
<PAGE>
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 Bank, Forum, 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 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.
33. Headings. The headings of the paragraphs 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.
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
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
The Cutler Trust
Cutler Equity Income Fund
CUTLER APPROVED LIST EQUITY FUND
The CRM Funds
Small Cap Value Fund
Mid Cap Value Fund
Large Cap Value Fund
Value Fund
Sound Shore Fund, Inc.
Sound Shore Fund
Forum Funds
Investors Bond Fund Investors Equity Fund
Investors High Grade Bond Fund Investors Growth Fund
TaxSaver Bond Fund Small Company Opportunities Fund
Maine Municipal Bond Fund Oak Hall Small Cap Contrarian Fund
New Hampshire Bond Fund Austin Global Equity Fund
Payson Value Fund Polaris Global Value Fund
Payson Balanced Fund BIA Growth Equity Fund
BIA Small-Cap Growth Fund
BANKERS TRUST COMPANY
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Bank 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 Bank and Forum.
1. ACCOUNT MAINTENANCE FEES
DOMESTIC CUSTODY ACCOUNTS $2,400 PER ACCOUNT PER YEAR
GLOBAL CUSTODY ACCOUNTS $6,000 PER ACCOUNT PER YEAR
2. DOMESTIC CUSTODY FEES
A. SAFEKEEPING CHARGES
ASSETS ANNUAL
UNDER CUSTODY ASSET FEE
------------- ---------
$0 - $1 Billion 1 Basis Point
$1 - $2 Billion 0.75 Basis Points
$2 - $6 Billion 0.50 Basis Points
$6 Billion + 0.25 Basis Points
b. Transaction Charges
Cost Per
Transaction Type Transaction
---------------- -----------
DTC ID Affirmed $6
DTC Non ID $10
Federal Book Entry $10
PTC $10
Physicals $25
Maturities (Depository) $10
Maturities (Physical) $25
P&I Payments (Book Entry) $3
P&I Payments (Physical) $10
Fed Wires (from Custody account) $8
SHE (Shares Held Elsewhere) Trades $25
Forum Money Market Funds $3
<PAGE>
A surcharge of $15 will be added for the processing of any facsimile
instructions with the exception of same day trade investments into a
money market fund advised by an affiliate of Forum.
<PAGE>
3. GLOBAL CUSTODY FEES (SAFEKEEPING & TRANSACTION CHARGES BY MARKET)
ANNUAL RECEIVE AND DELIVER
COUNTRY ASSET FEE TRANSACTIONS
------- --------- ------------
Argentina 35 Basis Points $100
Australia 3 Basis Points $50
Austria 5 Basis Points $75
Bangladesh 40 Basis Points $150
Belgium 4 Basis Points $60
Botswana 50 Basis Points $150
Brazil 30 Basis Points $70
Canada 3 Basis Points $20
Cedel/Euroclear 3 Basis Points $20
Chile 30 Basis Points $80
China 30 Basis Points $75
Colombia 35 Basis Points $100
Czech Republic 20 Basis Points $70
Denmark 4 Basis Points $50
Ecuador 45 Basis Points $100
Egypt 45 Basis Points $80
Finland 10 Basis Points $75
France 5 Basis Points $50
Germany 3 Basis Points $30
Ghana 50 Basis Points $150
Greece 35 Basis Points $120
Hong Kong 5 Basis Points $30
Hungary 45 Basis Points $150
India (Physical) 60 Basis Points $200
India (Dematerialized) 25 Basis Points $140
Indonesia 8 Basis Points $35
Ireland 5 Basis Points $50
Israel 40 Basis Points $50
Italy 3 Basis Points $50
Japan 3 Basis Points $35
Jordan 30 Basis Points $100
Kenya 50 Basis Points $150
Luxembourg 4 Basis Points $60
Malaysia 7 Basis Points $50
Mauritius 50 Basis Points $140
Mexico 5 Basis Points $30
Morocco 30 Basis Points $130
Netherlands 4 Basis Points $45
New Zealand 4 Basis Points $50
<PAGE>
3. GLOBAL CUSTODY FEES (SAFEKEEPING & TRANSACTION CHARGES BY MARKET)(CONTINUED)
Annual Receive and Deliver
Country Asset Fee Transactions
------- --------- -------------------
Norway 5 Basis Points $50
Pakistan 30 Basis Points $150
Peru 50 Basis Points $100
Philippines 8 Basis Points $30
Poland 45 Basis Points $100
Portugal 4 Basis Points $75
Russia 50 Basis Points $300
Singapore 7 Basis Points $50
Slovakia 25 Basis Points $100
South Africa 5 Basis Points $30
South Korea 15 Basis Points $50
Spain 6 Basis Points $50
Sri Lanka 12 Basis Points $60
Sweden 4 Basis Points $50
Switzerland 3 Basis Points $60
Taiwan 15 Basis Points $100
Thailand 7 Basis Points $100
Tunisia 45 Basis Points $50
Turkey 15 Basis Points $50
United Kingdom 2 Basis Points $15
United States 1 Basis Points $15
Venezuela 35 Basis Points $100
Zambia 50 Basis Points $150
Zimbabwe 50 Basis Points $150
<PAGE>
4. NOTES
The standard global custody service includes: (i) asset safekeeping,
(ii) trade settlement, (iii) income collection, (iv) corporate action
processing (including proxy voting) and (v) tax reclaims (where
applicable).
Contractual settlement of trades and posting of income will not be
offered in Russia due to the uncertainty of transaction settlement
efficiencies in the market. Contractual posting of income is not
offered in India, Bangladesh, Pakistan or Turkey due to local market
practice.
Strictly domestic accounts (I.E., U.S. assets only) utilize actual
settlement and are subject to the guidelines indicated in the Bankers
Trust POLICIES AND STANDARDS manual.
All domestic receipts and tax reclaim refunds are credited to client
accounts net of agent's collection fees (where applicable).
The above fee schedule includes the cost of time spent on the
installation of the bank's proprietary software (Globeview, etc.), and
one day of training on the system. The fee schedule does not include
the cost of any hardware, or the daily communication charges, which
will be incurred by using these systems. These costs are borne by
Forum.
Foreign Exchange transactions conducted outside Bankers Trust will be
charged $50 per wire transfer.
Out-of-pocket expenses are borne by Forum. Out-of-pocket expenses
include, but are not limited to, stamp charges, duties, application
and/or registration fees incurred outside of the United States, the
cost of building and/or setting up an interface with your (1)
investment managers, or (2) other vendors, as well as postage and legal
fees. These charges are passed on at cost.
This fee schedule shall be valid for a period of one year.
Minimum annual custody fee charge of $100,000.
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT C
MASTER SUBCUSTODIAN AGREEMENT
BANKERS TRUST COMPANY
AND
FORUM TRUST, LLC
SECRETARY'S CERTIFICATE
I, David I. Goldstein, hereby certify that I am the Secretary of Forum
Trust, LLC, a limited liability company organized under the laws of the State of
Maine and authorized to do business as a non-depositary trust company
thereunder(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 the State of Maine, 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 Amended and Restated Operating Agreement has
been duly adopted and no action has been taken to repeal such Amended and
Restated Operating Agreement, 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 master subcustodian agreement
with Bankers Trust Company (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, Amended and
Restated Operating Agreement, 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
<PAGE>
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:
<TABLE>
<S> <S> <C>
Name Title Signature
---- ----- ---------
John Y. Keffer President _______________________
Sara M. Morris Treasurer ________________________
David I. Goldstein Secretary ________________________
Margaret Fenderson Assistant Treasurer ________________________
Dana A. Lukens Assistant Secretary ________________________
</TABLE>
5. Authorized Instructions.
(a). General. Any two of the officers of the Company listed in Paragraph 4
are authorized to deliver instructions to Bankers Trust Company pursuant to
Section 15 of the Agreement on behalf of the Company or any Portfolio (as
defined in the Agreement) in accordance with the Agreement.
(b) Securities. Any of the following persons are authorized to deliver
instructions to transfers of Securities (as such term is defined in the
Agreement) of any Portfolio on behalf of a Portfolio, and the signatures set
forth opposite the respective names and titles of said persons are their true,
authentic signatures:
<TABLE>
<S> <C> <C>
Name Title Signature
---- ----- ---------
Joshua LaPan Manager,
Information Services _______________________
Dean E. Walker Lead Custody Analyst ________________________
Pamela J. Wheaton Senior Manager,
Fund Accounting ________________________
Dennis R. Mason Lead Performance
Analyst ________________________
</TABLE>
(b) Cash. Any of the following persons are authorized to deliver
instructions with respect to transfers of Cash (as such term is defined in the
Agreement) of any Portfolio to or from any money market mutual fund on behalf of
a Portfolio, and the signatures set forth opposite the respective names and
titles of said persons are their true, authentic signatures:
<PAGE>
<TABLE>
<S> <C> <C>
Name Title Signature
---- ----- ---------
Dawn Marie Stillings Assistant Portfolio
Manager/Analyst _______________________
Mark D. Kaplan Portfolio
Manager/Analyst _______________________
Victoria M. Jablonski Investment
Administrator _______________________
</TABLE>
(d) Transfer Agency. Any two of the persons authorized by Forum
Shareholder Services, LLC listed on Appendix A may deliver instructions with
respect to the transfer of cash in connection the purchase and redemption of
shares of any Portfolio, and the payments of distributions to shareholders of
any Portfolio.
(e) Administration. Any two of the persons authorized by Forum
Administrative Services, LLC listed on Appendix B may deliver instructions with
respect to approval of bills for the payment of the expenses of any Portfolio,
and the payments of distributions to shareholders of any Portfolio.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of April,
1999.
_______________________________
David I. Goldstein, Secretary
I, John Y. Keffer, President of the Company, hereby certify that on
this ___ day of April, 1999, David I. Goldstein is the duly elected Secretary of
the Company and that the signature above is his genuine signature.
_______________________________
John Y. Keffer, President
<PAGE>
MASTER SUBCUSTODY AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
The approved Subcustodians are those listed in Part III, "Subcustodian
Profiles," of the Directors' Overview As Part of 17F-5 Report for U.S.
Investment Companies, prepared by Bankers Trust Company, November, 1998, and
heretofore delivered to Forum Trust, LLC.
<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 Registrant (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.
<PAGE>
o Currently, there are 29 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 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.
<PAGE>
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
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
<PAGE>
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 (H)(1)
FORUM FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 19th day of June, 1997, as amended December 5,
1997, by and between Forum Funds, a Delaware business trust, with its principal
office and place of business at Two Portland Square, Portland, Maine 04101 (the
"Trust"), and Forum Administrative Services, Limited Liability Company, a
Delaware limited liability company with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may in the future offer shares of various classes of each
Fund as listed in Appendix A hereto (each such class together with all other
classes subsequently established by the Trust in a Fund being herein referred to
as a "Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain administrative
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act
as administrator of the Trust for the period and on the terms set forth in
this Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
<PAGE>
as currently in effect and as amended or supplemented, the "Prospectus"), (iv)
each current plan of distribution or similar document adopted by the Trust under
Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder service plan
or similar document adopted by the Trust ("Service Plan"), and (iv) all
procedures adopted by the Trust with respect to the Funds (i.e., repurchase
agreement procedures), and shall promptly furnish Forum with all amendments of
or supplements to the foregoing. The Trust shall deliver to Forum a certified
copy of the resolution of the Board of Trustees of the Trust (the "Board")
appointing Forum and authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM AND THE TRUST
(a) Subject to the direction and control of the Board, Forum shall
manage all aspects of the Trust's operations with respect to the Funds except
those that are the responsibility of Forum Advisors, Inc., any other investment
adviser or investment subadviser to a Fund or the Funds (collectively, the
"Adviser") or any other service provider hired by the Trust, all in such manner
and to such extent as may be authorized by the Board.
(b) With respect to the Trust or each Fund, as applicable, Forum shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such legal,
administrative and clerical functions not otherwise described in this
Section 2(b) as are necessary to provide effective operation of the
Trust;
(ii) oversee (A) the preparation and maintenance by the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant in such form, for such periods and in such locations as may
be required by applicable United States law, of all documents and
records relating to the operation of the Trust required to be prepared
or maintained by the Trust or its agents pursuant to applicable law;
(B) the reconciliation of account information and balances among the
Adviser and the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (C) the transmission of purchase and
redemption orders for Shares; (D) the notification to the Adviser of
available funds for investment; and (E) the performance of fund
accounting, including the calculation of the net asset value of the
Shares;
(iii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its custodian,
transfer agent and dividend disbursing agent as well as legal,
auditing, shareholder servicing and other services performed for the
Funds;
(iv) file or oversee the filing of each document required to be filed
by the Trust in either written or, if required, electronic format
(e.g., electronic data gathering analysis and retrieval system or
"EDGAR") with the SEC;
<PAGE>
(v) assist in and oversee the preparation, filing and printing and the
periodic updating of the Registration Statement and Prospectuses;
(vi) oversee the preparation and filing of the Trust's tax returns;
(vii) oversee the preparation of financial statements and related
reports to the Trust's shareholders, the SEC and state and other
securities administrators;
(xiii) assist in and oversee the preparation and printing of proxy and
information statements and any other communications to shareholders;
(ix) provide the Trust with adequate general office space and
facilities and provide persons suitable to the Board to serve as
officers of the Trust;
(x) assist the Advisers in monitoring Fund holdings for compliance with
Prospectus investment restrictions and assist in preparation of
periodic compliance reports;
(xi) prepare, file and maintain the Trust's Organic Documents and
minutes of meetings of Trustees, Board committees and shareholders;
(xii) with the cooperation of the Trust's counsel, Advisers, the
officers of the Trust and other relevant parties, prepare and
disseminate materials for meetings of the Board;
(xiii) maintain the Trust's existence and good standing under
applicable state law;
(xiv) monitor sales of Shares, ensure that the Shares are properly and
duly registered with the SEC and register, or prepare applicable
filings with respect to, the Shares with the various state and other
securities commissions;
(xv) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Trust and other appropriate purposes;
(xvi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), and prepare and distribute to
appropriate parties notices announcing the declaration of dividends and
other distributions to shareholders;
(xvii) advise the Trust and the Board on matters concerning the Trust
and its affairs;
(xviii) calculate, review and account for Fund expenses and report on
Fund expenses on a periodic basis;
<PAGE>
(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
<PAGE>
and all information to Forum, and assist Forum as may be required and (ii) shall
ensure that Forum has access to all records and documents maintained by the
Trust or any service provider to the Trust.
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(d)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of Forum's actions taken or failures to act with respect
to a Fund that are not consistent with the standard of care set forth in Section
3(a). Forum shall not be required to indemnify the Trust if, prior to confessing
any Claim against the Trust, the Trust does not give Forum written notice of and
reasonable opportunity to defend against the claim in its own name or in the
name of the Trust.
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum, and upon statements of accountants, brokers
and other persons reasonably believed in good faith by Forum to be
expert in the matters upon which they are consulted;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
<PAGE>
authorized by the Board to give such oral instruction. Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction;
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(e) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the administrative services provided by Forum
pursuant to this Agreement, the Trust shall pay Forum, with respect to each
Portfolio, the fees set forth in Appendix B hereto. These fees shall be accrued
by the Trust daily and shall be payable monthly in arrears on the first day of
each calendar month for services performed under this Agreement during the prior
calendar month. Any of the legal services identified in Appendix C hereto may be
provided to the Trust by personnel of the Legal Department of Forum, subject to
satisfaction of the conditions contained in Section 7(c) to the consents and
waivers by the Trust and Forum of any general conflict of interest existing as a
result of the provision of those services. Forum shall not charge the Trust for
providing the legal services identified in Appendix B, except for those matters
designated as Special Legal Services, as to which Forum may charge, and, subject
to review and approval by the Chairman of the Audit Committee or Trust Counsel,
the Trust shall pay, an additional amount as reimbursement of the cost to Forum
of providing the Special Legal Services. Reimbursement shall be payable monthly
in arrears on the first day of each calendar month for services performed under
this Agreement during the prior calendar month. Nothing in this Agreement shall
require Forum to provide any of the services listed in Appendix C, and each of
those services may be performed by an outside vendor if appropriate in the
judgment of Forum or the Trust.
<PAGE>
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.
<PAGE>
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund on
the date on which the Trust's Registration Statement relating to the Shares of
the Fund becomes effective. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as such Agreement may have been deemed to relate
to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY. Forum agrees to treat all records and other
information related to the Trust as proprietary information of the Trust and, on
behalf of itself and its employees, to keep confidential all such information,
except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) without limiting the generality of the Sections 7(a) and (b), the
Trust acknowledges that certain legal services may be provided to it by lawyers
<PAGE>
who are employed by Forum or its affiliates and who render services to Forum and
its affiliates. A lawyer who provides such services to the Trust, and any lawyer
who supervises such lawyer, although employed generally by Forum or its
affiliates, will have a direct professional attorney-client relationship with
the Trust. Those services for which such a direct relationship will exist are
listed in Appendix C hereto. Provided (i) Forum agrees with any attorney
performing legal services for the Trust to not direct the professional judgment
of the attorney in performing those legal services and (ii) the attorney agrees
to disclose to the Chairman of the Audit Committee or to Trust counsel any
circumstance in which a legal service the attorney proposes to provide relates
to a matter in which the Trust and Forum or the Trust and any other investment
company to which the attorney is providing legal services have divergent legal
or economic interests, each of Forum and the Trust hereby consents to the
simultaneous representation by the attorney of both Forum and the Trust and
waives any general conflict of interest existing in such simultaneous
representation, and the Trust agrees that, in the event the attorney ceases to
represent the Trust, whether at the request of the Trust or otherwise, the
attorney may continue thereafter to represent Forum, and the Trust expressly
consents to such continued representation.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
<PAGE>
(c) Without limiting the generality of the Sections 9(a) and (b), the
trust acknowledges that certain legal services may be rendered to it by lawyers
who are employed by Forum or its affiliates and who render services to Forum and
its affiliates. A lawyer who renders such services to the Trust, and any lawyer
who supervises such lawyer, although employed generally by Forum or its
affiliates, will have a direct professional attorney/client relationship with
the Trust. Those services for which such a direct relationship will exist are
listed in Appendix C hereto. Each of Forum and the Trust hereby consents to the
simultaneous representation by such lawyers of both Forum and the Trust, and
waives any conflict of interest existing in such simultaneous representation.
Furthermore, the Trust agrees that, in the event such lawyer ceases to represent
the Trust, whether at the request of the Trust or otherwise, the lawyer may
continue thereafter to represent Forum, and the Trust expressly consents to such
continued representation.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
<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 ADMINISTRATIVE SERVICES, LIMITED
LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
----------------------------------
John Y. Keffer
President
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
MAY 21, 1999
Austin Global Equity Fund
BIA Equity Growth Fund
BIA Small-Cap Growth Fund
Equity Index Fund
Investors Bond Fund
Investors Equity Fund
Investors Growth Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Polaris Global Value Fund
TaxSaver Bond Fund
<PAGE>
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 FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- -------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- -------------------------------------------------------- -------------------------------------------
Investors Bond Fund 0.20%
Investors High Grade Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Equity Index Fund
Small Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Equity Fund
Investors Growth Fund
- -------------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
---------------- ---
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ----------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ----------------------------------------------------- -------------------------------------------
- ----------------------------------------------------- -------------------------------------------
Austin Global Equity Fund 0.25%
Oak Hall Equity Fund
- ----------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
---------------- ---
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------------ -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ------------------------------------------------------ -------------------------------------------
- ------------------------------------------------------ -------------------------------------------
Quadra Value Equity Fund 0.10% of the first $50 million, 0.05%
Quadra Growth Fund over $50 million
- ------------------------------------------------------ -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
---------------- ---
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ---------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Class of the Fund
- ---------------------------------------------------- -------------------------------------------
Daily Assets Treasury Fund 0.05%
Daily Assets Cash Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
- ---------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
----------------- ---
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------ -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ------------------------------------------------ -------------------------------------------
- ------------------------------------------------ -------------------------------------------
Polaris Global Value Fund 0.10% of the first $150 million,
0.05% over $150 million
- ------------------------------------------------ -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
---------------- ---
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
MAY 21, 1999
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<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 Equity Growth Fund of the remaining assets
(subject to a $40,000 minimum)
- ------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
Service Provided Fee
------------------ ---
Special Legal services Approximate cost to Forum as agreed to
from time to time
</TABLE>
EXHIBIT (H)(2)
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
<PAGE>
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
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;
<PAGE>
(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;
<PAGE>
(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;
(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.
<PAGE>
(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
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
<PAGE>
(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
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
<PAGE>
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;
<PAGE>
(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.
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.
<PAGE>
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
<PAGE>
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By: /s/ Mark D. Kaplan
------------------------------
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM 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 MAY 21, 1999
Austin Global Equity Fund
BIA Equity Growth Fund
BIA Small-Cap Growth Fund
Equity Index 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
TaxSaver Bond Fund
INVESTOR SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
INSTITUTIONAL SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
INSTITUTIONAL SERVICE SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal 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>
<PAGE>
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.
Note 3: Accounting Fees for BIA Small-Cap Growth Fund and BIA Growth
Equity Fund are the same as above except for the following:
<TABLE>
<S> <C>
Standard Fee per Fund......................................................$3,000/month
Surcharge for Fund with asset levels exceeding $250 million................$1,000/month
Surcharge for Fund with assets levels exceeding $500 million...............$1,500/month
Surcharge for a Fund with more than 50% of its net assets
invested in asset backed securities......................................$2,000/month
</TABLE>
(II) START-UP FEE
Fund Start-Up Fee ............................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
1998 Fiscal Years (1997 Excise Tax for March and May Year Ends)
---------------------------------------------------------------
<TABLE>
<S> <C>
Preparation of tax returns: (i) state income, (ii) Federal income
and (iii) Federal excise, including extensions and amendments
Money Funds (Standard) $1,800/fiscal period/Fund
Money Funds (Feeder Gateway Fund) $1,200/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) $1,800/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
<PAGE>
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) $2,000/fiscal period/Fund
Other Funds (Standard) $4,500/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
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
</TABLE>
(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.
EXHIBIT (H)(3)
FORUM FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the 19 day of May, 1998, by and between Forum
Funds, a Delaware Business Trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Shareholder Services, LLC, a corporation organized under the laws of the State
of Delaware its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes"); and
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) Appointment. The Trust, on behalf of the Funds, hereby appoints
Forum to act as, and Forum agrees to act as, (i) transfer agent for the
authorized and issued shares of beneficial interest of the Trust representing
interests in each of the respective Funds and Classes thereof ("Shares"), (ii)
dividend disbursing agent and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information (collectively
"prospectus") of the applicable Fund, including, without limitation, any
periodic investment plan or periodic withdrawal program.
(b)Document Delivery. The Trust has delivered to Forum copies of (i) the
Trust's Trust Instrument and Bylaws (collectively, as amended from time to time,
"Organic Documents"), (ii) the Trust's Registration Statement and all amendments
thereto filed with the U.S. Securities and Exchange Commission ("SEC") pursuant
<PAGE>
to the Securities Act of 1933, as amended (the "Securities Act"), or the
Investment Company Act of 1940, as amended ("1940 Act")(the "Registration
Statement"), (iii) the Trust's current Prospectus and Statement of Additional
Information of each Fund (collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), (iv) each current plan of distribution or
similar document adopted by the Trust under Rule 12b-1 under the 1940 Act
("Plan") and each current shareholder service plan or similar document adopted
by the Trust ("Service Plan"), and (v) all procedures adopted by the Trust with
respect to the Funds (i.e., repurchase agreement procedures), and shall promptly
furnish Forum with all amendments of or supplements to the foregoing. The Trust
shall deliver to Forum a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a)Services. Forum agrees that in accordance with procedures established
from time to time by agreement between the Trust on behalf of each of the Funds,
as applicable, and Forum, Forum will perform the following services:
(i)provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts, (B) preparing Shareholder meeting lists, (C)
mailing proxies to Shareholders, (D) mailing Shareholder reports and
prospectuses to current Shareholders, (E) withholding taxes on U.S.
resident and non-resident alien accounts, (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders, (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, (H) preparing and
mailing activity statements for Shareholders, and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
<PAGE>
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended ("1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) Other Services. Forum shall provide the following additional
services on behalf of the Trust and such other services agreed to in writing
by the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
<PAGE>
(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.
<PAGE>
(b) Recordkeeping. Forum shall keep records relating to the services to
be performed under this Agreement, in the form and manner as it may deem
advisable and as required by applicable law. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Forum agrees that all such records
prepared or maintained by Forum relating to the services to be performed by
Forum under this Agreement are the property of the Trust and will be preserved,
maintained and made available in accordance with Section 31 of the 1940 Act and
the rules thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Trust's request. The Trust and the Trust's authorized
representatives shall have access to Forum's records relating to the services to
be performed under this Agreement at all times during Forum's normal business
hours. Upon the reasonable request of the Trust, copies of any such records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives.
(c) Confidentiality of Records. Forum and the Trust agree that all
books, records, information, and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
(d) Inspection of Records by Others. In case of any requests or demands
for the inspection of the Shareholder records of the Trust, Forum will endeavor
to notify the Trust and to secure instructions from an authorized officer of the
Trust as to such inspection. Forum shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that Forum may grant the
inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) Issuance of Shares. Forum shall make original issues of Shares of
each Fund and Class thereof in accordance with the Trust's then current
prospectus only upon receipt of (i) instructions requesting the issuance, (ii) a
certified copy of a resolution of the Board authorizing the issuance, (iii)
necessary funds for the payment of any original issue tax applicable to such
Shares, and (iv) an opinion of the Trust's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Trust of an appropriate notice with the SEC, as required by
Section 24 of the 1940 Act or the rules thereunder. If the opinion described in
(iv) above is contingent upon a filing under Section 24 of the 1940 Act, the
Trust shall indemnify Forum for any liability arising from the failure of the
Trust to comply with that section or the rules thereunder.
(b) Transfer of Shares. Transfers of Shares of each Fund and Class
thereof shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of Forum's counsel, protect Forum and the Trust from liability arising from (i)
not requiring complete documentation, (ii) registering a transfer without an
adverse claim inquiry, (iii) delaying registration for purposes of such inquiry
<PAGE>
or (iv) refusing registration whenever an adverse claim requires such refusal.
As Transfer Agent, Forum will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) Certificates. The Trust shall furnish to Forum a supply of blank
share certificates of each Fund and Class thereof and, from time to time, will
renew such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) Endorsement; Transportation. New Share certificates shall be issued
by Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) Non-Issuance of Certificates. In the event that the Trust informs
Forum that any Fund or Class thereof does not issue share certificates, Forum
shall not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Purchase Orders. Shares shall be issued in accordance with the
terms of a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) Distribution Eligibility. Shares issued in a Fund after receipt of
a completed purchase order shall be eligible to receive distributions of the
Fund at the time specified in the prospectus pursuant to which the Shares are
offered.
<PAGE>
(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.
<PAGE>
SECTION 9. PROPRIETARY INFORMATION
(a) Proprietary Information of Forum. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) Proprietary Information of the Trust. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement or as may
be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) Indemnification of Forum. Forum shall not be responsible for, and
the Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State
<PAGE>
or in violation of any stop order or other determination or ruling by
any federal agency or any State with respect to the offer or sale of
such Shares in such State.
(b) Indemnification of Trust. Forum shall indemnify and hold the Trust
and each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) Reliance. At any time Forum may apply to any officer of the Trust
for instructions, and may consult with legal counsel to the Trust or to Forum
with respect to any matter arising in connection with the services to be
performed by Forum under this Agreement, and Forum and its agents or
subcontractors shall not be liable and shall be indemnified by the Trust on
behalf of the applicable Fund for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of such counsel.
Forum, its agents and subcontractors shall be protected and indemnified in
acting upon (i) any paper or document furnished by or on behalf of the Trust,
reasonably believed by Forum to be genuine and to have been signed by the proper
person or persons, (ii) any instruction, information, data, records or documents
provided Forum or its agents or subcontractors by machine readable input, telex,
CRT data entry or other similar means authorized by the Trust, and (iii) any
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) Reliance on Electronic Instructions. If the Trust has the ability
to originate electronic instructions to Forum in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event Forum shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by Forum from time to time.
(e) Use of Fund/SERV and Networking. The Trust has authorized or in the
future may authorize Forum to act as a "Mutual Fund Services Member" for the
Trust or various Funds. Fund/SERV and Networking are services sponsored by the
National Securities Clearing Corporation ("NSCC") and as used herein have the
meanings as set forth in the then current edition of NSCC Rules and Procedures
published by NSCC or such other similar publication as may exist from time to
time. The Trust shall indemnify and hold Forum harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
<PAGE>
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.
<PAGE>
SECTION 12. ADDITIONAL FUNDS AND CLASSES. In the event that the Trust
establishes one or more series of Shares or one or more classes of Shares after
the effectiveness of this Agreement, such series of Shares or classes of Shares,
as the case may be, shall become Funds and Classes under this Agreement. Forum
or the Trust may elect not to make and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this agreement,
neither this agreement nor any rights or obligations under this agreement may be
assigned by either party without the written consent of the other party. this
agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE. Forum shall not be responsible or liable for
any failure or delay in performance of its obligations under this agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical
breakdowns, flood or catastrophe, acts of god, insurrection, war, riots or
failure of the mails or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. The trustees of the Trust and the shareholders
of each Fund shall not be liable for any obligations of the Trust or of the
Funds under this Agreement, and Forum agrees that, in asserting any rights or
claims under this Agreement, it shall look only to the assets and property of
the Trust or the Fund to which Forum's rights or claims relate in settlement of
such rights or claims, and not to the trustees of the Trust or the shareholders
of the Funds.
SECTION 16. TAXES. Forum shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
SECTION 17. MISCELLANEOUS
(a) No Consequential Damages. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
(b) Amendments. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by both parties hereto.
<PAGE>
(c) Choice of Law. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of the
State of Delaware.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
(e) Counterparts. This Agreement may be executed by the parties hereto
on any number of counterparts, and all of the counterparts taken together shall
be deemed to constitute one and the same instrument.
(f) Severability. If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(g) Headings. Section and paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
(h) Notices. Notices, requests, instructions and communications
received by the parties at their respective principal addresses, or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given.
(i) Business Days. Nothing contained in this Agreement is intended to
or shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.
(j) Distinction of Funds. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Trust are separate and distinct from the assets and liabilities of each other
Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(k) Nonliability of Affiliates. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(l) Representation of Signatories. Each of the undersigned expressly
warrants and represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their signature will bind
the party indicated to the terms hereof.
<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
persons, as of the day and year first above written.
FORUM FUNDS
By: /s/ John Y. Keffer
-------------------------------
John Y. Keffer, President
FORUM SHAREHOLDER SERVICES, LLC
By: /s/ David I. Goldstein
-------------------------------
David I. Goldstein, Secretary
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF MAY 21, 1999
Austin Global Value Fund
BIA Growth Equity Fund
BIA Small-Cap Growth Fund
Equity Index Fund
Investors Bond Fund
Investors Equity Fund
Investors Growth Fund
Investors High Grade Bond Fund
TaxSaver 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
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 Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX A (CONTINUED)
FUNDS AND CLASSES OF THE TRUST
MAY 21, 1999
INSTITUTIONAL SERVICE SHARES:
Daily Assets Treasury Obligations Fund
Daily Assets Government Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX B
<TABLE>
<S> <C>
I. FEES
Transfer Agency Fee as % of the Average
Fund Daily Net Assets of the Fund
- ---------------------------------------------------------------------------------------------------------------
TaxSaver Bond Fund
Maine Municipal Bond Fund 0.25% per year plus $12,000 per year and
New Hampshire Bond Fund annual shareholder account fees of $18.00
Investors Bond Fund per shareholder account
Investors High Grade Bond Fund
Investors Growth Fund
Payson Balanced Fund
Payson Value Fund
Investors Equity Fund
Equity Index Fund
Small Company Opportunities Fund
International Equity Fund
Emerging Markets Fund
- ---------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Daily Assets Treasury Obligations Fund 0.05% per year plus $12,000 per year and
Daily Assets Government Fund annual shareholder account fees of $18.00
Daily Assets Government Obligations Fund per shareholder account
Daily Assets Cash Fund
Daily Assets Municipal Fund
- ---------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SERVICE SHARES
Daily Assets Treasury Obligations Fund 0.10% per year plus $12,000 per year and
Daily Assets Government Fund annual shareholder account fees of $18.00
Daily Assets Government Obligations Fund per shareholder account
Daily Assets Cash Fund
Daily Assets Municipal Fund
- --------------------------------------------------------------------------------------------------------------------
<PAGE>
TRANSFER AGENCY AGREEMENT
APPENDIX B
I. FEES (CONTINUED)
Transfer Agency Fee as % of the Average
Fund Daily Net Assets of the Fund
- ----------------------------------------------------------------------------------------------------------------------
INVESTOR SHARES
Daily Assets Treasury Obligations Fund 0.25% per year plus $12,000 per year and
Daily Assets Govenment Fund annual shareholder account fees of $18.00
Daily Assets Government Obligations Fund per shareholder account
Daily Assets Cash Fund
Daily Assets Municipal Fund
- -----------------------------------------------------------------------------------------------------------------------
Oak Hall Equity Fund $12,000 per year plus $25 per shareholder
Austin Global Equity Fund account
- ------------------------------------------------------------------------------------------------------------------------------------
Polaris Global Value Fund $24,000 per year plus annual shareholder
account fees of $25 per shareholder account
- ------------------------------------------------------------------------------
BIA Small-Cap Growth Fund $2,000/month per Fund (where there is only one Fund);
$1,500/month (where there are two or more related Funds);
$1,000/month for each additional Class of a Fund above one;
Shareholder account fees of $25 per account per year for open
accounts and $5 per account per year for closed accounts.
</TABLE>
<PAGE>
(II) 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) statement, confirmation,
envelope and stationary stock, (ii) share certificates, (iii) printing
of checks and drafts, (iv) postage, (v) telecommunications, (vi) NSCC
Mutual Fund Service Member fees and expenses, (vii) outside proxy
solicitors and tabulators, (viii) proxy solicitation fees and (ix)
microfilm and microfiche. 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.
Notwithstanding the foregoing, the Trust shall not be required to
reimburse Forum for Forum's out-of-pocket costs relating to banking
services (DDA account, wire and ACH, check and draft clearing and lock
box fees and charges).
Exhibit (i)
OPINION OF SEWARD & KISSEL LLP
[Seward & Kissel LLP Letterhead]
June 11, 1999
Forum Funds
Two Portland Square
Portland, Maine 04101
Ladies and Gentlemen:
We consent to the continued inclusion as an exhibit to the Registration
Statement of Forum Funds of our opinion dated January 5, 1996 as to the legality
of the securities registered by Forum Funds as of that date.
Very truly yours,
/s/ Seward & Kissel LLP
EXHIBIT (J)
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to us in Post-Effective Amendment No. 72 to
Registration Statement (No. 2-67052) of Forum Funds on behalf of BIA Small-Cap
Growth Fund and BIA Growth Equity Fund under the heading "Independent Auditors"
appearing in the Statement of Additional Information, which is part of such
Registration Statement.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
June 7, 1999
