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OMB APPROVAL
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As filed with the Securities and Exchange Commission on April 17, 2000
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. 78
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 80
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)
[ ] on ________________ pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(1)
[x] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Virtual Growth/Value Fund.
<PAGE>
LOGO
PROSPECTUS
JULY 1, 2000
MASTRAPASQUA GROWTH VALUE FUND
MASTRAPASQUA GROWTH VALUE FUND SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN THE COMMON STOCK OF COMPANIES WHOSE VALUATION MAY
NOT YET REFLECT THE PROSPECTS FOR ACCELERATED EARNINGS/CASH FLOW GROWTH.
THE FUND DOES NOT PAY RULE 12B-1 (DISTRIBUTION) FEES.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THE FUND'S SHARES
OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MASTRAPASQUA & ASSOCIATES
<PAGE>
TABLE OF CONTENTS
Risk/Return Summary
Performance
Fee Table
Investment Objective, Principal Strategies and Principal Risks
Management
Your Account
How to Contact the Fund
General Information
Buying Shares
Selling Shares
Exchange Privileges
Retirement Accounts
Other Information
Financial Highlights
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE Mastrapasqua Growth Value Fund (the "Fund") seeks long-term
capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
[Margin callout: CONCEPTS TO UNDERSTAND
COMMON STOCK means an equity or ownership interest in a company
ACCELERATED EARNINGS OR CASH FLOW GROWTH means a dramatic increase in a
company's earnings and/or cash flow
MARKET CAPITALIZATION means the value of a company's common stock in
the stock market]
The Fund invests primarily in the common stock of companies whose valuation may
not yet reflect the prospects for accelerated earnings/cash flow growth. The
Fund seeks growth opportunities among companies of various market
capitalizations.
PRINCIPAL RISKS OF INVESTING IN THE FUND
GENERAL RISKS You could lose money on your investment in the Fund or the Fund
could underperform other investments. The principal risks of an investment in
the Fund include:
o The stock market goes down
o The stock market continues to undervalue the stocks in the Fund's portfolio
o The value of a share of the Fund will fluctuate
o The Fund's investment adviser (the "Adviser") makes poor investment decisions
WHO MAY WANT TO INVEST IN THE FUND
The Fund may be appropriate for you if you:
o Are willing to tolerate significant changes in the value of your investment o
Are pursuing a long-term goal o Are willing to accept higher short-term risk for
higher potential long-term return
The Fund may NOT be appropriate for you if you:
o Need regular income or stability of principal
o Are pursuing a short-term goal or investing emergency reserves
2
<PAGE>
PERFORMANCE INFORMATION
Performance information is not provided because the Fund had not commenced
operations prior to the date of this prospectus.
FEE TABLE
The following table describes the various fees and expenses that you will pay if
you invest in the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
The Fund has no Shareholder fees.
ANNUAL FUND OPERATING EXPENSES (1) (expenses that are deducted from Fund assets)
Advisory Fees 1.00%
Other Expenses 0.75%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.75%
Fee Waiver and Expense Reimbursement(2) 0.25%
Net Expenses 1.50%
(1) Based on estimated amounts for the Fund's fiscal year ending May 31, 2001.
(2) The Adviser has, until September 30, 2001, agreed to voluntarily waive
a portion of its fees and assume certain expenses so that Total Annual
Fund Operating Expenses do not exceed 1.50%. Fee waivers and expense
reimbursements may be reduced or eliminated at any time thereafter.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the 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 and that the operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$198 $612 $1,052 $2,275
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<PAGE>
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
[Margin callout: CONCEPTS TO UNDERSTAND
UNDERVALUED SECURITIES means securities that are trading at prices
below their intrinsic value
PRICE/EARNINGS RATIO means the price of a stock divided by it's
earnings per share]
INVESTMENT POLICIES
The Fund invests primarily in the common stock of domestic medium to
large-capitalization growth companies that the Adviser believes have a
demonstrated record of achievement and excellent prospects for earnings/cash
flow growth over a 3 to 5 year period. In selecting investments for the Fund,
the Adviser looks for securities that it believes are undervalued, that is,
securities that are trading at prices below their intrinsic value.
From time to time the Fund may invest in companies with a market capitalization
of less than $1 billion and own securities of foreign-based companies. The Fund
may also invest up to 15% of its assets in common stock that is not actively
traded on a national or regional stock exchange.
THE ADVISER'S PROCESS
When selecting investments for the Fund's portfolio, the Adviser utilizes a
process that considers the securities of "core" companies that the Adviser
believes have shown above-average and consistent long-term growth in earnings
and cash flow and have excellent prospects for future growth. These core
companies generally have projected 3 to 5 year earnings and cash flow growth
rates that exceed the Adviser's assessment of the companies' risk-adjusted
price-to-earnings ratio. It is anticipated that, under normal market conditions,
approximately 2/3 of the Fund's portfolio will consist of these core companies.
The balance of the Fund's investment portfolio, may consist of the securities of
"accelerated earnings/cash flow growth" companies that the Adviser believes are
either currently enjoying or are projected to enjoy a dramatic increase in
earnings and/or cash flow. These companies often have been overlooked by the
financial community and are believed to have valuations that have not been fully
recognized by the market. The Adviser believes that these companies may
experience an uncharacteristically rapid growth rate during the immediate 18 to
36 months.
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<PAGE>
These companies are typically newer additions to the portfolio and may become
core holdings over time.
The Adviser expects to hold investments for an average of 18 to 36 months.
However, changes in the Adviser's outlook and market conditions may
significantly affect the amount of time the Fund holds a security. The Fund may
make short-term trades in order to take advantage of changing market, industry
or company conditions. The Fund's portfolio turnover may vary greatly from year
to year and during a particular year. The Adviser does not set a price target
for its holdings in order to determine when to sell an investment. Rather, the
Adviser generally will sell a security if one or more of the following occurs:
o A change in the fundamentals of a company or industry
o Excessive valuation
o The Adviser concludes that the management of a company has inaccurately
assessed its prospects
TEMPORARY DEFENSIVE MEASURES In order to respond to adverse market, economic or
other conditions, the Fund may assume a temporary defensive position and invest
without limit in cash and prime quality cash equivalents such as commercial
paper and money market instruments. As a result, the Fund may be unable to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS
GENERAL The Fund is designed for investors who are investing for the long term
and is not intended for investors seeking assured income or preservation of
capital. The Fund's net asset value and investment return will fluctuate based
upon changes in the value of its portfolio securities upon redemption. The
market value of securities in which the Fund invests is based upon the market's
perception of value and is not necessarily an objective measure of the
securities' value. There is no assurance that the Fund will achieve its
investment goal. An investment in the Fund is not by itself a complete or
balanced investment program.
There is the risk that the market will not recognize the intrinsic value of the
stocks held by the Fund for an unexpectedly long time. The smaller a company's
market capitalization, the greater the potential for price fluctuations and
volatility of its stock due to lower trading volume for the stock, less publicly
available information about the company and less liquidity in the market for the
stock. There is also the risk that the Adviser's judgment as to the growth
potential or value of a stock may prove to be wrong. Finally, a decline in
investor demand for the stocks held by the Fund also may adversely affect the
value of the stocks.
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<PAGE>
MANAGEMENT
The Fund is a series of Forum Funds (the "Trust"), an open-end, management
investment company (mutual fund). The business of the Trust and of the Fund is
managed under the direction of the Board of Trustees (the "Board"). The Board
formulates the general policies of the Fund and meets periodically to review the
Fund's performance, monitor investment activities and practices and discuss
other matters affecting the Fund. Additional information regarding the Board, as
well as the Trust's executive officers, may be found in the Statement of
Additional Information ("SAI").
THE ADVISER
The Fund's Adviser is Mastrapasqua & Associates, 814 Church Street, Suite 600,
Nashville, TN 37203. Mastrapasqua & Associates was incorporated in January 1993
and currently provides investment advisory services to banks, pension and profit
sharing plans, trusts, corporations and other business entities, as well as
other investment companies. As of March 31, 2000, the Adviser had approximately
$1.8 billion of assets under management.
Subject to the general control of the Board, the Adviser makes investment
decisions for the Fund. For its services, the Fund pays the Adviser an advisory
fee at an annual rate of 1.00% of the average daily net assets of the Fund.
PORTFOLIO MANAGERS
FRANK MASTRAPASQUA Chairman and Chief Executive Officer of the Adviser since
1993. Mr. Mastrapasqua has been jointly responsible for the day-to-day
management of the Fund since its inception. Mr. Mastrapasqua has over 19 years
of experience in the investment industry and prior to his establishment of the
Adviser, was a Partner and Director of Research at J.C. Bradford & Co. Prior to
that Mr. Mastrapasqua was a Senior Vice President, Chief Economist and Manager
of Fixed Income Research at Solomon Smith Barney.
THOMAS TRANTUM President of the Adviser since 1993. Mr. Trantum has been jointly
responsible for the day-to-day management of the Fund since it's inception. Mr.
Trantum has over ___ years experience in the investment industry and prior to
the establishment of the Adviser, was a Senior Security Analyst at J.C. Bradford
& Co. Prior to that Mr. Trantum was Chief Executive Officer of Gulf &
Mississippi Corporation, a railroad.
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provide services to the Fund.
As of March 31, 2000, Forum provided administration and distribution services to
investment companies and collective investment funds with assets of
approximately $[71] 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 the Fund's shares. The distributor acts as the representative of
the Trust in connection with the offering of the 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 Fund's shares.
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<PAGE>
Forum Administrative Services, LLC provides administrative services to the Fund,
Forum Accounting Services, LLC is the Fund's accountant, Forum Shareholder
Services, LLC ("Transfer Agent") is the Fund's transfer agent and Forum Trust,
LLC is the Fund's custodian.
The Trust has adopted a shareholder servicing plan under which the Trust pays
FAds a fee for providing shareholder service activities 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
the Fund.
FUND EXPENSES
The Fund pays for all of its expenses. The Fund's expenses are comprised of its
own expenses as well as Trust expenses that are allocated among the Fund and the
other funds of the Trust. The Adviser or other service providers may waive all
or any portion of their fees and/or reimburse certain expenses of the Fund. Any
waiver or expense reimbursement would have the effect of increasing the Fund's
performance for the period during which the waiver or reimbursement was in
effect.
The Adviser has undertaken to waive a portion of its fees and/or to reimburse
certain expenses in order to limit the Fund's expenses (excluding taxes,
interest, portfolio transaction expenses and extraordinary expenses) to 1.50% or
less of the average daily net assets of the Fund until September 30, 2001.
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<PAGE>
YOUR ACCOUNT
[Margin call out: HOW TO CONTACT THE FUND
WRITE TO US AT:
Forum Funds
P.O. Box 446
Portland, Maine 04112
OVERNIGHT ADDRESS:
Forum Funds
Two Portland Square
Portland, Maine 04101
TELEPHONE US AT:
(800) XXX-XXXX or (800) XXX-XXXX (Toll Free)
(207) XXX-XXXX
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
Mastrapasqua Growth Value 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.
For instance, if the Transfer Agent receives your purchase request in proper
form after 4:00 p.m., eastern time, your transaction will be priced at the next
business day's NAV. The Fund cannot accept orders that request a particular day
or price for the transaction or any other special conditions.
The Fund does not issue share certificates.
If you purchase shares directly from the Fund, you will receive [MONTHLY]
statements and a confirmation of each transaction. You should verify the
accuracy of all transactions in your account as soon as you receive your
confirmations.
The Fund reserves the right to waive minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
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<PAGE>
WHEN AND HOW NAV IS DETERMINED The 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. The Fund's NAV is determined by
taking the market value of all securities owned by the Fund (plus all other
assets such as cash), subtracting liabilities and then dividing the result (net
assets) by the number of shares outstanding. The Fund values securities for
which market quotations are readily available at current market value. If market
quotations are not readily available, then the Fund values securities at fair
value pursuant to procedures adopted by the Board.
TRANSACTIONS THROUGH THIRD PARTIES If you invest through a broker or other
financial institution, the policies and fees charged by that institution may be
different than those of the Fund. Financial institutions may charge transaction
fees and may set different minimum investments or limitations on buying or
selling shares. These institutions may also provide you with certain shareholder
services such as periodic account statements and trade confirmations summarizing
your investment activity. Consult a representative of your financial institution
for more information.
BUYING SHARES
HOW TO MAKE PAYMENTS All investments must be in U.S. dollars and checks must be
drawn on U.S. banks.
CHECKS For individual, 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 The Fund accepts investments in the following minimum
amounts:
<TABLE>
<S> <C> <C>
MINIMUM INITIAL INVESTMENT MINIMUM ADDITIONAL INVESTMENT
Standard Account $2,000 $250
Traditional and Roth IRA Accounts $1,000 $250
Accounts With Systematic Investment Plans $250 $250
</TABLE>
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<PAGE>
ACCOUNT REQUIREMENTS
<TABLE>
<S> <C>
TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS: o Instructions must be signed by all persons required
Individual accounts are owned by one person, as are sole to sign exactly as their names appear on the
proprietorship accounts. Joint accounts have two or more account
owners
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a custodial
These accounts provide a way to give money to account under the UGMA or UTMA
a child and obtain tax benefits o The custodian must sign instructions in a manner
indicating custodial capacity
BUSINESS ENTITIES o 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>
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INVESTMENT PROCEDURES
<TABLE>
<S> <C>
HOW TO OPEN AN ACCOUNT HOW TO ADD TO YOUR ACCOUNT
BY CHECK BY CHECK
o Call or write us for an account application and/or o Fill out an investment slip from a confirmation or
a Corporate Organization write us a letter
o Complete the application o Write your account number on your check
o Mail us your application and a 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 and/or o Call to notify us of your incoming wire
a Corporate/Organization Resolution form o Instruct your bank to wire your money to us
o Complete the application
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 and/or o Complete the systematic investment section of the
a Corporate/Organization Resolution form application
o Complete the application o Attach a vioded check to your application
o Call us and we will assign you an account number o Mail us the completed application
o Mail us your application
o Make an ACH payment
</TABLE>
SYSTEMATIC INVESTMENTS You may invest a specified amount of money in the 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 The Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is likely to engage in excessive trading (usually
defined as more than four redemptions or exchanges out of the Fund within a
calendar year).
CANCELED OR FAILED PAYMENTS The Fund accepts checks and ACH transfers at full
value subject to collection. If the Fund does not receive your payment for
shares or you pay with a check or ACH transfer that does not clear, your
purchase will be canceled. You will be responsible for any losses or expenses
incurred by the Fund or the Transfer Agent, and the Fund may redeem shares you
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<PAGE>
own in the account (or another identically registered account that you maintain
with the Transfer Agent) as reimbursement. The Fund and its agents have the
right to reject or cancel any purchase or exchange due to nonpayment.
SELLING SHARES
The Fund processes redemption orders promptly. Generally, the Fund will send
redemption proceeds to you immediately after receiving your redemption request
in proper form. Delays may occur in cases of very large redemptions, excessive
trading or during unusual market conditions. The Fund may delay sending
redemption proceeds until it has collected payment for the shares you are
selling, which may take up to 15 calendar days.
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<PAGE>
HOW 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 the application
o Attach a voided check to your application
o Mail us your completed application
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.
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>
SYSTEMATIC WITHDRAWALS You may redeem a specified amount of money from your
account once a month on a specified date. These payments are sent from your
account to a designated bank account by ACH payment. Systematic withdrawals must
be for at least $250.
SIGNATURE GUARANTEE REQUIREMENTS To protect you and the 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.
Specific requirements are listed in the SAI or may be obtained by calling the
Transfer Agent.
SMALL ACCOUNTS If the value of your account falls below $1,000 ($500 for IRA
accounts), the Fund may ask you to increase your balance. If the account value
is still below $1,000 ($500 for IRA accounts) after 60 days, the Fund may close
your account and send you the proceeds. The Fund will not close your account if
it falls below these amounts solely as a result of a reduction in your account's
market value.
REDEMPTIONS IN KIND The Fund reserves the right to pay redemption proceeds in
portfolio securities rather than in cash. These redemptions "in kind" usually
occur if the amount to be redeemed is large enough to affect the Fund's
operations (for example, if it represents more than 1% of the Fund's assets).
LOST ACCOUNTS The Transfer Agent will consider your account lost if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address. When an account is lost, all
distributions on the account will be reinvested in additional Fund shares. In
addition, the amount of any outstanding (unpaid for six months or more) checks
for distributions that have been returned to the Transfer Agent will be
reinvested and the checks will be canceled.
EXCHANGE PRIVILEGES
You may exchange your Fund shares and buy Investor class shares of any money
market fund of the Trust by telephone or in writing. For a list of funds
available for exchange, you may call the Transfer Agent. Because exchanges are a
sale and purchase of shares, they may have tax consequences.
REQUIREMENTS You may make exchanges only between identically registered accounts
(name(s), address and taxpayer ID number). There is currently no limit on
exchanges, but the Fund reserves the right to limit exchanges. You may exchange
your shares by mail or telephone, unless you declined telephone redemption
privileges on your account application. You may be responsible for any
fraudulent telephone order as long as the Transfer Agent takes reasonable
measures to verify the order.
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<PAGE>
HOW TO EXCHANGE
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The names of the Fund 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 your request and documentation
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
RETIREMENT ACCOUNTS
The Fund offers IRA accounts, including traditional and Roth IRA accounts.
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 in which the contribution is made.
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<PAGE>
OTHER INFORMATION
DISTRIBUTIONS
The Fund distributes its net investment income quarterly and net capital gain at
least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested. Shares
become entitled to receive distributions on the day after the shares are issued.
TAXES
The Fund generally intends to operate in a manner such that it will not be
liable for Federal income or excise tax.
The Fund's distribution of net income (including short-term capital gain) is
taxable to you as ordinary income. The Fund's distributions of long-term capital
gain is taxable to you as long-term capital gain regardless of how long you have
held your Fund shares.
If you buy shares shortly before the Fund makes a distribution, you may pay the
full price for the shares and then receive a portion of the price back as a
distribution that may be taxable to you.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
The Fund will send you information about the Fund's distributions paid during
the year shortly after December 31 of each year.
For further information about the tax effects of investing in the Fund,
including state and local tax matters, please see the SAI and consult your tax
adviser.
ORGANIZATION
The Trust is a Delaware business trust. The Fund does not expect to hold
shareholders' meetings unless required by Federal or Delaware law. Shareholders
of each series of the Trust are entitled to vote at shareholders' meetings
unless a matter relates only to specific series (such as approval of an advisory
agreement for the Fund). From time to time, large shareholders may control the
Fund or the Trust.
FINANCIAL HIGHLIGHTS
Financial highlights are not provided because the Fund had not commenced
operations prior to the date of this prospectus.
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<PAGE>
<TABLE>
<S> <C>
FOR MORE INFORMATION LOGO
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS MASTRAPASQUA
Additional information about the Fund's investments will be available in the GROWTH VALUE
Fund's annual and semi-annual reports to shareholders. In the FUND
Fund's annualreport, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about the Fund and
is incorporated by reference into this Prospectus.
CONTACTING THE FUND
You can get free copies of both reports (when available) and the SAI, request
other information and discuss your questions about the Fund by contacting the
Fund at:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
800-XXX-XXXX
800-XXX-XXXX
207-XXX-XXXX
SECURITIES AND EXCHANGE COMMISSION INFORMATION
You can also review the Fund's reports and SAI at the Public Reference
Room of the Securities and Exchange Commission ("SEC"). You can get
text-only copies, for a fee, by writing to the following:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
E-mail address: [email protected]
The scheduled hours of operation of the Public Reference Room may be obtained
by calling the SEC at (202) 942-8090. Free copies of the reports Forum Funds
and SAI are available from the SEC's Internet website at http://www.sec.gov. P.O. Box 446
Portland, Maine 04112
800-943-6786
Investment Company Act File No. 811-3023 800-94FORUM
207-879-0001
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STATEMENT OF ADDITIONAL INFORMATION
JULY 1, 2000
MASTRAPASQUA GROWTH VALUE FUND
INVESTMENT ADVISER:
Mastrapasqua & Associates
814 Church Street, Suite 600
Nashville, TN 37203
ACCOUNT INFORMATION AND SHAREHOLDER SERVICES:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 94FORUM
(800) 943-6786
(207) 879-0001
This Statement of Additional Information (the "SAI") supplements the Prospectus
dated July 1 2000, as may be amended from time to time, offering shares of
Mastrapasqua Growth Value Fund (the "Fund"), a separate series of Forum Funds, a
registered, open-end management investment company (the "Trust"). This SAI is
not a prospectus and should only be read in conjunction with the Prospectus. You
may obtain the Prospectus without charge by contacting Forum Shareholder
Services at the address or telephone number listed above.
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TABLE OF CONTENTS
Glossary......................................................................1
1. Investment Policies and Risks.............................................2
2. Investment Limitations....................................................8
3. Performance Data and Advertising..........................................10
4. Management................................................................13
5. Portfolio Transactions....................................................18
6. Additional Purchase and Redemption Information............................21
7. Taxation..................................................................23
8. Other Matters.............................................................27
Appendix A - Description of Securities Ratings...............................A-1
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GLOSSARY
As used in this SAI, the following terms have the meanings listed.
"Adviser" means Mastrapasqua & Associates.
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Custodian" means Forum Trust, LLC, the custodian of the Fund's assets.
"FAcS" means Forum Accounting Services, LLC, the fund accountant of the
Fund.
"FAdS" means Forum Administrative Services, LLC, the administrator of
the Fund.
"Fitch" means Fitch IBCA, Inc.
"FFS" means Forum Fund Services, LLC, the distributor of the shares of
the Fund.
"Fund" means Mastrapasqua Growth Value Fund.
"Moody's" means Moody's Investors Service.
"NRSRO" means a nationally recognized statistical rating organization.
"NAV" means net asset value per share.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's, a Division of the McGraw Hill Companies.
"Transfer Agent" means Forum Shareholder Services, LLC, the transfer
agent of the Fund.
"Trust" means Forum Funds.
"U.S. Government Securities" means obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
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1. INVESTMENT POLICIES AND RISKS
The Fund is a diversified series of the Trust. This section discusses in greater
detail than the Fund's Prospectus certain investments that the Fund may make.
A. SECURITY RATINGS INFORMATION
The Fund's investments in convertible securities are subject to credit risk
relating to the financial condition of the issuers of the securities that the
Fund holds. To limit credit risk, the Fund may only invest in convertible
securities that are considered investment grade. Investment grade securities are
rated in the top four long-term rating categories by an NRSRO or are unrated and
determined by the Adviser to be of comparable quality. The Fund may purchase
unrated convertible securities if, at the time of purchase, the Adviser believes
that they are of comparable quality to rated securities that the Fund may
purchase.
The lowest rated convertible security bond in which the Fund may invest is "Baa"
in the case of Moody's and "BBB" in the case of S&P and Fitch. The lowest rated
preferred stock in which the Fund may invest is "baa" in the case of Moody's and
"BBB" in the case of S&P. Unrated securities may not be as actively traded as
rated securities.
The Fund may retain securities whose rating has been lowered below the lowest
permissible rating category (or that are unrated and determined by the Adviser
to be of comparable quality to securities whose rating has been lowered below
the lowest permissible rating category) if the Adviser determines that retaining
such security is in the best interests of the Fund. Because a downgrade often
results in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.
B. EQUITY SECURITIES
1. COMMON AND PREFERRED STOCK
GENERAL. Common stock represents an equity (ownership) interest in a company,
and usually possesses voting rights and earns dividends. Dividends on common
stock are not fixed but are declared at the discretion of the issuer. Common
stock generally represents the riskiest investment in a company. In addition,
common stock generally has the greatest appreciation and depreciation potential
because increases and decreases in earnings are usually reflected in a company's
stock price.
Preferred stock is a class of stock having a preference over common stock as to
the payment of dividends and the recovery of investment should a company be
liquidated, although preferred stock is usually junior to the debt securities of
the issuer. Preferred stock typically does not possess voting rights and its
market value may change based on changes in interest rates.
RISKS. The fundamental risk of investing in common and preferred stock is the
risk that the value of the stock might decrease. Stock values fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than
preferred stocks, fixed-income securities and money market investments. The
market value of all securities, including common and preferred stocks, is based
upon the market's perception of value and not necessarily the book value of an
issuer or other objective measure of a company's worth. If you invest in the
Fund, you should be willing to accept the risks of the stock market and should
consider an investment in the Fund only as a part of your overall investment
portfolio.
2. CONVERTIBLE SECURITIES
GENERAL. The Fund may invest in investment grade convertible securities.
Investment grade securities are rated in the top four long-term rating
categories or are unrated and determined by the Adviser to be of comparable
quality. Convertible securities include debt securities, preferred stock or
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other securities that may be converted into or exchanged for a given amount of
common stock of the same or a different issuer during a specified period and at
a specified price in the future. A convertible security entitles the holder to
receive interest on debt or the dividend on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Convertible
securities rank senior to common stock in a company's capital structure but are
usually subordinated to comparable nonconvertible securities. Convertible
securities have unique investment characteristics in that they generally: (1)
have higher yields than common stocks, but lower yields than comparable
non-convertible securities; (2) are less subject to fluctuation in value than
the underlying stocks since they have fixed income characteristics; and (3)
provide the potential for capital appreciation if the market price of the
underlying common stock increases.
A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security is called for redemption, the Fund will be required to
permit the issuer to redeem the security, convert it into the underlying common
stock or sell it to a third party.
RISKS. Investment in convertible securities generally entails less risk than an
investment in the issuer's common stock. Convertible securities are typically
issued by smaller capitalized companies whose stock price may be volatile.
Therefore, the price of a convertible security may reflect variations in the
price of the underlying common stock in a way that nonconvertible debt does not.
The extent to which such risk is reduced, however, depends in large measure upon
the degree to which the convertible security sells above its value as a fixed
income security.
3. WARRANTS & STOCK RIGHTS
GENERAL. Warrants are securities, typically issued with preferred stock or bonds
that give the holder the right to purchase a given number of shares of common
stock at a specified price and time. The price usually represents a premium over
the applicable market value of the common stock at the time of the warrant's
issuance. Warrants have no voting rights with respect to the common stock,
receive no dividends and have no rights with respect to the assets of the
issuer. The Fund will limit its purchases of warrants to not more than 5% of the
value of its total assets. The Fund may also invest up to 5% of its assets in
stock rights. A stock rights is an option given to a shareholder to buy
additional shares at a predetermined price during a specified time.
RISKS. Investments in warrants involve certain risks, including the possible
lack of a liquid market for the resale of the warrants, potential price
fluctuations due to adverse market conditions or other factors and failure of
the price of the common stock to rise. If the warrant is not exercised within
the specified time period, it becomes worthless.
4. DEPOSITARY RECEIPTS
GENERAL. A depositary receipt is a receipt for shares of a foreign-based company
that entitles the holder to distributions on the underlying security. Depositary
receipts include sponsored and unsponsored American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and other similar global
instruments. ADRs typically are issued by a U.S. bank or trust company, evidence
ownership of underlying securities issued by a foreign company, and are designed
for use in U.S. securities markets. EDRs (sometimes called Continental
Depositary Receipts) are receipts issued by a European financial institution
evidencing an arrangement similar to that of ADRs, and are designed for use in
European securities markets. The Fund invests in depositary receipts in order to
obtain exposure to foreign securities markets.
RISKS. Unsponsored depositary receipts may be created without the participation
of the foreign issuer. Holders of these receipts generally bear all the costs of
the depositary receipt facility, whereas foreign issuers typically bear certain
costs in a sponsored depositary receipt. The bank or trust company depositary of
an unsponsored depositary receipt may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through
voting rights. Accordingly, available information concerning the issuer may not
be current and the prices of unsponsored depositary receipts may be more
volatile than the prices of sponsored depositary receipts.
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C. FOREIGN SECURITIES
GENERAL. The Fund may invest in foreign securities but expects to limit
investments in foreign issuers to less than 15% of its total assets. Investments
in the securities of foreign issuers may involve risks in addition to those
normally associated with investments in the securities of U.S. issuers. All
foreign investments are subject to risks of: (1) foreign political and economic
instability; (2) adverse movements in foreign exchange rates; (3) the imposition
or tightening of exchange controls or other limitations on repatriation of
foreign capital; and (4) changes in foreign governmental attitudes towards
private investment, including potential nationalization, increased taxation or
confiscation of your assets.
RISKS. Dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to
you. Commission rates payable on foreign transactions are generally higher than
in the United States. Foreign accounting, auditing and financial reporting
standards differ from those in the United States, and therefore, less
information may be available about foreign companies than is available about
issuers of comparable U.S. companies. Foreign securities also may trade less
frequently and with lower volume and may exhibit greater price volatility than
United States securities.
Changes in foreign exchange rates will affect the U.S. dollar value of all
foreign currency-denominated securities held by the Fund. Exchange rates are
influenced generally by the forces of supply and demand in the foreign currency
markets and by numerous other political and economic events occurring outside
the United States, many of which may be difficult, if not impossible, to
predict.
Income from foreign securities will be received and realized in foreign
currencies, and the Fund is required to compute and distribute income in U.S.
dollars. Accordingly, a decline in the value of a particular foreign currency
against the U.S. dollar after the Fund's income has been earned and computed in
U.S. dollars may require the Fund to liquidate portfolio securities to acquire
sufficient U.S. dollars to make a distribution. Similarly, if the exchange rate
declines between the time the Fund incurs expenses in U.S. dollars and the time
such expenses are paid, the Fund may be required to liquidate additional foreign
securities to purchase the U.S. dollars required to meet such expenses.
D. REPURCHASE AGREEMENTS
1. GENERAL
The Fund may enter into repurchase agreements. Repurchase agreements are
transactions in which the Fund 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 Fund's custodian 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 the Fund to earn income on its
uninvested cash for periods as short as overnight, while retaining the
flexibility to pursue longer-term investments.
2. RISKS
The Fund may be exposed to the risks of financial failure or insolvency of
another party. To help reduce those risks, the Adviser, subject to the Board's
supervision, monitors and evaluates the creditworthiness of counterparties to
the Fund's transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal credit risks and the benefits
from the transaction justify the attendant risks.
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E. LEVERAGE
1. GENERAL
The Fund may use leverage to increase potential returns. Leverage involves
special risks and may involve speculative investment techniques. Leverage exists
when cash made available to the Fund through an investment technique is used to
make additional Fund investments. Lending portfolio securities are transactions
involving leverage. The Fund uses these investment techniques only when the
Adviser believes that the leveraging and the returns available to the Fund from
investing the cash will provide investors a potentially higher return.
2. SECURITIES LENDING
The Fund may lend portfolio securities in an amount up to 33 1/3% of its total
assets to brokers, dealers and other financial institutions. Securities loans
must be continuously collateralized and the collateral must have market value at
least equal to the value of the Fund's loaned securities, plus accrued interest.
In a portfolio securities lending transaction, the Fund receives from the
borrower an amount equal to the interest paid or the dividends declared on the
loaned securities during the term of the loan as well as the interest on the
collateral securities, less any fees (such as finders or administrative fees)
the Fund pays in arranging the loan. The Fund may share the interest it receives
on the collateral securities with the borrower. The terms of a Fund's loan
permits the Fund to reacquire loaned securities on five business days' notice or
in time to vote on any important matter. Loans are subject to termination at the
option of a Fund or the borrower at any time, and the borrowed securities must
be returned when the loan is terminated.
3. RISKS
Leverage creates the risk of magnified capital losses. Borrowings and other
liabilities that exceed the equity base of the Fund may magnify losses incurred
by a Fund. Leverage may involve the creation of a liability that requires a Fund
to pay interest (for instance, reverse repurchase agreements) or the creation of
a liability that does not entail any interest costs (for instance, forward
commitment costs).
The risks of leverage include a higher volatility of the net asset value of the
Fund's securities and the relatively greater effect on the net asset value of
the securities caused by favorable or adverse market movements or changes in the
cost of cash obtained by leveraging and the yield from invested cash. So long as
a Fund is able to realize a net return on its investment portfolio that is
higher than interest expense incurred, if any, leverage will result in higher
current net investment income for the Fund than if the Fund were not leveraged.
Changes in interest rates and related economic factors could cause the
relationship between the cost of leveraging and the yield to change so that
rates involved in the leveraging arrangement may substantially increase relative
to the yield on the obligations in which the proceeds of the leveraging have
been invested. To the extent that the interest expense involved in leveraging
approaches the net return on a Fund's investment portfolio, the benefit of
leveraging will be reduced, and, if the interest expense on borrowings were to
exceed the net return to investors, the Fund's use of leverage would result in a
lower rate of return than if the Fund were not leveraged. In an extreme case, if
a Fund's current investment income were not sufficient to meet the interest
expense of leveraging, it could be necessary for the Fund to liquidate certain
of its investments at an inappropriate time.
SEGREGATED ACCOUNTS. In order to attempt to reduce the risks involved in various
transactions involving leverage, the Fund's custodian will set aside and
maintain, in a segregated account, cash and liquid securities. The account's
value, which is marked to market daily, will be at least equal to the Fund's
commitments under these transactions.
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F. ILLIQUID AND RESTRICTED SECURITIES
1. GENERAL
The Fund may not acquire securities or invest in repurchase agreements if, as a
result, more than 15% of the Fund's net assets (taken at current value) would be
invested in illiquid securities.
The term "illiquid securities" means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately the amount
at which the Fund has valued the securities. Illiquid securities include: (1)
repurchase agreements not entitling the holder to payment of principal within
seven days; (2) purchased over-the-counter options; (3) securities which are not
readily marketable; and (4) except as otherwise determined by the Adviser,
securities subject to contractual or legal restrictions on resale because they
have not been registered under the 1933 Act ("restricted securities").
2. RISKS
Limitations on resale may have an adverse effect on the marketability of a
security and the Fund might also have to register a restricted security in order
to dispose of it, resulting in expense and delay. The Fund might not be able to
dispose of restricted or illiquid securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemptions. There can be no
assurance that a liquid market will exist for any security at any particular
time. Any security, including securities determined by the Adviser to be liquid,
can become illiquid.
3. DETERMINATION OF LIQUIDITY
The Adviser makes determinations of liquidity pursuant to guidelines approved by
the Board. The Adviser determines and monitors the liquidity of the portfolio
securities and reports periodically on its decisions to the Board. The Adviser
takes into account a number of factors in reaching liquidity decisions,
including but not limited to: (1) the frequency of trades and quotations for the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, 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.
G. U.S. GOVERNMENT SECURITIES
1. GENERAL
U.S. Government Securities may be supported by the full faith and credit of the
United States (e.g., mortgage-related securities and certificates of the
Government National Mortgage Association and securities of the Small Business
Administration); by the right of the issuer to borrow from the U.S. Treasury
(e.g., Federal Home Loan Bank securities); by the discretionary authority of the
U.S. Treasury to lend to the issuer (e.g., Fannie Mae (formerly the Federal
National Mortgage Association) securities); or solely by the creditworthiness of
the issuer (e.g., Federal Home Loan Mortgage Corporation securities).
2. RISKS
Holders of U.S. Government Securities not backed by the full faith and credit of
the United States must look principally to the agency or instrumentality issuing
the obligation for repayment and may not be able to assert a claim against the
United States in the event that the agency or instrumentality does not meet its
commitment. No assurance can be given that the U.S. Government would provide
support if it is not obligated to do so by law. Neither the U.S. Government nor
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any of its agencies or instrumentalities guarantees the market value of the
securities they issue.
H. BANK OBLIGATIONS
1. GENERAL
The Fund may invest in obligations of U.S. banks including certificates of
deposit, bankers' acceptances, having total assets at the time of purchase in
excess of $1 billion. Such banks must also be members of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft that
has been drawn by a customer and are usually backed by goods in international
trade. Certificates of deposit which are payable at the stated maturity date and
bear a fixed rate of interest, generally may be withdrawn on demand by the Fund
but may be subject to early withdrawal penalties which could reduce the Fund's
performance.
The Fund also may invest in certificates of deposit issued by foreign banks,
denominated in any major foreign currency. The Fund will invest in instruments
issued by foreign banks which, in the view of its investment adviser and the
Trust's Trustees, are of credit-worthiness and financial stature in their
respective countries comparable to U.S. banks in which the Fund invests.
2. RISKS
Obligations of banks are debt securities. The value of debt securities may
fluctuate in response to changes in interest rates. An increase in interest
rates typically cause a fall in the value of the debt securities in which the
Fund may invest. Debt securities are also subject to the risk that the issuer's
financial condition may change. The issuer, for example, may default or become
unable to pay interest or principal due on the security.
I. CORE AND GATEWAY(R)
The Fund may seek to achieve its investment objective by converting to a Core
and Gateway structure. The Fund operating under a Core and Gateway structure
holds, as its only investment, shares of another investment company having
substantially the same investment objective and policies. The Board will not
authorize conversion to a Core and Gateway structure if it would materially
increase costs to the Fund's shareholders. The Board will not convert a Fund to
a Core and Gateway structure without notice to the shareholders.
J. TEMPORARY DEFENSIVE POSITION
The Fund may assume a temporary defensive position and may invest without limit
in commercial paper and other money market instruments that are of prime
quality. Prime quality instruments are those instruments that are rated in one
of the two highest short-term rating categories by an NRSRO or, if not rated,
determined by the Adviser to be of comparable quality.
Money market instruments usually have maturities of one year or less and fixed
rates of return. The money market instruments in which the Fund may invest
include U.S. Government Securities, time deposits, bankers' acceptances and
certificates of deposit of depository institutions (such as banks), corporate
notes and short-term bonds and money market mutual funds. The Fund may only
invest in money market mutual funds to the extent permitted by the 1940 Act.
The money market instruments in which the Fund may invest may have variable or
floating rates of interest. These obligations include master demand notes that
permit investment of fluctuating amounts at varying rates of interest pursuant
to direct arrangement with the issuer of the instrument. These obligations often
include the right, after a given period, to prepay the outstanding principal
amount of the obligations upon a specified number of days' notice. These
obligations generally are not traded, nor generally is there an established
secondary market for these obligations. To the extent a demand note does not
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have a 7-day or shorter demand feature and there is no readily available market
for the obligation, it is treated as an illiquid security.
K. YEAR 2000
The date change transition to the Year 2000 prompted concern that certain
computer systems may not process date-related information properly on and after
January 1, 2000. The Adviser and the Fund's administrator have addressed and
continue to monitor this Year 2000 issue and its possible impact on their
systems. The Fund's other service providers have informed the Fund that they are
taking similar measures. Services provided to the Fund or any companies in which
it invests could still be adversely affected by a computer's failure to
accurately process date related information and, therefore, may lower the value
of your shares. While no adverse consequences have yet arisen, or have been
reported to the Adviser or the Fund's administrator, there is still the
possibility that certain computer systems may not be able to process
date-related information at some point during the year.
2. INVESTMENT LIMITATIONS
For purposes of all investment policies of the Fund: (1) the term "1940 Act"
includes the rules thereunder, SEC interpretations and any exemptive order upon
which the Fund may rely; and (2) the term "Code" includes the rules thereunder,
IRS interpretations and any private letter ruling or similar authority upon
which the Fund may rely.
Except as required by the 1940 Act or the Code, if any percentage restriction on
investment or utilization of assets is adhered to at the time an investment is
made, a later change in percentage resulting from a change in the market values
of the Fund's assets or purchases and redemptions of shares will not be
considered a violation of the limitation.
Fundamental policies of the Fund cannot be changed without the affirmative vote
of the lesser of: (1) 50% of the outstanding shares of the Fund; or (2) 67% of
the shares of the Fund present or represented at a shareholders meeting at which
the holders of more than 50% of the outstanding shares of the Fund are present
or represented. A nonfundamental policy of the Fund may be changed by the Board
without shareholder approval. The Fund's investment objective is a fundamental
policy.
A. FUNDAMENTAL LIMITATIONS
The Fund has adopted the following fundamental policies.
1. DIVERSIFICATION
The Fund may not, with respect to 75% of its assets, purchase a
security if as a result: (1) more than 5% of its assets would be
invested in the securities of any single issuer; or (2) the Fund would
own more than 10% of the outstanding voting securities of any single
issuer. This restriction does not apply to securities issued by the
U.S. Government, its agencies or instrumentalities. The Fund reserves
the right to invest up to 100% of its investable assets in one
investment company.
2. CONCENTRATION
The Fund will not invest 25% or more of the value of its assets in any
one industry.
3. UNDERWRITING ACTIVITIES
The Fund will not underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under U.S.
securities laws.
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4. BORROWING
The Fund may borrow money for the meeting of redemption requests, but
not in excess of 33 1/3% of the value of the Fund's total assets
(computed immediately after the borrowing) subject to investment
limitations specified in the Fund's prospectus.
5. MARGIN AND SHORT SALES
The Fund may not purchase securities on margin; however, the Fund may
make margin deposits in connection with permissible futures contracts,
options and other investments. The Fund may not sell securities short.
6. INVESTING FOR CONTROL
The Fund may not make investments for the purpose of exercising control
or management.
7. REAL ESTATE
The Fund may not purchase or sell real estate, provided that the Fund
may invest in securities issued by companies that invest in real estate
or interests therein.
8. LENDING
The Fund will not lend money except in connection with permissible debt
instruments. The Fund may make loans of portfolio securities and enter
into repurchase agreements.
9. SENIOR SECURITIES
The Fund will not issue senior securities except pursuant to Section 18
of the 1940 Act.
B. NONFUNDAMENTAL LIMITATIONS
The Fund has adopted the following nonfundamental investment limitations:
1. ILLIQUID SECURITIES
The Fund may not invest more than 15% of its net assets in illiquid
assets such as: (1) securities that cannot be disposed of within seven
days at their then-current value, (2) repurchase agreements not
entitling the holder to payment of principal within seven days and (3)
securities subject to restrictions on the sale of the securities to the
public without registration under the 1933 Act ("restricted
securities") that are not readily marketable. The Fund may treat
certain restricted securities as liquid pursuant to guidelines adopted
by the Board of Trustees.
2. WARRANTS
The Fund may not invest in warrants, valued at the lower of cost or
market, more than 5% of the value of the Fund's net assets (included
within that amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or
American Stock Exchange. Warrants acquired by the Fund in units or
attached to securities may be deemed to be without value).
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3. PLEDGING
The Fund may not purchase securities on margin; however, the Fund may
make margin deposits in connection with any hedging instruments, which
it may use as permitted by any of its other fundamental policies.
3. PERFORMANCE DATA AND ADVERTISING
A. PERFORMANCE DATA
The 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.
The Fund may compare any of its performance information with:
o Data published by independent evaluators such as Morningstar, Inc.,
Lipper Inc., iMoneyNet, 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 the Standard & Poor's 500(R) Index, the Russell
2000(R) Index, the Russell MidcapTM Index, the Russell 1000(R) Value
Index, the Russell 2500(R) Index, the Morgan Stanley - Europe,
Australia, Far East Index, the Dow Jones Industrial Average, the
Salomon Brothers Bond Index, the Shearson Lehman Bond Index, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index
as published by the U.S. Department of Commerce.
Performance information may be presented numerically or in a table, graph, or
similar illustration.
Indices are not used in the management of the Fund but rather are standards by
which the Fund's Adviser and shareholders may compare the performance of the
Fund to an unmanaged composite of securities with similar, but not identical,
characteristics as the Fund.
The 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.
The Fund's performance will fluctuate in response to market conditions and other
factors.
B. PERFORMANCE CALCULATIONS
The Fund's performance may be quoted in terms of yield or total return.
1. SEC YIELD
Standardized SEC yields for the Fund used in advertising are computed by
dividing the Fund's interest income (in accordance with specific standardized
rules) for a given 30 day or one month period, net of expenses, by the average
number of shares entitled to receive income distributions during the period,
dividing this figure by the Fund's net asset value per share at the end of the
period and annualizing the result (assuming compounding of income in accordance
with specific standardized rules) in order to arrive at an annual percentage
rate.
Capital gains and losses generally are excluded from these calculations.
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<PAGE>
Income calculated for the purpose of determining the Fund's yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for the Fund may differ from the rate of
distribution of income from the Fund over the same period or the rate of income
reported in the Fund's financial statements.
Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Financial intermediaries may charge their customers that
invest in the Fund fees in connection with that investment. This will have the
effect of reducing the Fund's after-fee yield to those shareholders.
The yields of the Fund are not fixed or guaranteed, and an investment in the
Fund is not insured or guaranteed. Accordingly, yield information should not be
used to compare shares of the Fund with investment alternatives, which, like
money market instruments or bank accounts, may provide a fixed rate of interest.
Also, it may not be appropriate to compare the Fund's yield information directly
to similar information regarding investment alternatives that are insured or
guaranteed.
Yield quotations are based on amounts invested in the Fund net of any applicable
sales charges that may be paid by an investor. A computation of yield that does
not take into account sales charges paid by an investor would be higher than a
similar computation that takes into account payment of sales charges.
Yield is calculated according to the following formula:
a - b
Yield = 2[(------ + 1)6 - 1]
cd
Where:
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the
last day of the period
2. TOTAL RETURN CALCULATIONS
The Fund's total return shows its overall change in value, including changes in
share price and assuming all of the Fund's distributions are reinvested.
Total return figures may be based on amounts invested in the Fund net of sales
charges that may be paid by an investor. A computation of total return that does
not take into account sales charges paid by an investor would be higher than a
similar computation that takes into account payment of sales charges.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is calculated using a
formula prescribed by the SEC. To calculate standard average annual total
returns the Fund: (1) determines the growth or decline in value of a
hypothetical historical investment in the Fund over a stated period; and (2)
calculates the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that performance is not constant over time but changes from year to year, and
that average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
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<PAGE>
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 redeemabl value: ERV is the value, at
the end of the applicable period, of a
hypothetical $1,000 payment made at the
beginning of the applicable period
Because average annual returns tend to smooth out variations in the Fund's
returns, shareholders should recognize that they are not the same as actual
year-by-year results.
OTHER MEASURES OF TOTAL RETURN. Standardized total return quotes may be
accompanied by non-standardized total return figures calculated by alternative
methods.
The Fund may quote unaveraged or cumulative total returns that reflect
the Fund's performance over a stated period of time.
Total returns may be stated in their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to
total return.
Any total return may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments and/or a series of
redemptions over any time period. Total returns may be quoted with or without
taking into consideration the Fund's front-end sales charge or contingent
deferred sales charge (if applicable).
Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total
return above
C. OTHER MATTERS
The Fund may also include various information in its advertising, sales
literature, shareholder reports or other materials including, but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity; (2) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents; (3)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quarterly or daily); (4) information
relating to inflation and its effects on the dollar; (for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively); (5) information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar-cost
averaging; (6) biographical descriptions of the Fund's portfolio managers and
the portfolio management staff of the Fund's investment adviser, summaries of
the views of the portfolio managers with respect to the financial markets, or
descriptions of the nature of the Adviser's and its staff's management
techniques; (7) the results of a hypothetical investment in the Fund over a
given number of years, including the amount that the investment would be at the
end of the period; (8) the effects of investing in a tax-deferred account, such
as an individual retirement account or Section 401(k) pension plan; (9) the net
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<PAGE>
asset value, net assets or number of shareholders of the Fund as of one or more
dates; and (10) a comparison of the Fund's operations to the operations of other
funds or similar investment products, such as a comparison of the nature and
scope of regulation of the products and the products' weighted average maturity,
liquidity, investment policies, and the manner of calculating and reporting
performance.
As an example of compounding, $1,000 compounded annually at 9.00% will grow to
$1,090 at the end of the first year (an increase in $90) and $1,188 at the end
of the second year (an increase of $98). The extra $8 that was earned on the $90
interest from the first year is the compound interest. One thousand dollars
compounded annually at 9.00% will grow to $2,367 at the end of ten years and
$5,604 at the end of 20 years. Other examples of compounding are as follows: at
7% and 12% annually, $1,000 will grow to $1,967 and $3,106, respectively, at the
end of ten years and $3,870 and $9,646, respectively, at the end of twenty
years. These examples are for illustrative purposes only and are not indicative
of the Fund's performance.
The Fund may advertise information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar cost
averaging. In a dollar-cost averaging program, an investor invests a fixed
dollar amount in the Fund at periodic intervals, thereby purchasing fewer shares
when prices are high and more shares when prices are low. While such a strategy
does not insure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
had been purchased at those intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares through periods of
low price levels. For example, if an investor invests $100 a month for a period
of six months in the Fund the following will be the relationship between average
cost per share ($14.35 in the example given) and average price per share:
SYSTEMATIC SHARE SHARES
PERIOD INVESTMENT PRICE PURCHASED
- ------ ---------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- ----
TOTAL AVERAGE TOTAL
INVESTED $600 PRICE $15.17 SHARES 41.81
In connection with its advertisements, the Fund may provide "shareholder's
letters" which serve to provide shareholders or investors with an introduction
into the Fund's, the Trust's or any of the Trust's service provider's policies
or business practices
4. MANAGEMENT
A. TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust and certain
related information is set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk
(*).
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<PAGE>
<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 Member and Director, Forum Financial Group, LLC (a mutual fund
Born: July 15, 1942 services holding company) Two
Portland Square Director, Forum Fund Services, LLC (Trust's underwriter)
Portland, ME 04101 Officer of six other investment companies for which Forum Financial
Group, LLC provides services
- -------------------------------------------- -----------------------------------------------------------------------
Costas Azariadas, 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 Trustee of Core Trust (Delaware), a registered investment company.
Los Angeles, CA 90024
- -------------------------------------------- -----------------------------------------------------------------------
James C. Cheng, Trustee President, Technology Marketing Associates (marketing company for
Born: July 26, 1942 small and medium size businesses in New England)
27 Temple Street Trustee of Core Trust (Delaware), a registered investment company.
Belmont, MA 02718
- -------------------------------------------- -----------------------------------------------------------------------
J. Michael Parish, Trustee Partner, Thelen Reid & Priest LLP (law firm)
Born: November 9, 1943 Trustee of Core Trust (Delaware), a registered investment company.
40 West 57th Street
New York, NY 10019
- -------------------------------------------- -----------------------------------------------------------------------
Stephen J. Barrett, Vice President Senior Relationship Manager, Forum Financial Group, LLC since 1996
Born: November 14, 1968 Senior Product Manager, Fidelity Investments, 1994 - 1996
Two Portland Square Officer of four other investment companies for which Forum Financial
Portland, Maine 04101 Group, LLC provides services
- -------------------------------------------- -----------------------------------------------------------------------
David I. Goldstein, Vice President General Counsel, Forum Financial Group LLC
Born: August 3, 1961 Officer of five other investment companies for which Forum Financial
Two Portland Square Group, LLC provides services
Portland, ME 04101
- -------------------------------------------- -----------------------------------------------------------------------
Ronald H. Hirsch, Treasurer Managing Director, Forum Financial Group, LLC since 1999
Born: October 14, 1943 Member of the Board - Citibank Germany 1991 - 1998
Two Portland Square Officer of six other investment companies for which Forum Financial
Portland, ME 04101 Group, LLC provides services
- -------------------------------------------- -----------------------------------------------------------------------
Leslie K. Klenk, Secretary Counsel, Forum Financial Group, LLC since 1998
Born: August 24, 1964 Associate General Counsel, Smith Barney Inc. (brokerage firm) 1993 -
Two Portland Square 1998
Portland, ME 04101 Officer of one other investment company for which Forum Financial
Group, LLC provides services
- -------------------------------------------- -----------------------------------------------------------------------
</TABLE>
B. COMPENSATION OF TRUSTEES AND OFFICERS
Effective February 7, 2000, each Trustee of the Trust is paid an annual retainer
fee of $6,000 for his service to the Trust. In addition, each Trustee is paid a
fee of $750 for each Board meeting attended (whether in person or by electronic
communication). Trustees are also reimbursed for travel and related expenses
incurred in attending Board meetings. Mr. Keffer receives no compensation (other
than reimbursement for travel and related expenses) for his service as a
Trustee. No officer of the Trust is compensated by the Trust but officers are
reimbursed for travel and related expenses incurred in attending Board meetings
held outside of Portland, Maine.
The following table sets forth the fees paid to each Trustee by the Trust and by
the "Fund Complex". The Fund Complex includes the Trust and Core Trust
(Delaware), another registered investment company.
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------- ------------------ -------------- --------------- -------------------------------
Compensation Total Compensation from Trust
Trustee from Trust Benefits Retirement and Fund Complex
- -------------------------- ------------------ -------------- --------------- -------------------------------
John Y. Keffer $0 $0 $0 $0
- -------------------------- ------------------ -------------- --------------- -------------------------------
Costas Azariadis $13,300 $0 $0 $23,800
- -------------------------- ------------------ -------------- --------------- -------------------------------
James C. Cheng $14,800 $0 $0 $25,300
- -------------------------- ------------------ -------------- --------------- -------------------------------
J. Michael Parish $14,800 $0 $0 $25,300
- -------------------------- ------------------ -------------- --------------- -------------------------------
</TABLE>
C. INVESTMENT ADVISER
1. SERVICES OF ADVISER
The Adviser serves as investment adviser to the Fund pursuant to an investment
advisory agreement with the Trust. Under this agreement, the Adviser furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing the Fund's investments and effecting portfolio
transactions for the Fund.
2. FEES
The Adviser's fee is calculated as a percentage of the Fund's average daily net
assets. The fee is accrued daily by the Fund and is paid monthly based on
average net assets for the previous month.
In addition, the Adviser may also act and be compensated as investment manager
for its clients with respect to assets they invest in the Fund. [IF YOU HAVE A
SEPARATELY MANAGED ACCOUNT WITH THE ADVISER WITH ASSETS INVESTED IN THE FUND,
THE ADVISER WILL CREDIT AN AMOUNT EQUAL TO ALL OR A PORTION OF THE FEES RECEIVED
BY THE ADVISER AGAINST ANY INVESTMENT MANAGEMENT FEE RECEIVED FROM THE CLIENT.]
3. OTHER PROVISIONS OF ADVISER'S AGREEMENT
The Adviser's agreement remains in effect for a period of two years from the
date of its effectiveness. Subsequently, the agreement must be approved at least
annually by the Board or by majority vote of the Fund's shareholders, and in
either case by a majority of the Trustees who are not parties to the agreement
or interested persons of any such party.
The agreement is terminable without penalty by the Trust on 60 days' written
notice when authorized either by a vote of the Fund's shareholders or by a
majority vote of the Board, or by the Adviser on 60 days' written notice to the
Trust. The agreement terminates immediately upon assignment.
Under the agreement, the Adviser is not liable for any mistake of judgment or in
any event whatsoever except for breach of fiduciary duty, willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreement.
D. DISTRIBUTOR
1. SERVICES OF DISTRIBUTOR
FFS serves as the distributor (also known as principal underwriter) of the
shares of the Fund and is located at Two Portland Square, Portland, Maine 04101.
FFS is a registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
FFS, FAdS, FAcS and the Transfer Agent are each controlled indirectly by Forum
Financial Group, LLC. Forum Financial Group, LLC is controlled by John Y.
Keffer.
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<PAGE>
Under a distribution agreement with the Trust (the "Distribution Agreement"),
FFS acts as the agent of the Trust in connection with the offering of shares of
the Fund. FFS continually distributes shares of the Fund on a best efforts
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 Fund.
FFS may enter into agreements with selected broker-dealers, banks, or other
financial institutions for distribution of shares of the Fund. These financial
institutions may charge a fee for their services and may receive shareholders
service fees. These financial institutions may otherwise act as processing
agents, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Fund.
2. FEES
For distribution services under the Agreement, the Distributor receives: (i) any
applicable sales charge assessed upon investors in connection with the purchase
of Shares; (ii) from the Trust, any applicable contingent deferred sales charge
("CDSC") assessed upon investors in connection with the redemption of Shares;
(iii) from the Trust, the distribution service fees with respect to the Shares
of certain classes for which a Plan is effective (the "Distribution Fee"); and
(iv) from the Trust, the shareholder service fees with respect to the Shares of
certain classes for which a Service Plan is effective (the "Shareholder Service
Fee").
3. OTHER PROVISIONS OF DISTRIBUTION AGREEMENT
The agreement remains in effect for a period of two years from the date of its
effectiveness. Subsequently, the agreement must be approved at least annually by
the Board or by majority vote of the Fund's shareholders, and in either case by
a majority of the Trustees who are not parties to the agreement or interested
persons of any such party.
The agreement is terminable without penalty by the Trust on 60 days' written
notice when authorized either by a vote of the Fund's shareholders or by a
majority vote of the Board, or by the Adviser on 60 days' written notice to the
Trust. The agreement terminates immediately upon assignment.
Under the agreement, the Distributor is not liable for any mistake of judgment
or in any event whatsoever except for breach of fiduciary duty, willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
agreement.
Under the agreement, 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 Trust's Registration Statement with respect to the Fund or any
alleged omission of a material fact required to be stated in the Registration
Statement to make statements contained therein not misleading. The Trust,
however, will not indemnify FSS for any such misstatements or omissions if they
were made in reliance upon information provided in writing by FSS in connection
with the preparation of the Registration Statement.
E. OTHER FUND SERVICE PROVIDERS
1. ADMINISTRATOR
As administrator, pursuant to an administration agreement with the Trust (the
"Administration Agreement"), Forum Administrative Services, LLC (FAdS) is
responsible for the supervision of the overall management of the Trust,
providing the Trust with general office facilities and providing persons
satisfactory to the Board to serve as officers of the Trust.
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<PAGE>
For its services, FAdS receives a fee from the Fund at an annual rate of 0.20%
of the average daily net assets of the Fund. The fee is accrued daily by the
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
Trustees who are not parties to the agreement or interested persons of any such
party. The Administration Agreement is terminable without penalty by the Trust
or by FAdS with respect to the 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.
2. FUND ACCOUNTANT
As fund accountant, pursuant to an accounting agreement with the Trust (the
"Accounting Agreement"), Forum Accounting Services, LLC (FAcS) provides fund
accounting services to the Fund. These services include calculating the NAV per
share of the Fund and preparing the Fund's financial statements and tax returns.
For its services, FAcS receives a fee from the Fund at an annual rate of $36,000
with certain surcharges based upon the number and type of the Fund's portfolio
transactions and positions. The fee is accrued daily by the Fund 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
Trustees who are not parties to the agreement or interested persons of any such
party. The Accounting Agreement is terminable without penalty by the Trust or by
FAcS with respect to the 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 the 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.
3. TRANSFER AGENT
As transfer agent and distribution paying agent, pursuant to a transfer agent
agreement with the Trust (the "Transfer Agent Agreement"), the Transfer Agent
maintains an account for each shareholder of record of the 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 0.25% of the average daily net
assets of the Fund, an annual fee of $12,000 and $18 per shareholder account.
17
<PAGE>
The Transfer Agent Agreement must be approved at least annually by the Board or
by majority vote of the shareholders, and in either case by a majority of the
Trustees who are not parties to the agreement or interested persons of any such
party. The Transfer Agent 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 Agent Agreement, the Transfer Agent is not liable for any act
in the performance of its duties to the Fund, except for willful misfeasance,
bad faith or gross negligence in the performance of its duties under the
agreement. Under the Transfer Agent Agreement, the Transfer Agent and certain
related parties (such as the Transfer Agent's officers and persons who control
the Transfer Agent) are indemnified by the Trust against any and all claims and
expenses related to FAdS's actions or omissions that are consistent with FAdS's
contractual standard of care.
4. CUSTODIAN
As custodian, pursuant to an agreement with the Trust, Forum Trust, LLC
safeguards and controls the Fund's cash and securities, determines income and
collects interest on Fund investments. The Custodian may employ subcustodians to
provide custody of the Fund's domestic and foreign assets. The Custodian is
located at Two Portland Square, Portland, Maine 04101.
For its services, the Custodian receives an annualized percentage of the average
daily net assets of the Fund. The Fund also pays an annual domestic custody fee
as well as certain other transaction fees. These fees are accrued daily by the
Fund and are paid monthly based on average net assets and transactions for the
previous month.
5. LEGAL COUNSEL
________________, 1200 G Street, N.W., Washington, D.C. 20005, passes upon legal
matters in connection with the issuance of shares of the Trust.
6. INDEPENDENT AUDITORS
________________, 200 Berkeley Street, 14th Floor, Boston, Massachusetts,
02116-5022, independent auditors, have been selected as auditors for the Fund.
The auditors audit the annual financial statements of the Fund and provide the
Fund with an audit opinion. The auditors also review certain regulatory filings
of the Fund and the Fund's tax returns.
5. PORTFOLIO TRANSACTIONS
A. HOW SECURITIES ARE PURCHASED AND SOLD
Purchases and sales of portfolio securities that are equity securities (for
instance common stock and preferred stock) are generally effected: (1) if the
security is traded on an exchange, through brokers who charge commissions; and
(2) if the security is traded in the "over-the-counter" markets, in a principal
transaction directly from a market maker. In transactions on stock exchanges,
commissions are negotiated. When transactions are executed in an
over-the-counter market, the Adviser will seek to deal with the primary market
makers; but when necessary in order to obtain best execution, the Adviser will
utilize the services of others.
Purchases and sales of portfolio securities that are fixed income securities
(for instance, money market instruments and bonds, notes and bills) usually are
principal transactions. In a principal transaction, the party from whom the Fund
purchases or to whom the Fund sells is acting on its own behalf (and not as the
agent of some other party such as its customers). These securities normally are
purchased directly from the issuer or from an underwriter or market maker for
the securities. There usually are no brokerage commissions paid for these
securities.
18
<PAGE>
Purchases of securities from underwriters of the securities include a disclosed
fixed commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers include the spread between the
bid and asked price.
In the case of fixed income and equity securities traded in the over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup.
B. ADVISER RESPONSIBILITY FOR PURCHASES AND SALES
The Adviser places orders for the purchase and sale of securities with brokers
and dealers selected by and in the discretion of the Adviser. The Fund does not
have any obligation to deal with any specific broker or dealer in the execution
of portfolio transactions. Allocations of transactions to brokers and dealers
and the frequency of transactions are determined by the Adviser in its best
judgment and in a manner deemed to be in the best interest of the Fund rather
than by any formula.
The Adviser seeks "best execution" for all portfolio transactions. This means
that the Adviser seeks the most favorable price and execution available. The
Adviser's primary consideration in executing transactions for the Fund is prompt
execution of orders in an effective manner and at the most favorable price
available.
1. CHOOSING BROKER-DEALERS
The Fund may not always pay the lowest commission or spread available. The
spread is the difference between the bid and offer price. Rather, in determining
the amount of commissions (including certain dealer spreads) paid in connection
with securities transactions, the Adviser takes into account factors such as
size of the order, difficulty of execution, efficiency of the executing broker's
facilities (including the research services described below) and any risk
assumed by the executing broker.
Consistent with applicable rules and the Adviser's duties, the Adviser may: (1)
consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund; and (2) take into
account payments made by brokers effecting transactions for the Fund (these
payments may be made to the Fund or to other persons on behalf of the Fund for
services provided to the Fund for which those other persons would be obligated
to pay.)
2. OBTAINING RESEARCH FROM BROKERS
The Adviser may give consideration to research services furnished by brokers to
the Adviser for its use and may cause the Fund to pay these brokers a higher
amount of commission than may be charged by other brokers. This research is
designed to augment the Adviser's own internal research and investment strategy
capabilities. This research may be used by the Adviser in connection with
services to clients other than the Fund, and not all research services may be
used by the Adviser in connection with the Fund. The Adviser's fees are not
reduced by reason of the Adviser's receipt of research services.
The Adviser has full brokerage discretion. It evaluates the range and quality of
a broker's services in placing trades including securing best price,
confidentiality, clearance and settlement capabilities, promptness of execution
and the financial stability of the broker-dealer. Under certain circumstances,
the value of research provided by a broker-dealer may be a factor in the
selection of a broker. This research would include reports that are common in
the industry. Typically, the research will be used to service all of the
Adviser's accounts although a particular client may not benefit from all the
research received on each occasion. The nature of the services purchased for
clients include industry research reports and periodicals, quotation systems,
software for portfolio management and formal databases.
Occasionally, the Adviser may execute a transaction through a broker and pay a
slightly higher commission than another broker might charge. The higher
commission is paid because of the Adviser's need for specific research, for
specific expertise a firm may have in a particular type of transaction (due to
factors such as size or difficulty), or for speed/efficiency in execution. Since
19
<PAGE>
most of the Adviser's brokerage commissions for research are for economic
research on specific companies or industries, and since the Adviser is involved
with a limited number of securities, most of the commission dollars spent for
industry and stock research directly benefit the clients.
There are occasions on which portfolio transactions may be executed as part of
concurrent authorizations to purchase or sell the same securities for more than
one account served by the Adviser, some of which accounts may have similar
investment objectives. Although such concurrent authorizations potentially could
be either advantageous or disadvantageous to any one or more particular
accounts, they will be effected only when the Adviser believes that to do so
will be in the best interest of the affected accounts. When such concurrent
authorizations occur, the objective will be to allocate the execution in a
manner equitable to the accounts involved. Clients are typically allocated
securities with prices averaged on a per-share or per-bond basis.
3. COUNTERPARTY RISK
The Adviser monitors the creditworthiness of counterparties to the Fund's
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal and appropriate credit risks.
4. TRANSACTIONS THROUGH AFFILIATES
The Adviser may effect brokerage transactions through affiliates of the Adviser
(or affiliates of those persons) pursuant to procedures adopted by the Trust.
5. OTHER ACCOUNTS OF THE ADVISER
Investment decisions for the Fund are made independently from those for any
other account or investment company that is or may in the future become managed
by the Adviser or its affiliates. Investment decisions are the product of many
factors, including basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. 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. In addition, when purchases or sales of the same
security for the Fund and other client accounts managed by the Adviser occurs
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
6. PORTFOLIO TURNOVER
The frequency of portfolio transactions of the Fund (the portfolio turnover
rate) will vary from year to year depending on many factors. From time to time
the Fund may engage in active short-term trading to take advantage of price
movements affecting individual issues, groups of issues or markets. An annual
portfolio turnover rate of 100% would occur if all of the securities in the Fund
were replaced once in a period of one year. Higher portfolio turnover rates may
result in increased brokerage costs to the Fund and a possible increase in
short-term capital gains or losses.
C. SECURITIES OF REGULAR BROKER-DEALERS
From time to time the Fund may acquire and hold securities issued by its
"regular brokers and dealers" or the parents of those brokers and dealers. For
this purpose, regular brokers and dealers are the 10 brokers or dealers that:
(1) received the greatest amount of brokerage commissions during the Fund's last
fiscal year; (2) engaged in the largest amount of principal transactions for
portfolio transactions of the Fund during the Fund's last fiscal year; or (3)
sold the largest amount of the Fund's shares during the Fund's last fiscal year.
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6. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
A. GENERAL INFORMATION
You may effect purchases or redemptions or request any shareholder privilege in
person at the Transfer Agent's offices located at Two Portland Square, Portland,
Maine 04101.
The Fund accepts orders for the purchase or redemption of shares on any weekday
except days when the New York Stock Exchange is closed.
Shares of the Fund as well as other series of the Trust may not be available for
sale in the sate in which you reside. Please check with your investment
professional to determine a class or fund's availability.
B. ADDITIONAL PURCHASE INFORMATION
The distributor sells shares of the Fund on a continuous basis. The Fund
reserves the right to refuse any purchase request.
Fund shares are normally issued for cash only. In the Adviser's discretion,
however, the Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
only accept securities that: (1) are not restricted as to transfer by law and
are not illiquid; and (2) have a value, which is readily ascertainable.
1. IRAS
All contributions into an IRA through the automatic investing service are
treated as IRA contributions made during the year the investment is received.
2. UGMAS/UTMAS
If the trustee's name is not in the account registration of a gift or transfer
to minor ("UGMA/UTMA") account, the investor must provide a copy of the trust
document.
3. PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Fund.
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 the Fund directly. Information concerning any
charges or services will be provided to customers by the financial institution.
Investors purchasing shares of the 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.
When you purchase the 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 Fund may
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confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. The Fund is not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of the Fund through a financial institution should
read any materials and information provided by the financial institution to
acquaint themselves with its procedures and any fees that the institution may
charge.
C. ADDITIONAL REDEMPTION INFORMATION
The 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
the Fund's shares as provided in the Prospectus.
1. SUSPENSION OF RIGHT OF REDEMPTION
The right of redemption may not be suspended, except for any period during
which: (1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted; (2) an emergency (as determined by the SEC) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the 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 the 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 the
Fund. If redemption proceeds are paid wholly or partly in portfolio securities,
brokerage costs may be incurred by the shareholder in converting the securities
to cash. The Trust has filed an election with the SEC pursuant to which the 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.
3. 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
D. NAV DETERMINATION
In determining the Fund's NAV per share, securities for which market quotations
are readily available are valued at current market value using the last reported
sales price. If no sale price is reported, the average of the last bid and ask
price is used. If no average price is available, the last bid price is used. If
market quotations are not readily available, then securities are valued at fair
value as determined by the Board (or its delegate).
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E. DISTRIBUTIONS
Distributions of net investment income will be reinvested at the Fund's NAV per
share as of the last day of the period with respect to which the distribution is
paid. Distributions of capital gain will be reinvested at the NAV per share of
the Fund on the payment date for the distribution. Cash payments may be made
more than seven days following the date on which distributions would otherwise
be reinvested.
7. TAXATION
The tax information set forth in the Prospectus and the information in this
section relates solely to U.S. federal income tax law and assumes that the Fund
qualifies as a regulated investment company (as discussed below). Such
information is only a summary of certain key federal income tax considerations
affecting the Fund and its shareholders that are not described in the
prospectus. No attempt has been made to present a complete explanation of the
federal tax treatment of the Fund or the implications to shareholders. The
discussions here and in the prospectus are not intended as substitutes for
careful tax planning.
This "Taxation" section is based on the Code and applicable regulations in
effect on the date hereof. Future legislative or administrative changes or court
decisions may significantly change the tax rules applicable to the Fund and
their shareholders. Any of these changes or court decisions may have a
retroactive effect.
All investors should consult their own tax advisor as to the federal, state,
local and foreign tax provisions applicable to them.
A. QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The 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 the Fund.
The tax year end of the Fund is May 31 (the same as the Fund's fiscal year end).
1. MEANING OF QUALIFICATION
As a regulated investment company, the Fund will not be subject to federal
income tax on the portion of its net investment income (that is, taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (that is, the excess of long-term capital gains over
long-term capital losses) that it distributes to shareholders. In order to
qualify as a regulated investment company the Fund must satisfy the following
requirements:
o The Fund must distribute at least 90% of its investment company
taxable income (that is, net investment income and capital gain net
income) for the tax year. (Certain distributions made by the 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.
o The Fund must satisfy the following asset diversification test at the
close of each quarter of the Fund's tax year: (1) at least 50% of the
value of the Fund's assets must consist of cash and cash items, U.S.
government securities, securities of other regulated investment
companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's assets in
securities of the issuer and as to which the Fund does not hold more
than 10% of the outstanding voting securities of the issuer); and (2)
no more than 25% of the value of the Fund's assets may be invested in
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the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or
in two or more issuers which the Fund controls and which are engaged
in the same or similar trades or businesses.
2. FAILURE TO QUALIFY
If for any tax year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) will be subject to
tax at regular corporate rates without any deduction for dividends to
shareholders, and the dividends will be taxable to the shareholders as ordinary
income to the extent of the Fund's current and accumulated earnings and profits.
A portion of these distributions generally may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Failure to qualify as a regulated investment company would thus have a negative
impact on the Fund's income and performance. It is possible that the Fund will
not qualify as a regulated investment company in any given tax year.
B. FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its net investment income
for each tax year. These distributions are taxable to you as ordinary income.
These distributions may qualify for the 70% dividends-received deduction for
corporate shareholders.
The Fund anticipates distributing substantially all of its net capital gain for
each tax year. These distributions generally are made only once a year, usually
in November or December, but the 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.
The Fund may have capital loss carryovers (unutilized capital losses from prior
years). These capital loss carryovers (which can be used for up to eight years)
may be used to offset any current capital gain (whether short- or long-term).
All capital loss carryovers are listed in the Fund's financial statements. Any
such losses may not be carried back.
Distributions by the Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital. Return of capital
distributions reduces your tax basis in the shares and is treated as gain from
the sale of the shares to the extent your basis would be reduced below zero.
All distributions by the 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.
You may purchase shares whose NAV at the time reflects undistributed net
investment income or recognized capital gain, or unrealized appreciation in the
value of the assets of the Fund. Distributions of these amounts are taxable to
you in the manner described above, although the distribution economically
constitutes a return of capital to you.
If you purchase shares of the Fund just prior to the ex-dividend date of a
distribution, you will be taxed on the entire amount of the distribution
received, even though the net asset value per share on the date of the purchase
reflected the amount of the distribution.
If you hold shares for six months or less and redeem shares at a loss after
receiving a capital gain distribution, the loss will be treated as a long-term
capital loss to the extent of the distribution.
Ordinarily, you are required to take distributions by the 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,
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however, is deemed to be received by you (and made by the Fund) on December 31
of that calendar year if the distribution is actually paid in January of the
following year.
You will be advised annually as to the U.S. federal income tax consequences of
distributions made (or deemed made) to them during the year.
C. CERTAIN TAX RULES APPLICABLE TO THE FUND'S TRANSACTIONS
For federal income tax purposes, when put and call options purchased by the Fund
expire unexercised, the premiums paid by the Fund give rise to short- or
long-term capital losses at the time of expiration (depending on the length of
the respective exercise periods for the options). When put and call options
written by the Fund expire unexercised, the premiums received by the Fund give
rise to short-term capital gains at the time of expiration. When the Fund
exercises a call, the purchase price of the underlying security is increased by
the amount of the premium paid by the Fund. When the Fund exercises a put, the
proceeds from the sale of the underlying security are decreased by the premium
paid. When a put or call written by the Fund is exercised, the purchase price
(selling price in the case of a call) of the underlying security is decreased
(increased in the case of a call) for tax purposes by the premium received.
Certain listed options, regulated futures contracts and forward currency
contracts are considered "Section 1256 contracts" for federal income tax
purposes. Section 1256 contracts held by the Fund at the end of each tax year
are "marked to market" and treated for federal income tax purposes as though
sold for fair market value on the last business day of the tax year. Gains or
losses realized by the Fund on Section 1256 contracts generally is considered
60% long-term and 40% short-term capital gains or losses. The Fund can elect to
exempt its Section 1256 contracts that are part of a "mixed straddle" (as
described below) from the application of Section 1256.
Any option, futures contract, or other position entered into or held by the Fund
in conjunction with any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. A straddle of which at least one,
but not all, the positions are Section 1256 contracts, may constitute a "mixed
straddle." In general, straddles are subject to certain rules that may affect
the character and timing of the Fund's gains and losses with respect to straddle
positions by requiring, among other things, that: (1) the loss realized on
disposition of one position of a straddle may not be recognized to the extent
that the Fund has unrealized gains with respect to the other position in such
straddle; (2) the Fund's holding period in straddle positions be suspended while
the straddle exists (possibly resulting in gain being treated as short-term
capital gain rather than long-term capital gain); (3) the losses recognized with
respect to certain straddle positions which are part of a mixed straddle and
which are non-Section 1256 positions be treated as 60% long-term and 40%
short-term capital loss; (4) losses recognized with respect to certain straddle
positions which would otherwise constitute short-term capital losses be treated
as long-term capital losses; and (5) the deduction of interest and carrying
charges attributable to certain straddle positions may be deferred. Various
elections are available to the Fund that may mitigate the effects of the
straddle rules, particularly with respect to mixed straddles. In general, the
straddle rules described above do not apply to any straddles held by the Fund
all of the offsetting positions of which consist of Section 1256 contracts.
D. FEDERAL EXCISE TAX
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to: (1) 98% of
ordinary its taxable income for the calendar year; and (2) 98% of its capital
gain net income for the one-year period ended on October 31 of the calendar
year. The balance of the Fund's income must be distributed during the next
calendar year. The Fund will be treated as having distributed any amount on
which it is subject to income tax for any tax year ending in a calendar year.
For purposes of calculating the excise tax, the Fund: (1) reduces its capital
gain net income (but not below its net capital gain) by the amount of any net
ordinary loss for the calendar year; and (2) excludes foreign currency gains and
losses incurred after October 31 of any year (or November 30 or December 31 if
it has made the election described above) in determining the amount of ordinary
taxable income for the current calendar year. The Fund will include foreign
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currency gains and losses incurred after October 31 in determining ordinary
taxable income for the succeeding calendar year.
The 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 the Fund may
in certain circumstances be required to liquidate portfolio investments to make
sufficient distributions to avoid excise tax liability.
E. SALE OR REDEMPTION OF SHARES
In general, a shareholder will recognize gain or loss on the sale or redemption
of shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases other shares of the Fund within 30 days before or after
the sale or redemption (a so called "wash sale"). In general, any gain or loss
arising from the sale or redemption of shares of the Fund will be considered
capital gain or loss and will be long-term capital gain or loss if the shares
were held for longer than one year. Any capital loss arising from the sale or
redemption of shares held for six months or less, however, is treated as a
long-term capital loss to the extent of the amount of capital gain distributions
received on such shares. For this purpose, the special holding period rules of
Code Section 246(c) (3) and (4) generally will apply in determining the holding
period of shares. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
F. WITHHOLDING TAX
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of distributions, and the proceeds of redemptions of shares, paid
to any shareholder: (1) who has failed to provide correct tax payer
identification number; (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly; or (3)
who has failed to certify to the Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
G. FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from the Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
If the income from the 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 the Fund, capital gain distributions
from the Fund and amounts retained by the Fund that are designated as
undistributed capital gain.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income
distributions, capital gain distributions, and any gain realized upon the sale
of shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or U.S. corporations.
In the case of a noncorporate foreign shareholder, the 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.
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The tax rules of other countries with respect to distributions from the Fund can
differ from the rules for U.S. federal income taxation described above. These
foreign rules are not discussed herein. Foreign shareholders are urged to
consult their own tax advisers as to the consequences of foreign tax rules with
respect to an investment in the Fund, distributions from the Fund and the
applicability of foreign taxes and related matters.
H. STATE AND LOCAL TAXES
The tax rules of the various states of the U.S. and their local jurisdictions
with respect to distributions from the Fund can differ from the rules for U.S.
federal income taxation described above. These state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
consequences of state and local tax rules with respect to an investment in the
Fund, distributions from the Fund and the applicability of state and local taxes
and related matters.
8. OTHER MATTERS
A. THE TRUST AND ITS SHAREHOLDERS
1. GENERAL INFORMATION
The Trust's predecessor, Forum Funds, Inc. was established on March 24, 1980
under the name Fahnestock Daily Income Fund, Inc. Forum Funds was organized as a
business trust under the laws of the State of Delaware on August 29, 1995. On
January 5, 1996 the Trust succeeded to the assets and liabilities of Forum
Funds, Inc.
The Trust is registered as an open-end, management investment company under the
1940 Act. The Trust offers shares of beneficial interest in its series. As of
the date hereof, the Trust consisted of the following shares of beneficial
interest:
Investors Bond Fund Payson Value Fund
TaxSaver Bond Fund Payson Balanced Fund
Investors High Grade Bond Fund Austin Global Equity Fund
Maine Municipal Bond Fund Polaris Global Value Fund
New Hampshire Bond Fund Investors Equity Fund
Daily Assets Government Fund Equity Index Fund
Daily Assets Treasury Obligations Fund Investors Growth Fund
Daily Assets Cash Fund BIA Small-Cap Growth Fund
Daily Assets Government Obligations Fund BIA Growth Equity Fund
Daily Assets Municipal Fund Mastrapasqua Growth Value Fund
The Trust offers shares of beneficial interest in an institutional,
institutional service, and investor share class of these series.
The Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate series and may divide series into classes of
shares; the costs of doing so will be borne by the Trust.
The Trust and the Fund will continue indefinitely until terminated.
2. SERIES AND CLASSES OF THE TRUST
Each series or class of the Trust may have a different expense ratio and each
class' performance will be affected by its expenses.
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3. SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency, shareholder service and administration expenses) are borne
solely by those shares. Each class votes separately with respect to the
provisions of any Rule 12b-1 plan that pertains to the class and other matters
for which separate class voting is appropriate under applicable law. Generally,
shares will be voted separately by individual series except if: (1) the 1940 Act
requires shares to be voted in the aggregate and not by individual series; and
(2) when the Trustees determine that the matter affects more than one series and
all affected series must vote. The Trustees may also determine that a matter
only affects certain classes of the Trust and thus only those such classes are
entitled to vote on the matter. Delaware law does not require the Trust to hold
annual meetings of shareholders, and it is anticipated that shareholder meetings
will be held only when specifically required by federal or state law. There are
no conversion or preemptive rights in connection with shares of the Trust.
All shares, when issued in accordance with the terms of the offering, will be
fully paid and nonassessable.
A shareholder in a series is entitled to the shareholder's pro rata share of all
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.
Upon written request of shareholders representing 10% or more of the Trust's (or
a series') outstanding shares may, as set forth in the Trust Instrument, call
meetings of the Trust (or series) for any purpose related to the Trust (or
series), including, in the case of a meeting of the Trust, the purpose of voting
on removal of one or more Trustees.
4. CERTAIN REORGANIZATION TRANSACTIONS
The Trust or any series may be terminated upon the sale of its assets to, or
merger with, another open-end, management investment company or series thereof,
or upon liquidation and distribution of its assets. The Trustees may, without
prior shareholder approval, change the form of organization of the Trust by
merger, consolidation or incorporation. Under the Trust Instrument, the Trustees
may, without shareholder vote, cause the Trust to merge or consolidate into one
or more trusts, partnerships or corporations or cause the Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end,
management investment company that will succeed to or assume the Trust's
registration statement.
B. FUND OWNERSHIP
As of July 1, 2000, and prior to the public offering of the Fund, the Adviser
beneficially owned 100% of and may be deemed to control the Fund. Frank
Mastrapasqua owns 100% of the shares of the Adviser. As of the same date, the
Trustees and officers of the Trust in the aggregate owned less than 1% of the
outstanding Shares of the Fund. From time to time, certain shareholders may own
a large percentage of the shares of the Fund. Accordingly, those shareholders
may be able to greatly affect (if not determine) the outcome of a shareholder
vote.
C. LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY
Delaware law provides that Fund shareholders are entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. In the past, the Trust believes that the securities
regulators of some states, however, have indicated that they and the courts in
their state may decline to apply Delaware law on this point. The Forum Funds'
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 series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
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circumstances in which Delaware law does not apply, no contractual limitation of
liability was in effect and the portfolio is unable to meet its obligations.
The Trust Instrument provides that the Trustees shall not be liable to any
person other than the Trust and its shareholders. In addition, the Trust
Instrument provides that the Trustees shall not be liable for any conduct
whatsoever, provided that a Trustee is not protected against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
D. REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered hereby. The registration statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by, reference to the copy of such contract or other documents
filed as exhibits to the registration statement.
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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
A. CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
1. MOODY'S INVESTORS SERVICE
AAA Bonds, which are rated Aaa, are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.
AA Bonds, which are rated Aa, are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present that make the long-term risk appear
somewhat larger than the Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
some time in the future.
BAA Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
BA Bonds, which are rated Ba, are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B Bonds, which are rated B generally, lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA Bonds, which are rated Caa, are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest. Ca Bonds, which are rated Ca, represent
obligations that are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
NOTE
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
a ranking in the lower end of that generic rating category.
A-1
<PAGE>
2. STANDARD AND POOR'S CORPORATION
AAA An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
NOTE Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics. BB indicates the least degree
of speculation and C the highest. While such obligations will likely
have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse
conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or
willingness to meet its financial commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In
the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial
commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments
on this obligation are being continued.
D An obligation rated D is in payment default. The D rating category is
used when payments on an obligation are not made on the date due even
if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace
period. The D rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation
are jeopardized.
NOTE Plus (+) or minus (-). The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
The "r" symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or
volatility of expected returns 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.
A-2
<PAGE>
3. DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+
AA High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.
A+
A, A- Protection factors are average but adequate. However, risk factors
are more variable in periods of greater economic stress.
BBB+
BBB
BBB- Below-average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.
BB+
BB
BB- Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according
to industry conditions. Overall quality may move up or down frequently
within this category.
B+
B, B- Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP Preferred stock with dividend arrearages.
4. FITCH IBCA, INC.
INVESTMENT GRADE
AAA Highest credit quality. `AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
A-3
<PAGE>
BBB Good credit quality. `BBB' ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.
SPECULATIVE GRADE
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse economic
change over time; however, business or financial alternatives may be
available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit risk
is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
CCC
CC,C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating indicates
that default of some kind appears probable. `C' ratings signal imminent
default.
DDD
DD, D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For U.S.
corporates, for example, `DD' indicates expected recovery of 50% - 90%
of such outstandings, and `D' the lowest recovery potential, i.e.
below 50%.
B. PREFERRED STOCK
1. MOODY'S INVESTORS SERVICE
AAA An issue that is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
AA An issue that is rated "aa" is considered a high- grade preferred
stock. This rating indicates that there is a reasonable assurance the
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
A An issue which is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater then in
the "aaa" and "aa" classification, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
BAA An issue that is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured. Earnings
and asset protection appear adequate at present but may be questionable
over any great length of time.
BA An issue which is rated "ba" is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse
periods. Uncertainty of position characterizes preferred stocks in this
class.
B An issue that is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
A-4
<PAGE>
CAA An issue that is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the
future status of payments.
CA An issue that is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual
payments.
C This is the lowest rated class of preferred or preference stock. Issues
so rated can thus be regarded as having extremely poor prospects of
ever attaining any real investment standing.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
2. STANDARD & POOR'S
AAA This is the highest rating that may be assigned by Standard & Poor's to
a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
AA A preferred stock issue rated AA also qualifies as a high-quality,
fixed-income security. The capacity to pay preferred stock obligations
is very strong, although not as overwhelming as for issues rated AAA.
A An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.
BBB An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the
A category.
BB
B,CCC Preferred stock rated BB, B, and CCC is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
preferred stock obligations. BB indicates the lowest degree of
speculation and CCC the highest. While such issues will likely have
some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
CC The rating CC is reserved for a preferred stock issue that is in
arrears on dividends or sinking fund payments, but that is currently
paying.
C A preferred stock rated C is a nonpaying issue.
D A preferred stock rated D is a nonpaying issue with the issuer in
default on debt instruments.
N.R. This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard &
Poor's does not rate a particular type of obligation as a matter of
policy.
NOTE Plus (+) or minus (-). To provide more detailed indications of
preferred stock quality, ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
A-5
<PAGE>
C. SHORT TERM RATINGS
1. MOODY'S INVESTORS SERVICE
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to
a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
PRIME-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
NOT
PRIME Issuers rated Not Prime do not fall within any of the Prime rating
categories.
2. STANDARD AND POOR'S
A-1 A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, certain
obligations are designated with a plus sign (+). This indicates that
the obligor's capacity to meet its financial commitment on these
obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than obligations in higher rating categories. However, the obligor's
capacity to meet its financial commitment on the obligation is
satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation.
B A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to
meet its financial commitment on the obligation; however, it faces
major ongoing uncertainties that could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to nonpayment
and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the
obligation.
A-6
<PAGE>
D A short-term obligation rated D is in payment default. The D rating
category is used when payments on an obligation are not made on the
date due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such
grace period. The D rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
3. FITCH IBCA, INC.
F1 Obligations assigned this rating have the highest capacity for timely
repayment under Fitch IBCA's national rating scale for that country,
relative to other obligations in the same country. This rating is
automatically assigned to all obligations issued or guaranteed by the
sovereign state. Where issues possess a particularly strong credit
feature, a "+" is added to the assigned rating.
F2 Obligations supported by a strong capacity for timely repayment
relative to other obligors in the same country. However, the relative
degree of risk is slightly higher than for issues classified as `A1'
and capacity for timely repayment may be susceptible to adverse changes
in business, economic, or financial conditions.
F3 Obligations supported by an adequate capacity for timely repayment
relative to other obligors in the same country. Such capacity is more
susceptible to adverse changes in business, economic, or financial
conditions than for obligations in higher categories.
B Obligations for which the capacity for timely repayment is uncertain
relative to other obligors in the same country. The capacity for timely
repayment is susceptible to adverse changes in business, economic, or
financial conditions.
C Obligations for which there is a high risk of default to other obligors
in the same country or which are in default.D-1
A-7
<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).
(8) Form of Investment Advisory Agreement between Registrant and
Mastrapasqua & Associates relating to Virtual Growth/Value Fund
(filed herewith).
(e)(1) Form of Selected Dealer Agreement between Forum Financial Services,
Inc. and securities brokers (see Note 3).
(2) Form of Bank Affiliated Selected Dealer Agreement between Forum
Financial Services, Inc. and bank affiliates (see Note 3).
(3) Distribution Agreement between Registrant and Forum 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,
TaxSaver Bond Fund and Virtual Growth/Value 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, TaxSaver Bond Fund, Virtual
Growth/Value Fund and Investor Shares, Institutional Shares and
<PAGE>
Institutional Service Shares of Daily Assets Government Fund,
Daily Assets Treasury Obligations Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and Daily Assets
Municipal Fund, undated (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, TaxSaver Bond Fund, Virtual Growth/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, TaxSaver Bond Fund, Virtual
Growth/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, TaxSaver Bond Fund, Virtual
Growth/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, TaxSaver Bond Fund, Virtual Growth/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).
(6) Shareholder Service Plan of Registrant dated March 1, 2000 relating
to BIA Small Cap Growth Fund and BIA Growth Equity Fund (filed
herewith).
(i) Opinion of Seward & Kissel LLP dated January 5, 1996 (see Note 11).
(j) None.
<PAGE>
(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).
(n) 18f-3 plan adopted by Registrant (see Note 3).
(p) (1) Code of Ethics adopted by Registrant (filed herewith).
(2) Code of Ethics adopted by Brown Investment Advisors (filed herewith).
(3) Code of Ethics adopted by H.M. Payson & Co (filed herewith).
(4) Code of Ethics adopted by Austin Investment Management, Inc. (filed
herewith).
(5) Code of Ethics adopted by Forum Fund Services, LLC and Forum Investment
Advisors, LLC (filed herewith).
(6) Code of Ethics adopted by Polaris Capital Management, Inc. (filed
herewith).
(7) Code of Ethics adopted by Peoples Heritage Bank (filed herewith).
(8) Code of Ethics adopted by Wells Capital Management (filed herewith).
(9) Code of Ethics adopted by Wells Fargo Bank (filed herewith).
(10)Joint Code of Ethics adopted by Wells Fargo Funds Trust, Wells Fargo
Variable Trust and Wells Fargo Core Trust (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.
<PAGE>
(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.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
"(i) Every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of being or having
been a Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
(ii) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) Who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of the
Covered Person's office or (B) not to have acted in good faith in the
reasonable belief that Covered Person's action was in the best interest
of the Trust; or
(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Trustee's or officer's office,
<PAGE>
(A) By the court or other body approving the
settlement;
(B) By at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) By written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 5.2 may be paid by the Trust
or Series from time to time prior to final disposition thereof upon
receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him to the Trust or Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 5.2; provided, however, that either (a) such Covered
Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Section 5.2.
(e) Conditional advancing of indemnification monies under this Section
5.2 for actions based upon the 1940 Act may be made only on the
following conditions: (i) the advances must be limited to amounts used,
or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or
on behalf of, the recipient to repay that amount of the advance which
exceeds that amount which it is ultimately determined that he is
entitled to receive from the Trust by reason of indemnification; and
(iii) (a) such promise must be secured by a surety bond, other suitable
insurance or an equivalent form of security which assures that any
repayments may be obtained by the Trust without delay or litigation,
which bond, insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be
found entitled to indemnification.
(f) In case any Holder or former Holder of any Series shall be held to
be personally liable solely by reason of the Holder or former Holder
being or having been a Holder of that Series and not because of the
Holder or former Holder acts or omissions or for some other reason, the
Holder or former Holder (or the Holder or former Holder's heirs,
executors, administrators or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust, on behalf of
the affected Series, shall, upon request by the Holder, assume the
defense of any claim made against the Holder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the
Series."
<PAGE>
With respect to indemnification of an adviser to the Trust, the
Investment Advisory Agreements between the Trust and Austin Investment
Management, Inc., H.M. Payson & Co. 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
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
<PAGE>
with respect to such matters whether any statement in or omission from
the Registration Statement was made in reliance upon, or in conformity
with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the
Trust and approved by the Distributor, which approval shall not be
withheld unreasonably. The Trust shall advise the Distributor that it
will assume the defense of the suit and retain counsel within ten (10)
days of receipt of the notice of the claim. If the Trust assumes the
defense of any such suit and retains counsel, the defendants shall bear
the fees and expenses of any additional counsel that they retain. If
the Trust does not assume the defense of any such suit, or if
Distributor does not approve of counsel chosen by the Trust or has been
advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust
will reimburse any Distributor Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person
retains. A Distributor Indemnitee shall not settle or confess any claim
without the prior written consent of the Trust, which consent shall not
be unreasonably withheld or delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"),
free and harmless from and against any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable
counsel fees incurred in connection therewith), but only to the extent
that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other
expenses result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen
by the Distributor and approved by the Trust, which approval shall not
be withheld unreasonably. The Distributor shall advise the Trust that
it will assume the defense of the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If the Distributor
assumes the defense of any such suit and retains counsel, the
defendants shall bear the fees and expenses of any additional counsel
that they retain. If the Distributor does not assume the defense of any
such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or
claims that are not available to or conflict with those available to
the Distributor, the Distributor will reimburse any Trust Indemnitee
named as defendant in such suit for the reasonable fees and expenses of
any counsel that person retains. A Trust Indemnitee shall not settle or
confess any claim without the prior written consent of the Distributor,
which consent shall not be unreasonably withheld or delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a
Distributor Indemnitee or Trust Indemnitee, respectively, by the person
against whom such action is brought within twenty (20) days after the
summons or other first legal process is served. Such notice shall refer
to the person or persons against whom the action is brought. The
failure to provide such notice shall not relieve the party entitled to
such notice of any liability that it may have to any Distributor
Indemnitee or Trust Indemnitee except to the extent that the ability of
the party entitled to such notice to defend such action has been
materially adversely affected by the failure to provide notice.
<PAGE>
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Distributor Indemnitee or Trust Indemnitee and shall survive the sale
and redemption of any Shares made pursuant to subscriptions obtained by
the Distributor. The indemnification provisions of this Section will
inure exclusively to the benefit of each person that may be a
Distributor Indemnitee or Trust Indemnitee at any time and their
respective successors and assigns (it being intended that such persons
be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware
arising out of or in any way connected with the issuance or sale of
Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable
statute or regulation or shall require the Distributor to take any
action contrary to any provision of its Articles of Incorporation or
Bylaws or any applicable statute or regulation; provided, however, that
neither the Trust nor the Distributor may amend their Organic Documents
or Articles of Incorporation and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made
in this Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders
to which the Distributor would otherwise be subject by reason of its
failure to satisfy the standard of care set forth in Section 7 of this
Agreement."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC (investment adviser
to Investors High Grade Bond Fund, Investors Bond Fund, TaxSaver Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund, Investors
Growth Fund, Virtual Growth/Value 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, Parts A and B of
post-effective amendment No. 77 to the Trust's Registration Statement
(accession number 0001004402-99-000487) 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.
<PAGE>
<TABLE>
<S> <C> <C>
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
</TABLE>
(b) H.M. Payson & Co.
The description of H.M. Payson & Co. (investment adviser to Payson
Value Fund, Payson Balanced Fund and Investors Equity Fund) contained
in Parts A and B of 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 directors and principal executive officers of
H.M. Payson & Co., including their business connections, which are of
a substantial nature. The address of H.M. Payson & Co. is One Portland
Square, Portland, Maine 04101.
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
Adrian L. Asherman Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
John C. Downing Managing Director, Treasurer H.M. Payson & Co.
..................................... .................................. ...................................
Thomas M. Pierce Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
Peter E. Robbins Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
John H. Walker Managing Director, President H.M. Payson & Co.
..................................... .................................. ...................................
Teresa M. Esposito Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
John C. Knox Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
Harold J. Dixon Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
Michael R. Currie Managing Director H.M. Payson & Co.
..................................... .................................. ...................................
William O. Hall, III Managing Director H.M. Payson & Co.
</TABLE>
(c) Austin Investment Management, Inc.
The description of Austin Investment Management, Inc. (investment
adviser to Austin Global Equity Fund) contained in Parts A and B of
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.
<PAGE>
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
..................................... .................................. ...................................
Peter Vlachos Director, President, Treasurer, Austin Investment Management Inc.
Secretary
</TABLE>
(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.
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
Gary L. Robinson Executive Vice President Peoples
..................................... .................................. ...................................
Dorothy M. Wentworth Vice President Peoples
..................................... .................................. ...................................
Stephen L. Eddy Vice President Peoples
..................................... .................................. ...................................
Dana R. Mitiguy Chief Investment Officer Peoples
..................................... .................................. ...................................
Larry D. Pelletier Vice President Peoples
217 Main Street
Lewiston, Maine 04240
..................................... .................................. ...................................
Carolyn B. May Vice President Peoples
217 Main Street
Lewiston, Maine 04240
..................................... .................................. ...................................
Kevin K. Brown Vice President Peoples
..................................... .................................. ...................................
Donald W. Smith Vice President Peoples
..................................... .................................. ...................................
John W. Gibbons Vice President Peoples
..................................... .................................. ...................................
Joseph M. Pratt Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
..................................... .................................. ...................................
Lucy L. Tucker Vice President Peoples
..................................... .................................. ..................................
Nancy W. Bard Assistant Vice President Peoples
..................................... .................................. ...................................
Douglas P. Adams Trust Officer Peoples
..................................... .................................. ...................................
Melanie L. Bishop Trust Officer Peoples
..................................... .................................. ...................................
Jeffrey Oldfield Vice President Peoples
..................................... .................................. ...................................
Janet E. Milley Assistant Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
..................................... .................................. ...................................
Kathryn Dion Vice President Peoples
217 Main Street
Lewiston, Maine 04240
</TABLE>
(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.
<PAGE>
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
Michael D. Hankin President, Chief Executive Brown
Officer, Trustee
.................................. ...................................
President The Maryland Zoological Society
.................................. ...................................
Trustee The Valleys Planning Council
..................................... .................................. ...................................
David L. Hopkins, Jr. Chairman Brown
.................................. ...................................
Director Westvaco Corporation
.................................. ...................................
Director Metropolitan Opera Association
.................................. ...................................
Trustee and Chairman, Finance Episcopal Church Foundation
Committee
.................................. ...................................
Trustee Maryland Historical Society
..................................... .................................. ...................................
Charles W. Cole, Jr. Vice Chairman of the Board of Brown
Trustees
.................................. ...................................
Director Flag Investors Mutual Funds
.................................. ...................................
Director Provident Bankshares Corporation
and Provident Bank of Maryland
.................................. ...................................
Director, Chairman of Investment The University of Maryland
Committee Foundation
.................................. ...................................
Board of Regents The University of Maryland Systems
.................................. ...................................
Member The Governor's Committee on
School Funding
.................................. ...................................
Member Investment Committee of Helix
Health System
.................................. ...................................
Chairman of Investment Committee France-Merrick Foundation
.................................. ...................................
Trustee and Chairman Baltimore Council on Foreign
Affairs
..................................... .................................. ...................................
Truman T. Semans Vice Chairman of the Board of Brown
Trustees
.................................. ...................................
Trustee, Member and Former Duke University
Chairman of Investment Committee
.................................. ...................................
Trustee, Chairman of Finance Lawrenceville School
Committee and Member of
Investment and Executive
Committees
.................................. ...................................
Board of Directors, Member of Chesapeake Bay Foundation
Investment and Executive
Committees
.................................. ...................................
Chairman Flag Investors Mutual Funds
.................................. ...................................
Investment Committee Member Mercy Medical Center
.................................. ...................................
Investment Committee Member St. Mary's Seminary
.................................. ...................................
Investment Committee Member Archdiocese of Baltimore
.................................. ...................................
Investment Committee Member Robert E. Lee Memorial Foundation
.................................. ...................................
Investment Committee Member W. Alton Jones Foundation
..................................... .................................. ...................................
<PAGE>
..................................... .................................. ...................................
William C. Baker Trustee Brown
.................................. ...................................
President and Chief Executive Chesapeake Bay Foundation
Officer
.................................. ...................................
Trustee John Hopkins Hospital
.................................. ...................................
Member Washington College Board of
Visitors and Governors
.................................. ...................................
Director Baltimore Community Foundation
..................................... .................................. ...................................
Jack S. Griswold Trustee Brown
.................................. ...................................
Managing Director Armata Partners
.................................. ...................................
Director Alex. Brown Realty
.................................. ...................................
Trustee The Baltimore Community Foundation
.................................. ...................................
Trustee The Chesapeake Bay Foundation
Living Classrooms
.................................. ...................................
Chairman Maryland Historical Society
.................................. ...................................
Member Washington College Board of
Visitors and Governors
.................................. ...................................
Treasurer Washington College
.................................. ...................................
Chair Campaign for Washington's College
..................................... .................................. ...................................
Earl L. Linehan Trustee Brown
.................................. ...................................
President Woodbrook Capital, Inc.
.................................. ...................................
Chairman Strescon Industries
.................................. ...................................
Chairman UMBC Board of Visitors
.................................. ...................................
Chairman Investment Committee Gilman School
.................................. ...................................
Board of Directors Member Stoneridge, Inc.
.................................. ...................................
Board of Directors Member Sagemaker, Inc.
.................................. ...................................
Board of Directors Member Medical Mutual Liability
Insurance Society of Maryland
.................................. ...................................
Board of Directors Member Heritage Properties, Inc.
.................................. ...................................
Board of Directors Member St. Mary's Seminary & University
.................................. ...................................
Board of Directors Member St. Ignatius Loyola Academy
.................................. ...................................
Board of Directors Member University of Notre Dame Advisory
Council
..................................... .................................. ...................................
<PAGE>
..................................... .................................. ...................................
Walter D. Pinkard, Jr. Trustee Brown
.................................. ...................................
President and Chief Executive Colliers Pinkard
Officer
.................................. ...................................
Chairman The Americas Region of Colliers
International
.................................. ...................................
Vice President France Foundation
.................................. ...................................
Chairman The Baltimore Community Foundation
.................................. ...................................
Board of Directors Member France-Merrick Foundation
.................................. ...................................
Trustee The John Hopkins University
.................................. ...................................
Trustee The Greater Baltimore Committee
.................................. ...................................
Trustee Gilman School
.................................. ...................................
Trustee Calvert School
.................................. ...................................
Trustee The Baltimore Community Foundation
.................................. ...................................
Trustee The East Baltimore Community
Development Bank
.................................. ...................................
Trustee The Greater Baltimore Alliance
.................................. ...................................
Director Baltimore Reads, Inc.
.................................. ...................................
Trustee The Downtown Baltimore District
Authority
.................................. ...................................
Trustee The Yale University Development
Board
.................................. ...................................
Trustee The Maryland Business Roundtable
for Education
..................................... .................................. ...................................
John J.F. Sherrerd Trustee Brown
.................................. ...................................
Director Provident Mutual Life Insurance
Company
.................................. ...................................
Director C. Brewer and Company
.................................. ...................................
Trustee, Vice Chairman of Princeton University
Executive Committee
.................................. ...................................
Trustee, Chairman of Investment The Robertson Foundation
Committee
.................................. ...................................
Trustee GESU School
.................................. ...................................
Director and Executive Committee Princeton Investment Management
Member
.................................. ...................................
Board of Overseers University of Pennsylvania
Wharton School.
..................................... .................................. ...................................
David M. Churchill, CPA Chief Financial Officer Brown
..................................... .................................. ...................................
Michael D. Hankin Chief Executive Officer Brown
..................................... .................................. ...................................
</TABLE>
(f) Polaris Capital Management, Inc.
The description of Polaris Capital Management, Inc.
("Polaris")(investment adviser to Polaris Global Value Fund) contained
in Parts A and B of post-effective amendment No. 77 (accession number
0001004402-99-000487) is incorporated by reference herein.
The following are the directors and principal executive officers of
Polaris, including their business connections, which are of a
substantial nature. The address of Polaris is 125 Summer Street,
Boston, Massachusetts 02110 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.
<PAGE>
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
Bernard R. Horn, Jr. President, Portfolio Manager Polaris
..................................... .................................. ...................................
Edward E. Wendell, Jr. Treasurer Polaris
.................................. ...................................
President Boston Investor Services, Inc.
..................................... .................................. ...................................
</TABLE>
(g) Mastrapasqua & Associates
The description of Mastrapasqua & Associates
("Mastrapasqua")(investment adviser to Virtual Growth/Value Fund)
contained in Parts A and B of this filing is incorporated by reference
herein.
The following are the directors and principal executive officers of
Mastrapasqua, including their business connections, which are of a
substantial nature. The address of Mastrapasqua is 814 Church Street,
Suite 600, Nashville, Tennessee, 37203 and, unless otherwise indicated
below, that address is the principal business address of any company
with which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C>
Name Title Business Connection
..................................... .................................. ...................................
Frank Mastrapasqua Chairman, CEO and Portfolio Mastrapasqua
Manager
..................................... .................................. ...................................
Thomas A. Trantum President, Portfolio Manager and Mastrapasqua
Security Analyst
</TABLE>
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.
<TABLE>
<S> <C> <C>
Name Position with Underwriter Position with Registrant
..................................... .................................. ...................................
John Y. Keffer President Chairman, President
..................................... .................................. ...................................
David I Goldstein Secretary Vice President
..................................... .................................. ...................................
Ronald H. Hirsch Treasurer Treasurer
</TABLE>
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained at the offices of Forum
Administrative Services, LLC and Forum Shareholder Services, LLC, Two
Portland Square, Portland, Maine 04101. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts
and deliveries of securities and receipts and disbursements of cash are
maintained at the offices of the Registrant's custodian, 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.
<PAGE>
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
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
March 31, 2000.
FORUM FUNDS
By: /s/ John Y. Keffer
John Y. Keffer, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on March
31, 2000.
(a) Principal Executive Officer
/s/ John Y. Keffer
John Y. Keffer
President and Chairman
(b) Principal Financial Officer
/s/ Ronald H. Hirsch
Ronald H. Hirsch
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.
<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 March 31, 2000.
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 March 31, 2000.
(d) Principal Executive Officer
/s/ John Y. Keffer
John Y. Keffer
President and Chairman
(e) Principal Financial Officer
/s/ Ronald H. Hirsch
Ronald H. Hirsch
Treasurer
(f) 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.
<PAGE>
INDEX TO EXHIBITS
(h)(6) Shareholder Service Plan of Registrant dated March 1, 2000 relating to
BIA Small Cap Growth Fund and BIA Growth Equity Fund
(p)(1) Code of Ethics adopted by Registrant.
(p)(2) Code of Ethics adopted by Brown Investment Advisors.
(p)(3) Code of Ethics adopted by H.M. Payson & Co.
(p)(4) Code of Ethics adopted By Austin Investment Management, Inc.
(p)(5) Code of Ethics adopted by Forum Fund Services, LLC and Forum Investment
Advisors, LLC.
(p)(7) Code of Ethics adopted by Peoples Heritage Bank.
(p)(6) Code of Ethics adopted by Polaris Capital Management, Inc.
(p)(8) Code of Ethics adopted by Wells Capital Management.
(p)(9) Code of Ethics adopted by Wells Fargo Bank.
(p)(10) Joint Code of Ethics adopted by Wells Fargo Funds Trust, Wells Fargo
Variable Trust and Wells Fargo Core Trust.
<PAGE>
Exhibit (h)(6)
FORUM FUNDS
SHAREHOLDER SERVICE PLAN
March 1, 2000
This Shareholder Services Plan (the "Plan") is adopted by Forum Funds
(the "Trust") with respect to the shares of beneficial interest ("Shares") of
each fund or class of the Trust or class thereof identified in Appendix A hereto
(each a "Fund," collectively the "Funds")(each, a "Fund").
SECTION 1. APPOINTMENT
In consideration of the services provided by Forum Administrative
Services, LLC ("Forum") to the Trust as described herein, the Trust hereby
appoints Forum as agent to perform the services for the period and on the terms
set forth in this Agreement. Forum accepts such appointment and agrees to
furnish the services described herein, in return for the compensation specified
in Section 3 of this Agreement. Forum agrees to comply with all relevant
provisions of the Investment Company Act of 1940, as amended (the "Act"), and
the Securities Exchange Act of 1934, as amended, and applicable rules and
regulations thereunder in performing the services described herein.
SECTION 2. SERVICE ACTIVITIES
Forum shall perform, or arrange for the performance of, certain
activities relating to the servicing and maintenance of shareholder accounts not
otherwise provided by each Fund's transfer agent ("Shareholder Servicing
Activities"). Shareholder Servicing Activities shall include one or more of the
following: (a) establishing and maintaining accounts and records for
shareholders of a Fund relating to clients of the Service Provider; (b)
answering client 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; (c) providing necessary personnel and
facilities to establish and maintain client accounts and records; (d) assisting
clients in arranging for processing purchase, exchange and redemption
transactions; (e) arranging for the wiring of funds; (f) guaranteeing
shareholder signatures in connection with redemption orders and transfers and
changes in shareholder-designated accounts; (g) integrating periodic statements
with other shareholder transactions; and (h) providing such other related
services as the shareholder may request.
SECTION 3. COMPENSATION
As compensation for Forum's Shareholder Servicing Activities, the Trust
shall pay Forum, with respect to each Fund, a fee at an annual rate as listed in
Appendix A of up to 0.25% of the average daily net assets of each Fund (the
"Payments"). The Payments shall be accrued daily and paid monthly. A Fund shall
not directly or indirectly pay any amounts, whether Payments or otherwise, that
<PAGE>
exceed any applicable limits imposed by law or the National Association of
Securities Dealers, Inc.
SECTION 4. SERVICE AGREEMENTS
Forum is authorized to enter into shareholder service agreements
("Servicing Agreements") with financial institutions or other persons who
provide Shareholder Servicing Activities to the Funds ("Service Providers").
Forum may pay any or all amounts of the Payments to the Service Providers for
Shareholder Service Activities. To the extent practicable, each such Agreement
shall contain a representation by the Service Provider that any compensation
payable to the Service Provider in connection with the investment in a Fund of
the assets of its customers (i) will be disclosed by the Service Provider to its
customers if required by law, (ii) will be authorized by its customers if
customer authorization is required, and (iii) will not result in an excessive
fee to the Service Provider.
SECTION 5. REVIEW AND RECORDS
(a) Forum shall prepare and furnish to the Board of Trustees of the
Trust (the "Board"), and the Board shall review at least quarterly, written
reports setting forth all amounts expended under the Plan by Forum and
identifying the activities for which the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement related
to the Plan and each report prepared and furnished pursuant to this Section.
SECTION 6. EFFECTIVENESS, AMENDMENT AND TERMINATION
With respect to each Fund:
(a) This Plan shall become effective on the date indicated in Appendix
A and, upon its effectiveness, shall supersede all previous Plans covering the
Funds regarding the subject matter hereof.
(b) Any material amendment to the Plan shall be effective only upon
approval of the Board of Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined in the
Investment Company Act of 1940 (the "Disinterested Trustees").
(c) The Plan may be terminated without penalty at any time (1) by vote
of a majority of the Board and a majority of the Disinterested Trustees or (2)
by Forum.
<PAGE>
SECTION 7. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under the Plan, and
Forum agrees that, in asserting any rights or claims under this Plan, it shall
look only to the assets and property of the Trust or the Fund to which Forum's
rights or claims relate in settlement of such rights or claims, and not to the
Trustees of the Trust or the shareholders of the Funds.
SECTION 8. MISCELLANEOUS
(a) With the exception of Appendix A, no provision of this Plan may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of any Fund thereby
affected.
(b) No amendment to this Plan or the termination of this Plan with
respect to a Fund shall affect this Plan as it pertains to any other Fund, nor
shall any such amendment require the vote of the shareholders of any other Fund.
(c) Neither party to this Plan shall be liable to the other party for
consequential damages under any provision of this Plan.
(d) This Plan shall be governed by, and the provisions of this Plan
shall be construed and interpreted under and in accordance with, the laws of the
State of Delaware.
(e) This Plan constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(f) This Plan may be executed by the parties hereto in any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(g) If any part, term or provision of this Plan is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Plan did
not contain the particular part, term or provision held to be illegal or
invalid. This Plan shall be construed as if drafted jointly by both Forum and
Trust and no presumptions shall arise favoring any party by virtue of authorship
of any provision of this Plan.
(h) Section headings in this Plan are included for convenience only
and are not to be used to construe or interpret this Plan.
(i) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
<PAGE>
(j) Notwithstanding any other provision of this Plan, the parties agree
that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Plan or otherwise.
(k) Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity hereunder, to perform any functions or duties on any day
other than a Fund business day. Functions or duties normally scheduled to be
performed on any day which is not a Fund business day shall be performed on, and
as of, the next Fund business day, unless otherwise required by law.
(l) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Plan.
(m) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person," and "affiliated person." Shall have the
meanings ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Plan to be executed by
their officers designated below as of the day first above written.
FORUM FUNDS
/s/ John Y. Keffer
----------------------------
John Y. Keffer, President
FORUM ADMINISTRATIVE SERVICES, LLC
/s/ David I. Goldstein
David I. Goldstein, Director
<PAGE>
FORUM FUNDS
SHAREHOLDER SERVICE PLAN
APPENDIX A
Funds to which Shareholder Service Plan Applies
<TABLE>
<S> <C> <C>
- --------------------------------------- ----------------------------- -----------------------------------------------
FUND/CLASS DATE SUBJECT TO PLAN PAYMENTS (AS A % OF AVERAGE NET ASSETS)
- --------------------------------------- ----------------------------- -----------------------------------------------
- --------------------------------------- ----------------------------- -----------------------------------------------
BIA Small Cap Growth Fund March 1, 2000 Up to 0.25% of each Fund; Any Payments shall
BIA Growth Equity Fund be limited to amounts paid by Forum to
Service Providers with respect to each Fund.
- --------------------------------------- ----------------------------- -----------------------------------------------
</TABLE>
<PAGE>
Exhibit (p)(1)
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.
(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.
<PAGE>
(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
<PAGE>
(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 sold 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:
<PAGE>
(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 a 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.
<PAGE>
APPENDIX A
ACCESS PERSONS
Costas Azariadis
James C. Cheng
J. Michael Parish
<PAGE>
Exhibit (p)(2)
BROWN INVESTMENT ADVISORY
MAY, 1999
CODE OF ETHICS
Purpose: Establish a standard of professional conduct which will be
maintained by the employees of the Company.
Applicability: All Company Personnel
Policy: It is the policy of the Company to act as a fiduciary with
undivided loyalties to its clients. It is the policy of the
Company to adhere to all laws and regulations to which it may
be subject by virtue of its business activities.
The Policy Manual of the Company sets forth numerous specific
policies and procedures for the conduct of its business. The
policies referenced below have particular relevance to the
dual objectives of avoiding conflicts of interest and adhering
to the laws which regulate the business affairs of the
Company.
As such, this set of policies, as more fully set forth in the
specific policies, shall constitute the Code of Ethics of the
Company.
I. Confidentiality of Client Accounts - Policy 220
It is the policy of the Company to disclose client
information only when the client agrees that such
information be disclosed, when disclosure is in the
best interests of the client, or when required by
applicable law or regulation.
Use of Material Inside Information - Policy 305
It is the policy of the Company to comply with the
restrictions of Rule 10b-5 of the Securities Exchange
Act of 1934.
III. Personal Securities Transactions - Policy 333 and
Procedure 333-01
It is the policy of the Company to require all personnel to pre-clear
all transactions in securities of employee related accounts, unless
such accounts are non-discretionary or otherwise exempt.
IV. Securities Restricted from Employees Purchase or Sale
- Policy 334
It is the policy of the Company to restrict its employees from personal
purchase or sale of certain issues from time to time, to ensure that
all transactions for clients may be undertaken in a reasonable time
prior to any employee securities transactions.
Office of Primary Responsibility: President
<PAGE>
BROWN INVESTMENT ADVISORY
DECEMBER, 1998
CONFIDENTIALITY OF CLIENT ACCOUNTS
Purpose: To state the policy of the Company with regard to the
confidentiality of client accounts.
Applicability: All Company Personnel
Policy: General
A fiduciary relationship is confidential in nature,
accordingly, it is the policy of the Company to disclose
client information only when the client agrees that such
information be disclosed, when disclosure is in the best
interests of the client, or when required by applicable
law or regulation.
Scope of Confidentiality
Employees shall not disclose "Confidential Information"
to any person not employed by the Company except as
outlined below. "Confidential Information" shall be the
following: Any account, personal or financial
information with respect to a client or prospective
client, or any other confidential information concerning
the Company's relationship with, or the handling of, the
affairs of a client of the Company.
Disclosure of Client Records or Documents
Client information or records should be disclosed only
under the following conditions:
1. The request for information is made by a party
whose beneficial interest entitles him to such
information under the law;
2. The request for information is made by court
order or subpoena;
3. The request for information is made by the
Securities and Exchange Commission or state
banking authorities having an official
interest in examination and supervision of the
Company; or
4. It is determined by the Executive Committee that
disclosure is in the best interest of the client.
Consequences for Violation of the Policy
Violation of this Policy by an employee shall be grounds for
severe disciplinary action, including the termination of employment for cause.
Office of Primary Responsibility: President
<PAGE>
BROWN INVESTMENT ADVISORY
APRIL, 1996
USE OF MATERIAL INSIDE INFORMATION
Purpose: To state the policy of the Company with regard to ensuring
compliance with Securities and Exchange Commission (SEC)
regulations concerning the use of material inside information.
Applicability: All Company Personnel
Definition
Of Terms: a. Information means specific existing facts, events or
circumstances.
b. Material information means it is of such importance that
it could reasonably be expected to affect the judgment of
investors in their buy, hold or sell decisions and, if
generally known, could affect significantly the market
price of the security.
c. Information becomes public immediately after it has
appeared in the financial press, wire service, a company
publication, broad tape, local newspapers, radio or
television.
d. Directors, officers, employees, consultants, public
accountants, attorneys, or underwriters of or
appointed by the Company are deemed to be insiders for
purposes of this Policy.
Policy: It is the policy of the Company to comply with the restrictions
of Rule 10b.5 of the Securities Exchange Act in the buying and
selling of securities. Any Company employee who comes into
possession of inside (non-public) information must bring such
information to the attention of the President who shall advise
the Trust Investment Committee (TIC). The TIC shall direct
investment personnel to refrain from trading in, or recommending,
the securities concerned while such information remains
undisclosed to the investing public.
If there is any question of whether or not particular information may be deemed
"insider", the matter should be brought to the immediate attention of the
President
Office of Primary Responsibility: President
References: - OCC Opinions 9.3890 and 9.3895, Section C-7, Use of
Material Inside Information
- Section 10 and Rule 10b.5 of the Securities Exchange Act
of 1934
<PAGE>
BROWN INVESTMENT ADVISORY
JANUARY, 1999
PERSONAL SECURITIES TRANSACTIONS
Purpose: To state the policy of the Company regarding the disclosure and
review process of their employees' personal securities
transactions. The Company's personal securities trading policies
and procedures have been developed in response to various banking
and securities laws and rules of regulatory agencies. Each
employee is expected to adhere to these policies and procedures
so as to avoid any actual or potential conflicts of interest, and
to avoid the appearance of impropriety or abuse of a position of
trust and responsibility.
Applicability: All Company Personnel.
Definitions: Employee Related Account - The term "Employee Related Account"
shall mean any account held in the name of an Employee or in
which the Employee has a Beneficial Interest.
Employee: The term "Employee" shall refer to all employees of the
Company and members of their immediate families. Immediate family
shall include the following persons: spouse, children, and other
relatives or dependents who share the same household as the
Employee.
Non-Discretionary Accounts: An Employee Account shall be deemed
to be Non-Discretionary when full investment discretion has been
granted in writing to an investment manager, trustee or other
professional with full discretion over the management of the
Account and where the Employee does not participate in the
investment decisions nor is informed in advance of transactions
in the Account.
Beneficial Interest: An Employee shall be considered to have a
beneficial interest in an account if he or she has a present or
future pecuniary benefit from the account. Employees are also
deemed to have a beneficial interest in accounts (other than
client accounts) in which they have the power, directly or
indirectly, to make investment decisions. Examples include, but
are not limited to, accounts for trusts, partnerships or
corporations in which the Employee maintains an interest or
derives a pecuniary benefit.
Policy: Pre-Clearance of Trades: It is the policy of the Company to
require all personnel to pre-clear all transactions in securities
in Employee Related Accounts, unless such accounts are
Non-Discretionary. Transactions in mutual fund shares, dividend
reinvestment plans and U.S. Government obligations shall be
excluded from such requirement.
<PAGE>
BROWN INVESTMENT ADVISORY
JANUARY, 1999
Reporting: It is the policy of the Company to require all
personnel to report to the Company's President or his designee
all transactions in securities in Employee Related Accounts. The
Employee shall provide the Company with copies of all Employee
Related Account statements. Personnel will thereby report the
securities purchased or sold, indicate the dates of the
transactions, and whether the transactions were purchases or
sales.
Office of Primary Responsibility: President
Reference: OCC 12 CFR 12.6(d), Securities Trading Policies and
Procedures; Investment Advisors Act Rule 204-2(a)(12)
and (13).
<PAGE>
BROWN INVESTMENT ADVISORY
JANUARY, 1999
PERSONAL SECURITIES TRANSACTIONS
Purpose: To delineate the Company's procedure regarding the reporting
and pre-clearance of employees' personal securities transactions.
Applicability: All Company Personnel.
Definitions: Employee Related Account - The term "Employee Related Account"
shall mean any account held in the name of an Employee or in
which the Employee has a Beneficial Interest.
Employee: The term "Employee" shall refer to all employees of the
Company and members of their immediate families. Immediate family
shall include the following persons: spouse, children, and other
relatives or dependents who share the same household as the
Employee.
Non-Discretionary Accounts: An Employee Related Account shall be
deemed to be Non-Discretionary when full investment discretion
has been granted in writing to an investment manager, trustee or
other professional with full discretion over the management of
the Account and where the Employee does not participate in the
investment decisions nor is informed in advance of transactions
in the Account.
Beneficial Interest: An Employee shall be considered to have a
beneficial interest in an account if he or she has a present or
future pecuniary benefit from the account. Employees are also
deemed to have a beneficial interest in accounts (other than
client accounts) in which they have the power, directly or
indirectly, to make investment decisions. Examples include, but
are not limited to, accounts for trusts, partnerships or
corporations in which the Employee maintains an interest or
derives a pecuniary benefit.
Procedure: Pre-Clearance of Trades: All Company personnel shall pre-clear
all transactions in securities in Employee Related Accounts,
unless such accounts are Non-Discretionary. Transactions in
mutual fund shares, dividend reinvestment plans and U.S.
Government obligations shall be excluded from such requirement.
To pre-clear trades, an employee shall obtain oral approval from
the Head Trader or her designee, and complete and file a
"Employee Equity Approval Transaction Form" (see attached) on
trade date. Approvals of transactions are good for the day they
are given and must be reinstated the next day if not executed or
withdrawn. Only after receiving approval may the employee contact
his or her broker-dealer or investment advisor to enter the
order.
<PAGE>
BROWN INVESTMENT ADVISORY
JANUARY, 1999
Reporting: In order to report all transactions in securities, all
Company personnel shall instruct any broker-dealer or custodian
where they maintain an Employee Related Account to send copies of
their statements to: Brown Investment Advisory & Trust Company;
Attention Sandra Doeller, P. O. Box 1944, Baltimore, Maryland
21203-1944 marked: "Confidential."
Office of Primary Responsibility: President
Reference: OCC 12 CFR 12.6(d), Securities Trading Policies and
Procedures; Investment Advisors Act Rule 204-2(a)(12)
and (13).
<PAGE>
BROWN INVESTMENT ADVISORY
JANUARY, 1999
SECURITIES RESTRICTED FROM EMPLOYEES PURCHASE OR SALE
Purpose: To state the policy of the Company with regard to
restricting employees from personal transactions in
certain issues purchased or sold for clients.
Applicability: All Company Personnel
Definitions: The defined terms used herein are set forth in Policy
333, Personal Securities Transactions
Policy: It is the policy of the Company to restrict its employees from
personal purchase or sale of certain issues from time to time, to
ensure that all transactions for clients may be undertaken in a
reasonable time prior to any employee securities transactions.
1. All Company personnel are prohibited from personal transactions in
Employee Related Accounts in an issue for a period of seven calendar
days after such issue has been added to or deleted from the Growth
Equity Guide List or had its rating changed (collectively, a "Rating
Change"). In addition, if a security is undergoing a Rating Change by
the responsible research analyst, all employees are restricted from
personal securities transactions for three calendar days prior to such
Rating Change.
2. All Company personnel are prohibited from personal
transactions in an issue when the trader is aware of any
client orders which remain unexecuted.
3. All employees who have access to security selection and
trading decisions for investment companies shall be
subject to the personal securities trading policies and
procedures of such investment companies, as well as this
Policy.
4. All research analysts may not personally purchase or sell
any security during a period beginning seven calendar
days prior to, and extending until seven calendar days
after a Rating Change with respect to a security on the
Growth Equity Guide List in any sector for which they are
responsible.
5. Research analysts are required to inform the trading desk
three calendar days prior to a making a Rating Change,
unless some extraordinary event triggers immediate
action.
6. The blackout periods described above do not apply to
Non-Discretionary Accounts.
Office of Primary Responsibility: President
<PAGE>
Exhibit (p)(3)
CODE OF ETHICS
Adopted Pursuant to Rule 17j-1Under
the Investment Company Act of 1940
As Amended January 1, 1995
INTRODUCTION
This Code of Ethics has been adopted by H.M. Payson & Co., Inc. (the
"Corporation") with respect to Payson Balanced Fund and Payson Value Fund, each
a separate investment portfolio of Forum Funds, Inc. (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 or any other
advisory client:
(i) employ any device, scheme or artifice to defraud the client;
(ii) make to the client 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 client; or
(iv) engage in any manipulative practice with respect to a Fund.
SECTION 1. DEFINITIONS
(a) "access person" means: any director, officer, general partner or advisory
person of the Corporation;
(b) "Access Person Account" means any securities account in which an access
person has a beneficial interest.
(c) "Act" means the Investment Company Act of 1940, as amended.
<PAGE>
(d) "advisory person" means:
(i) any employee of the Corporation or of any company in a control
relationship with the Corporation 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 a Fund, 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 Corporation
who obtains information concerning recommendations made to a Fund with regard to
the purchase or sale of a security.
(f) "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.
(g) "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.
(h) "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.
(i) "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;
<PAGE>
(iv) repurchase agreements covering any of the foregoing; and
(v) 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
(iv) purchases or sales that are determined to be unlikely to have any
economic impact 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 _________ 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 sold 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
<PAGE>
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(c) 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 must report to
________________. No person is required to make a report:
(i) with respect to transactions effected for any account over which
such person does not have any direct or indirect influence or control; or,
(ii) if that report would duplicate information reported pursuant to
Rule 204-2(a)(12) or (13) under the Investment Advisers Act of 1940.
(b) 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 shall contain the following information:
(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.
<PAGE>
(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. ____________________ shall identify all
access persons who are required to make reports to them and shall inform those
access persons of their reporting requirements.
(b) Sanctions. Upon discovering a violation of this Code, the Corporation 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. At least annually, ____________ shall notify the Board of Directors of
Forum Funds, Inc. of each violation of this Code relating to Forum Funds, Inc.
(c) Required Records. The Corporation shall maintain and cause to be maintained
in an easily accessible place a copy of any Code of Ethics adopted by the
Corporation pursuant to Rule 17j-1 under the Act which has been in effect during
the previous five (5) years. The Corporation shall maintain and cause to be
maintained:
(i) a record of any violation of any Code of Ethics adopted by the
Corporation 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 access person report made for 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 access person reports pursuant to any Code of Ethics
adopted pursuant to Rule 17j-1 under the Act, in an easily accessible place.
<PAGE>
Exhibit (p)(4)
AUSTIN INVESTMENT MANAGEMENT, INC.
CODE OF ETHICS
AS AMENDED MAY 1, 1999
INTRODUCTION
This Code of Ethics (the "Code") has been adopted by Austin Investment
Management, Inc. ("AIM"). This Code pertains to investment advisory services to
AIM's investment advisory clients. This Code establishes standards and
procedures for the detection and prevention of activities by which person having
knowledge of the investments and investment intentions of AIM's clients may
abuse their fiduciary duties to these clients and addresses other types of
conflict of interest situations.
POLICY STATEMENT
AIM forbids any Access Person (as defined below) from engaging in any
conduct which is contrary to (I) this Code, (ii) AIM's Insider Trading
Policy and Related Procedures. In addition to the prohibitions and
reporting requirements of this Code, Access Persons are also subject to
the other restrictions of requirements which affect their ability to
open securities accounts, effect securities accounts, effect securities
transactions, report securities transactions, maintain information and
documents in a confidential manner and other matters relating to the
proper discharge of their obligations to AIM. These include contractual
arrangements between the Access Person and AIM and policies adopted by
AIM concerning confidential information and documents.
AIM has always held itself and its employees to the highest ethical
standards. While this Code is only one manifestation of those
standards, compliance with its provisions is essential. Failure to
comply with this Code is a very serious matter and may result in
disciplinary action being taken. Such action can include among other
things, monetary fines, disgorgement of profits, suspension of even
termination of employment.
DEFINITIONS
(a) Access Person:
(i) of AIM means each manager and officer of AIM and any employee who,
in connection with the person's regular function or duties, makes,
participates in or obtains information regarding the purchase or
sale of a security by a client advised by AIM, or whose functions
relate to the making of any recommendations with respect to such
purchases or sales;
<PAGE>
(b) Act means the Investment Company Act of 1940, as amended.
(c) security held or to be acquired by means any security (as defined
below) which, within the most recent 15 days,) is or has been
held by the applicable client or (ii) is being or has been
considered by the applicable client or its investment adviser for
purchase by the applicable client.
(d) 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 (opportunity, directly or
indirectly, to profit or share in any profit derived from a
transaction in the subject securities) in a security.
In addition, a person should consider himself or herself the beneficial
owner of securities held by his or her spouse, his or her minor
children, a relative who shares his or her home, or other persons by
reason of any contract, arrangement, understanding of relationship that
provides him or her with sole or shared voting or investment power.
(e) purchase or sell a security means obtaining or disposing of
"beneficial ownership" of that security and includes, among
other things, the writing of an option to purchase or sell a
security.
(f) 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) "Government security" as defined in Section 2(a)(16) of the
Act with a maturity of less than 13 months as defined in
Rule 2a-7 under the Act;
(ii) bankers' acceptances and bank certificates of deposits
and time deposits;
(iii) commercial paper;
(iv) repurchase agreements covering any of the foregoing; and
<PAGE>
(v) shares of registered open-end, investment companies
PROBITED TRANSACTIONS
(a) Prohibition Against Fraudulent Conduct. No Access Person shall
use any information concerning a security held or to be
acquired by an AIM client or the Access Person's ability to
influence such investment intentions, for personal gain or in
a manner detrimental to the interests of an AIM client. In
addition, no Access Person or employee or AIM shall, directly
or indirectly:
(i) employ any device, scheme or artifice to defraud a client or
engage in any manipulative practice with respect to a client;
(ii) make to a client any untrue statement of a material fact or omit
to state to a client a material fact necessary in order to make
the statements made, in light of the circumstances under which
they are made, not misleading; or
(iii) engage in any act, practice, or of business which operates or
would operate as a fraud or deceit upon a client.
(b) Access Person Blackout Period. No Access Person may execute securities
transactions on a day during which any client has a pending "buy" or
"sell" order in that same security until that order is executed or
withdrawn. Trading by Access Persons shall be exempt from this same
day "blackout period" if the Access Person's trade is "bunched" with
the clients' trade as contemplated by AIM's bunching procedures.
(c) Portfolio Manager Blackout Period. No portfolio manager shall purchase
or sell a security within five calendar days before and two calendar
days after client's portfolio manager manages, trades in that
security. Any profits realized on trades within this proscribed period
shall be disgorged.
(d) Blackout Period Exclusions and Definitions. The following transactions
shall not be prohibited by this Code and are not subject to the
limitations of Sections III (b) and (c):
(i) purchases or sales over which an Access Person has no direct or
indirect influence or control (for this purpose, an Access Person
is deemed to have direct or indirect influence or control over
the accounts of a spouse, minor children and relatives residing
in the Access Person's home);
(ii) purchases which are part of an automatic dividend reinvestment
plan;
<PAGE>
(iii) purchases or sales which are non-volitional on the part of the
Access Person; and
(iv) 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.
Trading by any Access Person shall be exempt from the limitations of Section III
(b) and (c) provided that (I) the market capitalization of a particular security
exceeds $1 billion and (ii) pending orders of AIM do not exceed two percent of
the daily average trading volume of the security for the prior 15 days.
For purposes of Sections III (b) and (c), and subject to Section III (g) below,
the (i) common stock and any fixed income security of an issuer shall not be
deemed to be the same security and (ii) non-convertible preferred stock of an
issuer shall be deemed to be the same security as the fixed income securities of
that issuer; convertible preferred stock shall be deemed to be the same security
as both the common stock and fixed income securities of that issuer.
(e) When Preclearance Is Required. The following transactions require
prior written approval by the Chief Compliance Officer:
(i) purchasing an initial public offering of securities for which no
public market in the same or similar securities of the issue has
previously existed; and
(ii) acquiring securities in a private placement. Any Access Person
who has taken a personal position through a private placement
will be under an affirmative obligation to disclose that position
if he plays a material role in a client's subsequent investment
decision regarding the same issuer; and once disclosure is given,
an independent review of the investment decision will be made.
(f) Other Prohibited Transactions. The following actions of Access Persons
are prohibited by this Code:
(i) inducing or causing a client to take action or to fail to take
action, for person benefit rather than for the benefit of the
client;
<PAGE>
(ii) accepting anything other than of de minimus value or any other
preferential treatment from any broker-dealer or other entity
with which AIM does business;
(iii) establishing or maintaining an account at a broker-dealer, bank
or other entity through which securities transactions may be
effected without written notice to the Chief Compliance Officer
prior to establishing such an account;
(iv) using knowledge of portfolio transactions of AIM clients for
their personal benefit or the personal benefit of their friends
or relatives;
(v) violating the anti-fraud provisions of the federal or state
securities laws;
(vi) serving on the boards of directors of publicly traded companies,
absent prior authorization based upon a determination that the
board service would be consistent with the interests of Aim and
its clients.
(g) Undue Influence. No Access Person shall cause or attempt to cause any
client's portfolio to purchase, sell or hold any security in a manner
calculated to create any personal benefit to the Access Person. No
Access Person shall recommend any securities transactions for client's
portfolio without having disclosed (through reports in accordance with
Section IV, preclearance in accordance with Section III (e), or
otherwise) the Access Person's interest, if any, in such securities or
the issuer thereof, including, without limitation, (i) the Access
Person's direct of 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.
(h) Corporate Opportunities. No Access Person shall take personal
advantage of any opportunity properly belonging to a client's account.
(i) Confidentiality. Except as required in the normal course of carrying
out an Access Person's business responsibilities, no Access Person
shall reveal information relating to the investment intentions or
activities of any client portfolio, or securities that are being
considered for purchase of sale on behalf of any client's portfolio.
IV. REPORTING REQUIREMENTS
(a) Access Person Reporting. All Access Persons must report all securities
transactions (except those described in Section III (d)) in any
security in which the Access Person has, or by reason of such
<PAGE>
transaction acquires, any direct or indirect beneficial ownership. No
Access 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. The filing of
duplicate confirms and statements on all securities transactions shall
be deemed to satisfy these reporting requirements.
(b) Report Contents. Every report shall be made by submitting a duplicate
confirmation and statement to the Chief Compliance Officer which shall
be submitted no later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates was
effected, and shall contain, at a minimum, the following information;
(i) the date of 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.
(c) 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.
(d) Insider Trading Policy and Related Procedures. The reports required
herein are in addition to any reports that may be required under AIM's
Insider Trading Policy and Related Procedures.
(e) Account Opening Procedures. Access Persons shall provide written
notice to the Chief Compliance Officer prior to opening any account
(or maintaining any account) with any broker-dealer or other entity
through which securities transaction may be effected. Access Persons
must also give written notice to their broker that they are employed
by or associated with AIM. In addition, all Access Persons will
promptly:
(i) provide full access to AIM its agents and attorneys to any and
all records and documents which AIM considers relevant to any
securities transactions or other matters subject to this Code;
<PAGE>
(ii) cooperate with AIM, or its agents and attorneys, in investigating
any securities transactions or other matter subject to this Code;
(iii)provide AIM, or its agents and attorneys with an explanation (in
writing if requested) of the facts and circumstances surrounding
any securities transaction or other matter subject to this Code;
and
(iv) promptly notify the Chief Compliance Officer or such other
individual as may direct, in writing, from time to time, or any
incident of noncompliance with this Code by any Access Person.
(f) AIM Officers. Aim Officers shall be treated as Access Persons, and are
subject to the provisions of this Section IV. The Chief Compliance
Officer shall review AIM Officer reports for compliance with the
applicable AIM Code of Ethics.
VI. PROCEDURAL MATTERS
(a) Role of the Compliance Officer. The Chief Compliance Officer or his
designee shall:
(i) inform each Access Person of the requirements of this Code;
(ii) maintain and cause to be maintained record of any violation of
any Code of Ethics adopted by AIM 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, and report to the General
Counsel the facts and circumstances of any material violation;
(iii)maintain a copy of each report made for a period of not less
than six years the first three years in an easily accessible
place;
(iv) maintain 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 AIM in an easily accessible place; and
(v) maintain a signed acknowledgement by each person who is then and
Access Person, in the form of Attachment A.
(b) Sanctions. Failure to comply with the provisions of this Code in any
material respect is a serious matter and can result in disciplinary
action. Upon discovering a violation of this Code, AIM may impose such
sanctions, as it deems appropriate, including, among other things, a
<PAGE>
letter of censure, disgorgement of profits, suspension or termination
of the employment of the violator.
(c) Review by the Board of Directors. Forum shall prepare an annual report
to AIM"s board of directors that, at a minimum,
(i) summarizes existing procedures concerning personal investing and
any changes in the procedures made during the past year;
(ii) identifies any violations requiring significant remedial action
during the past year; and
(iii)identifies any recommended changes in existing restrictions or
procedures based upon AIM's experience under the Code, evolving
industry practices, or developments in applicable laws or
regulations.
<PAGE>
AUSTIN INVESTMENT MANAGEMENT, INC.
Code of Ethics
ATTACHMENT A
ACKNOWLEDGEMENT
I have read and I understand the Austin Investment Management Code of Ethics, as
amended April 1, 1999, and will comply with it in all respects. In addition, I
certify that I have complied with the requirements of the Code of Ethics and I
have disclosed or reported all personal securities transactions required to be
disclosed or reported pursuant to the requirements of the Code.
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Signature Date
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Printed Name
THIS FORM MUST BE COMPLETED AND RETURNED TO PETER VLACHOS, COMPLIANCE OFFICER.
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Exhibit (p)(5)
FORUM INVESTMENT ADVISORS, LLC
FORUM FUND SERVICES, LLC
CODE OF ETHICS
AS AMENDED FEBRUARY 28, 1999 JANUARY 17, 2000
INTRODUCTION
This Code of Ethics (the "Code") has been adopted by Forum Fund
Services, LLC ("FFS") and Forum Investment Advisors, LLC ("FIA" and collectively
with FFS, "Forum"). This Code pertains to Forum's investment advisory and
distribution services to registered management investment companies or series
thereof (each a "Fund"). In addition, this Code applies to employees of Forum's
commonly controlled companies who serve as officers of a Fund. This Code
establishes 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 addresses
other types of conflict of interest situations. Definitions of underlined terms
are included in Appendix A.
1. POLICY STATEMENT
Forum forbids any Access Person, Investment Personnel or Fund Officer
from engaging in any conduct which is contrary to this Code. In addition, due to
their positions, Forum also forbids any Access Person or Investment Personnel
from engaging in any conduct which is contrary to Forum's Insider Trading Policy
and Related Procedures. In addition, many persons subject to the Code are also
subject to the other restrictions or requirements which affect their ability to
open securities accounts, effect securities transactions, report securities
transactions, maintain information and documents in a confidential manner and
other matters relating to the proper discharge of your obligations to Forum.
These include contractual arrangements with Forum, policies adopted by Forum
concerning confidential information and documents and FFS' Compliance and
Supervisory Procedures Manual.
Forum has always held itself and its employees to the highest ethical
standards. While this Code is only one manifestation of those standards,
compliance with its provisions is essential. Failure to comply with this Code is
a very serious matter and may result in disciplinary action being taken. Such
action can include among other things, monetary fines, disgorgement of profits,
suspension or even termination of employment.
2. WHO IS COVERED BY THIS CODE
(a) All Access Persons and Investment Personnel, in each case only
with respect to those Funds as listed on Appendix B.
(b) Fund Officers, but only with respect to those Funds for which
they serve as Fund Officers as listed in Appendix B.
3. PROHIBITED TRANSACTIONS
(A) PROHIBITION AGAINST FRAUDULENT CONDUCT. It is unlawful for Access
Persons, Investment Personnel and Fund Officers to use any information
concerning a security held or to be acquired by a Fund, or their ability to
influence any investment decisions, for personal gain or in a manner detrimental
to the interests of a Fund. In addition, they shall not, directly or indirectly:
(i) employ any device, scheme or artifice to defraud a Fund or engage
in any manipulative practice with respect to a Fund;
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(ii) make to a Fund, any untrue statement of a material fact or omit
to state to a Fund a material fact necessary in order to make the
statements made, in light of the circumstances under which they
are made, not misleading; or
(iii)engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon a Fund.
(B) BLACKOUT PERIOD. Access Persons and Investment Personnel No Access
Person may execute securities transactions on a day during which any Fund in the
Access Person's complex has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn. Trading by Access Persons
shall be exempt from this same day "blackout period" if the Access Person's
trade is "bunched" with the Fund's trade as contemplated by FIA's bunching
procedures.
shall not purchase or sell a Covered Security in an account over which they have
direct or indirect influence or control on a day during which they know or
should have known a Fund has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn.
(C) ADDITIONAL INVESTMENT PERSONNEL BLACKOUT PERIOD. No Investment
Personnel shall purchase or sell a Covered Security within five calendar days
before or two calendar days after a Fund for which the Investment Personnel
makes or participates in making a recommendation trades in that security. Any
profits realized on trades within this proscribed period shall be disgorged.
This blackout period does not apply to money market mutual funds which are
advised by FIA.
(D) FUND OFFICER PROHIBITION. No Fund Officer shall directly or
indirectly seek to obtain information (other than that necessary to accomplish
the functions of the office) from any Fund portfolio manager regarding (i) the
status of any pending securities transaction for a Fund or (ii) the merits of
any securities transaction contemplated by the Fund Officer.
(E) BLACKOUT PERIOD EXCLUSIONS AND DEFINITIONS. The following
transactions shall not be prohibited by this Code and are not subject to the
limitations of Sections 3(b) and (c):
(i) purchases or sales over which you have no direct or indirect
influence or control (for this purpose, you are deemed to have
direct or indirect influence or control over the accounts of a
spouse, minor children and relatives residing in your home);
(ii) purchases which are part of an automatic dividend reinvestment
plan;
(iii) purchases or sales which are non-volitional on your part; and
(iv) 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.
Your trading shall be exempt from the limitations of Sections 3(b) and
(c) provided that (i) the market capitalization of a particular security exceeds
$1 billion and (ii) pending orders of FIA do not exceed two percent of the daily
average trading volume of the security for the prior 15 days.
For purposes of Sections 3(b) and (c), and subject to Section 3(g)
below, the (i) common stock and any fixed income security of an issuer shall not
be deemed to be the same security and (ii) non-convertible preferred stock of an
issuer shall be deemed to be the same security as the fixed income securities of
that issuer; and (iii) convertible preferred stock shall be deemed to be the
same security as both the common stock and fixed income securities of that
issuer.
(F) REQUIREMENT FOR PRECLEARANCE. Investment Personnel must obtain
prior written approval from the designated Review Officer before:
(i) directly or indirectly acquiring securities in purchasingan
initial public offering for which no public market in the same
or similar securities of the issue has previously existed; and
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(ii) directly or indirectly acquiring securities in a private
placement. In determining whether to preclear the transaction,
the Review Officer designated under Section 5 shall consider,
among other factors, whether the investment opportunity should
be reserved for a Fund, and whether such opportunity is being
offered to the Investment Personnel by virtue of their
position with the Fund.
Any Investment Personnel of a Fund who has taken a personal position
through a private placement will be under an affirmative obligation to disclose
that position in writing to the Review Officer if they play a material role in
the Fund's subsequent investment decision regarding the same issuer; this
separate disclosure must be made even though the Investment Personnel has
previously disclosed the ownership of the privately placed security in
compliance with the preclearance requirements of this section. Once disclosure
is given, an independent review of the Fund's investment decision will be made.
(G) OTHER PROHIBITED TRANSACTIONS. Access Persons, Investment
Personnel and Fund Officers shall not:
(i) induce or cause a Fund to take action or to fail to take
action, for personal benefit rather than for the benefit of
the Fund;
(ii) accept anything other than of DE MINIMIS value or any other
preferential treatment from any broker-dealer or other entity
with which a Fund does business;
(iii) establish or maintain an account at a broker-dealer, bank or
other entity through which securities transactions may be
effected without written notice to the designated Review
Officer prior to establishing such an account;
(iv) use knowledge of portfolio transactions of a Fund for your
personal benefit or the personal benefit of others;
(v) violate the anti-fraud provisions of the federal or state
securities laws;
(vi) serve on the boards of directors of publicly traded companies,
absent prior authorization based upon a determination by the
Review Officer that the board service would be consistent with
the interests of the Fund and its shareholders.
(G) UNDUE INFLUENCE. Access Persons, Investment Personnel and Fund
Officers shall not cause or attempt to cause any Fund to purchase, sell or hold
any security in a manner calculated to create any personal benefit to you. You
shall not recommend any securities transactions for a Fund without having
disclosed (through reports in accordance with Section 4, preclearance in
accordance with Section 3(f), or otherwise) your interest, if any, in such
securities or the issuer thereof, including, without limitation, (i) your
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 you (or any party in which you have a significant interest)
and such issuer or its affiliates.
(I) CORPORATE OPPORTUNITIES. Access Persons, Investment Personnel
and Fund Officers shall not take personal advantage of any opportunity properly
belonging to a Fund.
(J) CONFIDENTIALITY. Except as required in the normal course of
carrying out their business responsibilities, Access Persons, Investment
Personnel and Fund Officers shall not reveal 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.
4. REPORTING REQUIREMENTS
(A) REPORTING. Access Persons, Investment Personnel and Fund Officers
must report the information described in this Section with respect to
transactions in any Covered Security in which they have, or by reason of such
transaction acquire, any direct or indirect beneficial ownership. They must
report to the designated Review Officer unless they are otherwise required by a
Fund, pursuant to a Code of Ethics adopted by the Fund, to report to the Fund or
another person.
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(B) EXCLUSIONS FROM REPORTING. Purchases or sales in Covered Securities
in an account in which you have no direct or indirect influence or control are
not subject to the reporting requirements of this Section.
(C) INITIAL HOLDING REPORTS. No later than ten (10) days after you
become subject to this Code as set forth in Section 2, you must report the
following information:
(i) the title, number of shares and principal amount of each
Covered Security (whether or not publicly traded) in which you
have any direct or indirect beneficial ownership as of the
date you became subject to this Code;
(ii) the name of any broker, dealer or bank with whom you
maintained an account in which any securities were held for
your direct or indirect benefit as of the date you became
subject to this Code; and
(iii) the date that the report is submitted.
(D) QUARTERLY TRANSACTION REPORTS. No later than ten (10) days after
the end of a calendar quarter, you must report the following information:
(i) with respect to any transaction during the quarter in a Covered
Security (whether or not publicly traded) in which you have, or
by reason of such transaction acquired, any direct or indirect
beneficial ownership:
(1) the date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and
the principal amount of each Covered Security involved;
(2) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(3) the price of the Covered Security at which the transaction
was effected;
(4) the name of the broker, dealer or bank with or through which
the transaction was effected; and
(5) the date that the report is submitted.
(ii) with respect to any account established by you in which any
Covered Securities (whether or not publicly traded) were held
during the quarter for your direct or indirect benefit:
(1) the name of the broker, dealer or bank with whom you
established the account;
(2) the date the account was established; and
(3) the date that the report is submitted.
(E) ANNUAL HOLDINGS REPORTS. Annually, you must report the following
information (which information must be current as of a date no more than thirty
(30) days before the report is submitted):
(i) the title, number of shares and principal amount of each Covered
Security (whether or not publicly traded) in which you had any
direct or indirect beneficial ownership;
(ii) the name of any broker, dealer or bank with whom you maintain an
account in which any securities are held for your direct or
indirect benefit; and
(iii) the date that the report is submitted.
(F) CERTIFICATION OF COMPLIANCE. You are required to certify annually
(in the form of Attachment A) that you have read and understood the Code and
recognize that you are subject to the Code. Further, you are required to certify
annually that you have complied with all the requirements of the Code and you
have disclosed or reported all personal securities transactions pursuant to the
requirements of the Code.
(G) ALTERNATIVE REPORTING. The submission to the Review Officer of
duplicate broker trade confirmations and statements on all securities
transactions shall satisfy the reporting requirements of Section 4. The annual
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holdings report may be satisfied by confirming annually, in writing, the
accuracy of the records maintained by the Review Officer and recording the date
of the confirmation.
(H) 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 Covered
Securities to which the report relates.
(I) ACCOUNT OPENING PROCEDURES. You shall provide written notice to the
Review Officer prior to opening any account with any entity through which a
Covered Securities transaction may be effected. In addition, you will promptly:
(i) provide full access to a Fund, its agents and attorneys to any
and all records and documents which a Fund considers relevant
to any securities transactions or other matters subject to the
Code;
(ii) cooperate with a Fund, or its agents and attorneys, in
investigating any securities transactions or other matter
subject to the Code;
(iii) provide a Fund, its agents and attorneys with an explanation
(in writing if requested) of the facts and circumstances
surrounding any securities transaction or other matter subject
to the Code; and
(iv) promptly notify the Review Officer or such other individual as
a Fund may direct, in writing, from time to time, of any
incident of noncompliance with the Code by anyone subject to
this Code.
5. REVIEW OFFICER
(A) DUTIES OF REVIEW OFFICER. The Chief Compliance Officer of Forum has
been appointed by the Director of FIA and FFS as the Review Officer to:
(i) review all securities transaction and holdings reports and shall
maintain the names of persons responsible for reviewing these
reports;
(ii) identify all persons subject to this Code who are required to
make these reports and promptly inform each person of the
requirements of this Code;
(iii)compare, on a quarterly basis, all Covered Securities
transactions with each Fund's completed portfolio transactions to
determine whether a Code violation may have occurred;
(iv) maintain a signed acknowledgment by each person who is then
subject to this Code, in the form of Attachment A; and
(v) identify persons who are Investment Personnel of the Fund and
inform those persons of their requirements to obtain prior
written approval from the Review Officer prior to directly or
indirectly acquiring ownership of a security in any private
placement or initial public offering. (vi) exempt any Fund
Officer from provisions of this Code if the person is subject to
similar requirements of a Fund's Code of Ethics.
(B) POTENTIAL TRADE CONFLICT. When there appears to be a transaction
that conflicts with the Code, the Review Officer shall request a written
explanation of the person's transaction. If after post-trade review, it is
determined that there has been a violation of the Code, a report will be made by
the designated Review Officer with a recommendation of appropriate action to the
Director of FIA and FFS and a Fund's Board of Trustees.
(C) REQUIRED RECORDS. The Review Officer shall maintain and cause to be
maintained:
(i) a copy of any code of ethics adopted by Forum which has been
in effect during the previous five (5) years in an easily
accessible place;
(ii) a record of any violation of any code of ethics, and of any
action taken as a result of such violation, in an easily
accessible place for at least five (5) years after the end of
the fiscal year in which the violation occurs;
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(iii) a copy of each report made by anyone subject to this Code as
required by Section 4 for at least five (5) years after the
end of the fiscal year in which the report is made, the first
two (2) years in an easily accessible place;
(iv) a list of all persons who are, or within the past five years
have been, required to make reports or who were responsible
for reviewing these reports pursuant to any code of ethics
adopted by Forum, in an easily accessible place;
(v) a copy of each written report and certification required
pursuant to Section 5(e) of this Code for at least five (5)
years after the end of the fiscal year in which it is made,
the first two (2) years in an easily accessible place; and
(vi) a record of any decision, and the reasons supporting the
decision, approving the acquisition by Investment Personnel of
securities under Section 3(f) of this Code, for at least five
(5) years after the end of the fiscal year in which the
approval is granted.
(D) POST-TRADE REVIEW PROCESS. Following receipt of trade confirms and
statements, transactions will be screened for the following:
(i) SAME DAY TRADES: transactions by Access Persons and Investment
Personnel occurring on the same day as the purchase or sale of
the same security by a Fund for which they are an Access
Person or Investment Personnel.
(ii) PORTFOLIO MANAGER TRADES: transactions by Investment Personnel
within five calendar days before and two calendar days after a
Fund, for which the Investment Personnel makes or participates
in making a recommendation, trades in that security.
(iii) FRAUDULENT CONDUCT: transaction by Access Persons, Investment
Personnel and Fund Officers which, within the most recent 15,
is or has been held by a Fund or is being or has been
considered by a Fund or FIA for purchase by a Fund.
(iv) OTHER ACTIVITIES: transactions which may give the appearance
that an Access Person, Investment Personnel or Fund Officer
has executed transactions not in accordance with this Code.
(E) SUBMISSION TO FUND BOARD. The Review Officer shall annually prepare
a written report to the Board of Trustees of a Fund listed in Appendix B that
(i) describes any issues under this Code or its procedures since
the last report to the Trustees, including, but not limited
to, information about material violations of the code or
procedures and sanctions imposed in response to the material
violations; and
(ii) certifies that the Fund has adopted procedures reasonably
necessary to prevent Access Persons, Investment Personnel and
Fund Officers from violating this code.
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Exhibit (p)(6)
POLARIS CAPITAL MANAGEMENT, INC.
CODE OF ETHICS
I. INTRODUCTION
The policies in this Code of Ethics reflect Polaris Capital Management's, Inc.'s
("Polaris'") assumption and expectation of unqualified loyalty to the interests
of Polaris and its clients on the part of each access person. In the course of
their service to Polaris, access persons must be under no influence which may
cause them to serve their own or someone else's interests rather than those of
Polaris or its clients.
Polaris' policies reflect its desire to detect and prevent not only situations
involving actual or potential conflict of interests, but also those situations
involving only an appearance of conflict or of unethical conduct. Polaris'
business is one dependent upon public confidence. The mere appearance of
possibility of doubtful loyalty is as important to avoid as actual disloyalty
itself. The appearance of impropriety could besmirch Polaris' name and damage
its reputation to the detriment of all those with whom we do business.
II. STATEMENT OF GENERAL PRINCIPLES
It is the policy of Polaris that no access person shall engage in any act,
practice or course of conduct that would violate the provisions of the
Investment Advisors Act or, with respect to those clients that are Investment
Companies, Section 17(j) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and Rule 17j-1 thereunder. The fundamental position of Polaris is,
and has been, that each access person shall place at all times the interests of
Polaris' clients first. Accordingly, private financial transactions by access
persons of Polaris must be conducted consistent with this Code of Ethics and in
such a manner as to avoid any actual or potential conflict of interest or any
abuse of an access person's position of trust and responsibility. Further,
access persons should not take inappropriate advantage of their positions with
or on behalf of any client of Polaris.
Without limiting in any manner the fiduciary duty owed by access persons to the
clients of Polaris or the provisions of this Code of Ethics, it should be noted
that Polaris considers it proper that purchases and sales be made by its access
persons in the marketplace of securities owned by the clients of Polaris;
provided, however, that such securities transactions comply with the spirit of,
and the specific restrictions and limitations set forth in, this Code of Ethics.
Such personal securities transactions should also be made in amounts consistent
with the normal investment practice of the person involved and, with respect to
investment personnel, with an investment, rather than a trading, outlook. Not
only does this policy encourage investment freedom and result in investment
experience, but it also fosters a continuing personal interest in such
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investments by those responsible for the continuous supervision of the clients'
portfolios. It is also evidence of confidence in the investments made.
In making personal investment decisions with respect to any security, however,
extreme care must be exercised by access persons to insure that the prohibitions
of this Code of Ethics are not violated. Further, personal investing by an
access person should be conducted in such a manner so as to eliminate the
possibility that the access person's time and attention is being devoted to his
or her personal investments at the expense of time and attention that should be
devoted to management of a client's portfolio.
It bears emphasis that technical compliance with procedures, prohibitions and
limitations of this Code of Ethics will not automatically insulate from scrutiny
personal securities transactions which show a pattern of abuse by an access
person of his or her fiduciary duty to any client of Polaris.
III. LEGAL REQUIREMENTS
Section 17(j) of the 1940 Act, provides, among other things, that it is unlawful
for any affiliated person of Polaris to engage in any act, practice or course of
business in connection with the purchase or sale, directly or indirectly, by
such affiliated person of any security held or to be acquired by a client, which
is an investment company, in contravention of such rules and regulations as the
Securities and Exchange Commission (the "Commission") may adopt to define and
prescribe means reasonably necessary to prevent such acts, practices or courses
of business as are fraudulent, deceptive or manipulative. Pursuant to Section
17(j), the Commission has adopted Rule 17j-1 which states that it is unlawful
for any affiliated person of Polaris in connection with the purchase or sale of
a security held or to be acquired (as defined in the Rule) by a client:
(i) to employ any device, scheme or artifice to defraud a client, which
is an investment company;
(ii) to make to a client, which is an investment company, any untrue
statement of a material fact or omit to state to a client a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(iii) to engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon a client, which is
an investment company; or
(iv) to engage in any manipulative practice with respect to a client,
which is an investment company.
IV. DEFINITIONS
For purposes of this Code of Ethics, the following definitions shall apply:
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1. The term "access person" shall mean any director, officer or advisory person
(as defined below) of Polaris.
2. The term "Polaris" shall mean Polaris Capital Management, Inc.
3. The term "advisory person" shall mean (i) every employee of Polaris (or of
any company in a control relationship to Polaris) who, in connection with his or
her regular functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security (as defined below) by a client, or
whose functions relate to the making of any recommendations with respect to such
purchases or sales and (ii) every natural person in a control relationship to
Polaris who obtains information concerning recommendations made to a client with
regard to the purchase or sale of a security.
4. The term "beneficial ownership" shall mean a direct or indirect "pecuniary
interest" (as defined in subparagraph (a) (2) of Rule 16a-1 under the Securities
Exchange Act of 1934, as amended) that is held or shared by a person directly or
indirectly (through any contract, arrangement, understanding, relationship or
otherwise) in a security. While the definition of "pecuniary interest" in
subparagraph (a) (2) of Rule 16a-1 is complex, the term generally means the
opportunity directly or indirectly to provide or share in any profit derived
from a transaction in a security. An indirect pecuniary interest in securities
by a person would be deemed to exist as a result of: (i) ownership of securities
by any of such person's immediate family members sharing the same household
(including child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother- or father-in-law, sister- or brother-in-law, and son-
or daughter-in-law; (ii) the person's partnership interest in the portfolio
securities held by a general or limited partnership; (iii) the existence of a
performance-related fee (not simply an asset-based fee) received by such person
as broker, dealer, investment adviser or manager to a securities account; (iv)
the person's right to receive dividends from a security provided such right is
separate or separable from the underlying securities; (v) the person's interest
in securities held by a trust under certain circumstances; and (vi) the person's
right to acquire securities through the exercise or conversion of a "derivative
security" (which term excludes (a) a broad-based index option or future, (b) a
right with an exercise or conversion privilege at a price that is not fixed, and
(c) a security giving rise to the right to receive such other security only PRO
RATA and by virtue of a merger, consolidation or exchange offer involving the
issuer of the first security).
5. The term "control" shall mean the power to exercise a controlling influence
over the management or policies of Polaris, unless such power is solely the
result of an official position with Polaris, all as determined in accordance
with Section 2 (a) (9) of the 1940 Act.
6. The term "client" shall mean an entity (natural person, corporation,
investment company or other legal structure having the power to enter into legal
contracts), which has entered into a contract with Polaris to receive investment
management services.
7. The term "investment company" shall mean a management investment company
registered as such under the 1940 Act and for which Polaris is the investment
adviser or sub-adviser regardless of whether the investment company has entered
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into a contract for investment management services with Polaris.
8. The term "investment personnel" shall mean all portfolio managers of Polaris
and other advisory persons who assist the portfolio managers in making
investment decisions for a client, including, but not limited to, analysts and
traders of Polaris.
9. The term "material non-public information" with respect to an issuer shall
mean information, not yet released to the public, that would have a substantial
likelihood of affecting a reasonable investor's decision to buy or sell any
securities of such issuer.
10. The term "purchase" shall include the writing of an option to purchase.
11. The term "performance accounts" shall mean all clients of for which Polaris
receives a performance-related fee and in which Polaris is deemed to have an
indirect pecuniary interest because of the application of Rule
16a-1(a)(2)(ii)(C) under the Securities and Exchange Act of 1934, as amended, as
required by Rule 17j-1 under the 1940 Act.
12. The term "Review Officer" shall mean the officer or employee of Boston
Investor Services Inc. designated from time to time by Polaris to receive and
review reports of purchases and sales by access persons. The term "Alternate
Review Officer" shall mean the officer of Boston Investor Services Inc.
designated from time to time by Polaris to receive and review reports of
purchases and sales by the Review Officer, and who shall act in all respects in
the manner prescribed herein for the Review Officer.
13. The term "sale" shall include the writing of an option to sell.
14. The term "security" shall have the meaning set forth in Section 2 (a) (36)
of the 1940 Act, except that it shall not include shares of registered open-end
investment companies, securities issued by the United States government,
short-term securities which are "government securities" within the meaning of
Section 2 (a) (16) of the 1940 Act, bankers' acceptances, bank certificates of
deposit, commercial paper and such other money market instruments as may
designated from time to time by Polaris.
15. A security is "being considered for purchase or sale" when a recommendation
to purchase or sell a security has been made and communicated and, with respect
to the person making the recommendation, when such person seriously considers
making such a recommendation.
16. The term "significant remedial action" shall mean any action that has a
material financial effect upon an access person, such as firing, suspending or
demoting the access person, imposing a substantial fine or requiring the
disgorging of profits.
V. SUBSTANTIVE RESTRICTIONS ON PERSONAL TRADING ACTIVITIES
A. Prohibited Activities
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While the scope of actions which may violate the Statement of General Principles
set forth above cannot be defined exactly, such actions would always include at
least the following prohibited activities.
1. No ACCESS PERSON shall, directly or indirectly, purchase or sell securities
in such a way that the access person knew, or reasonably should have known, that
such securities transactions compete in the market with actual or considered
securities transactions for any client of Polaris, or otherwise personally act
to injure any client's securities transactions;
2. No ACCESS PERSON shall use the knowledge of securities purchased or sold by
any client of Polaris or securities being considered for purchase or sale by any
client of Polaris to profit personally, directly or indirectly, by the market
effect of such transactions;
3. No ACCESS PERSON shall, directly or indirectly, communicate to any person who
is not an access person any material non-public information relating to any
client of Polaris or any issuer of any security owned by any client of Polaris,
including, without limitation, the purchase or sale or considered purchase or
sale of a security on behalf or any client of Polaris, except to the extent
necessary to effectuate securities transactions on behalf of the client of
Polaris;
4. No ACCESS PERSON shall, directly or indirectly, execute a personal securities
transaction on a day during which a client of Polaris has a pending "buy" or
"sell" order in that same or equivalent security until that order is executed or
withdrawn;
5. No ACCESS PERSON shall accept any gift or other thing of more than DE MINIMIS
value from any person or entity that does business with or on behalf of client;
6. No ACCESS PERSONS shall serve on the board of directors of any publicly
traded company, absent prior written authorization and determination by the
President of Polaris that the board service would be consistent with the
interests of clients. Where board service is authorized, access persons serving
as directors normally should be isolated from those persons making investment
decisions through "Chinese Wall" or other procedures. All ACCESS PERSONS are
prohibited from accepting any service, employment, engagement, connection,
association or affiliation in or with any enterprise, business of otherwise
which is likely to materially interfere with the effective discharge of
responsibilities to Polaris and its clients;
7. INVESTMENT PERSONNEL shall avoid profiting by securities transactions of a
trading nature, which transactions are defined as a purchase and sale, or sale
and purchase, of the same (or equivalent) securities within sixty (60) calendar
days;
8. INVESTMENT PERSONNEL shall not, directly or indirectly, purchase any security
sold in an initial public offering of an issuer;
<PAGE>
9. INVESTMENT PERSONNEL shall not, directly or indirectly, purchase any security
issued pursuant to a private placement without obtaining prior written approval
from the Review Officer. Investment personnel who have been authorized to
acquire securities in a private placement must disclose such investment when
they are involved in a client's subsequent consideration of an investment in the
issuer. In such circumstances, the client's decision to purchase securities of
the issuer must be independently reviewed by investment personnel with no
personal interest in the issuer;
10. INVESTMENT PERSONNEL shall not recommend any securities transaction on
behalf of a client without having previously disclosed any beneficial ownership
interest in such securities or the issuer thereof to the Review Officer
including without limitation:
a. his or her beneficial ownership of any securities of such issuer;
b. any contemplated transaction by such person in such securities;
c. any position with such issuer or its affiliates; and
d. any present or proposed business relationship between such issuer
or its affiliates and such person or any party in which such person
has a significant interest.
Such interested investment personnel may not participate in the decision for the
client to purchase and sell securities of such issuer.
11. No portfolio manager shall, directly or indirectly, purchase or sell any
security or equivalent security in which he or she has, or by reason of such
purchase acquires, any beneficial ownership within a period of seven (7)
calendar days before and after a client has purchased or sold such security.
B. Exempt Transactions and Conduct
This Code of Ethics shall not be deemed to be violated by any of the following
transactions:
1. Purchases or sales for an account over which the access person has no direct
or indirect influence or control;
2. Purchases or sales which are non-volitional on the part of the access person;
3. Purchases which are part of an automatic dividend reinvestment plan;
4. Purchases made by exercising rights distributed by an issuer pro rata to all
holders of a class of its securities, to the extent such rights were acquired by
the access person from the issuer, and sales of such rights so acquired;
<PAGE>
5. Tenders of securities pursuant to tender offers which are expressly
conditioned on the tender offer's acquisition of all of the securities of the
same class;
6. Purchases or sales for which the access person has received prior written
approval from the Review Officer. Prior approval shall be granted only if a
purchase or sale of securities is consistent with the purposes of this Code of
Ethics and Section 17(j) of the 1940 Act and rules thereunder; and
7. Purchases or sales made in good faith on behalf of a client, it being
understood by, and disclosed to, each client that Polaris may make
contemporaneous investment decisions and cause to be effected contemporaneous
executions on behalf of one or more of the clients and that such executions may
increase or decrease the price at which securities are purchased or sold for the
clients.
VI. COMPLIANCE PROCEDURES
A. Preclearance for Personal Securities Investments
Every access person shall be required to submit on Form III their intent to
trade for their own account to the Review Officer. The Review Officer will be
obligated to determine whether any prohibitions or restrictions apply to the
relevant securities and respond to the access persons submitting such intent to
trade forms in writing. If the Review Officer does not respond in writing within
two business days following the date of submission, the trade may be considered
"precleared" and the access person may execute such "precleared" trade anytime
within two business days following the lapse of the Review Officer's two day
period. If four business days have elapsed, not including the day the form was
submitted, and the access person's trade has not been executed, "preclearance"
will lapse and the access person may not trade without violating this
preclearance provision. The access person will be required to submit another
Form III and have the intended trade "precleared" again.
B. Records of Securities Transactions
1. Upon the written request of the Review Officer, access persons are required
to direct their brokers to supply to Polaris on a timely basis duplicate copies
of confirmations of all securities transactions and copies of periodic
statements for all securities accounts in which the access person has a
beneficial ownership interest.
2. The Review Officer shall review on a quarterly basis all transactions in
securities on behalf of the Performance Accounts that were conducted
simultaneously with transactions in the same securities on behalf of other
clients. If the Review Officer determines that a violation of this Code of
Ethics has or may have occurred, he shall submit a written determination,
together with the related report to Polaris' counsel.
<PAGE>
C. Personal Reporting Requirements
1. Each ACCESS PERSON shall submit to the Review Officer a report in the form
annexed hereto as Form I or in similar form (such as a computer printout), which
report shall set forth at least the information described in subparagraph 2 of
this Section VI. C as to all securities transactions during each quarterly
period, in which such access person has, or by reason of such transactions
acquires of disposes of, any beneficial ownership of a security.
2. Every report on Form I shall be made not later than ten (10) days after the
end of each calendar quarter in which the transaction(s) to which the report
relates was effected and shall contain the following information:
(1) the date of each transaction, the title, class and number of
shares, and the principal amount of each security involved;
(2) the nature of each transaction (i.e., purchases, sale or other
type of acquisition or disposition);
(3) the price at which each transaction was effected; and
(4) the name of the broker, dealer or bank with or through whom each
transaction was effected;
PROVIDED, HOWEVER, if no transactions in any securities required to be reported
were effected during a quarterly period by an access person such access person
shall submit to the Review Officer a report on Form I within the time-frame
specified above stating that no reportable securities transaction were effected.
3. Every report concerning a securities transaction prohibited under the
Statement of General Principles or Prohibited Activities set forth in Sections
II or V.A., respectively, with respect to which the reporting person relies upon
the exceptions provided in Section V.B shall contain a brief STATEMENT OF THE
EXEMPTION RELIED UPON AND THE CIRCUMSTANCES OF THE TRANSACTIONS.
4. At the end of each calendar quarter, the Review Officer shall prepare a
summary of all transactions by access persons in securities which were
purchased, sold, held or considered for purchase or sale by each client during
the prior quarter.
5. Both the Review Officer and the Alternate Review Officer shall compare all
reported personal securities transaction with completed and contemplated
portfolio transactions of the client to determine whether a violation of this
Code of Ethics may have occurred. Before making any determination that a
violation has been committed by any person, the Review Officer shall give such
person an opportunity to supply additional explanatory material.
6. If the Review Officer determines that a violation of this Code of Ethics has
or may have occurred, he shall submit a written determination, together with the
related report by the access person and any additional explanatory material
<PAGE>
provided by the access person to Polaris' counsel. If the President of Polaris,
after consultation with counsel, determines a violation has occurred, he shall
immediately inform the client affected and report the sanctions.
D. Disclosure of Personal Holdings
All investment personnel shall submit to Polaris initially upon becoming such a
person and annually thereafter a report disclosing all securities in which such
person has a beneficial ownership interest.
E. Annual Certification of Compliance
All ACCESS PERSONS shall certify annually on the form annexed hereto as Form IV
that they (i) have read and understand this Code of Ethics and recognize that
they are subject hereto, (ii) have complied with the requirements of this Code
of Ethics and (iii) have disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the requirements
of this Code of Ethics.
F. Joint Participation
ACCESS PERSONS should be aware that a specific provision of the 1940 Act
prohibits such persons, in the absence of an order of the Commission, from
effecting a transaction in which an Investment Company is a "joint or a joint
and several participant" with such person. Any transaction which suggests the
possibility of a question in this area should be presented to legal counsel for
review.
G. Sub-contractors and Polaris Capital Management, Inc.
Polaris may contract with other investment advisers to provide research and
administrative services. Each such sub-contractor is subject to its own Code of
Ethics, a copy of which has been made available to Polaris. Each sub-contractor
is required to submit quarterly to Polaris a report that there have been no
violations of the sub-contractor's Code of Ethics during the most recent
calendar quarter. If there have been violations of the sub-contractor's Code of
Ethics, the sub-contractor must submit a detailed report of such violations and
what remedial action, if any, was taken. If the sub-contractor's violation
involved a client of Polaris, such violation will be analyzed by the Review
Officer in Section VI C6 (above); provided, however, that if the sub-contractor
is Boston Investor Services, Inc., the analysis of the violation will be done by
the President of EGA.
VII. SANCTIONS
Any violation of this Code of Ethics shall result in the imposition of such
sanctions as Polaris may deem appropriate under the circumstances, which may
include, but is not limited to, removal, suspension of demotion from office,
imposition of a fine, a letter of censure and/or restitution to the affected
<PAGE>
client of an amount equal to the advantage the offending person shall have
gained by reason of such violation.
The sanction of disgorgement of any profits realized may be imposed for any of
the following violations:
a. Violation of the prohibition against investment personnel profiting
from securities transactions of a trading nature;
b. Violation of the prohibition against access persons, directly or
indirectly, executing a personal securities transaction on a day
during which a client in his or her complex has a pending "buy" or
"sell" order; and,
c. Violation of the prohibition against portfolio managers, directly
or indirectly, purchasing or selling any security in which he or she
has, or by reason of such purchase acquired, any beneficial ownership
within a period of seven (7) calendar days before and after a client
has purchased or sold such security.
VIII. RECORDKEEPING REQUIREMENTS
Polaris shall maintain and preserve in an easily accessible place:
a. A copy of the Code of Ethics (and any prior code of ethics that was
in effect at any time during the past five years) for a period of five
years;
b. A record of any violation of this Code of Ethics and of any action
taken as a result of such violation for a period of five years
following the end of the fiscal year in which the violation occurs;
c. A copy of each report (or computer printout) submitted under this
Code of Ethics for a period of five years, only those reports
submitted during the previous two years must be maintained and
preserved in an easily accessible place; and
d. A list of all persons who are, or within the past five years were,
required to make reports pursuant to this Code of Ethics.
IX. MISCELLANEOUS
A. Confidentiality
All information obtained from any access person hereunder shall be kept in
strict confidence by Polaris, except that reports of securities transaction
hereunder will be made available to the Commission or any other regulatory or
self-regulatory organization to the extent required by law or regulation.
<PAGE>
B. Notice to Access Persons
Polaris shall identify all persons who are considered to be "access persons,"
"investment personnel" and "portfolio managers," inform such persons of their
respective duties and provide such persons with copies of this Code of Ethics.
Effective: July 1, 1997
<PAGE>
Exhibit (p)(7)
PEOPLES HERITAGE BANK/BANK OF NEW HAMPSHIRE/FAMILY BANK
TRUST/INVESTMENT
POLICIES AND PROCEDURES
GENERAL AREA: ETHICAL STANDARDS
TOPIC: CONFLICTS OF INTEREST
POLICY NUMBER: 5.2A
EFFECTIVE DATE: 6/15/99
POLICY
Officers, directors, and employees of the Trust Department will be free from any
conflict of interest with the grantors, beneficiaries of trust accounts, or
principals of agency and custody accounts. Notwithstanding the previous
sentence, a director of the Bank who is the attorney for a grantor, beneficiary,
or principal is not prohibited from recommending the Bank as fiduciary or
custodian, so long as such recommendation is accompanied by full disclosure to
the client of the nature of the attorney's relationship with the Bank.
PROCEDURES
1. Officers, directors, and employees will not:
Have any interest, activity, or association that would influence the
independent exercise of judgment in the best interests of the grantors,
beneficiaries, or principals of trust, agency or custody accounts.
Personally profit from business information or opportunities obtained as a
result of a position with the Trust Department.
Sell assets to or purchase assets from trust accounts directly or through a
firm in which the officer, director, or employee has a direct or indirect
interest, unless specifically authorized by the governing instrument, local
law, or court order.
Receive loans from trust accounts.
<PAGE>
2. No officer or employee of the Trust Department may:
Receive anything of value in connection with any business transaction
involving trust activities; excluding insignificant entertainment or
small gifts which do not breach fiduciary duty; and that meet the
Bank's Code of Conduct - Conflict of Interest Policy guidelines.
Receive loans from fiduciary clients.
Serve as a co-fiduciary without the consent of the Trust Committee.
Use a margin account without the written consent of the Trust
Committee. (Rule 407 of the New York Stock Exchange prohibits a member
firm of the Exchange from making a margin transaction or carrying a
margin account in which a bank employee is interested, directly or
indirectly, unless written consent of the employer has been obtained).
Engage in any activity in competition with the Bank or in conflict with
his or her fiduciary responsibilities.
3. Trust personnel who make recommendations or decisions for accounts,
participate in the determination of such recommendations or decisions, or
know which securities are being purchased, sold, or recommended for action
are in a position to benefit from such knowledge. They will not use the
information for their own benefit or for the benefit of close relatives.
4. Trust personnel who have investment transactions in excess of $10,000 per
quarter will report them to the Senior Trust Officer for review. Excluded
from this requirement are transactions for the benefit of the officer or
employee over which he or she has no direct or indirect influence or
control, or transactions in mutual fund shares or U.S. Government or
federal agency obligations. (See Policy #5.2C)
5. Directors of the Bank who are attorneys for a grantor, beneficiary, or
principal shall furnish the Bank with a written signed consent of the
client disclosing the attorney's relationship with the Bank. The consent
will also direct the Bank to use the attorney for estate or trust
administration services unless there is a compelling reason not to do so.
<PAGE>
PEOPLES HERITAGE BANK/BANK OF NEW HAMPSHIRE/FAMILY BANK
TRUST/INVESTMENT
POLICIES AND PROCEDURES
GENERAL AREA: ETHICAL STANDARDS
TOPIC: CONFLICTS OF INTEREST - SUMMARY OF
FIDUCIARY DUTY
POLICY NUMBER: 5.2B
EFFECTIVE DATE: 6/15/99
BACKGROUND
"The most fundamental duty owed by the trustee to the beneficiaries of the trust
is the duty of loyalty," --A. Scott in Law of Trusts (CHFA, pp. 203-212). The
duty of loyalty requires that the trustee administer the trust solely in the
interests of the beneficiaries. The trustee is not permitted to place
himself/herself/itself in a position where it would be beneficial for the
trustee to violate the duty to the beneficiaries. The following policy statement
assists trust personnel in carrying out these responsibilities.
LOAN BY TRUSTEE TO THE TRUST
If the trustee advances its own money to pay expenses properly incurred in the
administration of the trust, it is entitled to reimbursement out of the trust
estate. If it was reasonably necessary that the money should be advanced for the
proper administration of the trust, the court may allow the trustee a reasonable
rate of interest on the money advanced. This is not improper self-dealing. The
trustee will not be allowed interest where the advance was unnecessary, as, for
example, where there were sufficient funds in the estate which were not earning
interest.
BONUSES, COMMISSION, OR OTHER COMPENSATION
Trustees are entitled to compensation for their services, but the trustee is not
entitled to receive a profit from the administration of the trust, other than
compensation for services.
DUTY TO KEEP AND RENDER ACCOUNTS
A trustee is under a duty to the beneficiaries of the trust to keep clear and
accurate accounts. Its accounts should show what has been received and what has
been expended. The records should show what gains have accrued and what losses
have been incurred on changes of investments. If the trust is created for
beneficiaries in succession, the accounts should show what receipts and what
expenditures are allocated to principal and what are allocated to income.
<PAGE>
DUTY TO KEEP TRUST PROPERTY SEPARATE
It is the duty of a trustee to keep the trust property separate from other
property and properly to designate it as property of the trust. The trustee
must: 1) keep the trust property separate from his own property, 2) keep the
trust property separate from property held upon other trusts and 3) designate
trust property as property of the trust.
LIABILITY FOR BREACH OF DUTY OF LOYALTY
Where a trustee commits a breach of trust, the trustee is chargeable with any
loss which results from the breach of trust, or with any profit made through the
breach of trust, or with any profit which would have accrued if there had been
no breach of trust.
LIABILITY FOR INTEREST
Where a trustee commits a breach of trust and becomes liable for a sum of money,
it is ordinarily liable for interest thereon. If a trustee pays money out of the
trust funds which should not have been paid, the trustee is liable for both the
funds improperly distributed and any interest thereon. If the trustee makes an
improper investment and later restores the account to its prior status, the
trustee must repay any loss incurred and any interest relative to the
transactions.
LIABILITY OF SUCCESSOR TRUSTEE
If a trustee commits a breach of trust and is thereafter removed as trustee or
otherwise ceases to be trustee and a successor trustee is appointed, the latter
is not liable for breaches of trust committed by the former. The successor
trustee is liable only if it, too, is guilty of a violation of duty to the
beneficiaries.
LIABILITY FOR BREACH OF TRUST OF CO-TRUSTEE
Where there are two trustees and a breach of trust is committed by one of them,
the other is liable if it is also guilty of a violation of duty to the
beneficiaries. A co-trustee is liable if it: 1) participates in the breach of
trust, 2) improperly delegates the administration of the trust to a co-trustee,
3) by a failure to exercise reasonable care, enables the co-trustee to commit
the breach of trust, 4) approves or acquiesces in or conceals the breach of
trust, or 5) neglects to take proper steps to compel his co-trustee to redress
the breach of trust.
<PAGE>
INVESTMENTS A TRUSTEE CAN MAKE
The trustee has a duty to preserve the trust property and to make it productive.
It is ordinarily the trustee's duty to invest trust funds to receive an income
without improperly risking the loss of the principal. In general, the trustee is
required to make such investments as a prudent investor would make of his own
property having primarily in view the preservation of the estate and the amount
and regularity of the income to be derived. (See applicable state law version of
Uniform Prudent Investor Act or comparable statute.)
DUTY TO DISPOSE OF IMPROPER INVESTMENTS
Where a trustee on the creation of the trust receives securities that are not
proper trust investments, the trustee has a duty to dispose of them within a
reasonable time and to invest the proceeds in securities that are proper trust
investments, unless it is otherwise provided by the terms of the trust or by
statute.
<PAGE>
PEOPLES HERITAGE BANK/BANK OF NEW HAMPSHIRE
TRUST/INVESTMENT
POLICIES AND PROCEDURES
GENERAL AREA: ETHICAL STANDARDS
TOPIC: EMPLOYEE REPORTING OF PERSONAL TRADES -
FDIC RULE 344.6(D)/SEC RULE 17J-1
POLICY NUMBER: 5.2C
EFFECTIVE DATE: 6/15/99
POLICY
Trust Department employees will report to the Bank, within ten days of the end
of the calendar quarter, all securities transactions made by them or on their
behalf, either at the Bank or elsewhere, in which they have a beneficial
interest. Transactions excluded from this reporting requirement include: 1)
those made for the benefit of the employee over which the employee has no direct
or indirect influence or control; 2) transactions in mutual fund shares of U. S.
Government or Federal agency obligations and 3) all other transactions
involving, in the aggregate, $10,000 or less during the calendar quarter.
PROCEDURES
1. At the end of each calendar quarter, the Department Manager or Trust
Compliance Officer will provide all Trust Department employees with a
memorandum/form substantially in the same form as Exhibit 5.2C.
2. All Trust Department employees will complete the form, indicating whether or
not the employee had any reportable transactions for the prior calendar quarter,
and listing the date, action, shares or par value, security, price and broker
for any transactions required to be reported.
3. The completed forms will be reviewed by the Department Manager and/or
compliance Officer, and any employees with transaction activity requiring
further investigation will be contacted. The completed forms will be retained in
the department files for future reference.
<PAGE>
Exhibit (p)(8)
FORUM CODE OF ETHICS
APPENDIX A
DEFINITIONS
(a) Access Person:
(i)(1) of FIA means each director or officer of FIA, any employee or
agent of FIA, or any company in a control relationship to FIA
who, in connection with the person's regular functions or
duties, makes, participates in or obtains information
regarding the purchase or sale of Covered Securities by a Fund
advised by FIA, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
(i)(2) any natural person in a control relationship to FIA who
obtains information concerning recommendations made to a Fund
by FIA with regard to the purchase or sale of Covered
Securities by the Fund;
(ii) of FFS means each director or officer of FFS who in the
ordinary course of business makes, participates in or obtains
information regarding the purchase or sale of Covered
Securities for a Fund or whose functions or duties as part of
the ordinary course of business relate to the making of any
recommendation to a Fund regarding the purchase or sale of
Covered Securities.
(b) Act means the Investment Company Act of 1940, as amended.
(c) Beneficial Owner shall have the meaning as that set forth in Rule
16a-1(a)(2) under the Securities Exchange Act of 1934, as amended, except that
the determination of direct or indirect beneficial ownership shall apply to all
Covered Securities which an Access Person owns or acquires. A beneficial owner
of a security is any person who, directly or indirectly, 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.
Indirect pecuniary interest in a security includes securities held by a
person's immediate family sharing the same household. Immediate family means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships).
(d) Control means the power to exercise a controlling influence over the
management or policies of a company, unless this power is solely the result of
an official position with the company. Ownership of 25% or more of a company's
outstanding voting securities is presumed to give the holder thereof control
over the company. This presumption may be rebutted by the Review Officer based
upon the facts and circumstances of a given situation.
(e) Covered Security means any security except:
(i) direct obligations of the Government of the United States;
(ii) bankers' acceptances and bank certificates of deposits;
(iii) commercial paper and debt instruments with a maturity at
issuance of less than 366 days and that are rated in one of
the two highest rating categories by a nationally recognized
statistical rating organization;
(iv) repurchase agreements covering any of the foregoing; and
(v) shares of registered open-end investment companies.
<PAGE>
(f) Fund Officer means any employee of Forum or of a company commonly
controlled with Forum who is an officer or director/trustee of a Fund.
(h) Investment Personnel means
(i) any employee of FIA who, in connection with his or her regular
functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by a
Fund managed by FIA; and
(ii) any individual who controls FIA or a Fund for which FIA is an
investment adviser and who obtains information concerning
recommendations made to the Fund regarding the purchase or sale
of securities by the Fund.
(i) Purchase or sale includes, among other things, the writing of an option
to purchase or sell.
(j) Security held or to be acquired by the Fund means
(i) any Covered Security which, within the most recent 15 days (x) is
or has been held by the applicable Fund or (y) is being or has
been considered by the applicable Fund or its investment adviser
for purchase by the applicable Fund; and
(ii) and any option to purchase or sell, and any security convertible
into or exchangeable for, a Covered Security.
<PAGE>
FORUM CODE OF ETHICS
APPENDIX B
LIST OF ACCESS PERSONS
(as amended January 17, 2000)
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
FIA AP IP AS OF DATE FUND END DATE
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Berthy, Les C. X X September 1, 1989 FF
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Burns, John X X July 1, 1999 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Fischer, Anthony R. X X January 1, 1998 CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Goldstein, David I. X June 1, 1997 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Kaplan, Mark D. X X March 20, 1996 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Keffer, John Y. X September 1, 1989 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Stillings, Dawn Marie X X January 1, 1998 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Hirsch, Ron X November 1, 1999 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Campeau, Lisa X X December 20, 1999 FF/CTD
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
FFS AP IP AS OF DATE FUND END DATE
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Goldstein, David I. X September 1, 1991 All
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Keffer, John Y. X June 9, 1986 All
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Hirsch, Ron X November 1, 1999 All
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
FUND OFFICERS AP IP AS OF DATE OFFICER OR TRUSTEE OF END DATE
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Barrett, Stephen J. September 28, 1998 CT, TC, ML, SS
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Goldstein, David I. October 16, 1992 CT, FF
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Hirsch, Ron October 28, 1999 SS, TC, CT, ML
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Hong, Stacey E. May 19, 1998 CT, FF
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Kaplan, Mark D. June 14, 1996 FF
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Keffer, John Y. October 16, 1992 CT, FF, SS, TC
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Klenk, Leslie K. May 19, 1998 FF
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Riggle, D. Blaine March 9, 1998 CT, ML, TC
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
Sheehan, Thomas G. July 26, 1994 CT, ML
- ------------------------------ --------- -------- ----------------------------- ------------------------ --------------------
</TABLE>
AP = Access Person; IP = Investment Personnel
FF = Forum Funds; CTD = Core Trust (Delaware); CT = Cutler Trust; TC = True
Crossing; Memorial = ML; SS = Sound Shore
<PAGE>
FORUM
CODE OF ETHICS
ATTACHMENT A
ACKNOWLEDGMENT
I understand that I am subject to Forum's Code of Ethics. I have read and I
understand the Forum Code of Ethics, as adopted by Forum Investment Advisors,
LLC and Forum Fund Services, LLC as amended February 28January 17, 2000 and will
comply with it in all respects. In addition, I certify that I have complied with
the requirements of the Code of Ethics and I have disclosed or reported all
personal securities transactions required to be disclosed or reported pursuant
to the requirements of the Code.
Signature Date
Printed Name
THIS FORM MUST BE COMPLETED AND RETURNED TO FORUM'S
COMPLIANCE DEPARTMENT:
COMPLIANCE MANAGER
FORUM FINANCIAL GROUP
TWO PORTLAND SQUARE
PORTLAND, ME 04101
<PAGE>
Exhibit (p)(8)
WELLS CAPITAL MANAGEMENT
[LOGO]
CODE OF ETHICS
POLICY ON PERSONAL SECURITIES TRANSACTIONS
AND
INSIDER TRADING
Version 9.99
<PAGE>
TABLE OF CONTENTS
I INTRODUCTION.............................................................3
I.1 CODE OF ETHICS 3
I.2 "ADVISORY REPRESENTATIVE" 3
I.3 "BENEFICIAL OWNERSHIP" 3
II PENALTIES................................................................5
II.1 VIOLATIONS OF THE CODE 5
II.2 PENALTIES....5
II.4 DISMISSAL AND/OR REFERRAL TO AUTHORITIES 6
III EMPLOYEE TRADE PROCEDURES................................................7
III.1 PRE-CLEARANCE 7
III.2 TRADE REPORTS 8
III.3 POST-REVIEW.9
III.4 PRE-CLEARANCE AND REPORTING REQUIREMENTS 9
III.5 CONFIDENTIALITY 9
III.6 ACKNOWLEDGMENT OF BROKERAGE ACCOUNTS 10
III.7 INITIAL AND ANNUAL REPORTING REQUIREMENTS 10
IV RESTRICTIONS............................................................11
IV.1 RESTRICTED SECURITIES 11
IV.2 SHORT-TERM TRADING PROFITS (60-DAY TRADING RULE) 12
IV.3 BLACKOUT PERIODS 12
IV.4 INSIDER TRADING 13
IV.5 GIFTS AND OFFERINGS 13
IV.6 DIRECTORSHIPS AND OTHER OUTSIDE EMPLOYMENT 14
V REGULATORY REQUIREMENTS.................................................15
<PAGE>
V.1 INVESTMENT ADVISERS ACT OF 1940 AND INVESTMENT COMPANY ACT OF 1940 15
V.2 REGULATORY CENSURES 15
VI ACKNOWLEDGMENT AND CERTIFICATION........................................16
<PAGE>
INTRODUCTION
================================================================================
CODE OF ETHICS
Wells Capital Management (Wells Capital), as a registered
investment adviser, has an obligation to maintain a policy
governing personal securities transactions and insider
trading by its officers and employees. This CODE OF ETHICS
AND POLICY ON PERSONAL SECURITIES TRANSACTIONS AND INSIDER
TRADING ("Code") outlines the policies and procedures for
such activities based on the recognition that a fiduciary
relationship exists between Wells Capital and its clients.
All references in this Code to employees, officers,
directors, accounts, departments and clients refer to those
of Wells Capital.
.In addition to this Code, please refer to the policies
outlined in the Handbook for Wells Fargo Team Members and
the Wells Fargo Code of Conduct and Business Ethics.
Acknowledgment of, and compliance with, this Code is a
condition of employment. A copy of the Code and applicable
forms are available on Wells Capital's common drive:
As an employee, you must -
o Be ethical
o Act professionally
o Improve competency
o Exercise independent judgment
"ADVISORY
REPRESENTATIVE" For the purposes of this Code, Wells Capital defines
"ADVISORY REPRESENTATIVE" as any director, officer or
employee, who in connection with his or her regular
functions or duties -
o makes, participates in, or obtains information
regarding the purchase or sale of a security for an
advisory client, or
o whose functions are related to the making of any
recommendations with regard to such purchases or sales.
Because all personnel may at some time access or obtain
investment information, Wells Capital may designate any
employee (including independent contractors who have been
contracted for at least one month) as "advisory
representatives," and thereby subject to the policies and
procedures of the Code. The list of advisory personnel will
be updated each quarter.
"BENEFICIAL
OWNERSHIP"
Personal securities transaction reports should include all
accounts for which you have direct or indirect "beneficial
ownership."control. These include accounts over which you
have any control, influence, authority, or either with or
without beneficial interest, whether directly or indirectly,
including -
o accounts of immediate family members in the same
household; and
o any other account, including but not limited to those of
relatives and friends, over which you direct activities.
<PAGE>
Direct and indirect control may be further construed to
include accounts for which an Advisory Representative is
sole owner, joint owner, trustee, co-trustee, or
attorney-in-fact.
<PAGE>
PENALTIES
================================================================================
VIOLATIONS OF THE CODE
The firm's Chief Compliance Officer will report violations
of the Code on a quarterly basis to the President. Each
Advisory Representative should immediately report to the
Chief Compliance Officer any known or reasonably suspected
violations of this Code of which he or she becomes aware.
MONETARY FINESPENALTIES
Monetary fines Penalties will may be imposed on an Advisory
Representative as follows:
o Third offense - $1,000.00 fine to be donated to the
UNITED WAY;Minor Offenses -
>> First minor offense - Verbal warning;
>> Second minor offense - Written notice;
>> Third minor offense - $1,000.00 fine to
be donated to the advisory
representative's charity of choice*.
o Substantive Offenses
>> First substantive offense - Written notice;
>> Second substantive offense - $1,000 or
disgorgement of profits (whichever is
greater) to be donated to the advisory
representative's charity of choice*;
>> Third substantive offense - Termination of
employment and/or referral to authorities.
Minor offenses include the following: failure or late
submissions of quarterly trade reports and signed
acknowledgments of Code of Ethics forms and certifications,
failure to request trade pre-clearance, and conflicting
pre-clear request dates versus actual trade dates.
Substantive offenses include the following: unauthorized
purchase/sale of restricted securities outlined in the Code,
violations of seven-day blackouts, short-term trading for
profit (60-day rule), trading in conflict with clients'
transactions (such as the appearance of potential
front-running or scalping), and insider trading.
Wells Capital reserves the right to escalate the terms of
this Penalties section at any time and to use corrective
action that it determines is appropriate (including referral
to authorities) - and, if necessary, to terminate employment
immediately.
* The fines will be made payable to the Advisory
Representative's charity of choice and turned over to Wells
Capital, which in turn will mail the donation check on
behalf of the advisory representative. Short-term trading
profits - disgorgement of any profit or $1,000.00 fine,
whichever is greater to be donated to the UNITED WAY.
<PAGE>
MONETARY PENALTIES SUBJECT TO REVIEW AND APPROVAL OF THE
PRESIDENT.
DISMISSAL AND/OR
REFERRAL TO
AUTHORITIES REPEATED VIOLATIONS of the Code will may result in
dismissal. In addition, a single flagrant violation, such as
fraud or insider trading, will result in immediate dismissal
and referral to authorities.
The firm's Chief Compliance Officer will forward potential
Code violations involving affiliated mutual funds to Wells
Fargo Bank Mutual Fund Compliance.
<PAGE>
EMPLOYEE TRADE PROCEDURES
================================================================================
PRE-CLEARANCE
o All Advisory Representatives in the firm must pre-clear
personal securities transactions as specified in
Section III.4.
o All pre-clearance requests must be submitted via
ELECTRONIC MAIL to Marivic Jimiera/Wells Capital
Compliance ([email protected]). Responses will be
sent back via electronic mail. Exceptions will be made
only for telephone requests from Advisory
Representatives who are out of the office on business
or on vacation. It is the responsibility of the
Advisory Representative to ensure that Compliance
receives your pre-clearance requests. If it appears
that E-mail is down, please contact Marivic either at,
415/222-5891 (phone), or 415/210-6000 (pager).
o At a minimum, indicate the following information on
------------ your pre-clearance request - (a)
Transaction Type: BUY or SELL (B) SECURITY DESCRIPTION
/ TICKER or CUSIP (c) Security Type: COMMON STOCK,
OPTIONS, or BONDS
o Telephone requests from beneficial account holders
outside the firm will be accepted. Copies of
responsesResponses to requests will be forwarded to the
Advisory Representative via electronic mail. oRequests
may be submitted from 7:00 am (Pacific) until an hour
before the market closes for the day. Barring any
problems with systems access (i.e., SEI, Advent/Moxy),
responses will be made no more than an hour from the
receipt of request.
o Pre-cleared trades are VALID FOR SAME DAY TRADES only.
Nexceptions.
o Pre-clearance does not preclude the possibility of a
potential conflict appearing after the execution of an
employee trade. Trades will be screened for blackout
violations and other conflicts, but quarter-end review
of each personal trade will reveal conflicts occurring
after the trade is executed (for example, 60-day rule
violation).
o The use of the electronic mail system ensures that each
report is date-stamped, and it is the responsibility of
each Advisory Representative to ensure that the report
has been received by Wells Capital Compliance.
PERSONAL SECURITIES TRANSACTIONS SHOULD BE REPORTED,
WHETHER PRE-CLEARED OR NOT.
<PAGE>
TRADE REPORTS
o Quarterly Trade Reports which list personal securities
transactions for the quarter must be submitted no later
than the 10th day after the end of each calendar
quarter. This 10-day deadline is a FEDERAL REQUIREMENT
and includes weekends and holidays. If the 10th day
falls on a weekend or a holiday, the report is due the
business day immediately preceding this deadline.
o Quarterly Trade Reports must be submitted
using..\..\..\Wells Cap - NEWS\Risk Management
Guidelines\CodeofEthics\QUARTERLY TRADE REPORT.dot form
to Wells Capital Compliance, attention Marivic Jimiera.
If there are no activities for the quarter, a report
indicating such is still required to be submitted.
Hardcopies may be submitted via interoffice mail to WCM
Compliance at MAC A0103-101 or via electronic mail to
[email protected].
o Each Advisory Representative must instruct his or her
broker(s) to send duplicate copies of trades confirms
and/or statements to Wells Capital Compliance,
attention Marivic Jimiera. If your broker is unable to
directly send duplicate copies, please inform
Compliance in writing to document this. [Use form:
..\..\..\Wells Cap - NEWS\Risk Management
Guidelines\CodeofEthics\Request for Duplicate
Confirms.dot
<PAGE>
POST-REVIEW
Wells Capital Compliance will match any broker confirms
received to pre-clearance requests. Discrepancies will be
documented and may be subject to censures, as outlined in
the PENALTIES section of this Code.
Employee transactions will also be screened for the
following:
o Same day trades: Transaction occurring on the same day
as the purchase or sale of the same security in a
managed account, except for index programs (For S&P 500
securities).
o 7-day Blackout period: Transaction up to and including
seven calendar days before and after the purchase
and/or sale of the same security in a managed account
as described in Sec IV.3 of the Code (For non-S&P500
securities). Note: All interim activity is considered,
not just the initial purchase or sale of a security.
o Short-term trading profits: Purchase/Sale, or vice
versa, occurring within 60 days in the same security
resulting in net profit. Advisory Representatives are
responsible for ensuring that the 60-day rule is
observed when sale requests are made for securities
previously purchased, or vice versa.
o Other potential conflicts: Certain transactions may
also be deemed in conflict with the Code and will
warrant additional review, depending on the facts and
circumstances of the transaction.
PRE-CLEARANCE AND
REPORTING REQUIREMENTS
The table below indicates pre-clearance and reporting
requirements. Requirements for all other security type
transactions must be checked with Compliance.
SECURITY TYPE PRE-CLEARANCE QTRLY
REPORTING
Equity transactions* Yes Yes
Fixed Inc transactions Yes Yes
Wells Fargo stock No Yes
Open-ended MF No No
Proprietary MF No No
US Tsy/Agencies No No
Short term/cash equiv. No No
SPP- auto purchase No No
*INCLUDING OPTIONS, E EXCHANGE-TRADED
CLOSED-END MUTUAL FUNDS AND SELLS OF
STOCK PURCHASE PLAN ASSETS (E.G., ESPP,
401K).
CONFIDENTIALITY
All reports of personal securities transactions, holdings
and any other information filed pursuant to this Code will
be kept CONFIDENTIAL, provided, however that such
<PAGE>
information will also be subject to review by appropriate
Wells Capital personnel (Compliance and/or Senior
Management) and legal counsel. Such information will also be
provided to the Securities and Exchange Commission ("SEC")
or other government authority WHEN PROPERLY REQUESTED OR
UNDER COURT ORDER.
ACKNOWLEDGMENT OF
BROKERAGE ACCOUNTS All Advisory Representatives are required to submit a list
all brokerage accounts as required by the Code. In addition,
you are responsible for ensuring that new or closed accounts
are communicated to Compliance. For reporting purposes, use
..\..\..\Wells Cap - NEWS\Risk Management
Guidelines\CodeofEthics\Acknowledgment of Brokerage
Accounts.dot
INITIAL AND ANNUAL
HOLDINGS REPORT All Advisory Representatives are required to report holdings
(subject to Code requirements) within 10 days of employment
and on an annual basis thereafter. An Advisory
Representative's broker statement will suffice in lieu of a
separate initial or annual holdings report. It is the
Advisory Representative's responsibility to ensure that
Compliance receives duplicate copies of statements and/or
confirms if those are sent directly by the brokers.
<PAGE>
RESTRICTIONS
================================================================================
The following are Wells Capital's restrictions on personal trading:
RESTRICTED SECURITIES
<TABLE>
<S> <C> <C>
- ---------------------------------------- -------------------------------- ---------------------------------------
SECURITY TYPE PURCHASE SALE
- ---------------------------------------- -------------------------------- ---------------------------------------
A. S&P500 stocks PERMITTED PERMITTED
Subject to one-day blackout Subject to one-day blackout during
during execution of client trades execution of client trades (except
(except index program trades). index program trades). Must
Must pre-clear. pre-clear.
- ---------------------------------------- -------------------------------- ---------------------------------------
B. Any security not included in PERMITTED PERMITTED
the S&P500 above and not defined Subject to pre-clearance Subject to pre-clearance requirements.
as "small cap" below. requirements.
- ---------------------------------------- -------------------------------- ---------------------------------------
C. Any restricted list security PROHIBITED PERMITTED, subject to the following:
(and its associated option) (Transaction for an S&P Index >> If security held prior to
defined as "small cap" stock that is held in the Wells Capital employment, sale
(capitalization as defined by the Small/Mid Cap funds is permitted subject to
Russell 2000).holdings in permitted subject to the pre-clearance requirements.
WCM-actively managed Small Cap Code's pre-clearance
funds. requirements)
- ---------------------------------------- -------------------------------- ---------------------------------------
D. Any security issued by a PROHIBITED PERMITTED, subject to the following:
Wells Capital client >> If security held prior to
Wells Capita employment,
sales subject to
pre-clearance requirements.
- ---------------------------------------- -------------------------------- ---------------------------------------
E. Automatic investment programs PERMITTED PERMITTED
or direct stock purchase plans >> Subject to Code of Ethics
>> Subject to Code of reporting requirements
Ethics reporting
requirements
- ---------------------------------------- -------------------------------- ---------------------------------------
F. Initial Public Offerings (IPOs) PROHIBITED PERMITTED, only
>> If security held prior to
Wells Capital employment, sales
(An IPO is a corporation's first subject to pre-clearance
offering of a securityrepresenting requirements.
shares of the company to the public)
- ---------------------------------------- -------------------------------- ---------------------------------------
G. Private Placements PROHIBITED PERMITTED, only
----
>> If security held prior to
(A private placement is an offer or Wells Capital employment, sales
sale of any security by a brokerage subject to pre-clearance
firm not involving a public offering, requirments.
for example, a venture capital deal)
- ---------------------------------------- -------------------------------- ---------------------------------------
</TABLE>
<PAGE>
SHORT-TERM TRADING PROFITS
(60-DAY TRADING RULE)
The purchase and sale, or the sale and purchase, of the same
security (or equivalent) within 60 calendar days and at a
profit is PROHIBITED.
o This restriction applies without regard to tax lot
considerations and short-sales;
o Exercised options are not restricted, however,
purchases and sales of options occurring within 60 days
resulting in profits are PROHIBITED;
o Exceptions require advance written approval from the
firm's Chief Compliance Officer (or designee).
Profits from any sale before the 60-day period expires must
may require disgorgement.be disgorged Please refer to
"Penalties", section II of this Code, for additional
details.
BLACKOUT PERIODS
For securities in the S&P 500 Index, a one-day firm-wide
blackout will apply if the issue(s) is being traded on
behalf of a client, at the time the pre-clear request is
made.. The blackout will not apply to Index program trades.
All other issues are subject to a seven-day firm-wide
blackout period in advance of the Advisory Representative's
trade. The Advisory Representative is also prohibited from
trading that security in any account they he or she manages
for the seven-day period after the Advisory
Representative'shis or her personal trade.
<PAGE>
INSIDER TRADING
Wells Capital considers information MATERIAL if there is a
substantial likelihood that a reasonable shareholder would
consider it important in deciding how to act. Information is
considered NON-PUBLIC when it has not been disseminated in a
manner making it available to investors generally.
Information becomes PUBLIC once it is publicly disseminated;
limited disclosure does not make the information public
(e.g., disclosure by an insider to a select group of
persons).
Wells Capital generally defines INSIDER TRADING as the
buying or selling of a security, in breach of fiduciary duty
or other relationship of trust and confidence, while in
possession of material, non-public information. Insider
trading is a violation of federal securities laws,
punishable by a maximum prison term of 10 years and fines of
up to $1 million for the individual and $2.5 million for the
firm.
TIPPING of material, non-public information is PROHIBITED.
An Advisory Representative cannot trade, either personally
or on behalf of others, while in possession of such
information.
FRONT-RUNNING/SCALPING involves trading on the basis of
non-public information regarding impending market
transactions.
o Trading ahead of, or "front-running," a client or
proprietary mutual fund order in the same security; or
o Taking a position in stock index futures or options
contracts prior to buying or selling a block or
securities for a client or proprietary mutual fund
account (i.e., self-front running).
SCALPING occurs when an Advisory Representative purchases
shares of a security for his/her own account shortly before
recommending or buying that security for long-term
investment to a client and then immediately selling the
shares at profit upon the rise in the market price following
the recommendation.
GIFTS AND HOSPITALITY
Wells Capital, as a policy, PROHIBITS GIFTS OF MORE THAN
$500.00 IN VALUE from Wells Capital clients or any
person/entity that does business with or on behalf of Wells
Capital clients. follows Wells Fargo Bank's policy regarding
gifts and hospitality. Please refer to WFB Employee Handbook
for requirements.CASH: Acceptance of offerings or gifts of
any amount of cash from current or prospective clients,
brokers, or any 3rd party vendor are PROHIBITED, and such
offerings or gifts must be reported to Compliance within 10
days of the cash offer. Borrowing funds from any of the
above parties is also PROHIBITED.
GIFTS: Non-cash gifts/hospitality of over $500 in value
(including unsolicited advertising, promotional material or
travel expenses) may be accepted by a Wells Capital employee
from a current or prospective client, or may be given by a
Wells Capital Advisory Representative to a client but only
if such gifts have the advance written approval from the
firm's Chief Compliance Officer (or designee). Non-cash
gifts/hospitality of under $500 do not require approval.
o GIFTS: Non-cash gifts from broker-dealers and/or third
party service providers are limited to $500.00 in
value.
o OTHER: Client or vendor offers of expense-paid trips to
client or vendor sites, seminars, exhibits or other
outings may be accepted, but such offers must have the
advance written approval from the firm's Chief
Compliance Officer (or designee).
DIRECTORSHIPS AND Wells Capital, as a policy, prohibits all employees from
OTHER OUTSIDE serving on the Board of Directors of ANY PUBLICLY TRADED
EMPLOYMENT DIRECT- COMPANY. Directorships for either a nonpublic-for-profit or
ORSHIPS AND OTHER a non-profit organization is permitted, but require advance
OUTSIDE EMPLOYMENT written approval from Wells Capital's Chief Compliance
Officer (or designee). Employees who wish to pursue any
other outside employment must request approval from the
Chief Compliance Officer (or designee). All documentation
will be maintained by Compliance. Please refer to the Wells
Fargo Employee Handbook for additional information regarding
outside employment. Wells Capital, as a policy, follows
Wells Fargo Bank's policy regarding directorships and other
outside employment. Please refer to WFB Employee Handbook
for requirements.
<PAGE>
REGULATORY REQUIREMENTS
================================================================================
INVESTMENT ADVISERS
ACT OF 1940 AND
INVESTMENT COMPANY
ACT OF 1940 The SEC considers it a violation of general antifraud
provisions of federal securities laws whenever an adviser,
such as Wells Capital, engages in fraudulent, deceptive or
manipulative conduct. As a fiduciary to client assets, Wells
Capital cannot engage in activities which would result in
conflicts of interests (for example, "front-running,"
scalping, or favoring proprietary accounts over those of the
clients').
REGULATORY CENSURES
The SEC can censure, place limitations on the activities,
functions, or operations of, suspend for a period not
exceeding twelve months, or revoke the registration of any
investment adviser based on a:
>> Failure reasonably to supervise, with a view to
preventing violations of the provisions of the federal
securities laws, an employee or a supervised person who
commits such a violation.
>> However, no supervisor or manager shall be deemed to
have failed reasonably to supervise any person, if
(a) there have been established procedures, and a
system for applying such procedures, which would
reasonably be expected to prevent and detect,
insofar as practicable, any such violation by
such other person and
(b) such supervisor or manager has reasonably
discharged the duties and obligations incumbent
upon him/her by reason of such procedures and
systems without reasonable cause to believe that
such procedures and system were not being
complied with.
<PAGE>
ACKNOWLEDGMENT AND CERTIFICATION
================================================================================
I certify that I have received, read, understood and recognize that I am subject
to Wells Capital Management's CODE OF ETHICS AND POLICY ON PERSONAL SECURITIES
TRANSACTIONS AND INSIDER TRADING. This Code is in addition to Wells Fargo's
policy on BUSINESS CONDUCT AND ETHICS, as outlined in the Employee Handbook.
In addition to certifying that I will provide complete and accurate reporting as
required by the Code and have complied with all requirements of the Wells
Capital Management Code, I certify that I will not:
o Execute any prohibited purchases and/or sales, directly or indirectly, that
are outside those permissible by the Code;
o Employ any device, scheme or artifice to defraud Wells Fargo, Wells Capital
Management, or any company;
o Engage in any act, practice or course of business which operates or would
operate as a fraud or deceit upon Wells Fargo, Wells Capital Management or
any company;
o Make any untrue statement of a material fact, or omit to state a material
fact necessary in order to make the statements, in light of the
circumstances under which they are made, not misleading;
o Engage in any manipulative practice with respect to Wells Fargo, Wells
Capital Management or any company;
o Trade on inside information;
o Trade ahead of or front-run any transactions for Wells Capital managed
accounts;
o Trade without obtaining the necessary pre-clearance.
I understand that it is a violation of the Investment Advisers Act of 1940 to
fail to submit a record of my personal securities transactions within 10
calendar days of quarter-end.
I understand that, as an employee of Wells Capital Management, it is my
responsibility to submit a list of all brokerage accounts in which I have
beneficial ownership or interest and control (as defined in the Code).
Additionally, I will notify Wells Capital Management Compliance upon opening or
closing brokerage accounts.
ANY EXCEPTIONS, WHERE APPLICABLE, ARE NOTED AS FOLLOWS:
Signature Date
NAME (Print)
<PAGE>
THE ACKNOWLEDGMENT AND CERTIFICATION FORM IS DUE 10 DAYS FROM DATE OF RECEIPT.
SIGNED COPIES MUST BE SUBMITTED TO WELLS CAPITAL COMPLIANCE, ATTENTION MARIVIC
JIMIERA/MAC A0103-101.
<PAGE>
Exhibit (p)(9)
WELLS FARGO BANK
CODE OF ETHICS
ADOPTED UNDER RULE 17J-1
MARCH 1, 2000
Wells Fargo Bank (the Bank) is confident that its officers, directors and
employees act with integrity and good faith. The Bank recognizes, however, that
personal interests may conflict with those of the investment companies it
advises where its officers, directors or employees:
X Know about present or future portfolio transactions, or
X Have the power to influence portfolio transactions; and
X Engage in personal transactions in securities.
In an effort to prevent these conflicts and in accordance with Rule 17j-1 under
the Investment Company Act of 1940 (the 1940 Act), the Bank has adopted this
Code of Ethics (the Code) to prohibit transactions that create or may create
conflicts of interest, and to establish reporting requirements and enforcement
procedures.
I. ABOUT THE BANK.
The Bank is a national bank that is primarily engaged in traditional
banking activities and other financial services. The Bank also serves
as investment adviser to various investment companies registered under
the 1940 Act. As an investment adviser to registered investment
companies, the Bank is required to adopt a code of ethics under Rule
17j-1. Rule 17j-1 requires ALL investment advisers for registered
investment companies to adopt a code of ethics, but permits advisers
that, like the Bank, are "primarily engaged in a business or businesses
other than advising [registered investment companies] or other advisory
clients" to adopt codes that govern a more narrow universe of "access
persons." 1 The Bank has adopted this Code to comply with the
requirements under Rule 17j-1 for such investment advisers.
II. ABOUT THIS CODE OF ETHICS.
The Code sets forth general prohibitions and requirements, which are
included under Section IV (Statement of General Principles) and Section
V (Prohibitions Regarding Conduct of Covered Persons). This Code also
sets forth reporting obligations and specific prohibitions on
securities transactions, which are included under Section VI (Reporting
Obligations of Advisory Persons) and Section VII (Prohibitions
Regarding Securities Transactions by Advisory Persons). The remainder
of the Code sets forth review, enforcement, recordkeeping
responsibilities (Sections IX and X), and miscellaneous information
(Section XI). Underlined terms are defined in the Glossary.
NOTE: PERSONS COVERED BY THIS CODE ARE ALSO SUBJECT TO AND REQUIRED
TO COMPLY WITH THE BANK'S CODE OF ETHICS AND BUSINESS CONDUCT,
INCLUDING THE LIMITATIONS THEREIN REGARDING DIRECTORSHIPS AND
THE RECEIPT OF GIFTS.
III. WHO IS COVERED BY THE CODE OF ETHICS?
- -------------------------------
1/ An Adviser is primarily engaged in a business or businesses othe than
advising registered investment companies or other advisory clients if, for each
of its most recent three fiscal years or for the period of time since its
organization, whichever is less, the investment adviser derived, on an
inconsolidated basis more than 50% of its total sales and revenues and more than
50% of its income (or loss), before income taxes and extraordinary items from
the other bussines or businesses.
<PAGE>
(a) BANK OFFICERS, DIRECTORS AND EMPLOYEES.
This Code of Ethics applies to each officer, director and
employee of the Bank:
o who, with respect to any registered
investment company advised by the Bank (a
Fund), makes any recommendation,
participates in the determination of which
recommendation will be made, or whose
principal function or duties relate to the
determination of which recommendation will
be made by the Bank to any Fund
OR
o who, in connection with his or her duties,
obtains any information about securities
recommendations being made by the Bank to
any Fund.
Throughout this Code, these persons are referred to as
Advisory Persons." Currently, the Bank does not have any
Advisory Persons. The Bank has appointed sub-advisers to
manage each Fund's assets on a discretionary basis. Thus, the
sub-advisers, rather than the Bank, make recommendations to
the Funds regarding purchases and sales of securities. As a
result, the Bank itself neither manages the Funds' assets on a
discretionary basis and nor makes any securities
recommendations to the Funds.
(b) LIMITED PURPOSE ADVISORY PERSONS.
Although the Bank currently does not have any Advisory
Persons, the Bank recognizes that certain of its officers and
employees may from time to time obtain information regarding a
security being purchased or sold or being considered for
purchase by a Fund. For purposes of this Code, these officers
and employees are called Limited Purpose Advisory Persons.
Specifically, you are a Limited Purpose Advisory Person if
you: are a Bank officer or employee; do not meet the
definition of an Advisory Person; are not covered by a code of
ethics adopted by a Fund's sub-adviser pursuant to Rule 17j-1;
and obtain information from time to time regarding securities
being purchased or sold or being considered for purchase by a
Fund while performing your regular functions for the Bank.
The Review Officer, as defined below, will maintain a list of
Limited Purpose Advisory Persons and will notify such persons
of their obligations under this Code. The personal trading
activities of Limited Purpose Advisory Persons are addressed
in Section VIII below.
(c) COVERED PERSONS.
Throughout the Code, Advisory Persons and Limited Purpose
Advisory Persons are collectively referred to as "Covered
Persons."
IV. STATEMENT OF GENERAL PRINCIPLES.
In recognition of the trust and confidence placed in the Bank by the
Funds and their shareholders, and because the Bank believes that its
operations should benefit the Funds and their shareholders, the Bank
has adopted the following general principles to guide its Covered
Persons.
(a) The Funds' and their shareholders' interests are
paramount. You must place their interests before your own.
<PAGE>
(b) You must accomplish all personal securities transactions
in a manner that avoids a conflict of your personal interests
with those of the Funds or their shareholders.
(c) You must avoid actions or activities that allow you or
your family to profit or benefit from your relationship with a
Fund, or that bring into question your independence or
judgment.
V. PROHIBITION AGAINST FRAUD, DECEIT AND MANIPULATION.
No Covered Person in connection with the purchase or sale, directly or
indirectly, of a security held or to be acquired by any Fund may:
(a) employ any device, scheme or artifice to defraud any Fund;
(b) make to a Fund any untrue statement of a material fact or
omit to state to a Fund a material fact necessary in order to
make the statements made, in light of the circumstances under
which they are made, not misleading;
(c) engage in any act, practice or course of business which
would operate as a fraud or deceit upon any Fund; or
(d) engage in any manipulative practice with respect to any Fund.
VI. REPORTING OBLIGATIONS OF ADVISORY PERSONS.
(a) INITIAL AND ANNUAL REPORTS OF SECURITIES HOLDINGS AND
ACCOUNTS.
You must provide the Review Officer with a complete listing of
all securities you beneficially own and all your securities
accounts as of the date you first become subject to this
Code's reporting requirements. You must submit this list to
the Review Officer, as defined below, within 10 days of the
date you first become subject to this Code's reporting
requirements. Each following year, you must submit a revised
list to the Review Officer as of a date no more than 30 days
before you submit the list. An Initial and Annual Report of
Securities Holdings and Accounts is included as Appendix A.
(b) QUARTERLY REPORTS.
Each quarter, you must report all securities transactions
effected, as well as securities accounts you established,
during the quarter. You must submit your report to the Review
Officer no later than 10 days after the end of each calendar
quarter. A Quarterly Report is included as Appendix B.
If you had no reportable transactions and did not open any
securities accounts during the quarter, you are still required
to submit a report. Please note in the spaces provided on the
report that you had no reportable items during the quarter,
and return it, signed and dated.
(c) WHAT MUST BE INCLUDED IN YOUR REPORTS?
You must report all transactions in securities that: (i) you
directly or indirectly beneficially own or (ii) because of the
transaction, you acquire direct or indirect beneficial
ownership. You also must report all of your accounts in which
any securities were held for your direct or indirect benefit
(e.g., brokerage accounts, certain bank accounts).
<PAGE>
(d) WHAT MAY BE EXCLUDED FROM YOUR REPORTS?
You are not required to include the following securities,
transactions or accounts on your reports:
(1) Purchases or sales effected for any account
over which you have no direct or indirect
influence or control;
(2) Purchases you made solely with the dividend
proceeds received in a dividend reinvestment
plan or that are part of an automatic
payroll deduction plan, where you purchased
a security issued by your employer;
(3) Purchases effected upon the exercise of
rights issued by an issuer PRO RATA to all
holders of a class of its securities, as
long as you acquired these rights from the
issuer, and sales of such rights;
(4) Purchases or sales that are non-volitional,
including purchases or sales upon exercise
of written puts or calls, and sales from a
margin account to a BONA FIDE margin call;
(5) Purchases of direct obligations of the
U.S. Government, bankers' acceptances, bank
certificates of deposit, commercial paper,
high quality short-term debt instruments,
including repurchase agreements, and shares
issued by registered, open-end investment
companies.
As indicated on the reports, you may include a statement in
your report that the report shall not be construed as your
admission that you have any direct or indirect beneficial
ownership in a security included in the report.
(e) DUPLICATE BROKER CONFIRMATIONS.
You must direct your broker to send the Review Officer (as
defined below) on a timely basis duplicate copies of
confirmations of all personal securities transactions and
copies of periodic statements. This includes confirmations and
statements for transactions in Fund shares.
(f) INITIAL AND ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE
OF ETHICS.
Within 10 days of becoming an Advisory Person, and each year
thereafter, you must complete the Certification Form, included
as Appendix C.
VII. PROHIBITIONS REGARDING SECURITIES TRANSACTIONS BY ADVISORY PERSONS.
(a) INITIAL PUBLIC OFFERINGS.
You cannot acquire any securities in an initial public
offering.
(b) LIMITED OFFERINGS.
You cannot acquire any securities in a limited offering (e.g.,
private placement).
(c) BLACKOUT PERIODS ON PERSONAL SECURITIES TRANSACTIONS.
(1) You cannot purchase or sell, directly or indirectly,
a security in which you had (or by reason of the
transaction acquire) any beneficial ownership on a
day that any Fund has an unexecuted buy or sell order
in the same (or a related) security until the Funds
order is executed or withdrawn.
<PAGE>
(2) You cannot purchase or sell, directly or indirectly,
any security in which you had (or by reason of such
transaction acquire) any beneficial ownership at any
time within 7 calendar days before or after the time
that the same (or a related) security is being
purchased or sold by any Fund that you manage or for
which you trade.
(3) You cannot purchase or sell, directly or indirectly,
any security in which you had (or by reason of the
transaction acquire) any beneficial ownership at any
time within 7 calendar days before or after you have
issued an investment recommendation regarding that
(or a related) security.
(d) BAN ON SHORT-TERM TRADING PROFITS.
You cannot profit from buying and selling, or selling and
buying, the same security (or its equivalent) within 60
calendar days. For purposes of counting the 60 days, multiple
transactions in the same security will be counted in such a
manner as to produce the shortest time period between
transactions.
This prohibition includes short sales. EXERCISED options are
excluded, but profitable purchases and sales of options
occurring within 60 days are prohibited. Sales at original
purchase price or at a loss are not prohibited. All other
exceptions require the advance written approval from the
Review Officer (as defined below).
VIII. LIMITED PURPOSE ADVISORY PERSONS.
As a Limited Purpose Advisory Person, you must comply with the certification
requirement in Section VI.(f) above. You also must comply with the prohibitions
described below, but only with respect to those securities about which you
obtain information regarding a security being purchased or sold by a Fund or
being considered for purchase by a Fund while performing your regular Bank
functions.
(a) BLACKOUT PERIOD ON PERSONAL SECURITIES TRANSACTIONS.
If you obtain information regarding a security being
purchased or sold by a Fund or being considered for purchase
by a Fund, you cannot purchase or sell, directly or
indirectly, that security (or by reason of the transaction
acquire any beneficial ownership in that security) while such
security is being purchased or sold or is being considered for
purchase by a Fund. Further, you cannot purchase or sell that
security (or by reason of the transaction acquire any
beneficial ownership in that security) at any time during the
7 calendar days after the same (or a related) was purchased or
sold by a Fund.
(b) BAN ON SHORT-TERM TRADING PROFITS.
If you obtain information regarding a security being purchased
or sold by a Fund or being considered for purchase by a Fund,
you cannot profit from buying and selling, or selling and
buying, the same security (or its equivalent) within 60
calendar days. This includes short sales. EXERCISED options
are excluded, but profitable purchases and sales of options
occurring within 60 days are prohibited. Sales at original
purchase price or at a loss are not prohibited. All other
exceptions require the advance written approval from the
Review Officer (as defined below).
IX. REVIEW AND ENFORCEMENT OF THE CODE.
(a) APPOINTMENT OF A REVIEW OFFICER.
<PAGE>
A review officer (the Review Officer) will perform the
duties described below. The Review Officer is Ms. Dorothy
Peters.
(b) THE REVIEW OFFICERS DUTIES AND RESPONSIBILITIES.
(1) The Review Officer will identify each person who is
covered by this Code, as well as each person who is
required to report under the Code. The Review Officer
will inform each person of his or her status under
the Code and applicable reporting and other
requirements no later than 10 days before the first
quarter in which he or she is obligated to begin
reporting.
(2) The Review Officer will, on a quarterly basis,
compare reported personal securities transactions
with each Funds completed portfolio transactions
during the quarter covered by the reports to
determine whether a Code violation may have occurred.
The Review Officer also will compare reported
personal securities transactions with a list of
securities that were considered for purchase by the
Fund during the quarter covered by the reports, and
otherwise review the personal securities transactions
to determine whether a Code violation may have
occurred. The Review Officer may request additional
information or take any other appropriate measure
that the Review Officer decides is necessary to aid
in this determination.
(3) Before determining that a person has violated the
Code, the Review Officer must give the person an
opportunity to supply explanatory material. No person
is required to participate in a determination of
whether he or she has committed a Code violation or
of the imposition of any sanction against himself or
herself.
(4) If required, the Review Officer will submit his or her
own reports to an Alternate Review Officer who will
fulfill the duties of the Review Officer with respect
to such reports. If a securities transaction of the
Review Officer is under review for a possible
violation, an officer of the Bank will act for the
Alternate Review Officer for purposes of this Section
IX.
(c) SANCTIONS.
If the Review Officer finds that a person violated the Code,
the Review Officer may: (i) impose upon the person a notice or
notices of censure; (ii) notify appropriate Bank personnel for
further action; and/or (iii) recommend specific sanctions to
appropriate Bank personnel, such as suspension for one week or
more without pay, reductions in leave, elimination of bonuses
and similar payments, disgorgement of profits, dismissal and
referral to authorities.
X. RECORDKEEPING.
The Bank will maintain records as set forth below, which will be made
available for examination by representatives of the Securities and
Exchange Commission and other regulatory entities.
(a) A copy of this Code and any other code of the Bank, which
is, or at any time within the past five years has been, in
effect will be preserved in an easily accessible place.
(b) A record of any Code violation and of any sanctions taken
will be preserved in an easily accessible place for a period
of at least five years following the end of the fiscal year in
which the violation occurred.
<PAGE>
(c) A copy of each report submitted under this Code will be
preserved for a period of at least five years from the end of
the fiscal year in which it is made, for the first two years
in an easily accessible place.
(d) A record of all persons, currently or within the past five
years, who are or were required to submit reports under this
Code, and a list of those persons who are or were responsible
for reviewing these reports, will be maintained in an easily
accessible place.
(e) A copy of each annual issues and certification report, as
required by Section XI.(c) of this Code, must be maintained
for at least five years from the end of the fiscal year in
which it is made, for the first two years in any easily
accessible place.
XI. MISCELLANEOUS.
(a) Confidentiality. All reports and other information
submitted to the Bank pursuant to this Code will be treated as
confidential, provided that such reports and information may
be produced to the Securities and Exchange Commission and
other regulatory authorities.
(b) Interpretation of Provisions. The Bank may from time to
time adopt such interpretations of this Code as appropriate.
(c) Annual Issues and Certification Report. At least once a
year, the Review Officer will provide each Fund with a WRITTEN
report that:
(1) describes issues that arose during the previous year
under the Code or procedures thereto, including any
material Code or procedural violations, and any
resulting sanctions; and
(2) certifies to the Fund's board of directors or
trustees that the Bank has adopted procedures
necessary to prevent any of its access persons, as
defined under Rule 17j-1, from violating the Code.
Adopted: March 1, 2000
<PAGE>
GLOSSARY
Beneficial ownership means the same as it does under Section 16 of the
Securities Exchange Act of 1934. You should generally consider yourself the
beneficial owner of any securities in which you have a direct or indirect
pecuniary interest. In addition, you should consider yourself the beneficial
owner of securities held by your spouse, your minor children, a relative who
shares your home, or other persons by reason of any contract, arrangement,
understanding or relationship that provides you with sole or shared voting or
investment power.
High quality short-term debt instrument means any instrument that has a maturity
at issuance of less than 366 days and that is rated in one of the two highest
rating categories by a nationally recognized statistical rating organization
(e.g., Moody's Investors Service).
Initial public offering means an offering of securities registered under the
Securities Act of 1933, the issuer of which, immediately before registration,
was not subject to the reporting requirements of Section 13 or Section 15(d) of
the Securities Exchange Act of 1934.
Limited offering means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 504, Rule
505 or Rule 506.
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Security means the same as that set forth in Section 2(a)(36) of the 1940 Act,
except that it does not include direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments, including repurchase agreements, and shares
issued by registered, open-end mutual funds.
A security held or to be acquired by a Fund means (A) any security that, within
the most recent 15 days (i) is or has been held by the Fund, or (ii) is being or
has been considered by the Fund's adviser or sub-adviser for purchase by the
Fund, and (B) any option to purchase or sell, and any security convertible into
or exchangeable for, any security.
A security is being purchased or sold by a Fund from the time a purchase or sale
program has been communicated to the person who places buy and sell orders for
the Fund until the program has been fully completed or terminated.
A security is being considered for purchase by a Fund when a security is
identified as such by the Fund's adviser or sub-adviser.
<PAGE>
APPENDIX A
INITIAL AND ANNUAL REPORT OF SECURITIES HOLDINGS AND ACCOUNTS
Name of Reporting Person:
Date Person Became Subject to the Code's Reporting Requirements: _________
Information in Report Dated As Of: __________
Date Report Due: _______
Date Report Submitted: _________
If this is your first list of securities holdings and accounts, please check
here. 9 If this is an annual report, calendar year ended: ____________
<TABLE>
<S> <C> <C>
SECURITIES HOLDINGS
- ------------------------------------ ------------------------------------------- -------------------------------------------
Name of Issuer Title of Security Number of Shares, Principal Amount,
Interest Rate and Maturity Date
(as applicable)
- ------------------------------------ ------------------------------------------- -------------------------------------------
- ------------------------------------ ------------------------------------------- -------------------------------------------
- ------------------------------------ ------------------------------------------- -------------------------------------------
- ------------------------------------ ------------------------------------------- -------------------------------------------
- ------------------------------------ ------------------------------------------- -------------------------------------------
</TABLE>
If you have no securities holdings to report, please check here ____.
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
<TABLE>
<S> <C> <C>
SECURITIES ACCOUNTS
- -------------------------------------------------- ---------------------------------------- ------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account Date Account Established
(for annual reports only)
- -------------------------------------------------- ---------------------------------------- ------------------------------
- -------------------------------------------------- ---------------------------------------- ------------------------------
- -------------------------------------------------- ---------------------------------------- ------------------------------
- -------------------------------------------------- ---------------------------------------- ------------------------------
- -------------------------------------------------- ---------------------------------------- ------------------------------
</TABLE>
If you have no securities accounts to report, please check here _____.
I certify that I have included on this report all securities holdings and
accounts required to be reported pursuant to the Wells Fargo Bank Code of
Ethics.
Signature Date
<PAGE>
APPENDIX B
QUARTERLY REPORT
Name of Reporting Person:
Calendar Quarter Ended:
Date Report Due: _______ 10, 200__
Date Report Submitted: __________
SECURITIES TRANSACTIONS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
No. of Shares,
Name of Principal Amt.,
Issuer Date of Title of Interest Rate, Type of Name of Broker, Dealer or
Transaction Security Maturity Date Transaction Price Bank Effecting Transaction
(as applicable)
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
- ------------ --------------- ------------ --------------------- -------------- ----------- -----------------------------
</TABLE>
If you had no reportable securities transactions during the quarter, please
check here. ____
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
- ---------------------------------------------------------------------------
- -----------------------------------------------------------------
<TABLE>
<S> <C> <C>
SECURITIES ACCOUNTS
- ------------------------------------------- ------------------------------------------ ----------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account Date Account was Established
- ------------------------------------------- ------------------------------------------ ----------------------------------
- ------------------------------------------- ------------------------------------------ ----------------------------------
- ------------------------------------------- ------------------------------------------ ----------------------------------
- ------------------------------------------- ------------------------------------------ ----------------------------------
</TABLE>
If you did not establish any securities accounts during the quarter, please
check here. 9
I CERTIFY THAT I HAVE INCLUDED ON THIS REPORT ALL SECURITIES TRANSACTIONS AND
ACCOUNTS REQUIRED TO BE REPORTED PURSUANT TO THE WELLS FARGO BANK CODE OF
ETHICS.
Signature Date
<PAGE>
APPENDIX C
CERTIFICATION FORM
TO: Review Officer
FROM: ___________________
DUE DATE: 3/24/00
RE: Wells Fargo Bank Code of Ethics Certification
- --------------------------------------------------------------------------------
INITIAL CERTIFICATION
I CERTIFY THAT (1) I HAVE READ AND UNDERSTAND THE WELLS FARGO BANK CODE OF
ETHICS developed pursuant to requirements set forth in the Investment Company
Act of 1940 - the "17j-1 Code", (2) I have read and understand the Wells Fargo
Bank Code of Ethics and Business Conducts Rules, (3) I AM AWARE THAT I AM
SUBJECT TO THE PROVISIONS OF THIS CODE, AND (4) I WILL FULLY COMPLY WITH THese
CODEs.
Name (print): __________________
Position: ______________________
Signature: _____________________
Date: _________________________
- --------------------------------------------------------------------------------
ANNUAL CERTIFICATION
I CERTIFY THAT (1) I HAVE READ AND UNDERSTAND THE WELLS FARGO BANK CODE OF
ETHICS DEVELOPED PURSUANT TO THE REQUIREMENTS SET FORTH IN THE INVESTMENT
COMPANY ACT OF 1940 - THE "17J-1 CODE" AND THE BANK'S GENERAL CODE OF ETHICS AND
BUSINESS CONDUCT CODE PROVIDED IN THE EMPLOYEE HANDBOOK(2) I AM AWARE THAT I AM
SUBJECT TO THE PROVISIONS OF THESE CODES, (3) I HAVE COMPLIED WITH THESE CODES
AT ALL TIMES DURING THE PREVIOUS CALENDAR YEAR, (4) I HAVE, DURING THE PREVIOUS
CALENDAR YEAR, REPORTED ANY AND ALL SECURITIES HOLDINGS, TRANSACTIONS AND
ACCOUNTS THAT I AM REQUIRED TO REPORT PURSUANT TO THE 17J-1 CODE, AND (5) I WILL
FULLY COMPLY WITH THE CODES .
Name (print): __________________
Position: ______________________
Signature: _____________________
Date: _________________________
<PAGE>
Exhibit (p)(10)
WELLS FARGO FUNDS TRUST
WELLS FARGO VARIABLE TRUST
WELLS FARGO CORE TRUST
JOINT CODE OF ETHICS
ADOPTED UNDER RULE 17J-1
The Wells Fargo Funds Trust, the Wells Fargo Variable Trust and the
Wells Fargo Core Trust (including the Core Trust's "feeder funds" that are
advised or administered by Wells Fargo Bank or an affiliate thereof) (each a
"Fund" and, together, the "Funds") are confident that their officers and
trustees act with integrity and good faith. The Funds recognize, however, that
personal interests may conflict with the Funds' interests where officers or
trustees:
o Know about present or future portfolio transactions, or
o Have the power to influence portfolio transactions; and
o Engage in personal transactions in securities.
In an effort to prevent these conflicts and in accordance with Rule
17j-1(b)(1) under the Investment Company Act of 1940 (the "1940 Act"), the Funds
have adopted this Joint Code of Ethics (the "Code") to prohibit transactions
that create, may create, or appear to create conflicts of interest, and to
establish reporting requirements and enforcement procedures. Although the Funds
have adopted the Code jointly pursuant to Rule 17j-1(b)(1) under the 1940 Act,
each Fund is responsible for implementing the Code on behalf of, and for
compliance therewith by, its own "access persons" as defined under Rule 17j-1.
I. ABOUT THIS CODE OF ETHICS.
This Code sets forth in the attached sections specific prohibitions on
securities transactions and reporting requirements that apply to Fund officers
and trustees. The prohibitions and requirements that apply to each person
covered by this Code are included under Section III (General Principles) and
Section IV (Required Course of Conduct). For your specific reporting
requirements, please refer to Part A or B, as indicated below. Definitions of
underlined terms are included in Appendix A.
<TABLE>
<S> <C>
o Independent trustees
Part A
o Interested trustees, Fund officers and natural control persons Part B
</TABLE>
The remainder of this Code sets forth review, enforcement and
recordkeeping responsibilities (Sections V and VI), obligations of investment
advisers, administrators and distributors (Section VII), and miscellaneous
information (Section VIII).
<PAGE>
II. WHO IS COVERED BY THE CODE OF ETHICS?
o All Fund officers and Special Purpose Investment Personnel;
o All trustees, both interested and independent; and
o Natural persons in a control relationship with a Fund who obtain
information concerning recommendations made to a portfolio of a Fund
(a "Portfolio") about the purchase or sale of a security.
III. STATEMENT OF GENERAL PRINCIPLES.
In recognition of the trust and confidence placed in the Funds by their
shareholders, and because the Funds believe that their operations should benefit
their shareholders, the Funds have adopted the following general principles to
guide its trustees and officers.
(1) Our shareholders' interests are paramount. You must place shareholder
interests before your own.
(2) You must accomplish all personal securities transactions in a manner
that avoids even the appearance of a conflict of your personal
interests with those of the Funds and their shareholders.
(3) You must avoid actions or activities that allow (or appear to allow)
you or your family to profit or benefit from your position with a
Fund, or that bring into question your independence or judgment.
IV. REQUIRED COURSE OF CONDUCT.
(1) PROHIBITION AGAINST FRAUD, DECEIT AND MANIPULATION.
You cannot, in connection with the purchase or sale, directly
or indirectly, of a security held or to be acquired by any
Portfolio:
(A) employ any device, scheme or artifice to defraud any
Portfolio;
(B) make to a Portfolio any untrue statement of a
material fact or omit to state to a Portfolio a
material fact necessary in order to make the
statements made, in light of the circumstances under
which they are made, not misleading;
(C) engage in any act, practice or course of business
which would operate as a fraud or deceit upon any
Portfolio; or
(D) engage in any manipulativ practice with respect to
any Portfolio.
(2) LIMITS ON ACCEPTING OR RECEIVING GIFTS.
You cannot accept or receive any gift of more than DE MINIMIS
value from any person or entity that does business with or on
behalf of the Funds.
(3) REPORTING REQUIREMENTS.
Each quarter you must report transactions in securities that
you beneficially own. These reports must be submitted no later
than 10 days after the end of the quarter. You also may be
required to report your securities holdings annually. See Part
A or B, as appropriate, for your specific reporting
requirements.
<PAGE>
V. REVIEW AND ENFORCEMENT OF THE CODE.
(1) APPOINTMENT OF A REVIEW OFFICER.
A review officer (the "Review Officer") will be appointed by
each Fund's President to perform the duties described below.
(2) THE REVIEW OFFICER'S DUTIES AND RESPONSIBILITIES.
(A) The Review Officer will identify each person who is
covered by this Code, as well as each person who is required
to report personal securities transactions. The Review Officer
will promptly inform each person of his or her status and
reporting requirements.
(B) The Review Officer will, on a quarterly basis, compare all
reported personal securities transactions with the Portfolio's
completed portfolio transactions by the Fund's adviser(s) to
determine whether a Code violation may have occurred. The
adviser(s) will compare all reported personal securities
transactions with securities that were considered for purchase
or sale by a Portfolio during the quarter covered by the
reports, otherwise review the personal securities transactions
to determine whether a Code violation may have occurred, and
promptly report its findings to the Review Officer. Before
determining that a person has violated the Code, the Review
Officer must give the person an opportunity to supply
explanatory material.
(C) If the Review Officer determines that a Code violation may
have occurred, the Review Officer must submit the
determination, together with the confidential quarterly report
and any explanatory material provided by the person, to the
President and fund counsel. The President and fund counsel
will independently determine whether the person violated the
Code.
(D) No person is required to participate in a determination of
whether he or she has committed a Code violation or of the
imposition of any sanction against himself or herself. If a
securities transaction of the President is under
consideration, a Vice President will act for the President for
purposes of this Section V.
(3) SANCTIONS.
If the President and fund counsel find that the person
violated the Code, the President will impose upon the person
ANY sanctions that the President deems appropriate and will
report the violation and any imposed sanctions to the Board of
Trustees at the next regularly scheduled board meeting unless,
in the sole discretion of the President, circumstances warrant
an earlier report. Sanctions may include suspension of
authority to act on behalf of a Fund as an officer or trustee,
or removal from office.
VI. RECORDKEEPING.
The Funds will maintain records as set forth below. These records will
be maintained in accordance with Rule 31a-2 under the 1940 Act and will be
available for examination by representatives of the Securities and Exchange
Commission.
(1) A copy of this Code and any other code which is, or
at any time within the past five years has been, in effect
will be preserved in an easily accessible place;
<PAGE>
(2) A list of all persons who are, or within the past
five years have been, required to submit reports under this
Code will be maintained in an easily accessible place.
(3) A copy of each report made by an officer or trustee
under this Code will be preserved for a period of not less
than five years from the end of the fiscal year in which it is
made, the first two years in an easily accessible place; and
(4) A record of any Code violation and of any sanctions
taken will be preserved in an easily accessible place for a
period of not less than five years following the end of the
fiscal year in which the violation occurred.
VII. AN INVESTMENT ADVISER'S, ADMINISTRATOR'S OR DISTRIBUTOR'S CODE OF
ETHICS.
Each investment adviser to (including any sub-adviser), administrator
for (including any fund accounting services provider), and distributor of shares
of, a Fund must:
(1) Submit to the Board of Trustees of the Fund a copy of its code
of ethics. Each adviser's and distributor's code of ethics
must comply with the recommendations of the Investment Company
Institute's Advisory Group on Personal Investing or be
accompanied by a written statement explaining any differences
and the reasons for the differences. An administrator's code
of ethics must be accompanied by a written statement generally
describing the code, the potential conflicts of interest that
may arise from its role as administrator, the manner in which
the code seeks to prevent such conflicts of interest, and the
procedures that are reasonably designed to detect and prevent
violations of the code;
(2) Promptly report to the Fund in writing any material
amendments to its code of ethics;
(3) Promptly furnish to the Fund, upon request, copies of
any reports made under its code of ethics by any person who is
also covered by the Fund's Code under Section II above;
(4) Immediately furnish to the Review Officer, without
request, all pertinent information regarding any material
violation of its code of ethics; and
(5) Annually furnish to the Fund, without request, all
pertinent information regarding any violations of its code of
ethics by any person who is also covered by the Fund's Code
under Section II above.
VIII. MISCELLANEOUS.
(1) Confidentiality. All personal securities transactions
reports and any other information filed with a Fund under
this Code will be treated as confidential.
(2) Interpretation of Provisions. The Boards of Trustees
may from time to time adopt such interpretations of this Code
as appropriate.
(3) Periodic Review and Reporting. Each President will
report to its Board of Trustees at least annually as to the
operation of this Code and will address in any such report the
need (if any)for further changes or modifications to the Code.
Adopted:
Revised:
<PAGE>
PART A
INDEPENDENT TRUSTEES
(1) REQUIRED TRANSACTION REPORTS.
(A) You must report transactions in securities on a
quarterly basis. You must submit your report to the
Review Officer no later than 10 days after the end of
the calendar quarter in which the transaction to
which the report relates was effected. A Quarterly
Personal Securities Transactions Report is included
as Appendix B. If you had no reportable transactions
during the quarter, you are still required to submit
a report. Please note on your report that you had no
reportable transactions during the quarter, and
return it, signed and dated.
(B) Particular trades are required to be reported only if
you KNEW at the time of the transaction or, in the
ordinary course of fulfilling your official duties as
a trustee, SHOULD HAVE KNOWN, that during the 15-day
period immediately preceding or following the date of
your transaction, the same security was purchased or
sold, or was being considered for purchase or sale,
by a Portfolio.
Note: The "SHOULD HAVE KNOWN" standard does not:
o imply a duty of inquiry;
o presume you should have deduced or extrapolated
from discussions or memoranda dealing with a
Portfolio's investment strategies; or
o impute knowledge from your prior knowledge of a
Portfolio's holdings, market considerations, or
investment policies,objectives and restrictions.
(2) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY
REPORTING REQUIREMENT?
If the transaction is reportable because it comes within
paragraph (1), above, you must report all transactions in
securities that: (i) you directly or indirectly beneficially
own or (ii) because of the transaction, you acquire direct or
indirect beneficial ownership.
(3) WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM
YOUR REPORT?
You are not required to detail or list the following
securities or transactions on your quarterly report:
(A) Securities issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of
deposit, commercial paper or mutual funds.
<PAGE>
(B) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(C) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan, where
you purchase securities issued by your employer.
(D) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
You may include a statement in your report that the report
shall not be construed as your admission that you have any
direct or indirect beneficial ownership in the security or
securities included in the report.
<PAGE>
PART B
INTERESTED TRUSTEES, FUND OFFICERS AND NATURAL CONTROL PERSONS
(1) PROVIDING A LIST OF SECURITIES.
You must provide the Review Officer with a complete listing of
all securities you beneficially own as of [ ]. Each following
year, you must submit a revised list to the Review Officer
showing the securities you beneficially own as of [December
31st]. You must submit the initial listing within 10 days of
the date you first become a trustee, and each update no later
than 30 days after the start of the year.
You are NOT required to provide this list of securities if:
o you are required to provide this information under a
code of ethics described in Section VII of the Trust's
Code, OR
o you are not currently affiliated with or employed by
the Trust's investment adviser(s) or distributor.
(2) REQUIRED TRANSACTION REPORTS.
You must report transactions in securities on a quarterly
basis. You must submit your report to the Review Officer no
later than 10 days after the end of the calendar quarter in
which the transaction to which the report relates was
effected. A Quarterly Personal Securities Transactions Report
is included as Appendix B.
The Review Officer will submit quarterly reports with respect
to his or her own personal securities transactions to an
officer designated to receive his or her reports (the
"Alternate Review Officer"), who will act in all respects in
the manner prescribed herein for the Review Officer.
If you had no reportable transactions during the quarter, you
are still required to submit a report. Please note on your
report that you had no reportable transactions during the
quarter, and return it, signed and dated.
(3) WHAT IF YOU ARE REQUIRED TO FILE REPORTS UNDER
ANOTHER CODE?
You are not required to report your transactions on a
quarterly basis under this Code if you are required to file
such reports under a code of ethics for an entity described in
Section VII of the Code that has a relationship IN THAT
CAPACITY with the Trust.
(4) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY
REPORTING REQUIREMENTS?
You must report all transactions in securities that: (i) you
directly or indirectly beneficially own or (ii) because of the
transaction, you acquire direct or indirect beneficial
ownership.
(5) WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM
YOUR REPORT?
You are not required to detail or list the following
securities or transactions on your report:
(A) Securities issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of
deposit, commercial paper or mutual funds.
<PAGE>
(B) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(C) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan, where
you purchase securities issued by your employer.
(D) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
You may include a statement in your report that the report
shall not be construed as your admission that you have any
direct or indirect beneficial ownership in the security
included in the report.
<PAGE>
APPENDIX A
DEFINITIONS
Beneficial ownership means the same as under Section 16 of the Securities
Exchange Act of 1934. You should generally consider yourself the beneficial
owner of any securities in which you have a direct or indirect pecuniary
interest. In addition, you should consider yourself the beneficial owner of
securities held by your spouse, your minor children, a relative who shares your
home, or other persons by reason of any contract, arrangement, understanding or
relationship that provides you with sole or shared voting or investment power.
Control means the same as that under in Section 2(a)(9) of the 1940 Act. Section
2(a)(9) provides that "control" means 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. Ownership of 25% or
more of a company's outstanding voting security is presumed to give the holder
thereof control over the company. This presumption may be countered by the facts
and circumstances of a given situation.
Independent trustee means a trustee of a Fund who is not an "interested person"
of the Fund within the meaning of Section 2(a)(19) of the 1940 Act.
Interested trustee means a trustee of a Fund who is an "interested person" of
the Fund within the meaning of Section 2(a)(19) of the 1940 Act.
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Security means the same as that set forth in Section 2(a)(36) of the 1940 Act,
except that it does not include securities issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of deposit, commercial paper
or registered, open-end mutual funds.
A security held or to be acquired by a Fund (or any Portfolio) means any
security which, within the most recent 15 days, (i) is or has been held by the
Fund (or any Portfolio), or (ii) is being or has been considered by the Fund's
adviser or sub-adviser for purchase by the Fund (or any Portfolio).
A security is being purchased or sold by the Fund (or any Portfolio) from the
time a purchase or sale program has been communicated to the person who places
buy and sell orders for the Fund (or Portfolio) until the program has been fully
completed or terminated.
A security is being considered for purchase or sale when [research reports?
watch lists?].
Special Purpose Investment Personnel means a person not covered by a code of
ethics described in Section VII, but who, WHILE PERFORMING HIS OR HER REGULAR
FUNCTIONS IN CONNECTION WITH A FUND OR ANY PORTFOLIO (including, where
appropriate, attending Board meetings and other meetings where official Fund
business is discussed or carried on), obtains information regarding purchases or
sales of securities or securities being considered for purchase or sale by any
Portfolio.
<PAGE>
APPENDIX B
QUARTERLY PERSONAL SECURITIES TRANSACTIONS REPORT
Name of Reporting Person:
Calendar Quarter Ended:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
Name of Name of Broker, Dealer or
Issuer Date of Title of No. of Shares/ Type of Bank Effecting Transaction
Transaction Security Principal Amount Transaction Price
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
- ------------ --------------- ------------ -------------------- -------------- -------- -----------------------------
</TABLE>
If you had no reportable transactions during the quarter, please check here. |_|
If you disclaim beneficial ownership of one or more securities reported above,
please describe below and indicate which securities are at issue.
Signature Date
<PAGE>
ANNUAL LIST OF BENEFICIALLY OWNED SECURITIES
Name of Reporting Person:
If this is the first time you have provided a list of securities, please check
here. |_|
<TABLE>
<S> <C>
- ---------------------------------------------------------- ----------------------------------------------------------------
Name of Issuer
Title of Security
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------
</TABLE>
If you own no securities, please check here. |_|
If you intend to disclaim beneficial ownership of one or more securities listed
above, please describe below and indicate which securities are at issue.
Signature Date
<PAGE>
