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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 December 30, 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. 77
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 79
FORUM FUNDS
(Formerly "Forum Funds, Inc.")
Two Portland Square
Portland, Maine 04101
(207) 879-1900
Don L. Evans, Esq.
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Anthony C.J. Nuland, Esq.
Seward & Kissel LLP
1200 G Street, N.W.
Washington, D.C. 20005
- -------------------------------------------------------------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
X on December 31, 1999 pursuant to Rule 485, paragraph (b)
60 days after filing pursuant to Rule 485, paragraph (a)(1)
on _________________ pursuant to Rule 485, paragraph (a)(1)
75 days after filing pursuant to Rule 485, paragraph (a)(2)
on _________________ pursuant to Rule 485, paragraph (a)(2)
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets Treasury Obligations Fund, Daily
Assets Government Fund, Daily Assets Government Obligations Fund, Daily Assets
Cash Fund and Daily Assets Municipal Fund. Each Fund is structured as a
master-feeder fund and this amendment is also executed by Core Trust (Delaware).
<PAGE>
LOGO
PROSPECTUS
INVESTOR SHARES
JANUARY 1, 2000
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
FIVE MONEY MARKET FUNDS THAT, WITH THE EXCEPTION OF DAILY ASSETS MUNICIPAL
FUND, SEEK TO PROVIDE HIGH CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND THE MAINTENANCE OF LIQUIDITY. DAILY ASSETS MUNICIPAL FUND
SEEKS TO PROVIDE HIGH CURRENT INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX
AND THAT IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUNDS' SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Summary
Performance
Fee Tables
Management
Your Account
How to Contact the Funds
General Information
Buying Shares
Selling Shares
Exchange Privileges
Retirement Accounts
Other Information
Financial Highlights
<PAGE>
SUMMARY
This Prospectus offers Investor Shares of Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund (each a "Fund"). Investor
Shares are designed for retail investors.
INVESTMENT OBJECTIVES
The investment objective of each Fund, except Daily Assets Municipal Fund, is to
provide high current income consistent with the preservation of capital and the
maintenance of liquidity. The investment objective of Daily Assets Municipal
Fund is to provide high current income that is exempt from federal income taxes
to the extent consistent with the preservation of capital and the maintenance of
liquidity.
PRINCIPAL INVESTMENT STRATEGIES
Margin calloutConcepts to Understand
MONEY MARKET SECURITY means a high credit quality, short-term, U.S.
dollar denominated debt security
TREASURY SECURITY means a security that is issued or guaranteed by the
U.S. Treasury
GOVERNMENT SECURITY means a security that is issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
REPURCHASE AGREEMENT means a transaction in which a Fund purchases a
security and simultaneously commits to resell the security to the
other party at an greed-upon date and at a price reflecting a market
rate of interest
MUNICIPAL SECURITY means a security issued by a U.S. state, territory,
local government or related financing authoritythe interest on which i
exempt from Federal income tax.
Each Fund invests in a diversified portfolio of Money Market Securities and:
o seeks to maintain a stable net asset value of $1.00 per share
o invests in securities with remaining maturities of 397 days or less
o maintains a dollar weighted average maturity of its investments of 90 days
or less
Each Fund invests substantially all of its assets in another mutual fund (a
"Portfolio") which has the same investment objective and substantially similar
investment policies. The Portfolios in which the Funds invest and their primary
investments are:
1
<PAGE>
<TABLE>
<S> <C>
FUND/PORTFOLIO PRIMARY INVESTMENTS
Daily Assets Treasury Obligations At least 65% of total assets in Treasury Securitie and related Repurchase
Fund/Treasury Cash Portfolio Agreements backed by Treasury Securities
Daily Assets Government Treasury Securities and Government Securities that are exempt from state and
Fund/Government Portfolio local income taxes
Daily Assets Government Obligations At least 65% of total assets in Government Securities and in Repurchase Agreements
Fund/Government Cash Portfolio backed by these Securities
Daily Assets Cash Fund/Cash A spectrum of Money Market Securities including:
Portfolio o securities issued byfinancial institutions, such as certificates of deposits,
bank notes, bankers'acceptances and time deposits of banks and their foreign branches
o securities issued by domestic companies, such as commercial paper
o Government Securities and
o Repurchase Agreements
Daily Assets Municipal A spectrum of Municipal Securities including investment up to 20% of its total
Fund/Municipal Cash Portfolio assets in Municipal Securities or other Money Market Securities whose interest
is subject to Federal income tax
</TABLE>
The investment adviser for the Portfolios (the "Adviser") continuously monitors
economic factors such as interest rate outlooks and technical factors such as
prevailing interest rates and Federal Reserve policy to determine an appropriate
maturity profile for the Portfolio's investments. The Adviser searches for
securities that satisfy the maturity profile of a Portfolio and that provide the
greatest potential return relative to the risk of the security.
Daily Assets Municipal Fund has substantial exposure to Municipal Securities
that are supported by various types of third party credit and liquidity
enhancements. These investments are often comprised of long term Municipal
Securities structured to allow the owner the option to sell the security back to
the issuer or another person and with interest rates that are reset
periodically. The Adviser reviews and considers these factors in its investment
decisions and will only purchase a Municipal Security if it believes that third
party credit and liquidity supporters posses minimal credit risk.
The Adviser may sell a Money Market Security if (i) revised economic forecasts
or interest rate outlook requires a repositioning of the Portfolio, (ii) the
security subsequently fails to meet the Adviser's investment criteria or (iii)
funds are needed for another purpose.
PRINCIPAL RISKS OF INVESTING IN A FUND
Margin calloutMoney Market Fund Disclosure
An investment in a Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although each Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in a Fund.
There is no assurance that any Fund will achieve its investment objective. An
investment in a Fund is not by itself a complete or balanced investment program.
The principal risks of investing in a Fund are described below.
2
<PAGE>
These risks can result in a decrease in the value of a security or all the
securities owned by a Fund and, therefore, a change in the Fund's $1.00 per
share value. These risks also can result in lower investment performance.
INTEREST RATE RISK Changes in interest rates may affect the value of a
Portfolio's investments. Because the Portfolios invest in short-term securities,
a decline in interest rates will affect the Portfolios' yields as these
securities mature or are sold and the Portfolios purchase new short-term
securities with lower interest rates. Increases in interest rates may cause the
value of a Portfolio's investments to decline. The change in value for
shorter-term securities is usually smaller than for securities with longer
maturities. Because the Portfolios invest in securities with short-term
maturities and seek to maintain a stable net asset value of $1.00 per share, it
is possible, though unlikely, that an increase in interest rates would change
the value of your investment.
CREDIT RISK The value of a security held by a Portfolio may decline if the
security's credit rating is downgraded or credit quality otherwise falls. The
Portfolios invest in highly-rated securities to minimize credit risk.
MANAGEMENT RISK As with all mutual funds, the Adviser may make poor investment
decisions.
LOCAL ECONOMIC/POLITICAL RISK Changes in state or regional economies or politics
can adversely affect the value of the Municipal Securities issued in that
location. Daily Assets Municipal Fund may invest up to 35% of its total assets
in Municipal Securities issuers located in one state or territory.
3
<PAGE>
PERFORMANCE
The following charts and tables provide some indication of the historical risks
of investing in Daily Assets Government Fund and Daily Assets Cash Fund by
showing changes in the performance of the Funds from year to year and each
Fund's returns. Because the Investor Shares of each of these Funds commenced
operations in late 1998, the information is for each Fund's Institutional
Service Shares. The returns for Institutional Service Shares are similar to that
of Investor Shares. The returns of the classes differ only to the extent that
the classes have different expenses. PERFORMANCE INFORMATION PRESENTED HERE
REPRESENTS ONLY PAST PERFORMANCE AND DOES NOT NECESSARILY INDICATE FUTURE
RESULTS. THERE ARE NO CHARTS OR TABLES FOR DAILY ASSETS TREASURY OBLIGATIONS
FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND OR DAILY ASSETS MUNICIPAL FUND
BECAUSE THESE FUNDS HAVE NOT COMPLETED A FULL CALENDAR YEAR OF OPERATIONS.
DAILY ASSETS GOVERNMENT FUND
The following past performance charts show the annual total returns for each
full calendar year that the Funds have operated.
[EDGAR Representation of Bar Chart]
1993 2.83%
1994 3.80%
1995 5.36%
1996 4.82%
1997 4.87%
1998 4.97%
The calendar year-to-date total return as of September 30, 1999 was 3.47%.
During the periods shown in the chart, the highest quarterly return was 5.56%
(for the quarter ended March 31, 1995) and the lowest return was 2.78% (for the
quarter ended June 30, 1993).
The following table lists the Institutional Service Shares' average annual total
return as of December 31, 1998.
DAILY ASSETS
YEAR(S) GOVERNMENT FUND
1 Year 4.97%
5 Year 4.76%
Since Inception (7/1/92) 4.34%
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<PAGE>
DAILY ASSETS CASH FUND
The following chart shows the annual total returns for each full calendar year
that the Institutional Service Shares have operated.
[EDGAR Representation of Bar Chart]
1997 5.23%
1998 5.26%
The calendar year-to-date total return as of September 30, 1999 was 3.51%.
During the periods shown in the chart, the highest quarterly return was 5.39%
(for the quarter ended March 31, 1998) and the lowest return was 5.01% (for the
quarter ended December 31, 1998).
The following table lists the Institutional Service Shares average annual total
returns as of December 31, 1998.
DAILY ASSETS
YEAR(S) CASH FUND
1 Year 5.26%
Since Inception (10/1/96) 5.22%
5
<PAGE>
FEE TABLES
The following tables describe the various fees and expenses that you will pay if
you invest in Investor Shares of a Fund. There are no charges to purchase or
redeem Fund shares.
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Daily Assets Treasury Obligations Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees 0.27%
Other Expenses 99.65%
Total Annual Fund Operating Expenses (2) 100.05%
Fee Waiver and Expense Reimbursement(3) 99.10%
Net Expenses 0.95%
Daily Assets Government Fund
Management Fees (1) 0.15%
Distribution (Rule 12b-1) Fees 0.15%
Other Expenses 5.15%
Total Annual Fund Operating Expenses(2) 5.45%
Fee Waiver and Expense Reimbursement(3) 4.50%
Net Expenses 0.95%
Daily Assets Government Obligations Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses 148.56%
Total Annual Fund Operating Expenses (2) 148.94%
Fee Waiver and Expense Reimbursement(3) 147.99%
Net Expenses 0.95%
Daily Assets Cash Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees 0.30%
Other Expenses 8.81%
Total Annual Fund Operating Expenses (2) 9.24%
Fee Waiver and Expense Reimbursement(3) 8.29%
Net Expenses 0.95%
Daily Assets Municipal Fund
Management Fees (1) 0.15%
Distribution (Rule 12b-1) Fees 0.29%
Other Expenses 33.07%
Total Annual Fund Operating Expenses (2) 33.51%
Fee Waiver and Expense Reimbursement(3) 32.56%
Net Expenses 0.95%
(1) INCLUDES ALL ADVISORY AND ADMINISTRATION FEES.
(2) BASED ON AMOUNTS INCURRED DURING EACH FUND'S LAST FISCAL YEAR ENDED AUGUST
31, 1999 STATED AS A PERCENTAGE OF ASSETS PRIOR TO FEE WAIVERS AND
REIMBURSEMENTS. EACH FUND'S EXPENSES INCLUDE ITS PRO-RATA SHARE OF THE
EXPENSES OF ITS CORRESPONDING PORTFOLIO.
(3) BASED ON CERTAIN CONTRACTUAL FEE WAIVERS AND EXPENSE REIMBURSEMENTS
CURRENTLY IN EFFECT THAT MAY DECREASE AFTER AUGUST 31, 2000. DURING THE
FISCAL YEAR ENDED AUGUST 31, 1999, EACH fUND'S TOTAL ANNUAL FUND OPERATING
EXPENSES INCLUDING FEE WAIVERS AND REIMBURSEMENTS WERE 0.87% FOR DAILY
ASSETS TREASURY OBLIGATIONS FUND, 0.75% FOR DAILY ASSETS GOVERNMENT FUND,
0.84% FOR DAILY ASSETS GOVERNMENT OBLIGATIONS FUND, 0.90% FOR DAILY ASSETS
CASH FUND AND 0.88% FOR DAILY ASSETS MUNICIPAL FUND.
6
<PAGE>
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in Investor Shares of a Fund to the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in a Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% annual return,
that the operating expenses remain the same as stated in the above table, 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> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS FUND GOVERNMENT OBLIGATIONS FUND CASH MUNICIPAL FUND
FUND FUND
1 year $97 $97 $97 $97 $97
3 years $303 $303 $303 $303 $303
5 years $525 $525 $525 $525 $525
10 years $1,166 $1,166 $1,166 $1,166 $1,166
</TABLE>
7
<PAGE>
MANAGEMENT
Each Fund is a series of Forum Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and of 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 each Fund's
performance, monitor investment activities and practices and discuss other
matters affecting each Fund. Additional information about the Board and the
Trust's executive officers is in the Statement of Additional Information
("SAI").
THE ADVISER
Each Portfolio's investment adviser is Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101. The Adviser's primary business is fixed
income investment management and, in addition to the Portfolios, advises two
other money market funds and five taxable and tax-free bond funds.The Adviser
makes investment decisions for each Portfolio.
During the Funds' last fiscal year, as a percentage of average net assets, the
aggregate advisory fees paid to the Adviser were:
PORTFOLIO ADVISORY FEE
Treasury Cash Portfolio 0.035%
Government Portfolio 0.050%
Government Cash Portfolio 0.035%
Cash Portfolio 0.035%
Municipal Cash Portfolio 0.050%
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provides various services to
each Fund. As of September 30, 1999, Forum provided administration and
distribution services to investment companies and collective investment funds
with assets of approximately $94 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 representative
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 the Funds' shares.
Each Fund has adopted a distribution or Rule 12b-1 plan under which the Fund
pays fees for the distribution of Investor Shares and the servicing of
shareholder accounts. Because Investor Shares pay distribution fees on an
on-going basis, your investment cost you over time may be higher than paying
other types of sales charges.
8
<PAGE>
Forum Administrative Services, LLC ("FAdS") provides administrative services to
each Fund, Forum Accounting Services, LLC is each Fund's fund accountant, and
Forum Shareholder Services, LLC (the "Transfer Agent") is each Fund's Transfer
Agent.
The Trust has adopted a shareholder servicing plan that allows the Trust to pay
FAdS a fee for providing service activities for Investor Shares that are not
otherwise provided by the Transfer Agent. FAdS may pay this fee to various
financial institutions that provide shareholder servicing to their customers
invested in Investor Shares.
FUND EXPENSES
Certain service providers of each Fund have undertaken to waive a portion of
their fees in order to limit total fund operating expenses (excluding taxes,
interest, portfolio transaction expenses and extraordinary expenses) of Investor
Shares to no more than 0.75% for Daily Assets Government Fund and no more than
0.90% for each other Fund.
9
<PAGE>
YOUR ACCOUNT
[Margin call out: HOW TO CONTACT THE FUNDS
Write to us at:
Forum Shareholder Services, LLC
Attn: (Name of Your Fund)
P.O. Box 446
Portland, Maine 04112
Telephone us at:
(800) 94FORUM or (800) 943-6786 (Toll Free)
(207) 879-0001
Wire investments (or ACH payments) to us at:
Bankers Trust Company
New York, New York
ABA #021001033 For Credit to:
Forum Shareholder Services, LLC
Account # 01-465-547
Re: (Name of Your Fund)
(Your Name)
(Your Account Number)]
GENERAL INFORMATION
You may purchase or sell (redeem) shares at the net asset value of a share
("NAV") next calculated after the Transfer Agent receives your request in proper
form accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"). Investments are not accepted or invested by a Fund during the period
before the receipt of Federal Funds.
Shares become entitled to receive distributions on the day of purchase if the
order and payment are received in proper form by the Transfer Agent as follows:
Times indicated are eastern time
Order must be Payment must be
received by received by
DAILY ASSETS GOVERNMENT FUND, 12:00 p.m. 4:00 p.m.
DAILY ASSETS MUNICIPAL FUND,
DAILY ASSETS TREASURY OBLIGATIONS FUND,
DAILY ASSETS GOVERNMENT OBLIGATIONS
FUND,
DAILY ASSETS CASH FUND 2:00 p.m. 4:00 p.m.
On days that the Bond Market Association recommends an early close of the
government securities market or that those markets or theFederal Reserve Bank of
San Francisco closes early or the Public Securities Association recommends that
the government securities markets close early, the Trust may advance the time by
which the Transfer Agent must receive completed purchase and redemption orders.
10
<PAGE>
If you purchase shares directly from a Fund, you will receive monthly statements
and a confirmation of each transaction. You should verify the accuracy of all
transactions in your account as soon as you receive your confirmations.
Each Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED Each Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., eastern time) on each weekday
except days when the New York Stock Exchange is closed. The time at which NAV is
calculated may change in case of an emergency. In order to maintain a stable NAV
of $1.00 per share, each Fund (and the Portfolios in which they invest) values
the securities in its portfolio on an amortized cost basis
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 a Fund. Financial institutions may charge transaction
fees and may set different minimum investments or limitations on buying or
selling shares. These institutions also may provide you with certain shareholder
services such as periodic account statements and trade confirmations. 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, sole proprietorship, joint and gifts or
transfers to minors accounts, the check must be made payable to "Forum
Funds" or to one or more owners of the account and endorsed to "Forum
Funds." For all other accounts, the check must be made payable on its
face to "Forum Funds." No other method of check payment is acceptable
(for instance, 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 to settle. Your financial institution may charge you a fee
for this service.
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for
this service.
MINIMUM INVESTMENTS Each Fund accepts payments in the following minimum amounts
for it's Investor Shares:
<TABLE>
<S> <C> <C>
MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
Standard Accounts $10,000 $500
Traditional and Roth IRA Accounts $2,000 $250
Accounts With Systematic Investment Plans $250 $250
Exchanges $2,000 $250
</TABLE>
11
<PAGE>
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 on
proprietorship accounts. Joint accounts can have two or the account
more owners (tenants)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a
These custodial accounts provide a way to give money to a custodial account under the UGMA orthe UTMA
child and obtain tax benefits.
o The custodian must sign instructions in a manner
indicating trustee capacity
BUSINESS ENTITIES o For entities with officers, submit a
Corporate/Organization Resolution form or
similar document
o For entities with partners or other interested
parties, submit a
Corporate/Organization Resolution form or
similar document
TRUSTS o The trust must be established before an
account can be opened
o Submit a Corporate/Organization Resolution
form or similar document
12
<PAGE>
INVESTMENT PROCEDURES
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 BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
o Complete the application o Instruct your bank to wire your money to us
o Call us and we will assign you an account number
o Mail us your application
o Instruct your bank to wire your money to us
BY ACH PAYMENT BY SYSTEMATIC INVESTMENT
o Call or write us for an account application o Complete the systematic investment section of
o Complete the application the application
o Call us and we will assign you an account number o Attach a voided check to your application
o Mail us your application o Mail us the completed application
o Make an ACH payment
</TABLE>
SYSTEMATIC 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. Systematic investments must be for at least $250.
LIMITATIONS ON PURCHASES Each Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
a Fund or its operations.
SELLING SHARES
Generally, a Fund will send redemption proceeds to you immediately after
receiving your redemption request in proper form
Shares are not entitled to receive distributions declared on or after the day on
which a redemption order is accepted by the Transfer Agent.
13
<PAGE>
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 did not decline wire redemption privileges on your account
application
o Call us with your request (unless you declined telephone redemption
privileges on your account application - See "By Telephone") OR
o Mail us your request (See "By Mail")
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 the 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 on your
account application - See "By Wire")
SYSTEMATICALLY
o Complete the systematic withdrawal section of your account application
o Attach a voided check to your application
o Mail us your completed application
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.
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined wire redemption privileges on your account application. The minimum
amount that may be redeemed by wire is $5,000. If the Transfer Agent receives
your wire redemption order after 12:00 P.M., eastern time (or other time as may
be determined), for Daily Assets Government Fund and Daily Assets Municipal
Fund, or after 2:00 P.M., eastern time (or other time as may be determined), for
each other Fund, the Transfer Agent will wire proceeds to you on the next Fund
business day.
14
<PAGE>
SYSTEMATIC WITHDRAWALS You may redeem a specified amount of money from your
account once a month or once a quarter on a specified date. These payments are
sent from your account to a designated bank account by ACH payment. Systematic
withdrawals 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.
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name
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 systematic investment or withdrawal, 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 $5,000 ($500 for IRA
accounts), a Fund may ask you to increase your balance. If the account value is
still below $5,000 ($500 for IRAs) after 60 days, a Fund may close your account
and send you the proceeds.
REDEMPTIONS IN KIND Each Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash.
EXCHANGE PRIVILEGES
You may exchange your Investor Shares for Investor Shares of another Fund. For a
list of other funds available for exchange, you may call the Transfer Agent. If
you exchange into a fund that has a sales charge, you will have to pay that
fund's sales charge. If you exchange into a fund that has no sales charge, you
will not have to pay a sales charge at the time of exchange.
REQUIREMENTS You may exchange only between identically registered accounts
(name(s), address and taxpayer ID number). New accounts opened through an
exchange will be assigned the same shareholder privileges as the initial
account. You may exchange your shares by mail or 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.
15
<PAGE>
HOW TO EXCHANGE
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account numbers
o The names of the funds from which you are selling and into which you
are exchanging
o The dollar amount or number of shares you want to sell (and exchange)
o Open a new account and complete an account application if you are
requesting different shareholder privileges
o Mail us 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 (except Daily Assets Municipal Fund) offers IRA accounts, including
traditional and Roth IRAs. Before investing in any IRA or other retirement plan,
you should consult your tax adviser. Whenever making an investment in an IRA, be
sure to indicate the year for which the contribution is made.
16
<PAGE>
OTHER INFORMATION
ADDITIONAL INVESTMENT POLICIES
The Funds and Portfolios operate in accordance with "Rule 2a-7" under the
Investment Company Act of 1940. All restrictions relating to maturity, credit
and diversification are interpreted in accordance with that rule.
A Portfolio may from time to time take temporary defensive positions in response
to adverse market, economic, political or other conditions. For instance, the
Portfolios may hold cash in any amount. Each Portfolio may invest in other money
market mutual funds that have substantially similar policies.
Securities in which the Portfolios invest may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The Portfolios limit these securities to those
with an interest rate that is adjusted based solely on a single short-term rate
or index, such as the Prime Rate.
CORE AND GATEWAY(Registered Trademark))
Each Fund is a "gateway" fund in a "Core and Gateway(R)" structure. Each Fund
invests substantially all of its assets in a corresponding Portfolio, each of
which is a series of Core Trust (Delaware) ("Core Trust"), another mutual fund.
A Fund may withdraw its entire investment from a Portfolio at anytime that the
Board decides it is in the Fund's best interest to do so.
The board of trustees of Core Trust formulates the general policies of each
Portfolio and meets periodically to review each Portfolio's performance, monitor
investment activities and practices and discuss other matters affecting each
Portfolio. Additional information about Core Trust's board and executive
officers is in the SAI.
CLASSES OF SHARES
This Prospectus offers Investors Shares of each Fund.
Each Fund also offers Institutional Shares and Institutional Service Shares.
Institutional Shares are designed for institutional investors and Institutional
Service Shares are sold to banks, trust companies and certain other financial
institutions for their own and their customer accounts. You may obtain
prospectuses describing these classes by contacting the Transfer Agent.
DISTRIBUTIONS
Each Fund declares distributions from net investment income daily and pays those
distributions monthly. In addition, each Fund pays capital gain distributions,
if any, at least annually.
17
<PAGE>
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.
TAXES
GENERAL
Each Fund 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 (including short-term capital gain) is
taxable to you as ordinary income. A Fund's distribution of long-term capital
gain, if any, is taxable to you as long-term capital gain regardless of how long
you have held Fund Shares.
Each 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, including state and
local tax matters please see the SAI and consult your tax adviser.
DAILY ASSETS MUNICIPAL FUND
Generally, you are not subject to Federal income tax on distribution
of tax-exempt interest income. Distributions of
other investment income and short-term capital gain is taxable to you as
ordinary income. It is anticipated that substantially all of the Fund's net
investment income will be "tax-exempt interest income."
If you are a "substantial user" or a "related person" of a substantial user of
facilities financed by "private activit" securities held by the Fund, you may
have to pay Federal income tax on your pro rata share of the net income
generated from these securities. Distributions of interest income on certain
private activity bonds is an item of tax preference for purposes of individual
and corporate Federal alternative minimum tax.
18
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand the performance of
Investor Shares of each Fund. Daily Assets Government Fund and Daily Assets Cash
Fund commenced operations before the offering of Investor Shares. Performance
information for these Funds' Institutional Service Shares is included in the
table. Total return in the table represents the rate an investor would have
earned on an investment in a Fund (assuming the reinvestment of all
distributions). This information has been audited by KPMG LLP. Each Fund's
financial statements and the independent auditor's report are included in the
Annual Report dated August 31, 1999, which is available upon request, without
charge.
DAILY ASSETS TREASURY OBLIGATIONS FUND
INVESTOR
YEAR/PERIOD(2) AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.04 0.02
Total From Investment Operations 0.04 0.02
Less Distributions:
From Net Investment Income (0.04) (0.02)
Total Distributions (0.04) (0.02)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.87% 0.78%(3)
Gross Expenses2) 100.05% 727.11%(3)
Net Investment Income 3.87% 5.06(3)
Total Return 4.00% 0.33%
Net Assets at End of Period $33 $10
(in thousands)
(1) DAILY ASSETS TREASURY OBLIGATIONS FUND COMMENCED THE OFFERING OF THE
INVESTOR SHARES ON APRIL 1, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
19
<PAGE>
DAILY ASSETS GOVERNMENT FUND(1)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTOR INSTITUTIONAL SERVICE
YEAR/PERIOD ENDED: AUGUST 31, AUGUST 31 MARCH 31,
1999(4) 1998(5) 1997(5) 1997(5) 1996(5) 1995(5)
SELECTED DATA FOR A SINGLE
SHARE
Beginning Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
Income from Investment
Operations:
Net Investment Income 0.04 0.05 0.02 0.05 0.05 0.04
Total From Investment 0.04 0.05 0.02 0.05 0.05 0.04
Operations
Less Distributions:
From Net Investment Income (0.04) (0.05) (0.02) (0.05) (0.05) (0.04)
Total Distributions (0.04) (0.05) (0.02) (0.05) (0.05) (0.04)
Ending Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.75%(3) 0.46% 0.50%(3) 0.50% 0.50% 0.37%
Gross Expenses(2) 5.45%(3) 0.91% 0.95%(3) 0.99% 1.06% 1.10%
Net Investment Income 4.25%(3) 4.93% 4.76%(3) 4.70% 5.01% 4.45%
Total Return 4.43% 5.04% 2.01% 4.80% 5.18% 4.45%
Net Assets at End of Period $703 $9,485 $44,116 $43,975 $43,103 $36,329
(in thousands)
</TABLE>
(1) EFFECTIVE JUNE 19, 1997, THE FUND CHANGED ITS FISCAL YEAR END FROM MARCH 31
TO AUGUST 31.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
20
<PAGE>
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INVESTOR
YEAR/PERIOD ENDED AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.04 0.02
Net Realized and Unrealized Gain (Loss) on
Investments --- ---
Total From Investment Operations 0.04 0.02
Less Distributions:
From Net Investment Income (0.04) (0.02)
Total Distributions (0.04) (0.02)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.84% 0.78%(3)
Gross Expenses(2) 148.94% 766.21(3)
Net Investment Income 4.24% 5.06%(3)
Total Return 4.32% 0.35%
Net Assets at End of Period $11 $10
(in thousands)
(1) DAILY ASSETS GOVERNMENT OBLIGATIONS FUND COMMENCED THE OFFERING OF INVESTOR
SHARES ON AUGUST 6, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
21
<PAGE>
DAILY ASSETS CASH FUND(1)
<TABLE>
<S> <C> <C> <C> <C>
INVESTOR INSTITUTIONAL SERVICE
YEAR/PERIOD ENDED: AUGUST 31, AUGUST 31,
1999(4) 1998(4) 1998(5) 1997(5)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.04 0.02 0.05 0.05
Total From Investment Operations 0.04 0.02 0.05 0.05
Less Distributions:
From Net Investment Income (0.04) (0.02) (0.05) (0.05)
Total Distributions (0.04) (0.02) (0.05) (0.05)
Ending Net Asset Value Per Share $1.00 $1.00 $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses .90% .78%(3) .46% .52%(3)
Gross Expenses(1) 9.24% 709.02(3) .90% 1.22%(3)
Net Investment Income 4.13% 5.25%(3) 5.22% 5.06%(3)
Total Return 4.40% 5.37% 5.34% 4.70%
Net Assets at End of Period $458 $10 $5,235 $12,076
(in thousands)
</TABLE>
22
<PAGE>
(1) EFFECTIVE JUNE 19, 1997, THE FUND CHANGED ITS FISCAL YEAR END FROM MARCH 31
TO AUGUST 31.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
23
<PAGE>
DAILY ASSETS MUNCIPAL FUND
INVESTOR
YEAR/PERIOD ENDED: AUGUST 31,
1999 1998(2)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.02 0.01
Total From Investment Operations 0.02 0.01
Less Distributions:
From Net Investment Income (0.02) (0.01)
Total Distributions (0.02) (0.01)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.88% 0.78%(3)
Gross Expenses(1) 33.51% 749.30%(3)
Net Investment Income 2.23% 2.53%(3)
Total Return 2.36% 0.18%
Net Assets at End of Period $76 $10
(in thousands)
(1) DAILY ASSETS MUNICIPAL FUND COMMENCED THE OFFERING OF INVESTOR SHARES ON
AUGUST 6, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
24
<PAGE>
<TABLE>
<S> <C>
FOR MORE INFORMATION: LOGO
The following documents are available free upon request: INVESTOR SHARES
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about each Fund's DAILY ASSETS TREASURY
investments is available in the Fund's annual and OBLIGATIONS FUND
semi-annual reports to shareholders. In each Fund's annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. DAILY ASSETS GOVERNMENT FUND
STATEMENT OF ADDITIONAL INFORMATION ("SAI") DAILY ASSETS GOVERNMENT
The SAI provides more detailed information about each Fund and is OBLIGATIONS FUND
incorporated by reference into this Prospectus.
DAILY ASSETS CASH FUND
CONTACTING THE FUNDS DAILY ASSETS
You can get a free copy of both reports and the SAI, request other MUNICIPAL FUND
information and discuss your questions about each Fund by contacting the Funds at:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
800-943-6786
800-94FORUM
207-879-0001
SECURITIES AND EXCHANGE COMMISSION INFORMATION You can also
review the Funds' reports and SAIs at the Public Reference Room of
the Securities and Exchange Commission ("SEC"). You can get copies, for a fee,
by writing to the following:
Forum Funds
Public Reference Room P.O. Box 446
Securities and Exchange Commission Portland, Maine 04112
Washington, D.C. 20549-6009 800-94FORUM or
E-mail address: [email protected] 800-943-6786
207-879-0001
The scheduled hours of operation of the Public Reference Room may be obtained by
calling the SEC at 1-202-942-8090. Free copies of the reports and SAIs are
available from the SEC's Internet website at http://www.sec.gov.
</TABLE>
Investment Company Act File No. 811-3023
25
<PAGE>
LOGO
PROSPECTUS
INSTITUTIONAL SHARES
JANUARY 1, 2000
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
FIVE MONEY MARKET FUNDS THAT, WITH THE EXCEPTION OF DAILY ASSETS MUNICIPAL FUND,
SEEK TO PROVIDE HIGH CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND THE MAINTENANCE OF LIQUIDITY. DAILY ASSETS MUNICIPAL FUND
SEEKS TO PROVIDE HIGH CURRENT INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX AND
THAT IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUNDS' SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Summary
Performance
Fee Tables
Management
Your Account
How to Contact the Funds
General Information
Buying Shares
Selling Shares
Exchange Privileges
Other Information
Financial Highlights
<PAGE>
SUMMARY
This Prospectus offers Institutional Shares of Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund (each a "Fund").
Institutional Shares are designed for institutional investors.
INVESTMENT OBJECTIVES
The investment objective of each Fund, except Daily Assets Municipal Fund, is .
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of .Daily
Assets Municipal Fund is to provide high current income that is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
PRINCIPAL INVESTMENT STRATEGIES
[Margin callout:Concepts to Understand
MONEY MARKET SECURITY means a high credit quality, short-term, U.S.
dollar denominated debt security
TREASURY SECURITY means a security that is issued or guaranteed by the
U.S. Treasury
GOVERNMENT SECURITY means a security that is issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
REPURCHASE AGREEMENT means a transaction in which a Fund purchases
securities and simultaneously commits to resell the securities to the
other party at an agreed-upon date and at a price reflecting a market
rate of interest
MUNICIPAL SECURITY means a security issued by a U.S. state, territory,
local government or related financing authority the interest on which
is exempt from Federal income tax
Each Fund invests in a diversified portfolio of Money Market Securities and:
o seeks to maintain a stable net asset value of $1.00 per share
o invests in securities with remaining maturities of 397 days or less
o maintains a dollar weighted average maturity of its investments of 90 days
or less
Each Fund invests substantially all of its assets in another mutual fund (a
"Portfolio"). Which has the same investment objective and substantially similar
investment policies. The Portfolios in which the Funds invest and their primary
investments are:
2
<PAGE>
<TABLE>
<S> <C>
FUND/PORTFOLIO PRIMARY INVESTMENTS
Daily Assets Treasury Obligations At least 65% of total assets in Treasury Securities and related Repurchase
Fund/Treasury Cash Portfolio Agreements backed by Treasury Securities
Daily Assets Government Treasury Securities and Government Securities that generally are exempt from state and
Fund/Government Portfolio local income taxes
Daily Assets Government Obligations At least 65% of total assets in Government Securities and in Repurchase Agreements
Fund/Government Cash Portfolio backed by these securities
Daily assets Cash Fund/Cash A spectrum of Money Market Securities including:
Portfolio o securities issued by financial institutions, such as certificates of deposits, bank
notes, bankers acceptances and time deposits of banks and their foreign branches
o securities issued by domestic companies, such as commercial paper
o Government Securities and
o repurchase agreements.
Daily Assets Municipal A spectrum of Money Market Securities. Up to 20% of assets may be invested in Municipal
Fund/Muncipal Cash Portfolio Securities or other Money Market Securities whose interest is subject to Federal income
tax.
</TABLE>
The investment adviser for the Portfolios (the "Adviser") continuously monitors
economic factors such as interest rate outlooks and technical factors such as
prevailing interest rates and Federal Reserve policy to determine an appropriate
maturity profile for the Portfolio's investments. The Adviser searches for
securities that satisfy the maturity profile of a Portfolio and that provide the
greatest potential return relative to the risk of the security.
Daily Assets Municipal Fund has substantial exposure to Municipal Securities
that are supported by various types of third party credit and liquidity
enhancements. These investments are often comprised of long term Municipal
Securities structured to allow the owner the option to sell the security back to
the issuer or another person and with interest rates that are reset
periodically. The Adviser reviews and considers these factors in its investment
decisions and will only purchase a Municipal Security if it believes that third
party credit and liquidity supporters possess minimal credit risk.
The Adviser may sell a Money Market Security if (i) revised economic forecasts
or interest rate outlook requires a repositioning of the Portfolio, (ii) the
security subsequently fails to meet the Adviser's investment criteria or (iii)
funds are needed for another purpose.
PRINCIPAL RISKS OF INVESTING IN A FUND
Margin callout: MONEY MARKET FUND DISCLOSURE
An investment in a Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government. agency. Although each Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in a Fund.
3
<PAGE>
There is no assurance that any Fund will achieve its investment objective. An
investment in a Fund is not by itself a complete or balanced investment program.
The principal risks of investing in a Fund are described below.
These risks can result in a decrease in the value of a security or all the
securities owned by a Fund and, therefore, a change in the Fund's $1.00 per
share value. These risks also can result in lower investment performance
INTEREST RATE RISK Changes in interest rates may affect the value of a
Portfolio's investments. Because the Portfolios invest in short-term securities,
a decline in interest rates will affect the Portfolios' yields as these
securities mature or are sold and the Portfolios purchase new short-term
securities with lower interest rates. Increases in interest rates may cause the
value of a Portfolio's investments to decline. The change in value for
short-term securities is usually smaller than for securities with longer
maturities. Because the Portfolios invest in securities with short-term
maturities and seek to maintain a stable net asset value of $1.00 per share, it
is possible, though unlikely, that an increase in interest rates would change
the value of your investment.
CREDIT RISK The value of a security held by a Portfolio may decline if the
security's credit rating is downgraded or credit quality otherwise falls. The
Portfolios invest in highly-rated securities to minimize credit risk.
MANAGEMENT RISK As with all mutual funds, the Adviser may make poor investment
decisions.
LOCAL ECONOMIC/POLITICAL RISK Changes in state or regional economies or politics
can adversely affect the value of the Municipal Securities issued in that
location. Daily Assets Municipal Fund may invest up to 35% of its total assets
in Municipal Securities issuers located in one state or territory.
4
<PAGE>
PERFORMANCE
The following charts and tables provide some indication of the historical risks
of investing in Daily Assets Government Fund and Daily Assets Cash Fund by
showing changes in the performance of the Funds from year to year and each
Fund's returns. Because the Institutional Shares of each Fund commenced
operations in 1998, the information in the bar chart and performance table is
for each Fund's Institutional Service Shares. The returns for Institutional
Service Shares are similar to that of Institutional Shares. The returns of the
classes differ only to the extent that the classes have different expenses.
PERFORMANCE INFORMATION PRESENTED HERE REPRESENTS ONLY PAST PERFORMANCE AND DOES
NOT NECESSARILY INDICATE FUTURE RESULTS. THERE ARE NO CHARTS AND TABLES FOR
DAILY ASSETS TREASURY OBLIGATIONS FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
OR DAILY ASSETS MUNICIPAL FUND BECAUSE THESE FUNDS HAVE NOT COMPLETED A FULL
CALENDAR YEAR OF OPERATIONS.
DAILY ASSETS GOVERNMENT FUND
The following chart shows the annual total returns for each full calendar year
that the Institutional Service Shares have operated.
[GRAPHIC REPRESENTATION OF A BAR CHART]
1993 - 2.83%
1994 - 3.80%
1995 - 5.36%
1996 - 4.82%
1997 - 4.87%
1998 - 4.97%
The calendar year-to-date total return as of September 30, 1999 was
3.47%.
During the periods shown in the chart, the highest quarterly return was 5.56%
(for the quarter ended March 31, 1995) and the lowest return was 2.78% (for the
quarter ended June 30, 1993).
The following table lists the Institutional Service Shares' average annual total
return as of December 31, 1998.
5
<PAGE>
DAILY ASSETS
YEAR(S) GOVERNMENT FUND
1 Year 4.97%
5 Year 4.76%
Since Inception (7/1/92) 4.34%
DAILY ASSETS CASH FUND
The following chart shows the annual total returns for each full calendar year
that the Institutional Service Shares have operated.
[GRAPHIC REPRESENTATION OF A BAR CHART]
1997 - 5.23%
1998 - 5.26%
The calendar year-to-date total return as of September 30, 1999 was
3.51%.
During the periods shown in the chart, the highest quarterly return was 5.39%
(for the quarter ended March 31, 1998) and the lowest return was 5.01% (for the
quarter ended December 31, 1998).
The following table lists the Institutional Service Shares average annual total
returns as of December 31, 1998.
DAILY ASSETS
YEAR(S) CASH FUND
1 Year 5.26%
Since Inception (10/1/96) 5.22%
6
<PAGE>
FEE TABLES
The following tables describe the various fees and expenses that you will pay if
you invest in Institutional Shares of a Fund. There are no charges to purchase
or redeem Fund shares.
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
Daily Assets Treasury Obligations Fund
- --------------------------------------------------------------------------------
Management Fees (1) 0.14%
- --------------------------------------------------------------------------------
Distribution (Rule 12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses 0.18%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (2) 0.32%
Fee Waivers and Expense Reimbursements (3) 0.02%
Net Expenses 0.30%
- --------------------------------------------------------------------------------
Daily Assets Government Fund
- --------------------------------------------------------------------------------
Management Fees (1) 0.15%
- --------------------------------------------------------------------------------
Distribution (Rule 12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses 0.46%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (2) 0.61%
Fee Waivers and Expense Reimbursements (3) 0.31%
Net Expenses 0.30%
- --------------------------------------------------------------------------------
Daily Assets Government Obligations Fund
- --------------------------------------------------------------------------------
Management Fees (1) 0.13%
- --------------------------------------------------------------------------------
Distribution (Rule 12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses 0.27%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (2) 0.40%
Fee Waivers and Expense Reimbursements (3) 0.10%
Net Expenses 0.30%
- --------------------------------------------------------------------------------
Daily Assets Cash Fund
- --------------------------------------------------------------------------------
Management Fees (1) 0.13%
- --------------------------------------------------------------------------------
Distribution (Rule 12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses 0.22%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (2) 0.35%
Fee Waivers and Expense Reimbursements (3) 0.05%
Net Expenses 0.30%
- --------------------------------------------------------------------------------
Daily Assets Municipal Fund
- --------------------------------------------------------------------------------
Management Fees (1) 0.15%
- --------------------------------------------------------------------------------
Distribution (Rule 12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses 0.57%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES (2) 0.72%
Fee Waivers and Expense Reimbursements (3) 0.42%
Net Expenses 0.30%
- --------------------------------------------------------------------------------
(1) INCLUDES ALL INVESTMENT ADVISORY AND ADMINISTRATION FEES.
(2) BASED ON AMOUNTS INCURRED DURING EACH FUND'S LAST FISCAL YEAR ENDED AUGUST
31, 1999 STATED AS A PERCENTAGE OF ASSETS PRIOR TO FEE WAIVERS AND
REIMBURSEMENTS. EACH FUND'S EXPENSES INCLUDE ITS PRO-RATA SHARE OF THE
EXPENSES OF ITS CORRESPONDING PORTFOLIO.
(3) BASED ON CERTAIN CONTRACTUAL FEE WAIVERS AND EXPENSE REIMBURSEMENTS THAT
MAY DECREASE AFTER AUGUST 31, 2000. DURING THE FISCAL YEAR ENDED AUGUST 31,
1999, EACH FUND'S TOTAL ANNUAL FUND OPERATING EXPENSES INCLUDING FEE
WAIVERS AND EXPENSE REIMBURSEMENTS WERE 0.05% FOR DAILY ASSETS MUNICIPAL
FUND AND 0.20% FOR EACH OTHER FUND.
7
<PAGE>
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in the Institutional Shares of a Fund to the cost of investing in
other mutual funds. The example assumes that you invest $10,000 in a Fund for
the time periods indicated and then redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% annual
return, that the operating expenses remain the same as stated in the above
table, 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> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS FUND GOVERNMENT OBLIGATIONS FUND CASH MUNICIPAL FUND
FUND FUND
1 year $31 $31 $31 $31 $31
3 years $97 $97 $97 $97 $97
5 years $169 $169 $169 $169 $169
10 years $381 $381 $381 $381 $381
</TABLE>
As money marked funds, the Funds must meet the requirements of SEC Rule 2a-7.
The Rule imposes strict requirements on the investment quality, maturity, and
diversification of each Fund's investments. Under Rule 2a-7, each Fund's
investments must have a remaining maturity of no more than 397 days and the Fund
must maintain an average weighted maturity that does not exceed 90 days.
MANAGEMENT
Each Fund is a series of Forum Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and of 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 each Fund's
performance, monitor investment activities and practices and discuss other
matters affecting each Fund. Additional information about the Board and the
Trust's executive officers is in the Statement of Additional Information
("SAI").
THE ADVISER
Each Portfolio's Investment Adviser is Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101. The Adviser's primary business is fixed
income investment management and, in addition to the portfolios, advises two
other money market funds and five taxable and tax-free bond funds. The Adviser
makes investment decisions for each Portfolio.
During the Funds' last fiscal year, as a percentage of average net assets, the
aggregate advisory fees paid to the Adviser were:
8
<PAGE>
PORTFOLIO ADVISORY FEE
Treasury Cash Portfolio 0.035%
Government Portfolio 0.050%
Government Cash Portfolio 0.035%
Cash Portfolio 0.035%
Municipal Cash Portfolio 0.050%
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provides various services to
each Fund. As of September 30, 1999, Forum provided administration and
distribution services to investment companies and collective investment funds
with assets of approximately $94 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 representative
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 the Funds' shares.
Forum Administrative Services, LLC ("FAdS") provides administrative services to
each Fund, Forum Accounting Services, LLC is each Fund's fund accountant, and
Forum Shareholder Services, LLC (the "Transfer Agent") is each Fund's transfer
agent.
FUND EXPENSES
Certain service providers of each Fund have undertaken to waive a portion of
their fees in order to limit total operating expenses (excluding taxes,
interest, portfolio transaction expenses and extraordinary expenses) of
Institutional Shares to 0.05% for Daily Assets Municipal Fund and 0.20% for each
other Fund
9
<PAGE>
YOUR ACCOUNT
[Margin Callout]HOW TO CONTACT THE FUNDS
Write to us at:
Forum Shareholder Services, LLC
Attn: (Name of Your Fund)
P.O. Box 446
Portland, Maine 04112
Telephone us at:
(800) 94FORUM or (800) 943-6786 (Toll Free)
(207) 879-0001
Wire investments (or ACH payments) to us at:
Bankers Trust Company
New York, New York
ABA #021001033
FOR CREDIT TO:
Forum Shareholder Services, LLC
Account # 01-465-547
Re: (Name of Your Fund)
(Your Name)
(Your Account Number)]
GENERAL INFORMATION
You may purchase or sell (redeem) shares at the net asset value of a share
("NAV") next calculated after the Transfer Agent receives your request in proper
form accompanied by funds on deposit at a Federal Reserve Bank ("Federal Funds).
Investments are not accepted or invested by a Fund during the period before the
receipt of Federal Funds.
Shares become entitled to receive distributions on the day of purchase if the
order and payment are received by the Transfer Agent as follows:
TIMES INDICATED ARE EASTERN TIME
ORDER MUST BE PAYMENT MUST BE RECEIVED
RECEIVED BY BY
DAILY ASSETS GOVERNMENT FUND,
DAILY ASSETS TREASURY OBLIGATIONS FUND,
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS MUNICIPAL FUND 12:00 p.m. 4:00 p.m.
DAILY ASSETS CASH FUND 2:00 p.m. 4:00 p.m.
On days that the Bond Market Association recommends an early close of the
governmnet securities or that those markets or Federal Reserve Bank of San
Francisco closes early, the Trust may advance the time by which the Transfer
Agent must receive completed purchase and redemption orders.
10
<PAGE>
If you purchase shares directly from a Fund, you will receive monthly statements
and a confirmation of each transaction. You should verify the accuracy of all
transactions in your account as soon as you receive your confirmations.
Each Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED Each Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., eastern time) on each weekday
except days when the New York Stock Exchange is closed. The time at which NAV is
calculated may change in case of an emergency. In order to maintain a stable NAV
of $1.00 per share, each Fund (and the Portfolios in which they invest) values
the securities in its portfolio on an amortized cost basis
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 a Fund. Financial institutions may charge transaction
fees and may set different minimum investments or limitations on buying or
selling shares. These institutions also may provide you with certain shareholder
services such as periodic account statements and trade confirmations. 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, sole proprietorship, joint and gifts or transfer to
minors accounts, the check must be made payable to "Forum Funds" or to one
or more owners of the account and endorsed to "Forum Funds." For all other
accounts, the check must be made payable on its face to "Forum Funds." No
other method of check payment is acceptable (for instance, 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 to
settle. 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.
11
<PAGE>
MINIMUM INVESTMENTS Each Fund accepts payments in the following minimum amounts
<TABLE>
<S> <C> <C>
MINIMUM INITIAL INVESTMENT MINIMUM ADDITIONAL INVESTMENT
Standard Accounts $1,000,000 $250
</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 on
proprietorship accounts. Joint accounts can have two or the account
more owners
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a
These custodial accounts provide a way to give money to a custodial account under the UGMA or UTMA
child and obtain tax benefits. An individual can give up o The trustee must sign instructions in a manner
to $10,000 a year per child without paying Federal gift tax indicating trustee capacity
BUSINESS ENTITIES o For entities with officers, submit a Corporate/Organization
Resolution Form or similar document
o For entities with partners or other interested
parties, submit a Corporate/Organization
Resolution Form or similar document
TRUSTS o The trust must be established before an account can be opened
o Submit a Corporate/Organization Resolution Form or similar
document
</TABLE>
12
<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 BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
o Complete the application o Instruct your bank to wire your money to us
o Call us and we will assign you an account number
o Mail us your application
o Instruct your bank to wire your money to us
BY ACH PAYMENT BY SYSTEMATIC INVESTMENT
o Call or write us for an account application o Complete the systematic investment section of
o Complete the application the application
o Call us and we will assign you an account number o Attach a voided check to your application
o Mail us your application o Mail us the completed application
o Make an ACH payment
</TABLE>
LIMITATIONS ON PURCHASES Each Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
a Fund or its operations.
SELLING SHARES
Generally, a Fund will send redemption proceeds to you immediately after
receiving your redemption request in proper form.
Shares are not entitled to receive distributions declared on or after the day in
which a redemption order is accepted by the Transfer Agent.
13
<PAGE>
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 did not decline wire redemption privileges on your account
application
o Call us with your request (unless you declined telephone redemption
privileges on your account application - See "By Telephone") OR
o Mail us your request (See "By Mail")
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 the 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 on your
account application - See "By Wire")
SYSTEMATICALLY
o Complete the systematic withdrawal section of your account application
o Attach a voided check to your application
o Mail us your completed application
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.
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined wire redemption privileges on your account application. The minimum
amount that may be redeemed by wire is $5,000. If the Transfer Agent receives
your wire redemption order after 12:00 p.m., eastern time (or other time as may
be determined), for Daily Assets Government Fund and Daily Assets Municipal
14
<PAGE>
Fund, or after 2:00 p.m., eastern time (or other time as may be determined), for
each other Fund, the Transfer Agent will wire proceeds to you on the next Fund
business day.
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.
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name
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 systematic investment or withdrawal, distribution, telephone
redemption or exchange option or may other election in connection with your
account
SMALL ACCOUNTS If the value of your account falls below $1,000 ($500 for IRA
accounts), a Fund may ask you to increase your balance. If the account value is
still below $1,000 ($500 for IRAs) 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
this amount solely as a result of a reduction in your account's market value.
REDEMPTIONS IN KIND Each Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash.
EXCHANGE PRIVILEGES
You may exchange your Institutional Shares for Institutional Shares of another
Fund.
REQUIREMENTS You may exchange only between identically registered accounts
(name(s), address and taxpayer ID number). New accounts opened through an
exchange will be assigned the same shareholder privileges as the initial
account. You may exchange your shares by mail or 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.
15
<PAGE>
HOW TO EXCHANGE
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account numbers
o The names of the funds from which you are selling and into
which you are exchanging
o The dollar amount or number of shares you want to sell (and
exchange)
o Open a new account and complete an account application if you are
requesting different shareholder privileges
o Mail us request and documentation
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
priviledges 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
16
<PAGE>
OTHER INFORMATION
ADDITIONAL INVESTMENT POLICIES
The Funds and Portfolios operate in accordance with "Rule 2a-7" under the
Investment Company Act of 1940. All restrictions relating to maturity, credit
and diversification are interpreted in accordance with that rule.
A Portfolio may from time to time take temporary defensive positions in response
to adverse market, economic, political or other conditions. For instance, the
Portfolios may hold cash in any amount. Each Portfolio may invest in other money
market mutual funds that have substantially similar policies.
Securities in which the Portfolios invest may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The Portfolios limit these securities to those
with an interest rate that is adjusted based solely on a single short-term rate
or index, such as the Prime Rate.
CORE AND GATEWAY(Registered Trademark)
Each Fund is a "gateway" fund in a "Core and Gateway(R)" structure. Each Fund
invests substantially all of its assets in a corresponding Portfolio, each of
which is a series of Core Trust (Delaware) ("Core Trust"), another mutual fund.
A Fund may withdraw its entire investment from a Portfolio at anytime that the
Board decides it is in the Fund's best interest to do so.
The board of trustees of Core Trust formulates the general policies of each
Portfolio and meets periodically to review each Portfolio's performance, monitor
investment activities and practices and discuss other matters affecting each
Portfolio. Additional information about Core Trust's board and executive
officers is in the SAI.
CLASSES OF SHARES
This Prospectus offers Institutional Shares of each Fund.
Each Fund also offers Investor Shares and Institutional Service Shares. Investor
Shares are designed for retail investors and Institutional Service Shares are
sold to banks, trust companies and certain other financial institutions for
their own and their customer accounts. You may obtain a prospectus describing
these additional classes by contacting the Transfer Agent.
DISTRIBUTIONS
Each Fund declares distributions from net investment income daily and pays those
distributions monthly. In addition, each Fund pays capital gain distributions,
if any, at least annually.
17
<PAGE>
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.
TAXES
GENERAL
Each Fund 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 (including short-term capital gain) is
taxable to you as ordinary income. A Fund's distribution of long-term capital
gain, if any, is taxable to you as long-term capital gain regardless of how long
you have held fund shares.
Each 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, including
state and local tax matters, please see the SAI and consult your tax adviser.
DAILY ASSETS MUNICIPAL FUND
Generally, you are not subject to Federal income tax on distribution of
tax-exempt interest income. Distributions of other investment income and
short-term capital gain is taxable to you as ordinary income. It is anticipated
that substantially all of the Fund's net investment income will be "tax-exempt
interest income".
If you are a "substantial user" or a "related person" of a substantial user of
facilities financed by "private" activity held by the Fund, you may have to pay
Federal income tax on your pro rata share of the net income generated from these
securities. Distributions of interest income on certain private activity bonds
is an item of tax preference for purposes of individual and corporate Federal
alternative ainimum tax.
18
<PAGE>
FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the performance of
Institutional Shares of each Fund. Total return in the table represents the rate
an investor would have earned on an investment in the Institutional Share Class
of a Fund (assuming the reinvestment of all distributions). Prior to the
operation of Institutional Shares, Daily Assets Government Fund and Daily Assets
Cash Fund offered Institutional Service Shares. Performance information for this
class is also included in the following table. This information has been audited
by KPMG LLP. Each Fund's financial statements and the independent auditor's
report are included in the Annual Report dated August 31, 1999, which is
available upon request, without charge.
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL
YEAR/PERIOD ENDING: AUGUST 31, AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.05 0.03
Total From Investment Operations 0.05 0.03
Less Distributions:
From Net Investment Income (0.05) (0.03)
Total Distributions (0.05) (0.03)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.20% 0.20%(3)
Gross Expenses(2) 0.32% 0.47%(3)
Net Investment Income 4.58% 5.41%(3)
Total Return 4.67% 3.34%
Net Assets at End of Period $86,295 $110,561
(in thousands)
(1) DAILY ASSETS TREASURY OBLIGATIONS FUND COMMENCED THE OFFERING OF THE
INSTITUTIONAL SHARES ON JANUARY 22, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
19
<PAGE>
DAILY ASSETS GOVERNMENT FUND (1)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL INSTITUTIONAL SERVICE
YEAR/PERIOD ENDED: AUGUST 31, AUGUST 31, AUGUST 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1998 1997 1997 1996 1995
SELECTED DATA FOR A SINGLE
SHARE
Beginning Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
Income from Investment
Operations:
Net Investment Income 0.05 0.01 0.05 0.02 0.05 0.05 0.04
Total From Investment 0.05 0.01 0.05 0.02 0.05 0.05 0.04
Operations
Less Distributions:
From Net Investment Income (0.05) (0.01) (0.05) (0.02) (0.05) (0.05) (0.04)
Total Distributions (0.05) (0.01) (0.05) (0.02) (0.05) (0.05) (0.04)
Ending Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.20% 0.20%(3) 0.46%(3) 0.50%(3) 0.50% 0.50% 0.37%
Gross Expenses(2) 0.61% 0.69%(3) 0.91%(3) 0.95%(3) 0.99% 1.06% 1.10%
Net Investment Income 4.81% 5.26%(3) 4.93%(3) 4.76%(3) 4.70% 5.01% 4.45%
Total Return 4.92% .89% 5.04% 2.01% 4.80% 5.18% 4.45%
Net Assets at End of Period $28,709 $36,095 $9,485 $44,116 $43,975 $43,103 $36,329
(in thousands)
</TABLE>
(1) EFFECTIVE JUNE 19, 1997, THE FUND CHANGED ITS FISCAL YEAR END FROM MARCH 31
TO AUGUST 31.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
20
<PAGE>
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL
YEAR/PERIOD ENDING: AUGUST 31, AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.05 0.03
Total From Investment Operations 0.05 0.03
Less Distributions:
From Net Investment Income (0.05) (0.03)
Total Distributions (0.05) (0.03)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.20% 0.20%(3)
Gross Expenses(2) 0.40% 0.74%(3)
Net Investment Income 4.85% 5.43%(3)
Total Return 4.98% 3.24%
Net Assets at End of Period $26,627 $15,352
(in thousands)
(1) DAILY ASSETS GOVERNMENT OBLIGATIONS FUND COMMENCED THE OFFERING OF THE
INSTITUTIONAL SHARES ON JANUARY 30, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
21
<PAGE>
DAILY ASSETS CASH FUND(1)
<TABLE>
<S> <C> <C> <C> <C>
INSTITUTIONAL INSTITUTIONAL SERVICE
YEAR/PERIOD ENDED: AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1999 1998 1998 1997
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.05 0.03 0.05 0.05
Less Distributions:
From Net Investment Income (0.05) (0.03) (0.05) (0.05)
Total Distributions (0.05) (0.03) (0.05) (0.05)
Ending Net Asset Value Per Share $1.00 $1.00 $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.20% 0.20%(3) 0.46% 0.52%(3)
Gross Expenses(2) 0.35% 0.68%(3) 0.90% 1.22%(3)
Net Investment Income 4.93% 5.46%(3) 5.22% 5.06%(3)
Total Return 5.07% 2.70% 5.34% 4.70%
Net Assets at End of Period $38,926 $28,396 $5,235 $12,076
===================================
(in thousands)
(1) EFFECTIVE JUNE 19, 1997, THE FUND CHANGED ITS FISCAL YEAR END FROM MARCH 31
TO AUGUST 31.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
<PAGE>
22
</TABLE>
DAILY ASSETS MUNICIPAL FUND
INSTITUTIONAL
YEAR/PERIOD ENDED: AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.03 0.01
Total From Investment Operations 0.03 0.01
Less Distributions:
From Net Investment Income (0.03) (0.01)
Total Distributions (0.03) (0.01)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.05% 0.12%(3)
Gross Expenses(2) 0.72% 1.26%(3)
Net Investment Income 3.10% 3.16%(3)
Total Return 3.15% 0.59%
Net Assets at End of Period $20,624 $20,773
================================================
(in thousands)
(1) DAILY ASSETS MUNICIPAL FUND COMMENCED THE OFFERING OF INSTITUTIONAL SHARES
ON JUNE 25, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
23
<PAGE>
<TABLE>
<S> <C>
FOR MORE INFORMATION FORUM
FUNDS
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about each Fund's investments
is available in the Fund's annual and
semi-annual reports to shareholders. DAILY ASSETS TREASURY
OBLIGATIONS FUND
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about each Fund and is
incorporated by reference into this Prospectus. DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
CONTACTING THE FUNDS DAILY ASSETS CASH FUND
You can get a free copy of both reports and the SAI, request other DAILY ASSETS MUNCIPAL FUND
information and discuss your questions about each Fund by contacting the
Funds at:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
800-94FORUM or 800-943-6786
207-879-0001
SECURITIES AND EXCHANGE COMMISSION INFORMATION
You can also review the Funds' reports (when available) and SAIs at
the Public Reference Room of the Securities and Exchange Commission ("SEC"). LOGO
You can get copies, for a fee, by writing to:
Forum Funds
P.O. Box 446
Public Reference Room Portland, Maine 04112
Securities and Exchange Commission 800-94FORUM or
Washington, D.C. 20549-6009 800-943-6786
E-mail address: [email protected] 207-879-0001
The scheduled hours of operation of the Public Reference Room may be
obtained by calling the SEC at 1-202-942-8090. Free copies of the reports
and SAIs are available from the SEC's Internet website at
http://www.sec.gov.
</TABLE>
Investment Company Act File No. 811-3023
LOGO
PROSPECTUS
INSTITUTIONAL SERVICE SHARES
JANUARY 1, 2000
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
FIVE MONEY MARKET FUNDS THAT, WITH THE EXCEPTION OF DAILY ASSETS MUNICIPAL
FUND, SEEK TO PROVIDE HIGH CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND THE MAINTENANCE OF LIQUIDITY. DAILY ASSETS MUNICIPAL FUND
SEEKS TO PROVIDE HIGH CURRENT INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX
AND THAT IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE
OF LIQUIDITY.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUNDS' SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Summary
Performance
Fee Tables
Management
Your Account
How to Contact the Funds
General Information
Buying Shares
Selling Shares
Exchange Privileges
Other Information
Financial Highlights
<PAGE>
SUMMARY
This Prospectus offers Institutional Service Shares of Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund (each a
"Fund"). Institutional Service Shares are sold to banks, trust companies and
certain other financial institutions for their own and customer accounts.
INVESTMENT OBJECTIVES
The investment objective of each Fund, except Daily Assets Municipal Fund, is to
provide high current income consistent with the preservation of capital and the
maintenance of liquidity. The investment objective of Daily Assets Municipal
Fund is to provide high current income that is exempt from Federal income taxes
to the extent consistent with the preservation of capital and the maintenance of
liquidity.
PRINCIPAL INVESTMENT STRATEGIES
[Margin callout: Concepts to Understand
MONEY MARKET SECURITY means a high credit quality, short-term U.S.
dollar denominated debt security
TREASURY SECURITY means a security that is issued or guaranteed by the
U.S. Treasury
GOVERNMENT SECURITY means a security that is issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
REPURCHASE AGREEMENT means a transaction in which a Fund purchases
securities and simultaneously commits to resell the securities to the
other party at an agreed-upon date and at a price reflecting a market
rate of interest
MUNICIPAL SECURITY means a security issued by a U.S. state, territory,
local government or related financing authority the interest on which
is exempt from Federal income tax
Each Fund invests in a diversified portfolio of Money Market Securities and:
o seeks to maintain a stable net asset value of $1.00 per share
o invests in securities with remaining maturities of 397 days or less
o maintains a dollar weighted average maturity of its investments of 90 days
or less
Each Fund invests substantially all of its assets in another mutual fund (a
"Portfolio"). Each Fund and its corresponding Portfolio have the same investment
objective and substantially similar investment policies.
The Portfolios in which the Funds invest and their primary investments are:
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<TABLE>
<S> <C>
FUND/PORTFOLIO PRIMARY INVESTMENTS
Daily Assets Treasury At least 65% of total assets in Treasury Securities and related
Obligations Fund/Treasury Cash Repurchase Agreements backed by Treasury Securities
Portfolio
Daily Assets Government Treasury Securities and Government Securities that
generally are exempt from state and local income taxes
Daily Assets Government At least 65% of total assets in Government Securities and in Repurchase
Obligations fund/Government Agreements backed by these Securities
Cash Portfolio
Daily Assets Cash Fund/Cash A spectrum of Money Market Securities including
Portfolio o securities issued by financial institutions,
such as certificates of deposits, bank notes, bankers' acceptances
and time deposits of banks and their foreign branches
o securities issued by domestic companies, such as commercial paper
o Government Securities and
o Repurchase Agreements.
Daily Assets Municipal A spectrum of Municipal Securities. Up to 20% of its total assets in Municipal
Fund/Municipal Cash Portfolio Securities or other Money Market Securities whose interest is subject
to federal income tax.
</TABLE>
The investment adviser for the Portfolios (the "Adviser") continuously
monitors economic factors such as interest rate outlooks and technical factors
such as prevailing interest rates and Federal Reserve Policy to determine an
appropriate maturity profile for the Portfolio's investments. The Adviser
searches for securities that satisfy the maturity profile of a Portfolio and
that provide the greatest potential return relative to the risk of the security.
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<PAGE>
Daily Assets Municipal Fund has substantial exposure to Municipal
Securities that are supported by various types of third party credit and
liquidity enhancements. These investments are often compromised of long term
Municipal Securities structured to allow the owner the option to sell the
security back to the issuer or another person and with interest rates that are
reset periodically. The Adviser reviews and considers these factors in its
investment decisions and will only purchase a Municipal Security if it believes
that third party credit and liquidity possess minimal credit risk.
The Adviser may sell a Money Market Security if
o revised economic forecasts or interest rate outlook requires a
repositioning of the Portfolio,
o the security subsequently fails to meet the Adviser's investment
criteria or
o funds are needed for another purpose.
PRINCIPAL RISKS OF INVESTING IN A FUND
MARGIN CALLOUTMONEY MARKET FUND DISCLOSURE
An investment in a Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although each Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in a Fund.
There is no assurance that any Fund will achieve its investment objective. An
investment in a Fund is not by itself a complete or balanced investment program.
The principal risks of investing in a Fund are:
These risks can result in a decrease in the value of a security or all the
securities owned by a Fund and, therefore, change the Fund's $1.00 per share
value. These risks also can result in lower investment performance.
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<PAGE>
INTEREST RATE RISK Changes in interest rates may affect the value of a
Portfolio's investments. Because the Portfolios invest in short-term securities,
a decline in interest rates will affect the Portfolios' yields as these
securities mature or are sold and the Portfolios purchase new short-term
securities with lower interest rates. Increases in interest rates may cause the
value of a Portfolio's investments to decline. The change in value for
shorter-term securities is usually smaller than for securities with longer
maturities. Because the Portfolios invest in securities with short-term
maturities and seek to maintain a stable net asset value of $1.00 per share, it
is possible, though unlikely, that an increase in interest rates would change
the value of your investment.
CREDIT RISK The value of a security held by a Portfolio may decline if the
security's credit rating is downgraded or credit quality otherwise falls. The
Portfolios invest in highly-rated securities to minimize credit risk.
MANAGEMENT RISK As with all mutual funds, the Adviser may make poor investment
decisions.
LOCAL ECONOMIC/POLITICAL RISK Changes in state or regional economies or politics
can adversely affect the value of the Municipal Securities issued in that
location. Daily Assets Municipal Fund may invest up to 35% of its total assets
in Municipal Securities issuers located in one state or territory.
These risks can result in a decrease in the value of a security or all the
securities owned by a Fund and, therefore, change the Fund's $1.00 per share
value. These risks also can result in lower investment performance.
5
<PAGE>
PERFORMANCE
The following charts and tables provide some indication of the historical risks
of investing in the Institutional Service Shares of Daily Assets Government Fund
and Daily Assets Cash Fund by showing changes in the performance of the Funds
from year to year and each Fund's returns. PERFORMANCE INFORMATION PRESENTED
HERE REPRESENTS ONLY PAST PERFORMANCE AND DOES NOT NECESSARILY INDICATE FUTURE
RESULTS. THERE ARE NO CHARTS OR TABLES FOR DAILY ASSETS TREASURY OBLIGATIONS
FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND OR DAILY ASSETS MUNICIPAL FUND
BECAUSE THESE FUNDS HAVE NOT COMPLETED A FULL CALENDAR YEAR OF OPERATIONS.
DAILY ASSETS GOVERNMENT FUND
The following chart shows the annual total returns for each full calendar year
that the Institutional Service Shares have operated.
[EDGAR Representation of bar chart]
1993 2.83%
1994 3.80%
1995 5.36%
1996 4.82%
1997 4.87%
1998 4.97%
The calendar year-to-date total return as of September 30, 1999 was 3.47%.
During the periods shown in the chart, the highest quarterly return was 5.56%
(for the quarter ended March 31, 1995) and the lowest return was 2.78% (for the
quarter ended June 30, 1993).
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<PAGE>
The following table lists the Institutional Service Shares' average annual total
return as of December 31, 1998.
DAILY ASSETS
YEAR(S) GOVERNMENT FUND
1 Year 4.97%
5 Year 4.76%
Since Inception (7/1/92) 4.34%
DAILY ASSETS CASH FUND
DAILY ASSETS CASH FUND
The following chart shows the annual total returns for each full calendar year
that the Institutional Service Shares have operated.
[EDGAR representation of bar chart]
1997 5.23%
1998 5.26%
The calendar year-to-date total return as of September 30, 1999 was 3.51%.
During the periods shown in the chart, the highest quarterly return was 5.39%
(for the quarter ended March 31, 1998) and the lowest return was 5.01% (for the
quarter ended December 31, 1998).
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<PAGE>
The following table lists the Institutional Service Shares average annual total
returns as of December 31, 1998.
DAILY ASSETS
YEAR(S) CASH FUND
1 Year 5.26%
Since Inception (10/1/96) 5.22%
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<PAGE>
FEE TABLES
The following tables describe the various fees and expenses that you will pay if
you invest in the Institutional Service Shares of a Fund. There are no charges
to purchase or redeem Fund shares.
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Daily Assets Treasury Obligations Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.76%
Total Annual Fund Operating Expenses(2) 0.89%
Fee Waiver and Expense Reimbursement (3) 0.34%
Net Expenses 0.55%
Daily Assets Government Fund
Management Fees (1) 0.15%
Distribution (Rule 12b-1) Fees None
Other Expenses 1.00%
Total Annual Fund Operating Expenses(2) 1.15%
Fee Waiver and Expense Reimbursment (3) 0.60%
Net Expenses 0.55%
Daily Assets Government Obligations Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.67%
Total Annual Fund Operating Expenses(2) 0.80%
Fee Waiver and Expense Reimbursement (3) 0.25%
Net Expenses 0.55%
Daily Assets Cash Fund
Management Fees (1) 0.13%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.57%
Total Annual Fund Operating Expenses(2) 0.70%
Fee Waiver and Expense Reimbursement (3) 0.15%
Net Exepnses 0.55%
Daily Assets Municipal Fund
Management Fees (1) 0.15%
Distribution (Rule 12b-1) Fees None
Other Expenses 1.06%
Total Annual Fund Operating Expenses (2) 1.21%
Fee Waiver and Expense Reimbursement (3) 0.66%
Net Expenses 0.55%
(1) INCLUDES INVESTMENT ALL ADVISORY AND ADMINISTRATION FEES.
(2) BASED ON AMOUNTS INCURRED DURING EACH FUND'S LAST FISCAL YEAR ENDED
AUGUST 31, 1999 STATED AS A PERCENTAGE OF ASSETS PRIOR TO FEE WAIVERS
AND REIMBURSEMENTS. EACH FUND'S EXPENSES INCLUDE ITS PRO-RATA SHARE OF
THE EXPENSES OF ITS CORRESPONDING PORTFOLIO.
(3) BASED ON CERTAIN CONTRACTUAL FEE WAIVERS AND EXPENSE REIMBURSEMENTS
CURRENTLY IN EFFECT THAT MAY DECREASE AFTER AUGUST 31, 2000. DURING
THE FISCAL YEAR ENDED 8/31/99, EACH FUND'S TOTAL ANNUYAL FUND
OPERATING EXPENSES INCLUDING FEE WAIVER AND EXPENSE REIMBURSMENTS WERE
0.45% FOR EACH FUND.
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in the Institutional Service Shares of a Fund to the cost of investing
in other mutual Service Shares of a Fund for the time periods indicated and then
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<PAGE>
1redeem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% annual return, that the operating expenses remain
the same as stated in the above table, 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> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS FUND GOVERNMENT OBLIGATIONS FUND CASH MUNICIPAL FUND
FUND FUND
1 year $56 $56 $56 $56 $56
3 years $176 $176 $176 $176 $176
5 years $307 $307 $307 $307 $307
10 years $689 $689 $689 $689 $689
</TABLE>
10
<PAGE>
MANAGEMENT
Each Fund is a series of Forum Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and of 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 each Fund's
performance, monitor investment activities and practices and discuss other
matters affecting each Fund. Additional information about the Board and the
Trust's executive officers is in the SAI.
THE ADVISER
Each Portfolio's investment Adviser is Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101. The Adviser's primary business is fixed
income investment management and, in addition to the Portfolios, advises two
other money market funds and five taxable and tax-free bond funds. The Advisor
makes investment decisions for each Portfolio.
During the Funds' last fiscal year, as a percentage of average net assets, the
aggregate advisory fees paid to the Adviser were:
PORTFOLIO ADVISORY FEE
Treasury Cash Portfolio 0.030%
Government Portfolio 0.050%
Government Cash Portfolio 0.030%
Cash Portfolio 0.030%
Municipal Cash Portfolio 0.050%
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provides various services to
each Fund. As of September 30, 1999, Forum provided administration and
distribution services to investment companies and collective investment funds
with assets of approximately $94 billion.
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<PAGE>
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of each Fund's shares. The distributor acts as the representative
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 the Funds' shares.
Forum Administrative Services, LLC ("FAdS") provides administrative services to
each Fund, and Forum Accounting Services, LLC is each Fund's fund accountant,
Forum Shareholder Services, LLC (the "Transfer Agent") is each Fund's transfer
agent.
The Trust has adopted a shareholder servicing plan that allows the Trust to pay
FAdS a fee for providing service activities for Institutional Service Shares
that are not otherwise provided by the Transfer Agent. FAdS may pay this fee to
various financial institutions that provide shareholder servicing to their
customers invested in Institutional Service Shares.
FUND EXPENSES
Certain service providers of each Fund have undertaken to waive a portion
of their fees in order to limit total Fund operating expenses (excluding taxes,
interest, portfolio transaction expenses and extraordinary expenses) to 0.45% of
each Fund
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<PAGE>
YOUR ACCOUNT
[Margin Callout]HOW TO CONTACT THE FUNDS
Write to us at:
Forum Shareholder Services, LLC
Attn: (Name of Your Fund)
P.O. Box 446
Portland, Maine 04112
Telephone us at:
(800) 94FORUM or (800) 943-6786 (Toll Free)
(207) 879-0001
Wire investments (or ACH payments) to us at:
Bankers Trust Company
New York, New York
ABA #021001033 For Credit to:
Forum Shareholder Services, LLC
Account # 01-465-547
Re: (Name of Your Fund)
(Your Name)
(Your Account Number)]
GENERAL INFORMATION
You may purchase or sell (redeem) shares at the net asset value of a share
("NAV") next calculated after the Transfer Agent receives your request in proper
form accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"). Investments are not accepted or invested by a Fund during the period
before the receipt of Federal Funds.
Shares become entitled to receive distributions on the day of purchase if the
order and payment are received by the Transfer Agent as follows:
TIMES INDICATED ARE EASTERN TIME
ORDER MUST BE PAYMENT MUST BE
RECEIVED BY RECEIVED BY
DAILY ASSETS GOVERNMENT FUND,
DAILY ASSETS TREASURY OBLIGTAIONS
FUND, DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND, DAILY ASSETS
MUNICIPAL FUND 12:00 p.m. 4:00 p.m.
DAILY ASSETS CAHS FUND 2:00 p.m. 4:00 p.m.
On days that the Bond Market Association recommends an early close of the
government securities or that those markets or the New York Stock Exchange or
San Francisco Federal Reserve Bank closes early or the Public Securities
Association recommends that the government securities markets close early, the
Trust may advance the time by which the Transfer Agent must receive completed
purchase and redemption orders.
If you purchase shares directly from a Fund, you will receive monthly statements
and a confirmation of each transaction. You should verify the accuracy of all
transactions in your account as soon as you receive your confirmations.
Each Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED Each Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., eastern time) on each weekday
except days when the New York Stock Exchange is closed. The time at which NAV is
13
<PAGE>
calculated may change in case of an emergency. In order to maintain a stable NAV
of $1.00 per share, each Fund (and the Portfolios in which they invest) values
the securities in its portfolio on an amortized cost basis.
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 a Fund. Financial institutions may charge transaction
fees and may set different minimum investments or limitations on buying or
selling shares. These institutions also may provide you with certain shareholder
services such as periodic account statements and trade confirmations. 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, sole propretorship, joint and gift or
transfer to minors, the check must be made payable to "Forum Funds" or
to one or more owners of the account and endorsed to "Forum Funds."
For all other accounts, the check must be made payable on its face to
"Forum Funds." No other method of check payment is acceptable (for
instance, 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 to settle. Your financial institution may charge you a fee for
this service.
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<PAGE>
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for this
service.
MINIMUM INVESTMENTS Each Fund accepts payments in the following minimum amounts
MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
Standard Accounts $100,000 $250
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 on
proprietorship accounts. Joint accounts can have two or the account
more owners
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a
These custodial accounts provide a way to give money to a custodial account under the UGMA or UTMA
child and obtain tax benefits.
o The custodian must sign instructions in a manner
indicating trustee capacity
BUSINESS ENTITIES o For entities with officers, submit a
Corporate/Organization Resolution form or
similiar document
o For entities with partners or other interested
parties, submit a Corporate/Organization Resolution
form or simliar document
TRUSTS o The trust must be established before an
account can be opened
o Submit a Corporate/Organization Resolution
form or similiar document
15
<PAGE>
INVESTMENT PROCEDURES
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 BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
o Complete the application o Instruct your bank to wire your money to us
o Call us and we will assign you an account number
o Mail us your application
o Instruct your bank to wire your money to us
BY ACH PAYMENT BY SYSTEMATIC INVESTMENT
o Call or write us for an account application o Complete the systematic investment section of
o Complete the application the application
o Call us and we will assign you an account number o Attach a voided check to your application
o Mail us your application o Mail us the completed application
o Make an ACH payment
</TABLE>
LIMITATIONS ON PURCHASES Each Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
a Fund or its operations.
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<PAGE>
SELLING SHARES
Generally, a Fund will send redemption proceeds to you immediately after
receiving your redemption request in proper form.
Shares are not entitled to receive distributions declared on or after the day on
which a redemption order is accepted by the Transfer Agent.
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 did not decline 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 declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which the 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")
SYSTEMATICALLY
o Complete the systematic withdrawal section of your account application
o Attach a voided check to your application
o Mail us your completed application
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.
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<PAGE>
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined wire redemption privileges on your account application. The minimum
amount that may be redeemed by wire is $5,000. If the Transfer Agent receives
your wire redemption order after 12:00 P.M., eastern time (or other time as may
be determined), for Daily Assets Government Fund and Daily Assets Municipal
Fund, or after 2:00 P.M., eastern time (or other time as may be determined), for
each other Fund, the Transfer Agent will wire proceeds to you on the next Fund
business day.
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.
o Sales of over $100,000 worth of shares
o Changes to a shareholder's record name
o Redemption 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)m from yours
o Changes to systematic investment or withdrawal, distribution,
telephone redemption or exchange option or any other election in
connection with your acount
SMALL ACCOUNTS If the value of your account falls below $100,000, a Fund
may ask you to increase your balance. If the account value is still below
$100,000 after 60 days, a Fund may close your account and send you the proceeds.
REDEMPTIONS IN KIND Each Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash.
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<PAGE>
EXCHANGE PRIVILEGES
You may exchange your Institutional Service Shares for Institutional
Service Shares of another Fund or for shares of certain other funds. For a list
of other Funds available for exchange, you may call the Transfer Agent. If you
exchange into a fund that has a sales charge, you will have to pay that fund's
sales charge. If you exchange into a fund that has no sales charge, you will not
have to pay a sales charge at the time of exchange. Because exchanges are a sale
and purchase of shares, they may have tax consequences.
REQUIREMENTS You may exchange only between identically registered accounts
(name(s), address and taxpayer ID number). New accounts opened through an
exchange will be assigned the same shareholder privileges as the initial
account. You may exchange your shares by mail or 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.
HOW TO EXCHANGE
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account numbers
o The names of the funds from which you are selling and into which
you are exchanging
o The dollar amount or number of shares you want to sell (and
exchange)
o Open a new account and complete an account application if you are
requesting different shareholder privileges
o Mail us 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
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<PAGE>
OTHER INFORMATION
ADDITIONAL INVESTMENT POLICIES
The Funds and Portfolios operate in accordance with "Rule 2a-7" under the
Investment Company Act of 1940. All restrictions relating to maturity, credit
and diversification are interpreted in accordance with that rule.
A Portfolio may from time to time take temporary defensive positions in response
to adverse market, economic, political or other conditions. For instance, the
Portfolios may hold cash in any amount. Each Portfolio may invest in other money
market mutual funds that have substantially similar policies.
Securities in which the Portfolios invest may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The Portfolios limit these securities to those
with an interest rate that is adjusted based solely on a single short-term rate
or index, such as the Prime Rate.
CORE AND GATEWAY(Registered Trademark))
Each Fund is a "gateway" fund in a "Core and Gateway(R)" structure. Each Fund
invests substantially all of its assets in a corresponding Portfolio, each of
which is a series of Core Trust (Delaware) ("Core Trust"), another mutual fund.
A Fund may withdraw its entire investment from a Portfolio at anytime that the
Board decides it is in the Fund's best interest to do so.
The board of trustees of Core Trust formulates the general policies of each
Portfolio and meets periodically to review each Portfolio's performance, monitor
investment activities and practices and discuss other matters affecting each
Portfolio. Additional information about Core Trust's board and executive
officers is in the SAI.
20
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CLASSES OF SHARES
This Prospectus offers Institutional Service Shares of each Fund.
Each Fund also offers Investor Shares and Institutional Shares. Investor Shares
are designed for retail investors and Institutional Shares are designed for
institutional investors. You may obtain a prospectus describing these additional
classes by contacting the Transfer Agent.
DISTRIBUTIONS
Each Fund distributes its net investment income monthly 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.
TAXES
GENERAL
Each Fund 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 (including short-term capital gain) is
taxable to you as ordinary income. A Fund's distribution of long-term capital
gain, if any, is taxable to you as long-term capital gain regardless of how long
you have held Fund shares
Each 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, including state and
local tax matters, please see the SAI and consult your tax adviser.
21
<PAGE>
DAILY ASSETS MUNICIPAL FUND
Generally, you are not subject to Federal income tax on distribution of
tax-exempt interest income. Distributions of other investment income and
short-term capital gain is taxable to you as ordinary income. It is anticipated
that substantially all of the Fund's net income will "tax-exempt interest
income."
If you are a "substantial user" or a "related person" of a substantial user of
facilities financed by "private activity" bonds held by the Fund,you may have to
pay Federal income tax on your pro rata share of the net income generated from
these securities. Distributions of interest income on certain private activity
bonds is an item of tax preference for purposes of individual and corporate
Federal Alternative Minimum Tax.
22
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand the performance of
Institutional Service Shares of each Fund. Total return in the table represents
the rate an investor would have earned on an investment in a Fund (assuming the
reinvestment of all distributions). This information has been audited by KPMG
LLP. Each Fund's financial statements and the independent auditor's report are
included in the Annual Report dated August 31, 1999, which is available upon
request, without charge.
DAILY ASSETS TREASURY OBLIGATIONS FUND
YEAR/PERIOD ENDING: AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.04 0.02
Net Realized and Unrealized Gain (Loss) on
Investments --- ---
Total From Investment Operations 0.04 0.02
Less Distributions:
From Net Investment Income (0.04) (0.02)
Total Distributions (0.04) (0.02)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.45% 0.45%(3)
Gross Expenses(2) 0.89% 1.53%(3)
Net Investment Income 4.34% 5.16(3)
Total Return 4.46% 2.19%
Net Assets at End of Period $18,369 $4,448
(in thousands)
(1) DAILY ASSETS TREASURY OBLIGATIONS FUND COMMENCED THE OFFERING OF
INSTITUTIONAL SERVICE SHARES ON JANUARY 22, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND
ITS RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
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DAILY ASSETS GOVERNMENT FUND(1)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
YEAR/PERIOD ENDED: AUGUST 31, MARCH 31,
1999 1998 1997 1997 1996 1995
SELECTED DATA FOR A SINGLE
SHARE
Beginning Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
Income from Investment
Operations:
Net Investment Income 0.05 0.05 0.02 0.05 0.05 0.04
Total From Investment 0.05 0.05 0.02 0.05 0.05 0.04
Operations
Less Distributions:
From Net Investment Income (0.05) (0.05) (0.02) (0.05) (0.05) (0.04)
Total Distributions (0.05) (0.05) (0.02) (0.05) (0.05) (0.04)
Ending Net Asset Value Per $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Share
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.45% 0.46% 0.50%(4) 0.50% 0.50% 0.37%
Gross Expenses(2) 1.15% 0.91% 0.95%(4) 0.99% 1.06% 1.10%
Net Investment Income 4.57% 4.93% 4.76%(4) 4.70% 5.01% 4.45%
Total Return 4.66% 5.04% 2.01% 4.80% 5.18% 4.45%
Net Assets at End of Period $5,775 $9,485 $44,116 $43,975 $43,103 $36,329
(in thousands)
</TABLE>
(1) EFFECTIVE JUNE 19, 1997, THE fUND CHANGED ITS FISCAL YEAR END FROM MARCH 31
TO AGUST 31.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) THESE FIGURES REFLECT THE FINANCIAL HIGHLIGHTS FOR THE PERIOD APRIL 1, 1997
THROUGH AUGUST 31, 1997.
(4) ANNUALIZED.
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<PAGE>
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
AUGUST 31,
YEAR/PERIOD ENDED: 1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.05 0.02
Net Realized and Unrealized Gain (Loss) on
Investments --- ---
Total From Investment Operations 0.05 0.02
Less Distributions:
From Net Investment Income (0.05) (0.02)
Total Distributions (0.05) (0.02)
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.45% 0.45%(3)
Gross Expenses(2) 0.80% 2.13%(3)
Net Investment Income 4.54% 5.16%(3)
Total Return 4.72% 2.22%
Net Assets at End of Period $22,328 $2,390
(in thousands)
(1) DAILY GOVERNMENT OBLIGATIONS FUND COMMENCED THE OFFERING OF THE
INSTITUTIONAL SERVICE SHARES OF ON MARCH 30, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
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<PAGE>
DAILY ASSETS CASH FUND
YEAR/PERIOD ENDED: AUGUST 31,
1999 1998 1997(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.05 0.05 0.05
Net Realized and Unrealized Gain
(Loss) on Investments --- --- ---
Total From Investment Operations 0.05 0.05 0.05
Less Distributions:
From Net Investment Income (0.05) (0.05) (0.05)
Total Distributions (0.05) (0.05) (0.05)
Ending Net Asset Value Per Share $1.00 $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.45% 0.46%(3) 0.52%(3)
Gross Expenses(2) 0.70% 0.90%(3) 1.22%(3)
Net Investment Income 4.59% 5.22%(3) 5.06%(3)
Total Return 4.81% 5.34% 4.70%
Net Assets at End of Period $58,661 $5,235 $12,076
(in thousands)
(1) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(2) DAILY ASSETS CASH FUND COMMENCED THE OFFERING OF THE INSTITUTIONAL SERVICE
SHARES OF ON OCTOBER 1, 1996.
(3) ANNUALIZED.
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<PAGE>
DAILY ASSETS MUNCIPAL FUND
YEAR/PERIOD ENDED: AUGUST 31,
1999 1998(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value Per Share $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.03 ---
Net Realized and Unrealized Gain (Loss) on
Investments --- ---
Total From Investment Operations 0.03 ---
Less Distributions:
From Net Investment Income (0.03) ---
Total Distributions (0.03) ---
Ending Net Asset Value Per Share $1.00 $1.00
OTHER INFORMATION
Ratios to Average Net Assets:
Net Expenses 0.45% 0.59%(3)
Gross Expenses(2) 1.21% 721.84%(3)
Net Investment Income 2.66% 2.76%(3)
Total Return 2.77% 0.20%
Net Assets at End of Period $3,295 $10
(in thousands)
(1) DAILY ASSETS MUNICIPAL FUND COMMENCED THE OFFERING OF THE INSTITUTIONAL
SERVICE SHARES CLASS ON AUGUST 6, 1998.
(2) THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE
RATIO EXCLUDING ANY WAIVERS AND EXPENSE REIMBURSEMENTS FOR THE FUND AND ITS
RESPECTIVE PORTFOLIO.
(3) ANNUALIZED.
27
<PAGE>
<TABLE>
<S> <C>
FOR MORE INFORMATION LOGO
The following documents are available free upon request: INSTITUTIONAL SERVICE SHARES
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about each Fund's investments DAILY ASSETS TREASURY
is available in the Fund's annual and OBLIGATIONS FUND
semi-annual reports to shareholders.
STATEMENT OF ADDITIONAL INFORMATION ("SAI") DAILY ASSETS
The SAI provides more detailed information about each Fund GOVERNMENT FUND
and is incorporated by reference into this Prospectus.
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
CONTACTING THE FUNDS DAILY ASSETS CASH FUND
You can get a free copy of both reports and the SAI, request other
information and discuss your questions about each Fund by
contacting the Funds at:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
800-94FORUM or 800-943-6786
207-879-0001
SECURITIES AND EXCHANGE COMMISSION INFORMATION
You can also review the Funds' reports (when available)
and SAIs at the Public Reference Room of
the Securities and Exchange Commission ("SEC").
You can get copies, for a fee, by writing to:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-6009 Forum Funds
E-mail address: [email protected] P.O. Box 446
Portland, Maine 04112
The scheduled hours of operation of the Public Reference Room may be 800-94FORUM or
obtained by calling the SEC at 1-202-942-8090. Free copies of the 800-943-6786
reports and SAIs are available from the SEC's Internet website at 207-879-0001
http://www.sec.gov.
Investment Company Act File No. 811-3023
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January 1, 2000
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Cash Fund
Fund Information:
Forum Funds
Two Portland Square
Portland, Maine 04101
(207) 879-0001
(800) 94FORUM
Account Information and Shareholder Services:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(207) 879-0001
(800) 94FORUM
This Statement of Additional Information or "SAI" supplements the Prospectuses
dated January 1, 2000, as may be amended from time to time, offering
Institutional Shares, Institutional Service Shares and Investors Shares of Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily Assets Municipal
Fund (the "Funds"). This SAI is not a prospectus and should only be read in
conjunction with a prospectus. The Prospectuses may be obtained without charge
by contacting shareholder services at the address or telephone number listed
above.
<PAGE>
TABLE OF CONTENTS
Glossary ....................................................
1. General Information..........................................
2. Investment Policies and Risks................................
3. Investment Limitations.......................................
4. Performance Data and Advertising.............................
5. Management...................................................
6. Portfolio Transactions.......................................
7. Additional Purchase and Redemption Information...............
8. Taxation ....................................................
9. Other Matters................................................
Appendix A - Description of Securities Ratings........................ A-1
Appendix B - Miscellaneous Tables..................................... B-1
Appendix C - Performance Data......................................... C-1
Appendix D - Additional Advertising Materials......................... D-1
<PAGE>
GLOSSARY
"Adviser" means Forum Investment Advisors, LLC
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"Custodian" means the custodian of each Fund's assets.
"FAdS" means Forum Administrative Services, LLC, administrator of each Fund.
"FAcS" means Forum Accounting Services, LLC, fund accountant of each Fund.
"FFS" means Forum Fund Services, LLC, distributor of each Fund's shares.
"FSS" means Forum Shareholder Services, LLC, transfer agent of each Fund.
"Fund" means each of Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund, Daily Assets Government Obligations Fund, Daily Assets Cash
Fund and Daily Assets Municipal Fund.
"Fitch" means Fitch IBCA, Inc.
"Government Securities" means securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (see prospectus).
"Moody's" means Moody's Investors Service.
"NAV" means net asset value per share (see prospectus).
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means each of Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio, Cash Portfolio or Municipal Cash Portfolio, series of
Core Trust.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation, a division of McGraw Hill Companies.
"Transfer Agent" means Forum Shareholder Services, LLC, the transfer agent and
distribution disbursing agent of each Fund.
"Treasury Securities" means securities issued or guaranteed by the U.S. Treasury
(see prospectus).
"Trust" means Forum Funds.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
<PAGE>
1. GENERAL INFORMATION
Each Fund is a "gateway" fund in a Core and Gateway(R) structure. Each Fund
invests substantially all of its assets in separate Portfolios of Core Trust
(each "a Portfolio"), another open-end, management investment company with
identical investment objectives and substantially similar investment policies,
as follows:
Daily Assets Treasury Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Cash Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
CONSIDERATIONS OF INVESTING IN A PORTFOLIO
A Fund's investment in a Portfolio may be affected by the actions of other
investors in the Portfolio. A Fund may withdraw its entire investment from a
Portfolio at any time if the Board determines that it is in the best interests
of the Fund and its shareholders to do so. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it would incur transaction costs. If a Fund withdrew
its investment from a Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in accordance with its
investment objective and policies by the Adviser or the investment of all of the
Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact FFS
at 800-754-8757. If an investor invests through a financial institution, the
investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
2. INVESTMENT POLICIES AND RISKS
The following discussion supplements the disclosure in the prospectuses about
each Fund's investment techniques, strategies and risks. Unless otherwise
indicated below, the discussion of the investment policies of a Fund also refers
to the investment policies of the Core Portfolio in which the Fund invests.
A. SECURITY RATINGS INFORMATION
Under Rule 2a-7, each Portfolio must normally invest at least 95% of its total
assets in securities that are rated in the highest short-term rating category
for debt obligations, or are unrated and determined to be of comparable quality.
Unrated securities may not be as actively traded as rated securities. A
Portfolio 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 if the Adviser determines that retaining such
security is in the best interests of the Portfolio. 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 securities by
several NRSROs is included in Appendix A to this SAI. The Portfolios 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
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<PAGE>
maturity, interest rate and rating may have different market prices.To the
extent that the ratings given by a 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.
B. FIXED INCOME SECURITIES
1. VARIABLE AND FLOATING RATE SECURITIES
Each Portfolio may invest in fixed income securities with variable or floating
rates. The yield of variable and floating rate securities varies in relation to
changes in specific money market rates, such as the Prime Rate. A "variable"
interest rate adjusts at predetermined intervals (for example, daily, weekly or
monthly), while a "floating" interest rate adjusts whenever a specified
benchmark rate (such as the bank prime lending rate) changes. These changes are
reflected in adjustments to the yields of the variable and floating rate
securities, and different securities may have different adjustment rates.
Accordingly, as interest rates increase or decrease, the appreciation or
depreciation may be less on these obligations than for fixed rate obligations.
To the extent that a Portfolio invests in long-term variable or floating rate
securities, the Adviser believes that the Portfolio may be able to take
advantage of the higher yield that is usually paid on long-term securities.
Each Portfolio will only purchase variable or floating rate securities, whose
interest rate is adjusted based on a single short-term rate or index such as the
Prime Rate. Under Rule 2a-7 of the 1940 Act, a Portfolio may only purchase
securities with maturities of greater than 397 days if they have demand features
that meet certain requirements or they are certain long-term U.S. Government
Securities.
Cash Portfolio also may purchase variable and floating rate corporate master
notes and similar securities. Master notes with variable or floating interest
rates are unsecured obligations that are redeemable upon notice. You may invest
fluctuating amounts in these instruments at varying rates of interest under a
direct arrangement with the issuer. These obligations include master demand
notes. The issuer of these obligations often has the right, after a given
period, to prepay its outstanding principal obligations upon a specified number
of days' notice. These obligations generally are not traded and there is
generally no established secondary market for these obligations. To the extent a
demand note does not have a seven day or shorter demand feature and there is no
readily available market for the obligation, it is treated as an illiquid
security.
2. ASSET BACKED SECURITIES
A Portfolio may purchase adjustable rate mortgage backed or other asset backed
securities (such as Small Business Association Securities that are Government
Securities). Treasury Cash Portfolio may only purchase mortgage backed or asset
backed securities that are U.S. Treasury Securities. These securities directly
or indirectly represent a participation in, or are secured by and payable from,
adjustable rate mortgages or other loans that may be secured by real estate or
other assets. Most mortgage-related securities are pass-through securities,
which means that investors receive payments consisting of a pro-rata share of
both principal and interest (less servicing and other fees), as well as
unscheduled prepayments, as loans in the underlying mortgage pool are paid off
by the borrowers. Additional prepayments to holders of these securities are
caused by prepayments resulting from the sale or foreclosure of the underlying
property or refinancing of the underlying loans. Prepayments of the principal of
underlying loans may shorten the effective maturities of these securities.
Adjustable Rate Mortgage Backed Securities Adjustable rate mortgage securities
("ARMs") are pass-through securities representing interests in pools of mortgage
loans with adjustable interest rates that are reset at periodic intervals,
usually by reference to some interest rate index or market interest rate, and
that may be subject to certain limits. Although the rate adjustment feature may
reduce sharp changes in the value of adjustable rate securities, these
securities can change in value based on changes in market interest rates or
changes in the issuer's creditworthiness. Changes in the interest rates on ARMs
may lag behind changes in prevailing market interest rates. This may result in a
slightly lower net value until the interest rate resets to market rates. Thus, a
Portfolio could suffer some principal loss if the Portfolio sold the securities
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<PAGE>
before the interest rates on the underlying mortgages were adjusted to reflect
current market rates. Some adjustable rate securities (or the underlying
mortgages) are subject to caps or floors, that limit the maximum change in
interest rates during a specified period or over the life of the security.
Small Business Administration Securities Small Business Administration
securities ("SBA") are variable rate securities that are backed by the full
faith and credit of the United States Government, and generally have an interest
rate that resets monthly or quarterly based on a spread to the Prime rate. SBA
securities generally have maturities at issue of up to 40 years. No Portfolio
may purchase an SBA security if, immediately after the purchase, (1) the
Portfolio would have more than 15% of its net assets invested in SBA securities
or (2) the total unamortized premium (or the total unaccreted discount) on SBA
securities would exceed 0.25% of the Portfolio's net assets.
Collateralized Mortgage Obligations Each Portfolio may purchase collateralized
mortgage obligations ("CMOs"), which are collateralized by MBSs or by pools of
conventional mortgages. CMOs are typically have a number of classes or series
with different maturities and are generally retired in sequence. Each class of
bonds receives periodic interest payments according to the coupon rate on the
bonds. However, all monthly principal payments and any prepayments from the
collateral pool are paid first to the "Class 1" bondholders. The principal
payments are such that the Class 1 bonds will be completely repaid no later
than, for example, five years after the offering date. Thereafter, all payments
of principal are allocated to the next most senior class of bonds until that
class of bonds has been fully repaid. Although full payoff of each class of
bonds is contractually required by a certain date, any or all classes of bonds
may be paid off sooner than expected because of an acceleration in pre-payments
of the obligations comprising the collateral pool.
3. MUNICIPAL SECURITIES
Municipal Cash Portfolio may invest in municipal securities. Municipal
securities are issued by the states, territories and possessions of the United
States, their political subdivisions (such as cities, counties and towns) and
various authorities (such as public housing or redevelopment authorities),
instrumentalities, public corporations and special districts (such as water,
sewer or sanitary districts) of the states, territories and possessions of the
United States or their political subdivisions. In addition, municipal securities
include securities issued by or on behalf of public authorities to finance
various privately operated facilities, such as industrial development bonds,
that are backed only by the assets and revenues of the non-governmental user
(such as hospitals and airports).
Bonds and Notes Municipal securities are issued to obtain funds for a variety of
public purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities are
classified as general obligation bonds, revenue bonds and notes. General
obligation securities are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue
securities are payable from revenue derived from a particular facility, class of
facilities or the proceeds of a special excise tax or other specific revenue
source but not from the issuer's general taxing power. Private activity bonds
and industrial revenue bonds do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued.
Leases State and local governments and authorities enter into municipal leases
to acquire equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other assets. Municipal leases permit
governmental issuers to acquire property and equipment without meeting
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes do not apply
to municipal leases that do not require the governmental issuer to satisfy
underlying obligations unless money is appropriated for that purpose by the
state legislature on a yearly or periodic basis.
Puts and Standby Commitments on Municipal Securities The Portfolio may acquire
"puts" on municipal securities. A put gives the Portfolio the right to sell the
municipal security at a specified price at any time on or before a specified
date. The Portfolio may sell, transfer or assign a put only with the sale,
transfer or assignment of the underlying security or securities. The amount
payable to the Portfolio upon its exercise of a "put" is normally: (1) the
Portfolio's acquisition cost of the municipal securities (excluding any accrued
interest which the Portfolio paid on their acquisition), less any amortized
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<PAGE>
market premium or plus any amortized market or original issue discount during
the period the Portfolio owned the securities, plus (2) all interest accrued on
the securities since the last interest payment date during that period.
Puts may be acquired by the Portfolio to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Portfolio's assets at a rate of return more favorable than that of the
underlying security. Puts may, under certain circumstances, also be used to
shorten the maturity of underlying variable rate or floating rate securities for
purposes of calculating the remaining maturity of those securities and the
dollar-weighted average portfolio maturity of the Portfolio's assets. The
Portfolio intends to enter into puts only with dealers, banks and broker-dealers
that, in the Adviser's opinion, present minimal credit risks.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment. The Portfolio's policy
is to enter into stand-by commitment transactions only with municipal securities
dealers that are determined to present minimal credit risks.
The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities that continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value. When the Portfolio
pays directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the
Portfolio's portfolio of securities.
Other Municipal Obligations Variable Rate Demand Notes ("VRDN") are municipal
bonds with maturities of up to 40 years. These instruments have a demand feature
that permits the holder to sell the instruments back to the issuer. A holder of
these instruments may exercise the demand feature at predetermined intervals,
usually daily or weekly. The interest rate on these securities mirror prevailing
interest rates. Tender option bonds have relatively long maturities and fixed
rates of interest. Under an agreement with a third party financial institution,
a holder of these bonds may tender them to the institution and receive the face
value of the bonds. A holder may exercise this option at periodic intervals,
usually six months to a year.
Alternative Minimum Tax Municipal securities are also categorized according to
(1) whether the interest is or is not included in the calculation of alternative
minimum taxes for individuals and corporations, (2) whether the costs of
acquiring or carrying the bonds are or are not deductible in part by banks and
other financial institutions, and (3) other criteria relevant for Federal income
tax purposes. Due to the increasing complexity of the Code and related
requirements governing the issuance of tax-exempt bonds, industry practice has
uniformly required as a condition to the issuance of such bonds, but
particularly for revenue bonds, an opinion of nationally recognized bond counsel
as to the tax-exempt status of interest on the bonds.
4. ZERO COUPON SECURITIES
Government Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
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fluctuation of market value than the other securities in which the Portfolios
may invest. All zero-coupon securities in which the Portfolio invests will have
a maturity of less than 13 months.
The Portfolio must include a portion of the original issue discount of
zero-coupon securities, if any, as income even though these securities do not
pay any interest until maturity. Because the Portfolio distributes all of its
net investment income, the Portfolio may have to sell portfolio securities to
distribute imputed income, which may occur at a time when the Adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
5. FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio currently
are prohibited from purchasing any security issued by the Federal Home Loan
Mortgage Corporation. This does not prohibit the Portfolios from entering into
repurchase agreements collateralized with securities issued by the Federal Home
Loan Mortgage Corporation.
6. GENERAL RISKS
Interest Rate Risk Changes in interest rates affects the market value of the
interest-bearing fixed income securities held by a Portfolio. There is normally
an inverse relationship between the market value of securities sensitive to
prevailing interest rates and actual changes in interest rates. The longer the
remaining maturity (and duration) of a security, the more sensitive the security
is to changes in interest rates. All fixed income securities, including U.S.
Government Securities, can change in value when there is a change in interest
rates.
Credit Risk A Portfolio's investment in fixed income securities is subject to
credit risk relating to the financial condition of the issuers of the securities
that each Portfolio holds. Credit risk is the risk that a counterparty to a
transaction will be unable to honor its financial obligation. To limit credit
risk, each Portfolio only invests in securities rated in the highest rating
category of an NRSRO or those that are unrated and deemed to be of comparable
credit quality by the Adviser.
Mortgage and Asset Backed Securities The value of mortgage-related securities
may be significantly affected by changes in interest rates, the markets'
perception of issuers, the structure of the securities and the creditworthiness
of the parties involved. The ability of a Portfolio to successfully utilize
mortgage-related securities depends in part upon the ability of the Adviser to
forecast interest rates and other economic factors correctly. Some
mortgage-related securities have structures that make their reaction to interest
rate changes and other factors difficult to predict.
Prepayments of principal of mortgage-related securities by mortgagors or
mortgage foreclosures affect the average life of the mortgage-related
securities. Mortgage prepayments may be triggered by various factors, including
the level of interest rates, general economic conditions, the location and age
of the mortgages and other social and demographic conditions. In periods of
rising interest rates, the prepayment rate tends to decrease, lengthening the
average life of a pool of mortgage-related securities. In periods of falling
interest rates, the prepayment rate tends to increase, shortening the average
life of a pool. The volume of prepayments of principal on the mortgages
underlying a particular mortgage-related security will influence the yield of
that security and a Portfolio's yield. Because prepayments of principal
generally occur when interest rates are declining, a Portfolio may have to
reinvest the proceeds of prepayments at lower interest rates then those of their
previous investments. When this occurs, a Portfolio's yield will decline. A
decrease in the rate of prepayments may extend the effective maturities of
mortgage-related securities, increasing their sensitivity to changes in market
interest rates. To the extent that a Portfolio purchases mortgage-related
securities at a premium, unscheduled prepayments, which are made at par, result
in a loss equal to any unamortized premium.
C. REPURCHASE AGREEMENTS AND SECURITIES LENDING
1. GENERAL
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Each Portfolio may enter into Repurchase Agreements. Repurchase Agreements are
transactions in which a Portfolio purchases securities from a bank or securities
dealer and simultaneously commits to resell the securities to the bank or dealer
at an agreed-upon date and at a price reflecting a market rate of interest
unrelated to the purchased security. During the term of a Repurchase Agreement,
the Portfolios' custodian or subcustodian maintains possession of the purchased
securities and any underlying collateral, which is maintained at not less than
100% of the repurchase price. Repurchase Agreements allow a Portfolio to earn
income on its uninvested cash for periods as short as overnight, while retaining
the flexibility to pursue longer-term investments.
2. RISKS
Repurchase Agreements involve credit risk. In the event that bankruptcy,
insolvency or similar proceedings are commenced against a counterparty, a
Portfolio may have difficulties in exercising its rights to the underlying
securities. A Portfolio may incur costs and expensive time delays in disposing
of the underlying securities and it may suffer a loss. Failure by the other
party to deliver a security purchased by or lent by a Portfolio may result in a
missed opportunity to make an alternative investment. Favorable insolvency laws
that allow a Portfolio, among other things, to liquidate the collateral held in
the event of the bankruptcy of the counterparty reduce counterparty insolvency
risk with respect to Repurchase Agreements. A Portfolio will only enter a
Repurchase Agreement with a seller that the Adviser believes present minimal
credit risk.
D. BORROWING
1. GENERAL
Each Portfolio may borrow money from banks for temporary or emergency purposes
in an amount up to 33 1/3% of a Portfolio's total assets. Each Portfolio may
borrow money for other purposes so long as such borrowings do not exceed 5% of a
Portfolio's total assets. The purchase of securities is prohibited if a
Portfolio's borrowing exceeds 5% or more of a Portfolio's total assets.
2. RISKS
The use of borrowing involves special risks, including magnified capital losses.
If a Portfolio buys securities with borrowed Portfolios and the value of the
securities declines, a Portfolio 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 Portfolio 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 Portfolio's investment portfolio, the benefit of
borrowing will be reduced. If the interest expense due to a borrowing
transaction exceeds the net return on a Portfolio's investment portfolio, a
Portfolio's use of borrowing would result in a lower rate of return than if the
Portfolio did not borrow. The size of any loss incurred by a Portfolio due to
borrowing will depend on the amount borrowed. The greater the percentage
borrowed, the greater potential of gain or loss to a Portfolio.
E. WHEN-ISSUED SECURITIES
1. GENERAL
Each Portfolio may purchase securities offered on a when-issued or
delayed-delivery basis. When these transactions are negotiated, the price, which
is generally expressed in yield terms, is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the transaction,
but delayed settlements beyond two months may be negotiated. During the period
between a commitment and settlement, no payment is made for the securities
purchased by the purchaser and thus, no interest accrues to the purchaser from
the transaction. At the time a Portfolio makes the commitment to purchase
securities on a when-issued or delayed delivery basis, the Portfolio will record
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the transaction as a purchase and thereafter reflect the value each day of such
securities in determining its net asset value.
2. RISKS
At the time a Portfolio makes a commitment to purchase securities in this
manner, the Portfolio immediately assumes the risk of ownership, including the
risk that the value of the security may decline. The use of when-issued
transactions and forward commitments enables a Portfolio to protect against
anticipated changes in interest rates and prices, but may also increase the
volatility of the Portfolio's asset value per unit. Failure by a counterparty to
deliver a security purchased by a Portfolio on a when-issued or delayed delivery
basis may result in a loss the Portfolio or a missed opportunity to make an
alternative investment.
F. ILLIQUID SECURITIES
1. GENERAL
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and, except as
otherwise determined by the Adviser, securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
2. RISKS
Limitations on resale may have an adverse effect on the marketability of a
security and a Portfolio might also have to register a restricted security in
order to dispose of it, resulting in expense and delay. A Portfolio might not be
able to dispose of restricted or illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions. There can
be no assurance that a liquid market will exist for any security at any
particular time. Any security, including securities determined by the Adviser to
be liquid, can become illiquid.
3. DETERMINATION OF LIQUIDITY
The 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, 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.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated as illiquid
securities if there is no readily available market for the instrument.
3. INVESTMENT LIMITATIONS
Each Fund has adopted the same investment limitations. The investment objective
of a Fund or Portfolio is fundamental. Each Portfolio and Fund have also adopted
a fundamental policy which provides that, notwithstanding any other investment
policy or restriction (whether fundamental), the Portfolio or Fund, as
applicable, may invest all of its assets in the securities of a single pooled
investment fund having substantially the same investment objectives, policies
and restrictions as the Fund or Portfolio, as applicable.
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A fundamental policy of a Fund cannot be changed without the affirmative vote of
the lesser of: (1) 50 percent of the outstanding shares of the Fund (or
interests in the case of a Portfolio); or (2) 67 percent of the shares of the
Fund (or interests of a Portfolio) present or represented at a shareholders
meeting at which the holders of more than 50 percent of the outstanding shares
of the Fund (or interests in the case of a Portfolio) are present or
represented. The Board may change a nonfundamental policy of a Fund without
shareholder approval and the Core Trust Board may change a nonfundmental policy
of a Portfolio without interestholder consent..
For purposes of all investment policies of the Funds and Portfolios (1) the term
1940 Act includes the rules thereunder, SEC interpretations and any exemptive
order upon which the Fund or Portfolio 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 or Portfolio 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 or Portfolio's assets or purchases and redemptions of shares will
not be considered a violation of the limitation.
A. FUNDAMENTAL LIMITATIONS
GOVERNMENT PORTFOLIO
The Portfolio may not:
DIVERSIFICATION With respect to 75% of its assets, purchase securities, other
than U.S. Government Securities, of any one issuer if more than 5% of the value
of the Portfolio's total assets would at the time of purchase be invested in any
one issuer.
CONCENTRATION Purchase securities, other than U.S. Government Securities, if
more than 25% of the value of the Portfolio's total assets would be invested in
securities of issuers conducting their principal business activity in the same
industry, provided that consumer finance companies and industrial finance
companies are considered to be separate industries and that there is no limit on
the purchase of the securities of domestic commercial banks.
For purposes of concentration: (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
UNDERWRITING Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio securities, the
Portfolio may be deemed to be an underwriter for purposes of the Securities Act
of 1933.
REAL ESTATE Purchase or sell real estate or any interest therein (including
limited partnership interests), except that the Portfolio may invest in debt
obligations secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein.
COMMODITIES Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related contracts
will not be deemed to be physical commodities.
BORROWING Borrow money, except for temporary or emergency purposes (including
the meeting of redemption requests). Total borrowings may not exceed 33 1/3% of
the Portfolio's total assets and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's total assets.
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Outstanding borrowings in excess of 5% of the value of the Portfolio's total
assets must be repaid before any subsequent investments are made by the
Portfolio.
SENIOR SECURITIES Issue senior securities except pursuant to Section 18 of the
1940 Act and except that the Portfolio may borrow money subject to investment
limitations specified in the Portfolio's Prospectus.
LENDING Make loans, except that the Portfolio may (i) purchase debt securities
which are otherwise permissible investments, (ii) enter into Repurchase
Agreements and (iii) lend portfolio securities, but not in an amount greater
than 33 1/3% of the value of the Portfolio's total assets.
PLEDGING Pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness. Collateralized loans of securities are not deemed to be pledges or
hypothecations for this purpose.
OPTIONS Write put and call options.
INVESTING FOR CONTROL Invest for the purpose of exercising control over any
person.
RESTRICTED SECURITIES Purchase restricted securities.
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TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO AND MUNICIPAL
CASH PORTFOLIO
The Portfolios may not:
DIVERSIFICATION With respect to 75% of its assets, purchase a security other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer.
CONCENTRATION Purchase securities if, immediately after the purchase, more than
25% of the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the same
industry; provided, however, that there is no limit on investments in U.S.
Government Securities.
For purposes of concentration: (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
UNDERWRITING Underwrite securities of other issuers, except to the extent that
the Portfolio may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.
REAL ESTATE Purchase or sell real estate or any interest therein, except that
the Portfolio may invest in debt obligations secured by real estate or interests
therein or issued by companies that invest in real estate or interests therein.
COMMODITIES Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related contracts
will not be deemed to be physical commodities.
BORROWING Borrow money, except for temporary or emergency purposes (including
the meeting of redemption requests) and except for entering into reverse
repurchase agreements, provided that borrowings do not exceed 33 1/3% of the
value of the Portfolio's total assets.
SENIOR SECURITIES Issue senior securities except as appropriate to evidence
indebtedness that the Portfolio is permitted to incur, and provided that the
Portfolio may issue shares of additional series or classes that the Trustees may
establish.
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LENDING Make loans except for loans of portfolio securities, through the use of
repurchase agreements, and through the purchase of debt securities that are
otherwise permitted investments.
THRIFT INVESTOR LIMITATIONS With respect to Government Cash Portfolio, purchase
or hold any security that (i) a Federally chartered savings association may not
invest in, sell, redeem, hold or otherwise deal pursuant to law or regulation,
without limit as to percentage of the association's assets and (ii) pursuant to
12 C.F.R. Section 566.1 would cause shares of the Fund not to be deemed to be
short term liquid assets when owned by Federally chartered savings associations.
B. NONFUNDAMENTAL LIMITATIONS
GOVERNMENT CASH PORTFOLIO
The Portfolio may not:
DIVERSIFICATION With respect to 100% of its assets, purchase a security other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer, unless the
investment is permitted by Rule 2a-7 under the 1940 Act.
SECURITIES WITH VOTING RIGHTS Purchase securities having voting rights, except
the Portfolio may invest in securities of other investment companies to the
extent permitted by the 1940 Act.
MARGIN; SHORT SALES Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.
LIQUIDITY Acquire securities or invest in repurchase agreements with respect to
any securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements not
entitling the holder to payment of principal within seven days and in securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO AND MUNICIPAL
CASH PORTFOLIO
Each Portfolio may not:
DIVERSIFICATION With respect to 100% of its assets, purchase a security other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer, unless the
investment is permitted by Rule 2a-7 under the 1940 Act.
BORROWING Purchase securities for investment while any borrowing equaling 5% or
more of the Portfolio's total assets is outstanding; and if at any time the
Portfolio's borrowings exceed the Portfolio's investment limitations due to a
decline in net assets, such borrowings will be promptly (within three days)
reduced to the extent necessary to comply with the limitations. Borrowing for
purposes other than meeting redemption requests will not exceed 5% of the value
of the Portfolio's total assets.
SECURITIES WITH VOTING RIGHTS Purchase securities that have voting rights,
except the Portfolio may invest in securities of other investment companies to
the extent permitted by the 1940 Act.
MARGIN; SHORT SALES Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.
LIQUIDITY Acquire securities or invest in Repurchase Agreements with respect to
any securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements not
entitling the holder to payment of principal within seven days and in securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
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C. INVESTMENTS BY FINANCIAL INSTITUTIONS
INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - GOVERNMENT CASH PORTFOLIO
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's investment portfolio will be modified accordingly, including by
disposing of portfolio securities or other instruments that no longer qualify
under the Guidelines. In addition, the Portfolio does not intend to hold in its
portfolio any securities or instruments that would be subject to restriction as
to amount held by a National bank under Title 12, Section 24 (Seventh) of the
United States Code. If the Portfolio's investment portfolio includes any
instruments that would be subject to a restriction as to amount held by a
National bank, investment in the Portfolio may be limited.
The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. The Adviser has no reason to
believe that such a determination would be made with respect to the Portfolio.
There are various subjective criteria for making this determination and,
therefore, it is not possible to provide any assurance as to how Portfolio
shares will be evaluated by bank examiners.
Before acquiring Portfolio shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Portfolio shares is permissible and in
compliance with any applicable investment or other limits.
Portfolio shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Portfolio shares, and thereafter may be required
to review its investment in a Portfolio for the purpose of verifying compliance
with applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Portfolio at
least quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - TREASURY CASH PORTFOLIO AND
GOVERNMENT CASH PORTFOLIO
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Funds limit their investments to U.S. Government Securities
(including Treasury STRIPS) and Repurchase Agreements fully collateralized by
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U.S. Government Securities. Certain U.S. Government Securities owned by a
Portfolio may be mortgage or asset backed, but, no such security will be (i) a
stripped mortgage backed security ("SMBS"), (ii) a collateralized mortgage
obligation ("CMO") or real estate mortgage investment conduit ("REMIC") that
does not meet all of the tests outlined in 12 C.F.R. Section 703.100(e) or (iii)
a residual interest in a CMO or REMIC. The Portfolios also may invest in reverse
Repurchase Agreements in accordance with 12 C.F.R. 703.100(j) to the extent
otherwise permitted herein and in the Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT CASH
PORTFOLIO
Government Cash Portfolio limits its investments to investments that are legally
permissible for Federally chartered savings associations without limit as to
percentage under applicable provisions of the Home Owners' Loan Act (including
12 U.S.C. Section 1464) and the applicable rules and regulations of the Office
of Thrift Supervision, as such statutes and rules and regulations may be
amended. In addition, the Portfolio limit its investments to investments that
are permissible for an open-end investment company to hold and would permit
shares of the investment company to qualify as liquid assets under 12 C.F.R.
Section 566.1(g) and as short-term liquid assets under 12 C.F.R. Section
566.1(h).
4. 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, Inc., IBC Financial Data, Inc., CDA/Wiesenberger or other
companies which track the investment performance of investment
companies ("Fund Tracking Companies").
o The performance of other mutual funds.
o The performance of recognized stock, bond and other indices, including
but not limited to 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 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 Funds' performance will fluctuate in response to market conditions and other
factors.
B. PERFORMANCE CALCULATIONS
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A Fund's performance may be quoted in terms of yield or total return. Appendix B
includes performance information for each Fund.
1. SEC YIELD
Yield quotations for a Fund or class will include an annualized historical
yield, carried at least to the nearest hundredth of one percent, based on a
specific seven-calendar-day period and are calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value reflects the value of additional shares
purchased with dividends declared on the original share and dividends declared
on both the original share and any such additional shares, but would not reflect
any realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any effective
annualized yield quotation used by Fund is calculated by compounding the current
yield quotation for such period by adding 1 to the product, raising the sum to a
power equal to 365/7, and subtracting 1 from the result. The standardized tax
equivalent yield is the rate an investor would have to earn from a fully taxable
investment in order to equal a Fund's yield after taxes. Tax equivalent yields
are calculated by dividing the Fund's yield by one minus the stated Federal or
combined Federal and state tax rate. If a portion of a Fund's yield is
tax-exempt, only that portion is adjusted in the calculation.
2. TOTAL RETURN CALCULATIONS
A Fund's or class's total return shows its overall change in value, assuming
that all of the Fund's or class's distributions are reinvested.
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 or class over a stated period; and (2)
calculates the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that performance is not constant over time but changes from year to year, and
that average annual returns represent averaged figures as opposed to the actual
year-to-year performance of a Fund or class.
Average annual total return is calculated according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 payment made at the
beginning of the applicable period
Because average annual returns tend to smooth out variations in a Fund's or
class'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.
13
<PAGE>
A Fund or class may quote unaveraged or cumulative total returns that
reflect a Fund's or class`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. Total returns may be quoted with or without
taking into consideration a Fund's or class's front-end sales charge or
contingent deferred sales charge (if applicable).
Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total
return above
C. OTHER MATTERS
A Fund or class 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) biographical descriptions of a Fund's portfolio managers
and the portfolio management staff of a Fund's 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; (6) the
results of a hypothetical investment in a Fund or class over a given number of
years, including the amount that the investment would be at the end of the
period; (7) the effects of investing in a tax-deferred account, such as an
individual retirement account or Section 401(k) pension plan; (8) the net asset
value, net assets or number of shareholders of a Fund or class as of one or more
dates; and (9) a comparison of a Fund's or class'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.
In connection with its advertisements, a Fund or class may provide
"shareholder's letters" that serve to provide shareholders or investors with an
introduction to the Fund's, the Trust's or any of the Trust's service provider's
policies or business practices.
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<PAGE>
5. MANAGEMENT
A. TRUSTEES AND OFFICERS OF THE TRUST
The names of the Trustees and officers of the Trust, their position 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 (*). The Board
supervises each Fund's activities, monitors its contractual arrangements with
various service providers and decides upon matters of general policy.
<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
Born: July 15, 1942 holding company)
Two Portland Square
Portland, Maine 04101
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
Costas Azariadis, Trustee Professor of Economics, University of California-Los Angeles
Born: February 15, 1943 Visiting Professor of Economics, Athens University of Economics and
Department of Economics Business 1998-1999
University of California
Los Angeles, CA 90024
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
James C. Cheng, Trustee President, Technology Marketing Associates
Born: July 26, 1942 (marketing company for small and medium size businesses in New
27 Temple Street England)
Belmont, MA 02718
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
J. Michael Parish, Trustee Partner, Thelen Reid & Priest LLP (law firm) since 1995
Born: November 9, 1943 Partner, Winthrop Stimson Putnam & Roberts (law firm) 1989-1995
40 West 57th Street
New York, NY 10019
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
David I. Goldstein, Vice President Counsel and General Counsel, Forum Financial Group, LLC since 1995
Born: August 3, 1961 Secretary, Forum Fund Services, LLC (Trust's underwriter)
Two Portland Square
Portland, Maine 04101
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
Stacey Hong, Treasurer Director, Fund Accounting, Forum Financial Group, LLC
Born: May 10, 1966
Two Portland Square
Portland, Maine 04101
- -------------------------------------------- ----------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------
Leslie K. Klenk, Secretary Assistant Counsel and Counsel, Forum Financial Group, LLC since 1998
Born: August 24, 1964 Vice President/Associate General Counsel, Smith Barney Inc.
Two Portland Square (brokerage firm) 1993-1998
Portland, Maine 04101
- -------------------------------------------- ----------------------------------------------------------------------
</TABLE>
The following trustees and officers hold the same positions with other
investment companies that are considered part of a "Fund Complex." A Fund
Complex is comprised of two or more investment companies that (1) hold
themselves out to investors as related for purposes of investment and investor
services (2) share a common investment adviser or (3) have an investment adviser
that is an affiliate of an adviser to another investment company.
Trustee or Officer Position
John Y. Keffer Trustee and President, The Cutler Trust
Chairman and President, Core Trust (Delaware)
Trustee, The Cutler Trust
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<PAGE>
Costas Azariadas Trustee, Core Trust (Delaware)
James C. Cheng Trustee, Core Trust (Delaware)
J. Michael Parish Trustee, Core Trust (Delaware)
David I. Goldstein Vice President, Core Trust (Delaware)
B. COMPENSATION OF TRUSTEES AND OFFICERS
Each Trustee of the Trust (other than John Y. Keffer, who is an interested
person of the Trust) is paid $1,000 for each Board meeting attended (whether in
person or by electronic communication) and $1,000 for each audit committee
meeting attended on a date when a Board meeting is not held. In addition to the
$1,000 for each Board meeting attended, each Trustee is paid $100 per active
portfolio of the Trust. To the extent a meeting relates to only certain
portfolios of the Trust, Trustees are paid the $100 fee only with respect to
those portfolios. Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Board.
Trustees that are affiliated with the Adviser receive no compensation for their
services or reimbursement for their associated expenses. No officer of the Trust
is compensated by the Trust.
The following table sets forth the fees paid to each Trustee by the Trust for
the fiscal year ended August 31, 1999.
TOTAL COMPENSATION
COMPENSATION FROM TRUST AND
TRUSTEE TRUST FUND COMPLEX(1)
John Y. Keffer $0 $0
Costas Azariadis $9,500 $13,000
James C. Cheng $9,500 $14,500
J. Michael Parish $9,500 $14,500
(1) These figures include fees paid to the Core Trust Trustees by the
Portfolios.
C. TRUSTEES AND OFFICERS OF CORE TRUST
The names of the Trustees and officers of Core Trust, their positions with Core
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 Core Trust is indicated by an asterisk (*). The Core
Trust Board supervises the Portfolios' activities, monitors its contractual
arrangements with various service providers and decides upon matters of general
policy.
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------------------
Name, Position with the Trust, Principal Occupation(s) During
Age and Address Past 5 Years
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
John Y. Keffer*,Chairman and President
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
Costas Azariadas, Trustee
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
James C. Cheng, Trustee
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
J. Michael Parish, Trustee
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
Thomas G. Sheehan, Vice President Managing Director, Forum Financial Group
Born: July 15, 1954
Two Portland Square
Portland, Maine 04101
- --------------------------------------------------- ---------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------- ---------------------------------------------------------------
Ronald H. Hirsch, Treasurer Managing Director, Operations and Finance, Forum Financial
Group since 1999
Member of the Board - Citibank Germany 1991 - 1998
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
David I. Goldstein, Vice President & Secretary
- --------------------------------------------------- ---------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------
Don L. Evans, Secretary Assistant Counsel and Counsel, Forum Financial Group, since
Born: August 12, 1948 1995
Two Portland Square Associate, Weiner & Strother (law firm), 1994 - 1995
Portland, Maine 04101
- --------------------------------------------------- ---------------------------------------------------------------
</TABLE>
D. INVESTMENT ADVISER
1. SERVICES OF THE ADVISER
Forum Investment Advisors, LLC acts as the investment advisor to the Portfolios
pursuant to an investment advisory agreement (the "Agreement") with Core Trust.
Under the Agreement, the Adviser furnishes at its own expense all services,
facilities and personnel necessary in connection with managing a Portfolio's
investments and effecting portfolio transactions for the Portfolio. Since their
inception, Anthony R. Fischer, Jr., has been the portfolio manager responsible
for the day to day management of the Portfolios. Mr. Fischer has over 25 years
of experience in the money market industry.
2. FEES
The Adviser's fees are calculated as a percentage of a Portfolio's average net
assets. The fee is accrued daily by each Portfolio and is paid monthly based on
average net assets for the previous month. Each Fund pays its pro-rata portion
of its corresponding Portfolio's investment advisory fee.
Table 1 in Appendix C shows the dollar amount payable by each Portfolio to the
Adviser, the amount of fees waived by the Adviser, and the actual fee paid by
each Portfolio. The data are for the past three fiscal years.
3. OTHER PROVISIONS OF ADVISER'S AGREEMENT
The 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
("Disinterested Trustees").
The Agreement is terminable without penalty by the Trust regarding the Fund on
30 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 90 days'
written notice to the Trust. The Agreement terminates immediately upon
assignment.
Under the Agreement, the Adviser is not liable for any action or inaction in the
absence of bad faith, willful misconduct or gross negligence in the performance
of its duties.
E. DISTRIBUTOR
1. 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.
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<PAGE>
Under a distribution agreement (the "Distribution Agreement") with the Trust,
FFS acts as the representative of the Trust in connection with the offering of
shares of the Funds. FFS continually distributes shares of the Funds on a best
effort basis. FFS has no obligation to sell any specific quantity of Fund
shares.
FFS may enter into arrangements with various financial institutions through
which you may purchase or redeem shares. FFS may, at its own expense and from
its own resources, compensate certain persons who provide services in connection
with the sale or expected sale of shares of the Funds.
FFS may enter into agreements with selected broker-dealers, banks or other
financial institutions for distribution of shares of the Funds. These financial
institutions may charge a fee for their services and may receive shareholders
service fees even though shares of the Funds are sold with sales charges or
distribution fees. These financial institutions may otherwise act as processing
agents, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Funds.
Investors who purchase shares in this manner will be subject to the procedures
of the institution through which they purchase shares, which may include
charges, investment minimums, cutoff times and other restrictions in addition
to, or different from, those listed herein. Information concerning any charges
or services will be provided to customers by the financial institution.
Investors purchasing shares of a Fund in this manner should acquaint themselves
with their institution's procedures and should read the Prospectus in
conjunction with any materials and information provided by their institution.
The financial institution and not its customers will be the shareholder of
record, although customers may have the right to vote shares depending upon
their arrangement with the institution.
FFS does not receive a fee for any distribution services performed under the
Distribution Agreement except the distribution service fees from the Trust with
respect to the Shares of those classes for which a Plan is effective.
2. OTHER PROVISIONS OF DISTRIBUTOR'S AGREEMENT
The 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
Disinterested Trustees.
The Distribution 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 the Distribution 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 the Distribution 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 the Funds' 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 FFS for any such misstatements or omissions if they were made in
reliance upon information provided in writing by FFS in connection with the
preparation of the Registration Statement.
3. DISTRIBUTION PLAN - INVESTOR SHARE CLASS
In accordance with Rule 12b-1 under the 1940 Act, with respect to the Investor
Class of each Fund, the Trust has adopted a distribution plan (the "Plan") which
provides for the payment to FFS of a Rule 12b-1 fee at the annual rate of up to
0.50% of the average daily net assets of the Investor Class of each Fund (except
Daily Assets Government Fund) as compensation for FFS' services as distributor.
Under the Plan, FFS also receives a fee as an annual rate of 0.15% of the
average daily net assets of the Investor Shares of Daily Assets Government Fund
as compensation for its services under the Plan. The Board's approval of the
Plan was contingent on the Trust limiting any payments under the Plan to 0.30%
18
<PAGE>
of the average daily net assets of the Investor Share Class of each Fund (except
Daily Assets Government Fund) without further Board approval.
The Plan provides that FFS may incur expenses for such activities including, but
not limited to, (i) expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expense for services in
connection with the distribution of shares; (ii) payments to broker-dealers and
financial institutions for services in connection with the distribution of
shares, including fees calculated with reference to the average daily net asset
value of shares held by shareholders who have a brokerage or other service
relationship with the broker-dealer of institution receiving such fees; (iii)
costs of printing prospectuses and other materials to be given or sent to
prospective investors; and, (iv) the costs of preparing, printing and
distributing sales literature and advertising materials used by FFS or others in
connection with the offering of Investor Class shares for sale to the public.
During the fiscal year ended August 31, 1999, there were no payments made under
the Plan.
The Plan provides that all written agreements relating to that plan must be
approved by the Board, including a majority of the Qualified Trustees. In
addition, the Plan (as well as the Distribution Agreement) requires the Trust
and Forum to prepare and submit to the Board, at least quarterly, and the Board
to review, written reports setting forth all amounts expended under the Plan and
identifying the activities for which those expenditures were made. The Plan
obligates the Funds to pay as compensation for FFS's services and not as
reimbursement for certain expenses incurred.
The Plan provides that it will remain in effect for one year from the date of
its adoption and thereafter shall continue in effect provided it is approved at
least annually by the shareholders or by the Board, including a majority of the
Qualified Trustees. The Plan further provides that it may not be amended to
materially increase the costs which the Trust bears for distribution pursuant to
the Plan without shareholder approval and that other material amendments of the
Plan must be approved by the Qualified Trustees. The Plan may be terminated at
any time by the Board, by a majority of the Qualified Trustees, or by a Fund's
Investor Class shareholders.
Table 2 in Appendix C shows the dollar amount of fees payable under the Plan
with respect to each Fund. This information is provided for the past three years
(or shorter time a Fund has been operational).
F. OTHER FUND SERVICE PROVIDERS
1. ADMINISTRATOR
THE TRUST As administrator, pursuant to an agreement with the Trust (the
"Administration Agreement"), FAdS is responsible for supervising 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 each Fund at an annual rate of 0.05%
of the average daily net assets of each Fund. The fee is accrued daily by each
Fund and is paid monthly based on average net assets for the previous month.
The 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
Disinterested Trustees. The Administration Agreement is terminable without
penalty by the Trust or by FAdS with respect to a Fund on 60 days' written
notice.
Under the Administration 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
Administration 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.
19
<PAGE>
Core Trust FAdS also manages all aspects of Core Trust's operations with respect
to the Portfolios. With respect to each Portfolio, FAdS has entered into an
administration agreement ("Core Administration Agreement") that will continue in
effect only if such continuance is specifically approved at least annually by
the Core Trust Board or by the shareholders and, in either case, by a majority
of the Disinterested Trustees. Under the Core Administration Agreement, FAdS
performs similar services for each Portfolio to those provided to each Fund.
THE CORE Administration Agreement provides that FAdS shall not be liable to Core
Trust or any of Core Trust's interestholders for any action or inaction of FAdS
relating to any event whatsoever in the absence of bad faith, willful
misfeasance or gross negligence in the performance of FAdS' duties or
obligations under the Agreement or by reason of FAdS' reckless disregard of its
duties and obligations under this Agreement. The Administration Agreement may be
terminated with respect to a Portfolio at anytime, without the payment of any
penalty: (1) by the Core Trust Board on 60 days' written notice to FAdS; or (2)
by FAdS on 60 days' written notice to Core Trust.
Table 3 in Appendix C shows the dollar amount of the fees payable by each Fund
to FAdS, the amount of the fee waived by FAdS, and the actual fees received by
FAdS. The table provides similar information for the Portfolios. The data is for
the past three fiscal years (or shorter period depending on a Fund's
commencement of operations).
2. FUND ACCOUNTANT
THE TRUST As fund accountant, pursuant to an accounting agreement with the Trust
(the "Accounting Agreement"), FAcS provides fund accounting services to each
Fund. These services include calculating the NAV per share of each Fund 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
$36,000 plus $2,200 for the preparation of tax returns and certain surcharges
based upon the number and type of the Fund's portfolio transactions and
positions. The fee is accrued daily by the Funds and is paid monthly based on
the transactions and positions for the previous month.
The 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
Disinterested Trustees. The Accounting Agreement is terminable without penalty
by the Trust or by FAcS with respect to a Fund on 60 days' written notice.
Under the Accounting 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 Accounting 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 Accounting 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
Accounting Agreement also provides that FAcS will not be liable to a shareholder
for any loss incurred due to an NAV difference if such difference is less than
or equal 1/2 of 1% or less than or equal to $10. In addition, FAcS is not liable
for the errors of others, including the companies that supply securities prices
to FAcS and the Funds.
CORE TRUST FAcS performs similar services for the Portfolios pursuant to a
Portfolio and Unitholder Accounting Agreement ("Core Accounting Agreement"). The
Core Portfolio Accounting Agreement shall continue in effect with respect to a
Portfolio until terminated; provided, that continuance is specifically approved
at least annually by the Board. The Portfolio and Unitholder Accounting
Agreement may be terminated with respect to a Portfolio at any time, without the
payment of any penalty (i) by the Board on 60 days' written notice to FAcS or
(ii) by FAcS on 60 days' written notice to the Trust. FAcS is required to use
its best judgment and efforts in rendering fund accounting services and is not
liable to Core Trust for any action or inaction in the absence of bad faith,
willful misconduct or gross negligence.
20
<PAGE>
Table 4 in Appendix C shows the dollar amount of the fees payable by the Funds
to FAcS, the amount of the fee waived by FAcS, and the actual fees received by
FAcS. The table also includes similar information for the Portfolios. The data
is for the past three fiscal years (or shorter period depending on a Fund's
commencement of operations).
3. TRANSFER AGENT
FSS, as transfer agent and distribution paying agent pursuant to a transfer
agency agreement with the Trust (the "Transfer Agency Agreement"), maintains an
account for each shareholder of record of a Fund and is responsible for
processing purchase and redemption requests and paying distributions to
shareholders of record. The Transfer Agent is located at Two Portland Square,
Portland, Maine 04101 and is registered as a transfer agent with the SEC.
For its services, the Transfer Agent receives with respect to each Fund 0.25% of
the average daily net assets of the Fund, an annual fee of $12,000 and $18 per
shareholder account. The fee is accrued daily by each Fund and is paid monthly
based on the average net assets for the previous month.
The Transfer Agency 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
Disinterested Trustees. The Transfer Agency Agreement is terminable without
penalty by the Trust or by the Transfer Agent with respect to the Fund on 60
days' written notice.
Under the Transfer Agency Agreement, the Transfer Agent is not liable for any
act in the performance of its duties to a Fund, except for willful misfeasance,
bad faith or gross negligence in the performance of its duties under the
agreement. Under the Transfer Agency Agreement, the Transfer Agent and certain
related parties (such as the Transfer Agent's officers and persons who control
the Transfer Agent) are indemnified by the Trust against any and all claims and
expenses related to the Transfer Agent's actions or omissions that are
consistent with the Transfer Agent's contractual standard of care.
Table 5 in Appendix C shows the dollar amount of the fees payable by the Funds
to FSS, the amount of the fee waived by FSS, and the actual fees received by
FSS. The data is for the past three fiscal years (or shorter period depending on
a Fund's commencement of operations.).
4. SHAREHOLDER SERVICE PLAN AND AGREEMENTS
The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional Service Class and the Investor Class of each
Fund under which the Trust may pay FAdS a shareholder servicing fee at an annual
rate of 0.25% of the average daily net assets of each of the Institutional
Service Class and the Investor Class. FAdS's may pay any or all amounts of these
payments to various institutions that provide shareholder servicing to their
customers holding Institutional Services shares or Investor shares. The
Shareholder Service Plan was effective on December 5, 1997 for the Institutional
Service Class of those Funds then operating.
Any material amendment to the Shareholder Service Plan must be approved by a
majority of the Disinterested Trustees pursuant to a vote cast in person at a
meeting called for the purpose of voting on the amendment to the Plan. The Plan
may be terminated without penalty at any time by a vote of a majority of the
Disinterested Trustees.
FAdS may enter into shareholder servicing agreements with various Shareholder
Servicing Agents pursuant to which those agents, as agent for their customers,
may agree among other things to: (i) answer shareholder inquiries regarding the
manner in which purchases, exchanges and redemptions of shares of the Trust may
be effected and other matters pertaining to the Trust's services; (ii) provide
necessary personnel and facilities to establish and maintain shareholder
accounts and records; (iii) assist shareholders in arranging for processing
purchase, exchange and redemption transactions; (iv) arrange for the wiring of
funds; (v) guarantee shareholder signatures in connection with redemption orders
and transfers and changes in shareholder-designated accounts; (vi) integrate
21
<PAGE>
periodic statements with other shareholder transactions; and (vii) provide such
other related services as the shareholder may request.
In offering or redeeming Fund shares, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents may also act
and receive compensation for acting as custodian, investment manager, nominee,
agent or fiduciary for its customers or clients who are shareholders of the
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents may elect to credit against the fees payable to it by its clients or
customers all or a portion of any fee received from the Trust with respect to
assets of those customers or clients invested in the Funds.
Table 6 in Appendix C shows the dollar amount of fees paid under the Shareholder
Service Plan with respect to Institutional Service Shares and Investor Shares of
each Fund. This information is provided for the past three fiscal years (or
shorter time a Fund has been operational).
5. CUSTODIAN
As custodian, pursuant to an agreement with the Trust, Union Bank of California,
N.A. safeguards and controls the Funds' cash and securities, determines income
and collects interest on Fund investments. The Custodian may employ
subcustodians to provide custody of a Fund's domestic and foreign assets. The
Custodian is located at 350 California Street, San Francisco, California 94104.
For its services, the Custodian receives an annualized percentage of the average
daily net assets of the Portfolios in which the Funds invest. Each Portfolio
also pays an annual domestic custody fee as well as certain other transaction
fees. These fees are accrued daily by the Portfolios and are paid monthly based
on average net assets and transactions for the previous month.
6. LEGAL COUNSEL
Seward & Kissel LLP, 1200 G Street, N.W., Washington, D.C. 20005 passes upon
legal matters in connection with the issuance of shares of the Trust.
7. INDEPENDENT AUDITORS
KPMG, LLP, 99 High Street, Boston, MA 02110, is the independent auditor of the
Funds and the Portfolios. The auditor audits the annual financial statements of
the Funds and Portfolios. The auditor also reviews certain regulatory filings of
the Funds and Portfolios and the Funds' and Portfolios' tax returns.
6. PORTFOLIO TRANSACTIONS
Each Fund invests substantially all of its assets in a corresponding Portfolio
and not directly in portfolio securities. Therefore, the Funds do not pay
brokerage commissions directly.
Purchases and sales of portfolio securities for each Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
include the spread between the bid and asked price. There usually are no
brokerage commissions paid for any purchases. While the Trust does not
anticipate that the Portfolios will pay any amounts of brokerage commissions, in
the event a Portfolio pays brokerage commissions or other transaction-related
compensation, the payments may be made to broker-dealers who pay expenses of the
Portfolio that the Portfolio would otherwise be obligated to pay itself. All
transactions for which a Portfolio pays transaction-related compensation are
effected at the best price and execution available, taking into account the
amount of any payments made on behalf of the Portfolio by the broker-dealer
effecting the transaction.
22
<PAGE>
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by the Adviser in its best judgment and in a
manner deemed to be in the best interest of interestholders of that Portfolio
rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner and at the most favorable price available to the
Portfolio. The Adviser monitors the creditworthiness of counterparties to its
Fund's transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal and appropriate credit risks. No
portfolio transactions are executed with FIA or any of its affiliates.
For the Portfolios' fiscal years ended August 31, 1997, 1998, and 1999, no
Portfolio paid any brokerage commissions.
C. OTHER ACCOUNTS OF THE ADVISER
Investment decisions for a Portfolio 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 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. In addition, two or more clients may
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. When purchases or sales of the same security for a
Portfolio 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.
D. SECURITIES OF REGULAR BROKER-DEALERS
As of August 31, 1999, several Portfolios maintained investments in dealers (or
their parent companies) with whom they conduct portfolio transactions. Table 7
of Appendix C provides details of these investments.
7. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
A. GENERAL INFORMATION
You may purchase or redeem shares or request any shareholder privilege in person
at the offices of the Transfer Agent located at Two Portland Square, Portland,
Maine 04101.
The Funds accept orders for the purchase or redemption of shares on each weekday
except on Federal holidays and other days that the Federal Reserve Bank of San
Francisco is closed ("Fund Business Days"). A Fund cannot accept orders that
request a particular day or price for the transaction or any other special
conditions.
B. ADDITIONAL PURCHASE INFORMATION
Shares of each Fund are sold on a continuous basis by the distributor.
Each Fund reserves the right to refuse any purchase request. There is currently
no limit on exchanges, but each Fund reserves the right to limit exchanges.
Fund shares are normally issued for cash only. At 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 that is readily ascertainable (and not
established only by valuation procedures).
23
<PAGE>
1. IRAs
All contributions into an IRA through systematic investments are treated as IRA
contributions made during the year the investment is received.
Each Fund, except Daily Assets Municipal Fund, may be a suitable investment
vehicle for part or all of the assets held in Traditional or Roth individual
retirement accounts (collectively, "IRAs"). Call the Funds at 1-800-94FORUM to
obtain an IRA account application. Generally, all contributions and investment
earnings in an IRA will be tax-deferred until withdrawn. If certain requirements
are met, investment earnings held in a Roth IRA will not be taxed even when
withdrawn. You may contribute up to $2,000 annually to an IRA. Only
contributions to Traditional IRAs are tax-deductible. However, that deduction
may be reduced if you or your spouse is an active participant in an
employer-sponsored retirement plan and you have adjusted gross income above
certain levels. Your ability to contribute to a Roth IRA also may be restricted
if you or, if you are married, you and your spouse have adjusted gross income
above certain levels.
Your employer may also contribute to your IRA as part of a Savings Incentive
Match Plan for Employees, or "SIMPLE plan," established after December 31, 1996.
Under a SIMPLE plan, you may contribute up to $6,000 annually to your IRA, and
your employer must generally match such contributions up to 3% of your annual
salary. Alternatively, your employer may elect to contribute to your IRA 2% of
the lesser of your earned income or $160,000.
This information on IRAs is based on regulations in effect as of January 1, 1998
and summarizes only some of the important federal tax considerations affecting
IRA contributions. These comments are not meant to be a substitute for tax
planning. Consult your tax advisors about your specific tax situation.
2. UGMAs/UTMAs
These custodial accounts provide a way to give money to a child and obtain tax
benefits. Depending on state laws, you can set up a custodial account under the
UGMA or the UTMA. If the trustee's name is not in the account registration of a
gift or transfer to minor ("UGMA/UTMA") account, the custodian must sign
instructions in a manner indicating trustee capacity.
3. PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Funds.
If you purchase shares through a financial institution, you will be subject to
the institution's procedures, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable when you invest in a Fund directly. When you purchase a Fund's shares
through a financial institution, you may or may not be the shareholder of record
and, subject to your institution's procedures; you may have Fund shares
transferred into your name. There is typically a three-day settlement period for
purchases and redemptions through broker-dealers. Certain financial institutions
may also enter purchase orders with payment to follow.
You may not be eligible for certain shareholder services when you purchase
shares through a financial institution. Contact your institution for further
information. If you hold shares through a financial institution, the Funds may
confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. The Funds are not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of the Funds through a financial institution should
read any materials and information provided by the financial institution to
acquaint themselves with its procedures and any fees that the institution may
charge.
24
<PAGE>
4. SIGNATURE GUARANTEES
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
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 systematic investment or withdrawal, distribution,
telephone redemption or exchange option or any other election in
connection with your account
5. 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 cancelled.
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 or herein.
A delay may occur in cases of very large redemptions, excessive trading or
during unusual market conditions. Normally, redemption proceeds are paid
immediately following receipt of a redemption order in proper form. In any
event, you will be paid within 7 days, unless: (1) your bank has not cleared the
check to purchase the shares (which may take up to 15 days); (2) the Federal
Reserve Bank of San Francisco is closed for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical for
the Fund to sell its portfolio securities or for the Fund to determine its net
asset value; or (4) the SEC deems it inappropriate for redemption proceeds to be
paid. You can avoid the delay of waiting for your bank to clear your check by
paying for shares with wire transfers. Unless otherwise indicated, redemption
proceeds normally are paid by check mailed to your record address.
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
25
<PAGE>
Portfolio or if the amount to be redeemed is large enough to affect a
Portfolio's operations. If redemption proceeds are paid wholly or partly in
portfolio securities, shareholders may incur brokerage costs by 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.
D. NAV DETERMINATION
Pursuant to Rule 2a-7, the Board has established procedures to stabilize a
Fund's net asset value at $1.00 per share. These procedures include a review of
the extent of any deviation of net asset value per share as a result of
fluctuating interest rates, based on available market rates, from a Fund's $1.00
amortized cost price per share. Should that deviation exceed 1/2 of 1%, the
Board will consider whether any action should be initiated to eliminate or
reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding distributions and utilizing a net asset value
per share as determined by using available market quotations. Each Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less, will
not purchase any instrument with a remaining maturity greater than 397 days or
subject to a Repurchase Agreement having a duration of greater than 397 days,
will limit portfolio investments, including Repurchase Agreements, to those U.S.
dollar-denominated instruments that the Board has determined present minimal
credit risks and will comply with certain reporting and recordkeeping
procedures. The Trust has also established procedures to ensure that portfolio
securities meet a Fund's high quality criteria.
As described in the Prospectuses, under certain circumstances a Fund may close
early and advance the time by which the Fund must receive a purchase or
redemption order and payments. In this case, if an investor places an order
after the cut-off time, the order will be processed on the follow-up business
day and your access to the fund would be temporarily limited.
E. DISTRIBUTIONS
Distributions of net investment income will be reinvested at a Fund's NAV per
share as of the last business day of the period with respect to which the
distribution is paid. Distributions of capital gain will be reinvested at the
NAV per share of a Fund on the payment date for the distribution. Cash payments
may be made more than seven days following the date on which distributions would
otherwise be reinvested.
8. TAXATION
The tax information set forth in the Prospectuses 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. No attempt has been made to present a
complete explanation of the federal tax treatment of the Funds or the
implications to shareholders. The discussions here and in the prospectus are not
intended as substitutes for careful tax planning.
The tax-year end of each Fund is August 31 (the same as the Fund's fiscal year
end).
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.
The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes. All investors should consult their own tax adviser as to the
federal, state, local and foreign tax provisions applicable to them.
A. QUALIFICATION AS A REGULATED INVESTMENT COMPANY
26
<PAGE>
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.
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, short-term capital gains and other taxable ordinary income, net of
expenses) and net capital gain (that is, the excess of its net long-term capital
gain over its net short-term capital loss) that it distributes to shareholders.
In order to qualify as a regulated investment company a Fund must satisfy the
following requirements:
o The Fund must distribute at least 90% of its investment company
taxable income (and 90% of its tax-exempt interest income, net of
expenses) 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,
Government Securities, securities of other regulated investment
companies, and securities of other issuers 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 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 distributions 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 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.
27
<PAGE>
B. FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its net investment
income for each tax year. Each Fund expects to derive substantially all of its
gross income (exclusive of capital gain) from sources other than dividends.
Accordingly, it is expected that none of a Fund's distributions will qualify for
the dividends-received deduction for corporations.
Each Fund anticipates distributing substantially all of its net capital gain, if
any, for each tax year. These distributions generally are made only once a year,
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.
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, it will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.
Ordinarily, you are required to take distributions by a Fund into account in the
year in which they are made. A distribution declared in October, November or
December of any year and payable to you on a specified date in those months,
however, is deemed to be received by you (and made by the Fund) on December 31
of that calendar year even 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. 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; (2) 98% of its capital gain net
income for the one-year period ended on October 31 of the calendar year; and (3)
any ordinary taxable income or capital gain net income from the preceding
calendar year that was not distributed during that year. Each Fund will be
treated as having distributed any amount on which it is subject to income tax
for any tax year.
For purposes of calculating the excise tax, each Fund 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.
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
might in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
D. BACKUP WITHHOLDING
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 a 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.
28
<PAGE>
E. FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from a Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
If the income from a Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income distributions paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower applicable treaty rate) upon the gross amount of the distribution.
The foreign shareholder generally would be exempt from U.S. federal income tax
on gain realized on the sale of shares of a Fund and distributions of net
capital gain from a Fund.
In the case of a non-corporate foreign shareholder, a Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes the Fund with proper notification of its foreign
status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.
The tax rules of other countries with respect to distributions from a Fund can
differ from the rules 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.
F. 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.
9. OTHER MATTERS
A. THE TRUST AND ITS SHAREHOLDERS
1. GENERAL INFORMATION
The Trust 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. No Fund expects to hold
shareholders' meetings unless required by Federal or Delaware law. Shareholders
of each Fund are entitled to vote at shareholders' meetings unless a matter
relates only to a specific series or class (such as approval of an advisory
agreement for a Fund or a distribution plan). From time to time, large
shareholders may control a class of a Fund, a Fund or the Trust.
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:
Austin Global Equity Fund Investors Equity Fund
BIA Growth Equity Fund Investors Growth Fund
BIA Small-Cap Growth Fund Investors High Grade Bond Fund
Daily Assets Cash Fund(1) Maine Municipal Bond Fund
Daily Assets Government Fund(1) New Hampshire Bond Fund
Daily Assets Government Obligations Fund(1) Payson Balanced Fund
Daily Asset Municipal Fund(1) Payson Value Fund
29
<PAGE>
Daily Assets Treasury Obligations Fund(1) Polaris Global Value Fund
Equity Index Fund TaxSaver Bond Fund
Investors Bond Fund
(1) The Trust offers shares of beneficial interest in an institutional,
institutional service, and investor share class of these series. Each class
of a Fund may have a different expense ratio and its expenses will affect
each class' performance.
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. SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust and each class of shares has equal
distribution, liquidation and voting rights. Fractional shares have these 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. 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 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) 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.
3. 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 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.
30
<PAGE>
B. FUND OWNERSHIP
As of December 1, 1999, the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding Shares of each Fund and class.
Also as of that date, certain shareholders of record owned 5% or more of a Fund
or Class. These shareholders and any shareholder known by a Fund to own
beneficially 5% or more of a Fund are listed in Table 8 in Appendix C.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund or Class. Accordingly, those shareholders may be able to require the
Trust to hold a shareholder meeting to vote on certain issues and may be able to
greatly affect (if not determine) the outcome of a shareholder vote. As of
December 1, 1999, the following persons beneficially or of record owned 25% or
more of the shares of a Fund or Class (or of the Trust) and may be deemed to
control the Fund or the Class (or the Trust). For each person listed that is a
company, the jurisdiction under the laws of which the company is organized (if
applicable) and the company's parents are listed.
CONTROLLING PERSON INFORMATION
<TABLE>
<S> <C> <C> <C> <C>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS TREASURY Emil Russell 15,443 48.36 0.02
OBLIGATIONS FUND RFD #3 Box 720
Investor Shares Houlton, ME 04730
..................................... .............. ............... ...............
Forum Financial Group 10,538 33.00 0.01
2 Portland Square
Portland, ME 04101
................................. ..................................... .............. ............... ...............
Institutional Shares Babb & Co 55,555,295 64.98 60.90
c/o Bank of New
Hampshire
P.O. Box 477
Concord, NH 03302-0477
..................................... .............. ............... ...............
Allagash & Co 28,879,031 33.78 31.66
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
................................. ..................................... .............. ............... ...............
Institutional Service Shares Al1agash & Co 3,568,367 62.65 3.91
c/o Bank of New
Hampshire
P.O. Box 477
Concord, NH 03302-0477
................................. ..................................... .............. ............... ...............
DAILY ASSETS GOVERNMENT FUND Stone & Stone Properties 225,212 27.84 0.64
Investor Shares 2100 E. Tulare Ave
Tulare, CA 93274
................................. ..................................... .............. ............... ...............
Institutional Shares Payson & Co 16,600,354 54.70 47.48
Custody Account
P.O. Box 31
Portland, ME 04112
..................................... .............. ............... ...............
HM Payson & Co 13,710,830 45.18 39.22
Trust Account
P.O. Box 31
Portland, ME 04112
................................. ..................................... .............. ............... ...............
DAILY ASSETS GOVERNMENT Forum Financial Group 10,577 99.00 0.02
OBLIGATIONS FUND 2 Portland Square
Investor Shares Portland, ME 04101
................................. ..................................... .............. ............... ...............
Institutional Shares Allagash & Co 18,494,222 56.33 30.92
c/o Bank of New
31
<PAGE>
Hampshire
P.O. Box 477
Concord, NH 03302-0477
..................................... .............. ............... ...............
Babb & Co 13,251,181 40.36 22.15
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
................................. ...................................... .............. ............... ...............
DAILY ASSETS CASH FUND BankBoston IRA FBO 197,072 36.00 0.21
Investor Shares Stanton D. Anderson
General Delivery
Sheridan, ME 04775
..................................... .............. ............... ...............
FirstTrust Co 150,012 27.41 0.16
National City Bank Trust Dept
227 Main Street
Evansville, IN 47708
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
................................. ..................................... .............. ............... ...............
DAILY ASSETS MUNICIPAL FUND Barry R. Elden 64,582 73.91 0.30
Investor Shares 22 West Chestnut Street
Chicago, IL 60610
................................. ..................................... .............. ............... ...............
Institutional Shares 48.70& Co 10,337,722 53.79 48.70
c/o Bank of New
Hampshire
P.O. Box 477
Concord, NH 03302-0477
..................................... .............. ............... ...............
FirstTrust Co 6,872,446 35.76 32.38
National City Bank Trust Dept
227 Main Street
Evansville, IN 47708
................................. ..................................... .............. ............... ...............
Institutional Service Shares Amherst Nursing Home 1,148,236 59.91 5.41
150 University Drive
Amherst, MA 01002
</TABLE>
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'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 Instrument provides for indemnification out of each Fund's property of any
shareholder or former shareholder held personally liable for the obligations of
the Fund. The Trust Instrument also provides that each Fund 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 a Fund 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. However, 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.
32
<PAGE>
D. REGISTRATION STATEMENT
This SAI and the Prospectuses 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 Prospectuses 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.
E. FINANCIAL STATEMENTS
The financial statements of the Funds and their corresponding Portfolios for the
year ended August 31, 1999 which are included in the Funds' Annual Report to
Shareholders are incorporated herein by reference. These financial statements
are the schedules of investments, statement of assets and liabilities,
statements of operations, statements of changes in net assets, financial
highlights, notes and independent auditors' reports.
33
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
A. CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
1. MOODY'S
Aaa Bonds that 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 that 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 that make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
NOTE 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. S&P
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.
NOTE Plus (+) or minus (-). The ratings from AA to A 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 that 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.
A-1
<PAGE>
AA+ High credit quality. Protection factors are strong. Risk is modest
AA but may vary slightly from time to time because of economic
conditions.
4. FITCH
AAA Highest credit quality. `AAA' ratings denote the lowest expectation of
credit risk. They are Investment assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments. Grade This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely payment
of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
C. SHORT TERM RATINGS
1. MOODY'S
Moody's employs the following three designatio all judged to be investment
grade, to indicate the n relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
NOT Issuers rated Not Prime do not fall within any of the Prime
PRIME rating categories.
S&P
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
<PAGE>
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.
F-1 Obligations assigned this rating have the highest capacity for
timely repayment under Fitch IBCA's Fitch 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.
A-3
<PAGE>
APPENDIX B - PERFORMANCE INFORMATION
For the seven-day period ended August 31, 1999, the annualized yields of each
Class of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C>
CURRENT YIELD EFFECTIVE YIELD
DAILY ASSETS TREASURY OBLIGATIONS FUND
Investor Shares 4.19% 4.28%
Institutional Service Shares 4.64% 4.75%
Institutional Shares 4.89% 5.01%
DAILY ASSETS GOVERNMENT FUND
Investor Shares 4.54% 4.65%
Institutional Service Shares 4.84% 4.96%
Institutional Shares 5.09% 5.22%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Investor Shares 4.32% 4.42%
Institutional Service Shares 4.75% 4.87%
Institutional Shares 5.00% 5.13%
DAILY ASSETS CASH FUND
Investor Shares 4.44% 4.53%
Institutional Service Shares 4.89% 5.01%
Institutional Shares 5.14% 5.27%
DAILY ASSETS MUNICIPAL FUND
Investor Shares 2.30% 2.33%
Institutional Service Shares 2.75% 2.79%
Institutional Shares 3.20% 3.25%
</TABLE>
B-1
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1999 105,930 0 105,930
Year ended August 31, 1998 55,735 0 55,735
Year ended August 31, 1997 0
GOVERNMENT PORTFOLIO
Year ended August 31, 1999 20,197 0 20,197
Year ended August 31, 1998 23,813 0 23,813
Period ended August 31, 1997 9,064 0 9,064
Year ended March 31, 1997 20,637 0 20,637
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1999 303,532 0 303,532
Year ended August 31, 1998 238,860 0 238,860
Year ended August 31, 1997 196,857 0 196,857
CASH PORTFOLIO
Year ended August 31, 1999 266,660 0 266,660
Year ended August 31, 1998 158,716 0 158,716
Year ended August 31, 1997 72,872 0 72,872
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1999 14,330 0 14,330
Year ended August 31, 1998 1,937 0 0
Year ended August 31, 1997 -- -- --
C-1
<PAGE>
TABLE 2 - INVESTOR SHARES RULE 12B-1 FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1999 49 49 0
Year ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1999 712 712 0
Period ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1999 26 26 0
Year ended August 31, 1998 0 0 0
DAILY ASSETS CASH FUND
Year ended August 31, 1999 640 640 0
Period ended August 31, 1998 0 0 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1999 139 139 0
Year ended August 31, 1998 0 0 0
C-2
<PAGE>
TABLE 3 - ADMINISTRATION FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1999 153,011 0 153,011
Year ended August 31, 1998 74,964 29,678 45,286
Year ended August 31, 1997 24,287 14,346 9,941
GOVERNMENT PORTFOLIO
Year ended August 31, 1999 20,197 20,197 0
Year ended August 31, 1998 28,796 28,796 0
Period ended August 31, 1997 18,128 18,128 0
Year ended March 31, 1997 41,274 41,274 0
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1999 438,060 0 438,060
Year ended August 31, 1998 317,754 0 317,754
Year ended August 31, 1997 252,821 0 252,821
CASH PORTFOLIO
Year ended August 31, 1999 385,799 0 385,799
Year ended August 31, 1998 212,800 0 212,800
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1999 14,330 14,330 0
Year ended August 31, 1998 1,937 1,937 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1999 52,465 52,465 0
Year ended August 31, 1998 24,549 24,549 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1999 20,109 20,109 0
Year ended August 31, 1998 28,110 2,864 25,246
Period ended August 31, 1997 18,123 0 18,123
Year ended March 31, 1997 41,232 7,453 33,779
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1999 22,178 22,178 0
Year ended August 31, 1998 4,115 4,115 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1999 35,746 35,746 0
Year ended August 31, 1998 10,505 10,505 0
Year ended August 31, 1997 7,453 7,453 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1999 14,310 14,310 0
Year ended August 31, 1998 1,934 1,934 0
Year ended August 31, 1997 -- -- --
C-3
<PAGE>
TABLE 4 - TRANSFER AGENCY FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1999 19,157 7,223 11,934
Year ended August 31, 1998 6,071 6,069 2
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1999 63,155 36,847 26,308
Year ended August 31, 1998 31,381 31,036 345
Investor Shares
Year ended August 31, 1999 12,098 12,098 0
Year ended August 31, 1998 843 843 0
Daily Assets Government Fund
Institutional Service Shares
Year ended August 31, 1999 21,102 11,025 10,077
Year ended August 31, 1998 68,534 53,276 15,258
Period ended August 31, 1997 50,810 44,054 6,756
Year ended March 31, 1997 116,051 101,485 14,566
Institutional Shares
Year ended August 31, 1999 29,243 20,824 819
Year ended August 31, 1998 4,874 4,853 21
Investor Shares
Year ended August 31, 1999 12,707 12,688 19
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1999 26,211 0 26,211
Year ended August 31, 1998 6,869 6,866 3
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1999 28,042 20,559 7,483
Year ended August 31, 1998 10,816 10,762 54
Investor Shares
Year ended August 31, 1999 12,062 12,062 0
Year ended August 31, 1998 843 843 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1999 44,383 0 44,383
Year ended August 31, 1998 27,955 15,294 12,661
Period ended August 31, 1997 29,772 17,766 12,006
Institutional Shares
Year ended August 31, 1999 33,137 18,933 14,204
Year ended August 31, 1998 9,362 9,311 51
Investor Shares
Year ended August 31, 1999 13,095 0 13,095
Year ended August 31, 1998 843 843 0
C-4
<PAGE>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1999 14,718 8,585 6,133
Year ended August 31, 1998 842 842 0
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1999 25,585 25,072 513
Year ended August 31, 1998 4,150 4,126 24
Investor Shares
Year ended August 31, 1999 12,173 12,172 1
Year ended August 31, 1998 843 843 0
C-5
<PAGE>
TABLE 5 - SHAREHOLDER SERVICE FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1999 17,320 17,320 0
Year ended August 31, 1998 2,600 2,600 0
Investor Shares
Year ended August 31, 1999 45 45 0
Period ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Year ended August 31, 1999 17,533 17,533 0
Period ended August 31, 1998 78,274 78,274 0
Investor Shares
Year ended August 31, 1999 1,186 1,186 0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1999 33,862 29,859 4,033
Year ended August 31, 1998 2,018 2,018 0
Investor Shares
Year ended August 31, 1999 26 26 0
Period ended August 31, 1998 0 0 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1999 77,200 46,584 30,616
Year ended August 31, 1998 22,439 22,439 0
Investor Shares
Year ended August 31, 1999 540 540 0
Period ended August 31, 1998 0 0 0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1999 6,491 6,491 0
Year ended August 31, 1998 0 0 0
Investor Shares
Year ended August 31, 1999 120 120 0
Period ended August 31, 1998 0 0 0
C-6
<PAGE>
TABLE 6 - FUND ACCOUNTING FEES ($)
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1999 49,500 0 49,500
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 24,279 0 24,279
Year ended August 31, 1996 28,518 19,955 8,563
GOVERNMENT PORTFOLIO
Year ended August 31, 1999 49,500 39,899 9,601
Year ended August 31, 1998 48,000 37,946 10,054
Period ended August 31, 1997 20,000 0 20,000
Year ended March 31, 1997 48,000 0 48,000
Year ended March 31, 1996(1) 5,241 0 5,241
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1999 49,500 0 49,500
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 0 42,000
CASH PORTFOLIO
Year ended August 31, 1999 49,500 0 49,500
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 14,957 27,043
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1999 49,500 46,497 3,003
Year ended August 31, 1998 8,800 8,800 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1999 37,250 37,250 0
Year ended August 31, 1998 13,323 13,323 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1999 37,250 37,250 0
Year ended August 31, 1998 14,000 4,000 10,000
Period ended August 31, 1997 5,000 0 5,000
Year ended March 31, 1997 12,000 0 12,000
Year ended March 31, 1996 38,621 0 38,621
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1999 37,250 37,250 0
Year ended August 31, 1998 14,064 14,064 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1999 37,250 37,250 0
Year ended August 31, 1998 18,999 12,999 6,000
Year ended August 31, 1997
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1999 37,250 37,250 0
Year ended August 31, 1998 4,198 4,198 0
Year ended August 31, 1997 -- -- --
</TABLE>
C-7
<PAGE>
TABLE 7 - PORTFOLIO HOLDINGS IN DEALERS ($)
VALUE
CASH PORTFOLIO
Goldman Sachs $39,984,000
C-8
<PAGE>
TABLE 8 - 5% SHAREHOLDERS
As of December 1, 1999, the officers and Trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund. Also as of that date, the
following table lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares, as well as their percentage holding of
all shares of the Fund
<TABLE>
<S> <C> <C> <C> <C>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS TREASURY Emil Russell 15,443 48.36 0.02
OBLIGATIONS FUND RFD #3 Box 720
Investor Shares Houlton, ME 04730
Forum Financial Group 10,538 33.00 0.01
2 Portland Square
Portland, ME 04101
Gloria J. Wilcox 4,057 12.70 0.00
24 Sweden Street
P.O. Box 306
Caribou, ME 04736-0306
Cheryl Barnes 1,788 5.60 0.00
3840 N. Broadway #30
Boulder, CO 80304
Institutional Shares Babb & Co 55,555,295 64.98 60.90
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Allagash & Co 28,879,031 33.78 31.66
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Institutional Service Shares Allagash & Co 3,568,367 62.65 3.91
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Goodless Brothers Electric Co, Inc 733,014 12.87 0.80
100 Memorial Drive
P.O. Box 925
West Springfield, MA 01090
National Yiddish Book Center 446,183 7.83 0.49
1021 West Street
Amherst, MA 01002-3375
Evangelical Covenant Church 300,275 5.27 0.33
915 Plumtree Road
Springfield, MA 01119-2930
DAILY ASSETS GOVERNMENT FUND Stone & Stone Properties 225,212 27.84 0.64
Investor Shares 2100 E. Tulare Ave
Tulare, CA 93274
David M. McKay and 61,755 7.63 0.18
Trudy K. McKay
710 Van Auken
Elmhurst, IL 60126
C-9
<PAGE>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS GOVERNMENT FUND BankBoston IRA FBO 60,712 7.50 0.17
(CONT) Kenneth Ky-Sung Tien
Investor Shares (cont) 1305 Newport Blvd
League City, TX 77573
Henry Goichman and 48,157 5.95 0.14
Jane C. L. Goichman
3015 Arrowhead Drive
Los Angeles, CA 90068
Richard Allen Jr., John P. Scruggs, 45,494 5.62 0.13
L. Sossaman and
Martin F. Thompson
813 Ridge Lake Blvd
Suite 300
Memphis, TN 38120
Institutional Shares HM Payson & Co 16,600,354 54.70 47.48
Custody Account
P.O. Box 31
Portland, ME 04112
HM Payson & Co 13,710,830 45.18 39.22
Trust Account
P.O. Box 31
Portland, ME 04112
Institutional Service Shares FloriCorp Retirement Savings Plan 765,767 20.14 2.19
1920 E. Maryland #18
Phoenix, AZ 85016
Lansdowne Parking Associates LP 534,636 14.06 1.61
c/o Meredith Management
One Bridge Street #300
Newton, MA 02458
BankBoston IRA FBO 390,448 10.27 1.12
Merne E. Young
18751 San Rufino
Irvine, CA 92612
Retirement Planning Strategies 366,436 9.64 1.05
Scudder Growth and Income Fund, NY
BankBoston IRA FBO 232,521 6.12 0.67
Howard H. Stevenson
P.O. Box 277
Southborough, MA 01772-0003
DAILY ASSETS GOVERNMENT Forum Financial Group 10,577 99.00 0.02
OBLIGATIONS FUND 2 Portland Square
Investor Shares Portland, ME 04101
Institutional Shares Allagash & Co 18,494,222 56.33 30.92
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Babb & Co 13,251,181 40.36 22.15
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
C-10
<PAGE>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS GOVERNMENT The Dennis Group Inc 5,297,728 19.64 8.86
OBLIGATIONS FUND (CONT) 1391 Main Street
Institutional Service Shares Springfield, MA 01103
Allagash & Co 3,957,516 14.67 6.62
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Holyoke Community College 2,989,386 11.08 5.00
303 Homestead Ave
Holyoke, MA 01040
Auer & Co 1,722,147 6.38 2.88
c/o Banker Trust Co 93411
648 Grassmere Park Road
Attn Mutual Funds 2nd Floor
Nashville, TN 37211
Auer & Co 1,680,652 6.23 2.81
c/o Banker Trust Co 93413
648 Grassmere Park Road
Attn Mutual Funds 2nd Floor
Nashville, TN 37211
Cathedral High School 1,386,449 5.14 2.32
260 Surrey Road
Springfield, MA 01118
DAILY ASSETS CASH FUND BankBoston IRA FBO 197,072 36.00 0.21
Investor Shares Stanton D. Anderson
General Delivery
Sheridan, ME 04775
FirstTrust Co 150,012 27.41 0.16
National City Bank Trust Dept
227 Main Street
Evansville, IN 47708
J.K. MacMillan 111,454 20.36 0.12
3621 Maplewood Ave
Los Angeles, CA 90066
Institutional Shares Allagash & Co 10,793,444 23.79 11.32
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Allagash & Co 10,596,569 23.35 11.11
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
HM Payson & Co 5,688,767 12.54 5.97
Custody Account
P.O. Box 31
Portland, ME 04112
FirstTrust Co 5,666,713 12.49 5.94
National City Bank Trust Dept
227 Main Street
Evansville, IN 47708
C-11
<PAGE>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS CASH FUND (CONT) HM Payson & Co 3,791,191 8.35 3.98
Institutional Shares (cont) Trust Account
P.O. Box 31
Portland, ME 04112
FirstTrust Co 3,298,650 7.27 3.46
c/o National City Bank of Evansville
227 Main Street
P.O. Box 868
Evansville, IN 47705-0868
Maine Mutual Fire Insurance 3,024,981 6.67 3.17
44 Maysville Road
P.O. Box 729
Presque Isle, ME 04769
Spectrum Medical Group, PA 2,517,349 5.55 2.64
20 Mussey Road
Scarborough, ME 04074
Institutional Service Shares Allagash & Co 7,623,095 15.42 7.99
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
Auer & Co 2,709,271 5.48 2.84
c/o Bankers Trust Co 93413
648 Grassmere Park Road
Attn Mutual Funds 2nd Floor
Nashville, TN 37211
Auer & Co 2,647,754 5.36 2.78
c/o Bankers Trust Co 93411
648 Grassmere Park Road
Attn Mutual Funds 2nd Floor
Nashville, TN 37211
Turbine Kinetics Inc 2,509,887 5.08 2.63
60 Sequin Drive
Glastonbury, CT 06033
AW Hastings & Co Inc 2,501,727 5.06 2.62
2 Pearson Way
Enfield, CT 06082
DAILY ASSETS MUNICIPAL FUND Barry R. Elden 64,582 73.91 0.30
Investor Shares 22 West Chestnut Street
Chicago, IL 60610
William A. Roberts 11,042 12.64 0.05
P.O. Box 579
Hinsdale, IL 60522
Forum Financial Group 10,314 11.80 0.05
2 Portland Square
Portland, ME 04101
Institutional Shares Babb & Co 10,337,722 53.79 48.70
c/o Bank of New Hampshire
P.O. Box 477
Concord, NH 03302-0477
C-12
<PAGE>
NAME AND ADDRESS SHARES % OF CLASS % OF FUND
DAILY ASSETS MUNICIPAL FUND FirstTrust Co 6,872,446 35.76 32.38
(CONT) National City Bank Trust Dept
Institutional Shares (cont) 227 Main Street
Evansville, IN 47708
Imperial Securities Corp 1,121,287 5.83 5.28
9920 South La Cieniega Blvd
14th Floor
Inglewood, CA 90301
Institutional Service Shares Amherst Nursing Home 1,148,236 59.91 5.41
150 University Drive
Amherst, MA 01002
PRM Environmental, Inc 414,645 21.63 1.95
495 Springfield Street
Chicopee, MA 01013-2806
Partyka Business Trust 324,459 16.93 1.53
495 Springfield Street
Chicopee, MA 01013-2806
</TABLE>
C-13
<PAGE>
APPENDIX D - ADDITIONAL ADVERTISING MATERIALS
TEXT OF FORUM BROCHURE
In connection with its advertisements, a Fund may provide a description of the
Fund's investment adviser and its affiliates, which are service providers to the
Fund. Text, which is currently in use, is set forth below.
FORUM FINANCIAL GROUP OF COMPANIES
Forum Financial Group of Companies represent more than a decade of diversified
experience with every aspect of mutual funds. The Forum Family of Funds has
benefited from the informed, sharply focused perspective on mutual funds that
experience makes possible.
The Forum Family of Funds has been created and managed by affiliated companies
of Portland-based Forum Financial Group, among the nation's largest mutual fund
administrators providing clients with a full line of services for every type of
mutual fund.
The Forum Family of Funds is designed to give investment representatives and
investors a broad choice of carefully structured and diversified portfolios,
portfolios that can satisfy a wide variety of immediate as well as long-term
investment goals.
Forum Financial Group has developed its "brand name" family of mutual funds and
has made them available to the investment public and to institutions on both the
national and regional levels.
For more than a decade Forum has had direct experience with mutual funds from a
different perspective, a perspective made possible by Forum's position as a
leading designer and full-service administrator and manager of mutual funds of
all types.
Today Forum Financial Group administers and provides services for over 181
mutual funds for 17 different fund managers, with more than $70 billion in
client assets. Forum has its headquarters in Portland, Maine, and has offices in
Seattle, Bermuda, and Warsaw, Poland. In a joint venture with Bank Handlowy, the
largest and oldest commercial bank in Poland, Forum operates the only
independent transfer agent and mutual fund accounting business in Poland. Forum
directs an off-shore and hedge fund administration business through its Bermuda
office. It employs more than 390 professionals worldwide.
From the beginning, Forum developed a plan of action that was effective with
both start-up funds, and funds that needed restructuring and improved services
in order to live up to their potential. The success of its innovative approach
is evident in Forum's growth rate over the years, a growth rate that has
consistently outstripped that of the mutual fund industry as a whole, as well as
that of the fund service outsource industry.
Forum has worked with both domestic and international mutual fund sponsors,
designing unique mutual fund structures, positioning new funds within the
sponsors' own corporate planning and targeted markets.
Forum's staff of experienced lawyers, many of whom have been associated with the
Securities and Exchange Commission, have been available to work with fund
sponsors to customize fund components and to evaluate the potential of various
fund structures.
D-1
<PAGE>
Forum has introduced fund sponsors to its unique proprietary Core and Gateway(R)
partnership, helping them to take advantage of this full-service master/feeder
structure.
Fund sponsors understand that even the most efficiently and creatively designed
fund can disappoint shareholders if it is inadequately serviced. That is the
reason why fund sponsors have relied on Forum to meet all of a fund's complex
compliance, regulatory, and filing needs.
Forum's full service commitment includes providing state-of-the-art accounting
support (Forum has 7 CPAs on staff, as well as senior accountants who have been
associated with Big 6 accounting firms). Forum's proprietary accounting system
is continually upgraded and can provide custom-built modules to satisfy a fund's
specific requirements. This service is joined with transfer agency and
shareholder service groups that draw their strength both from the high caliber
of the people staffing each unit and from Forum's advanced technology support
system.
More than a decade of experience with mutual funds has given Forum practical
hands-on experience and knowledge of how mutual funds function "from the inside
out."
Forum has put that experience to work by creating the Forum Family of Funds, a
family where each member is designed and positioned for your best investment
advantage, and where each fund is serviced with the utmost attention to the
delivery of timely, accurate, and comprehensive shareholder information.
INVESTMENT ADVISERS
Forum Investment Advisors, LLC offers the services of portfolio managers with
the highest qualifications--because without such direction, a comprehensive and
goal-oriented investment program and ongoing investment strategy are not
possible. Serving as portfolio managers for the Forum Family of Funds are
individuals with decades of experience with some of the country's major
financial institutions.
Forum Funds are also managed by the portfolio managers of H.M. Payson & Co.,
founded in Portland, Maine in 1854 and one of the oldest investment firms in the
country. Payson has approximately $1.25 billion in assets under management, with
clients that include pension plans, endowment funds, and institutional and
individual accounts.
FORUM INVESTMENT ADVISORS, LLC
Forum Investment Advisors, LLC is the largest Maine based investment adviser
with approximately $1.95 billion in assets under management. The portfolio
managers have decades of combined experience in a cross section of the country's
financial markets. The managers have specific, day-to-day experience in the
asset class portfolios they manage, bringing critical focus to meeting each
fund's explicit investment objectives. The portfolio managers have been involved
in investing the assets of large insurance companies, banks, pension plans,
individuals, and of course mutual funds. Forum Investment Advisors, LLC has a
staff of analysts and investment administrators to meet the demands of serving
shareholders in our funds.
D-2
<PAGE>
FORUM FAMILY OF FUNDS
It has been said that mutual fund investment offerings--of which there are
nearly 10,000, ith assets spread across stock, bond, and money market funds
worth more than $4 trillion--come in a rainbow of varieties. A better
description would be a "spectrum" of varieties, the spectrum graded from green
through amber and on to red. In simpler terms, from low risk investments,
through moderate to high risk. The lower the risk, the lower the possible reward
- -- the higher the risk, the higher the potential reward.
The Forum Family of Funds provides conservative investment opportunities that
reduce the risk of loss of capital, using underlying money market investments
U.S. Government securities (although the shares of the Forum Funds are neither
insured nor guaranteed by the U.S. Government or its agencies), thus cushioning
the investment against market volatility. These funds offer regular income,
ready access to your money, and flexibility to buy or sell at any time.
In the less conservative but still not aggressive category are funds in the
Forum Family that seek to provide steady income and, in certain cases, tax-free
earnings. Such investments provide important diversification to an investment
portfolio.
Growth funds in the Forum Family more aggressively pursue a high return at the
risk of market volatility. These funds include domestic and international stock
mutual funds."
TEXT OF PEOPLES HERITAGE NEWS RELEASE
Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has
formed an alliance with a major mutual fund provider and an investment advisory
firm to expand its mutual fund offerings. The alliance with Forum Financial
Group and H.M. Payson & Company will result in 18 funds, including the unique
Maine Municipal Bond Fund and New Hampshire Bond Fund, being offered through the
branches of Peoples' affiliate banks in Maine, New Hampshire and northern
Massachusetts and the Company's trust and investment subsidiarie
'There is no secret to where financial services are moving, under one roof,"
said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples
Heritage. "One only has to watch the virtually daily announcements of
consolidations in the financial sector to nderstand that customers are demanding
and receiving 'one-stop' financial services.
"We think we are adding the additional competitive advantage of funds that are
managed and administered close to home."
Eighteen Forum funds will be offered including two Payson funds. The tax-free
Maine and New Hampshire state bond funds are the only two such funds available
and usually invest 80% of total assets in municipal securities. Other funds
being provided by the alliance include money market, debt and equity funds.
Forum Financial, based in Portland, Maine since 1987, administers 124 funds with
more than $29 billion in assets. Forum manages mutual funds for independent
investment advisers such as Payson and for banks. Forum Investment Advisors, LLC
an affiliate, is the largest Maine-based investment adviser with approximately
$1.95 billion in fund assets under management.
"We are providing a great product set to the customers served by Peoples' nearly
200 branches in northern New ngland," said John Y. Keffer, Forum Financial
president, "The key today is to link a wide variety of investment options with
convergent, easy access for customers. I believe this alliance does just that."
D-3
<PAGE>
H.M. Payson & Co., founded in 1854, is one of the nation's oldest
investment firms with nearly $1.25 billion in assets under management and $412
million in non-managed custodial accounts. The Payson Value Fund and Payson
Balanced Fund are among the 18 offerings.
"I believe we have all the ingredients of a tremendous alliance," said John
Walker, Payson President and Managing Director. "We have the region's premier
community banking company, a community-based investment adviser, and a local
mutual fund company that operates nationally and specializes in working with
banks. We are poised to provide solid investment performance and service."
Peoples Heritage Financial Group is a $10 billion multi-state bank and financial
services holding company headquartered in Portland, Maine. Its Maine banking
affiliate, Peoples Heritage Bank, has the state's leading deposit market share.
Its New Hampshire banking affiliate, Bank of New Hampshire, has the state's
leading deposit market share. Family Bank, the Company's Massachusetts banking
subsidiary, has the state's tenth largest deposit market share and the leading
market share in many of the northern Massachusetts communities it serves.
Peoples affiliate banks also operate subsidiaries in leasing, trust and
investment services and insurance.
FORUM FINANCIAL GROUP:
Headquarters: Two Portland Square, Portland, Maine 04101
President: John Y. Keffer
Offices: Portland, Seattle, Warsaw, Bermuda
*Established in 1986 to administer mutual funds for independent investment
advisers and banks *Among the nation's largest third-party fund
administrators
*Uses proprietary in-house systems and custom programming capabilities
*Administration and Distribution Services: Regulatory, compliance,
expense accounting, budgeting for all funds
*Fund Accounting Services: Portfolio valuation, accounting, dividend
declaration, and tax advice
*Shareholder Services: Preparation of statements, distribution support,
inquiries and processing of trades
*Client Assets under Administration and Distribution: $73 billion
*Client Assets Processed by Fund Accounting: $53 billion
*Client Funds under Administration and Distribution: 181 mutual funds with 89
share classes
*International Ventures: Joint venture with Bank Handlowy in Warsaw, Poland,
using Forum's proprietary transfer agency and distribution systems; Off-shore
investment fund administration, using Bermuda as Forum's center of operations
*Forum Employees:
United States -215, Poland - 180, Bermuda - 4
Forum Contacts:
John Burns, Director, Forum Investment Advisors, LLC, (207) 879-1900 X 6132 Tony
Santaniello, Director of Marketing, (207) 879-1900 X 6175
H.M. PAYSON & CO.:
Headquarters: One Portland Square, Portland, Maine
President and Managing Director: John Walker
Quality investment services and conservative wealth management since 1854
*Assets under Management: $1.25 Billion
*Non-managed Custody Assets: $412 Million
*Client Base: 85% individuals; 15% institutional
*Owned by 11 shareholders; 10 managing directors
*Payson Balanced Fund and Payson Value Fund (administrative and shareholder
services provided by Forum Financial Group)
*Employees: 45
D-4
<PAGE>
H.M. PAYSON & CO. CONTACT:
Joel Harris, Marketing Coordinator, (207) 772-3761
D-5
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Trust Instrument of Registrant dated August 29, 1995 as amended on June 25,
1999 (see Note 1).
(b) By-Laws of Registrant (see Note 2).
(c) See 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 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 4).
(4) Investment Advisory Agreement between Registrant and Polaris Capital
Management, Inc. dated as of June 1, 1998 (see Note 5).
(5) Investment Advisory Agreement between Registrant and H.M. Payson & Co.
relating to Investors Equity Fund dated as of
December 5, 1997 (see Note 6).
(6) 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 7).
(7) Investment Advisory Agreement between Registrant and Brown Investment
Advisory & Trust Company relating to BIA Small-Cap Growth Fund and BIA
Growth Equity Fund, dated as of June 29, 1999 (see Note 1).
(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 Fund Services, LLC
relating to 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, 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, Maine Municipal Bond
Fund, New Hampshire Bond Fund, Payson Balanced Fund, Payson Value
Fund, Polaris Global Value Fund and TaxSaver Bond Fund dated as of
February 28, 1999 (see Note 1).
(4) Sub-Distribution Agreement between Forum Fund Services, LLC and Forum
Financial Services, Inc. dated March 1, 1999 (see Note 8).
(f) None.
(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, 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
1
<PAGE>
Fund, Daily Assets Government Obligations Fund, Daily Assets Cash Fund
and Daily Assets Municipal Fund, undated (see Note 8).
(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, 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 April 20, 1999 (see Note 8).
(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, 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 (see Note 8).
(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,
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 (see Note 8).
(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, 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, as amended
May 21, 1999 (See Note 9).
(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 10).
(5) Shareholder Service Plan of Registrant dated March 18, 1998 and Form
of Shareholder Service Agreement relating to Polaris Global Value Fund
(see Note 6).
(i) Opinion of Seward & Kissel LLP dated January 5, 1996 (see Note 11).
(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) 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 12).
2
<PAGE>
(n) 18f-3 plan adopted by Registrant (see Note 3).
(p) Code of Ethics adopted by Registrant (filed herewith).
Other Exhibits:
(A) Power of Attorney for James C. Cheng, Costas Azariadis and J. Michael
Parish, Trustees of Registrant (see Note 13).
(B) Power of Attorney for John Y. Keffer, Trustee of Registrant (see Note 6).
(C) Power of Attorney for John Y. Keffer, James C. Cheng, Costas Azariadis and
J. Michael Parish, Trustees of Core Trust (Delaware) (see Note 14).
- ---------------
Note:
(1) Exhibit incorporated by reference as filed in post-effective amendment No.
73 via EDGAR on July 30, 1999, accession number 0001004402-99-000341.
(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.
56 via EDGAR on December 31, 1997, accession number 0001004402-97-000281.
(5) Exhibit incorporated by reference as filed in post-effective amendment No.
63 via EDGAR on June 8, 1998, accession number 0001004402-98-000339.
(6) Exhibit incorporated by reference as filed in post-effective amendment No.
65 via EDGAR on September 30, 1998, accession number 0001004402-98-000530.
(7) Exhibit incorporated by reference as filed in post-effective amendment No.
64 via EDGAR on July 31, 1998, accession number 0001004402-98-000421.
(8) Exhibit incorporated by reference as filed in post-effective amendment No.
72 via EDGAR on June 16, 1999, accession number 0001004402-99-000308.
(9) Exhibit incorporated by reference as filed in post-effective amendment No.
75 via EDGAR on September 30, 1999, accession number 0001004402-99-000395.
(10) Exhibit incorporated by reference as filed in post-effective amendment No.
50 via EDGAR on November 12, 1997, accession number 0001004402-97-000189.
(11) Exhibit incorporated by reference as filed in post-effective amendment No.
33 via EDGAR on January 5, 1996, accession number 0000912057-96-000216.
(12) Exhibit incorporated by reference as filed in post-effective amendment No.
69 via EDGAR on December 15, 1998, accession number 0001004402-98-000648.
(13) Exhibit incorporated by reference as filed in post-effective amendment No.
34 via EDGAR on May 9, 1996, accession number 0000912057-96-008780.
(14) Exhibit incorporated by reference as filed in post-effective amendment No.
15 to the registration statement of Monarch Funds via EDGAR on December 19,
1997, accession number 0001004402-97-000264.
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.
3
<PAGE>
(a) Subject to the exceptions and limitations contained in Section
(b) below:
"(i) Every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of being or having
been a Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
(ii) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) Who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of the
Covered Person's office or (B) not to have acted in good faith in the
reasonable belief that Covered Person's action was in the best interest
of the Trust; or
(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Trustee's or officer's office,
(A) By the court or other body approving the settlement;
(B) By at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) By written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 5.2 may be paid by the Trust
or Series from time to time prior to final disposition thereof upon
receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him to the Trust or Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 5.2; provided, however, that either (a) such Covered
Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a
4
<PAGE>
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."
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. and Forum Investment Advisers, LLC
(Investors Bond Fund, Investors High Grade Bond Fund, TaxSaver Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund and Investors
Growth Fund) include language similar to the following:
"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 Polaris Capital
Management, Inc. and Brown Investment Advisors & Trust Company 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
5
<PAGE>
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.
(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
6
<PAGE>
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen
by the Distributor and approved by the Trust, which approval shall not
be withheld unreasonably. The Distributor shall advise the Trust that
it will assume the defense of the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If the Distributor
assumes the defense of any such suit and retains counsel, the
defendants shall bear the fees and expenses of any additional counsel
that they retain. If the Distributor does not assume the defense of any
such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or
claims that are not available to or conflict with those available to
the Distributor, the Distributor will reimburse any Trust Indemnitee
named as defendant in such suit for the reasonable fees and expenses of
any counsel that person retains. A Trust Indemnitee shall not settle or
confess any claim without the prior written consent of the Distributor,
which consent shall not be unreasonably withheld or delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a
Distributor Indemnitee or Trust Indemnitee, respectively, by the person
against whom such action is brought within twenty (20) days after the
summons or other first legal process is served. Such notice shall refer
to the person or persons against whom the action is brought. The
failure to provide such notice shall not relieve the party entitled to
such notice of any liability that it may have to any Distributor
Indemnitee or Trust Indemnitee except to the extent that the ability of
the party entitled to such notice to defend such action has been
materially adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Distributor Indemnitee or Trust Indemnitee and shall survive the sale
and redemption of any Shares made pursuant to subscriptions obtained by
the Distributor. The indemnification provisions of this Section will
inure exclusively to the benefit of each person that may be a
Distributor Indemnitee or Trust Indemnitee at any time and their
respective successors and assigns (it being intended that such persons
be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware
arising out of or in any way connected with the issuance or sale of
Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable
statute or regulation or shall require the Distributor to take any
action contrary to any provision of its Articles of Incorporation or
Bylaws or any applicable statute or regulation; provided, however, that
neither the Trust nor the Distributor may amend their Organic Documents
or Articles of Incorporation and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made
in this Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders
to which the Distributor would otherwise be subject by reason of its
failure to satisfy the standard of care set forth in Section 7 of this
Agreement."
7
<PAGE>
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,, 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 this filing and in Parts A and B of post-effective amendment No. 73
to the Trust's Registration Statement (accession number
0001004402-99-000341) 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.
Name Title Business Connection
.................. ................... ................................
David I. Goldstein Secretary Forum Investment Advisors, LLC
................... ................................
................... ................................
General Counsel Forum Financial Group, LLC
................... ................................
................... ................................
Officer other Forum affiliated companies
.................. ................... ................................
.................. ................... ................................
John Burns Director Forum Investment Advisors, LLC
................... ................................
................... ................................
Director Forum Financial Group, LLC
................... ................................
................... ................................
Officer other Forum affiliated companies
.................. ................... ................................
.................. ................... ................................
Marc Keffer Assistant Secretary Forum Investment Advisors, LLC
................... ................................
................... ................................
Corporate Counsel Forum Financial Group, LLC
................... ................................
................... ................................
Officer other Forum affiliated companies
(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 post-effective amendment No. 73 to the Trust's
Registration Statement (accession number 0001004402-99-000341) is
incorporated by reference herein.
8
<PAGE>
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.
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.
(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
post-effective amendment No. 73 to the Trust's Registration Statement
(accession number 0001004402-99-000341), is incorporated by reference
herein.
The following is the director and principal executive officer of Austin
Investment Management, Inc. 375 Park Avenue, New York, New York 10152,
including his business connections, which are of a substantial nature.
Name Title Business Connection
.............. ..................... ..................................
.............. ..................... ..................................
Peter Vlachos Director, President, Austin Investment Management Inc.
Treasurer, Secretary
(d) Peoples Heritage Bank
The description of Peoples Heritage Bank ("Peoples") (investment
sub-adviser to Investors Equity Fund) contained in Parts A and B of
post-effective amendment No. 75 to the Trust's Registration Statement
(accession number 0001004402-99-000395) 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
otherwise indicated below, the principal business address of Peoples
with which these are connected is One Portland Square, Portland, Maine
04101.
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
9
<PAGE>
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
(e) 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 post-effective
amendment No. 72 (accession number 0001004402-99-000308) 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.
Name Title Business Connection
..................... ..................... ...........................
..................... ..................... ...........................
Michael D. Hankin President, Chief Brown
Executive 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, Episcopal Church
Finance Committee Foundation
..................... ...........................
..................... ...........................
Trustee Maryland Historical Society
..................... ..................... ...........................
10
<PAGE>
....................... ...................... ........................
Charles W. Cole, Jr. Vice Chairman of the Brown
Board of Trustees
...................... ........................
...................... ........................
Director Flag Investors Mutual
Funds
...................... ........................
...................... ........................
Director Provident Bankshares
Corporation, Provident
Bank of Maryland
...................... ........................
...................... ........................
Director, Chairman of The University of
Investment Committee Maryland 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 France-Merrick
Committee Foundation
...................... ........................
...................... ........................
Trustee and Chairman Baltimore Council on
Foreign Affairs
....................... ...................... ........................
....................... ...................... ........................
Truman T. Semans Vice Chairman of the Brown
Board of Trustees
...................... ........................
...................... ........................
Trustee, Member and Duke University
Former Chairman of
Investment Committee
...................... ........................
...................... ........................
Trustee, Chairman of Lawrenceville School
Finance Committee and
Member of Investment
and Executive
Committees
...................... ........................
...................... ........................
Board of Directors, Chesapeake Bay
Member of Investment Foundation
and Executive
Committees
...................... ........................
...................... ........................
Chairman Flag Investors Mutual
Funds
...................... ........................
...................... ........................
Investment Mercy Medical Center
Committee Member
...................... ........................
...................... ........................
Investment St. Mary's Seminary
Committee Member
...................... ........................
...................... ........................
Investment Archdiocese of Baltimore
Committee Member
...................... ........................
...................... ........................
Investment Robert E. Lee Memorial
Committee Member Foundation
...................... ........................
...................... ........................
Investment W. Alton Jones
Committee Member Foundation
11
<PAGE>
....................... ...................... ........................
....................... ...................... ........................
William C. Baker Trustee Brown
...................... ........................
...................... ........................
President and Chief Chesapeake Bay
Executive Officer Foundation
...................... ........................
...................... ........................
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 Gilman School
Investment Committee
...................... ........................
...................... ........................
Board of Directors Stoneridge, Inc.
Member
...................... ........................
...................... ........................
Board of Directors Sagemaker, Inc.
Member
...................... ........................
...................... ........................
Board of Directors Medical Mutual Liability
Member Insurance Society of
Maryland
...................... ........................
...................... ........................
Board of Directors Heritage Properties, Inc
Member
...................... ........................
...................... ........................
Board of Directors St. Mary's Seminary &
Member University
...................... ........................
...................... ........................
Board of Directors St. Ignatius Loyola
Member Academy
...................... ........................
...................... ........................
Board of Directors University of Notre Dame
Member Advisory Council
12
<PAGE>
....................... ...................... ........................
....................... ...................... ........................
Walter D. Pinkard, Jr. Trustee Brown
...................... ........................
...................... ........................
President and Chief Colliers Pinkard
Executive Officer
...................... ........................
...................... ........................
Chairman The Americas Region of
Colliers International
...................... ........................
...................... ........................
Vice President France Foundation
...................... ........................
...................... ........................
Chairman The Baltimore Community
Foundation
...................... ........................
...................... ........................
Board of Directors France-Merrick
Member 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
13
<PAGE>
....................... ...................... ........................
....................... ...................... ........................
John J.F. Sherrerd Trustee Brown
...................... ........................
...................... ........................
Director Provident Mutual Life
Insurance Company
...................... ........................
...................... ........................
Director C. Brewer and Company
...................... ........................
...................... ........................
Trustee, Vice Chairman Princeton University
of Executive Committee
...................... ........................
...................... ........................
Trustee, Chairman of The Robertson Foundation
Investment Committee
...................... ........................
...................... ........................
Trustee GESU School
...................... ........................
...................... ........................
Director and Executive Princeton Investment
Committee Member Management
...................... ........................
...................... ........................
Board of Overseers University of
Pennsylvania Wharton
School
....................... ...................... ........................
....................... ...................... ........................
David M. Churchill, CPA Chief Financial Brown
Officer
....................... ...................... ........................
....................... ...................... ........................
Michael D. Hankin Chief Executive Brown
Officer
....................... ...................... ........................
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Fund Services, LLC, Registrant's underwriter, or its affiliate,
Forum Financial Services, Inc., serve as underwriter for the following
investment companies registered under the Investment Company Act of
1940,as amended:
The Cutler Trust Monarch Funds
Memorial Funds Sound Shore Fund, Inc.
Forum Funds TrueCrossing Funds
(b) The following officers of Forum Fund Services, LLC, the Registrant's
underwriter, hold the following positions with the Registrant. Their
business address is Two Portland Square, Portland, Maine 04101.
Name Position with Underwriter Position with Registrant
................. ......................... ...........................
................. ......................... ...........................
John Y. Keffer President Chairman, President
................. ......................... ...........................
................. ......................... ...........................
David I Goldstein Secretary Vice President
(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, as listed
under "Custodian" in Part B to this Registration Statement. 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.
14
<PAGE>
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
None.
15
<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 amendment 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 December 30, 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
December 30, 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 previously filed as Other Exhibits to this
Registration Statement.
16
<PAGE>
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Forum Funds to be signed in the
City of Portland, State of Maine on December 30, 1999.
CORE TRUST (DELAWARE)
By:/s/ John Y. Keffer
John Y. Keffer, President
On behalf of Core Trust (Delaware), this amendment to the Registration Statement
of Forum Funds has been signed below by the following persons in the capacities
indicated on December 30, 1999.
Principal Executive Officer
/s/ John Y. Keffer
John Y. Keffer
President and Chairman
Principal Financial Officer
/s/ Stacey Hong
Stacey Hong
Treasurer
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 previously filed as Other Exhibits to this
Registration Statement.
17
<PAGE>
Index to Exhibits
(j) Consent of Independent Auditors.
(p) Code of Ethics adopted by Registrant.
18
<PAGE>
Exhibit (j)
Consent of Independent Auditors
The Board of Trustees and Shareholders
Forum Funds:
We consent to the use of our reports dated October 8, 1999 for Daily Assets
Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund, series
of Forum Funds and for Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio, series of Core
Trust (Delaware), incorporated herein by reference into the statement of
additional information and to the references to our Firm under the headings,
"Financial Highlights" in the prospectuses and "Independent Auditors" in the
statement of additional information.
Boston, Massachusetts
December 28, 1999
<PAGE>
Exhibit (p)
FORUM FUNDS
Code of Ethics
December 18, 1995
Adopted Pursuant to Rule 17j-1
Under the Investment Company Act of 1940
INTRODUCTION
This Code of Ethics has been adopted by Forum Funds (the "Trust") with
respect to each of its investment portfolios (each a "Fund") to establish
standards and procedures for the detection and prevention of activities by which
persons having knowledge of the investments and investment intentions of a Fund
may abuse their fiduciary duties to the Fund and to deal with other types of
conflict of interest situations.
No access person (as defined below) shall use any information
concerning the investments or investment intentions of a Fund, or his or her
ability to influence such investment intentions, for personal gain or in a
manner detrimental to the interests of a Fund. In addition, no access person
shall, directly or indirectly in connection with the purchase or sale of a
security held or being considered for purchase or sale by a Fund:
(i) employ any device, scheme or artifice to defraud the Fund;
(ii) make to the Fund, the Fund's investment adviser or distributor any
untrue statement of a material fact or omit to state to any of the
foregoing a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not
misleading;
(iii) engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Fund; or
(iv) engage in any manipulative practice with respect to the Fund.
SECTION 1. DEFINITIONS
(a) "access person" means: any trustee, officer or advisory person
of the trust.
(b) "Access Person Account" means any securities account in which an
access person has a direct or indirect beneficial interest.
(c) "Act" means the Investment Company Act of 1940, as amended.
(d) "advisory person" means, with respect to the trust:
(i) any employee of the trust or of any company in a control
relationship with the trust who, in connection with the employee's
regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a security by the trust,
or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and
(ii) any natural person in a control relationship to the trust that
obtains information concerning recommendations made to the trust with
regard to the purchase or sale of a security.
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(e) "being considered for purchase or sale" means, with respect to a
security, when a recommendation to purchase or sell that security has been
communicated and, with respect to the person making the recommendation, when
that person seriously considers making the recommendation.
(f) "beneficial owner" shall have the same meaning as that set forth in
Rule 16a-1(a) under the Securities Exchange Act of 1934, as amended, except that
the determination of direct or indirect beneficial ownership shall apply to all
securities which an access person has or acquires. A beneficial owner of a
security is any person who, directly or indirectly,
(i) through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power (including the power to direct
voting) or investment power (including the power to direct a
disposition) in the security or
(ii) through any contract, arrangement, understanding, relationship or
otherwise, has or shares a direct or indirect pecuniary interest (the
opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in the subject securities) in a security.
(g) "control" shall mean the power to exercise a controlling influence
over the management or policies of a company, unless such power is solely the
result of an official position with such company.
(h) "security" shall mean a "security" as defined in Section 2(a)(36)
of the Act; provided, however, that the term security shall not include:
(i) obligations issued or guaranteed by the U.S. Treasury or any
other "Government security" as defined in Section 2(a)(16) of the Act
with a remaining maturity of 12 months or less;
(ii) bankers' acceptances and bank certificates of deposit;
(iii) commercial paper;
(iv) repurchase agreements covering any of the foregoing;
(v) other money market instruments as determined by the trust's
Board of Trustees (the "Board"); and
(vi) shares of registered open-end investment companies.
SECTION 2. PROHIBITED TRANSACTIONS
(a) Access Person Account Prohibitions. No access person Account may
purchase or sell any security if, to the knowledge of any access person having
any beneficial ownership in the Access Person Account, that security (i) is
being considered for purchase or sale by any Fund, (ii) is being purchased or
sold by any Fund, or (iii) has been purchased or sold by any Fund within the
preceding 5 business days. These prohibitions shall not apply if the access
person obtains advance clearance of the transaction in accordance with the
procedures in Section 3(b).
(b) Clearance of Transactions. The prohibitions of Section 3(a)
shall not apply to:
(i) purchases or sales affected in any account over which an
access person has no direct or indirect influence or control;
(ii) purchases which are part of an automatic dividend reinvestment
plan;
(iii) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to the
extent such rights were acquired from such issuer; or
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(iv) purchases or sales that are determined to be unlikely to have any
economic impact on a Trust or on a Fund's ability to purchase or sell
securities of the same type or other securities of the same issuer. Any
such determination shall be made by an appropriate officer of the
investment adviser to the subject Fund (such officer to have no
personal interest in the subject transaction) and must be obtained in
writing no more than 10 business days prior to the purchase or sale of
a security. Among other things, the following factors should be
considered in determining whether or not a proposed transaction should
be allowed:
(A) whether the amount or nature of the transaction or
person making it is likely to affect the price or market for
the security;
(B) whether the individual making the proposed purchase or
sale is likely to benefit from purchases or sales being made
or being considered by the Fund;
(C) whether the security proposed to be purchased or sol
is one that would qualify for purchase or sale by the Fund;
(c) Undue Influence; Disclosure of Personal Interest. No access person
shall cause or attempt to cause any Fund to purchase, sell or hold any security
in a manner calculated to create any personal benefit to the access person or
any Access Person Account. No access person shall recommend any securities
transactions for a Fund without having disclosed his or her interest, if any, in
such securities or the issuer thereof, including, without limitation, (i) his or
her direct or indirect beneficial ownership of any securities of such issuer,
(ii) any position with such issuer or its affiliates and (iii) any present or
proposed business relationship between such issuer or its affiliates, on the one
hand, and such person or any party in which such person has a significant
interest, on the other hand.
(d) Corporate Opportunities. All access persons are expressly
prohibited from taking personal advantage of any opportunity properly belonging
to a Fund.
(e) Confidentiality. Except as required in the normal course of
carrying out an access person's business responsibilities, access persons are
prohibited from revealing information relating to the investment intentions or
activities of any Fund, or securities that are being considered for purchase or
sale on behalf of any Fund.
SECTION 3. REPORTING REQUIREMENTS
(a) Access Person Reporting. All access persons must report the
information described in Section 3(b) with respect to transactions in any
security in which the access person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership. All access persons of the
trust must report to the Secretary of the trust unless they are otherwise
required to report to the distributor or an investment adviser of the trust
pursuant to a Code of Ethics adopted by those entities. No person is required to
make a report with respect to transactions effected for any account over which
such person does not have any direct or indirect influence or control.
(b) Trustee Reporting. A trustee of the trust who is not an interested
person of the trust as defined in Section 2(a)(19) of the Act need only report a
transaction if at the time of the transaction the trustee knew or, in the
ordinary course of fulfilling his or her official duties as a trustee, should
have known that, during the 15 day period immediately preceding or after the
date of the transaction in a security by the trustee, such security is or was
purchased or sold by a Fund or such purchase or sale was being considered for
purchase or sale by a Fund or an investment adviser to a Fund.
(c) Report Contents. Every report shall be made no later than 10 days
after the end of the calendar quarter in which the transaction to which the
report relates was effected, and (with respect to those reports required to be
submitted to the Secretary) shall contain the following information:
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(i) the date of the transaction, the title and number of shares,
and the principal amount of each security involved;
(ii) the nature of the transaction (i.e., purchase, sale or other
type of acquisition or disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or through whom
the transaction was effected.
All access person reports submitted to the distributor or an investment adviser
of the trust pursuant to Section 3(a) shall contain the information required by
the distributor or investment adviser.
(d) Report Qualification. Any report may contain a statement that
the report shall not be construed as an admission by the person making the
report that he or she has any direct or indirect beneficial ownership in the
securities to which the report relates.
SECTION 4. MISCELLANEOUS
(a) Notification Of Access Persons. The Secretary of the trust shall
identify all access persons of the trust and inform them of this Code of Ethics
and shall inform those access persons who are required to make reports to the
Secretary of their reporting requirements. Appendix A, as it may be amended from
time to time by the Secretary of the Trusts is a list of access persons who must
report to the Secretary pursuant to Section 3 hereof. The duties of the
Secretary may be delegated to the appropriate compliance personnel of the
distributor and investment advisers to the trust.
(b) Sanctions. Upon discovering a violation of this Code of Ethics, the
Board may impose such sanctions as it deems appropriate, including, among other
things, a letter of censure or suspension or termination of the employment of
the violator.
(c) Required Records. The trust shall maintain and cause to be
maintained in an easily accessible place a copy of any Code of Ethics adopted by
a Fund pursuant to Rule 17j-1 under the Act which has been in effect during the
previous five (5) years. With respect to those access persons reporting to the
Secretary, the trust shall maintain and cause to be maintained:
(i) a record of any violation of any Code of Ethics adopted by the
trust pursuant to Rule 17j-1 under the Act and of any action taken as a
result of such violation, each for a period of not less than six years
in an easily accessible place;
(ii) a copy of each report made a period of not less than six years,
the first three years in an easily accessible place; and
(iii) a list of all persons who are, or within the past five years have
been, required to make reports pursuant to any Code of Ethics adopted
by a Fund pursuant to Rule 17j-1 under the Act, in an easily accessible
place.
(d) Reporting. At least annually the Secretary shall report to the
Board on all matters relating to the operation of this Code.
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APPENDIX A
ACCESS PERSONS
Costas Azariadis
James C. Cheng
J. Michael Parish
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