FORUM FUNDS
497, 2001-01-19
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FORUM                                  STATEMENT OF ADDITIONAL INFORMATION
FUNDS



                                       JANUARY 1, 2001









FUND INFORMATION:
                                       DAILY ASSETS TREASURY OBLIGATIONS FUND
Forum Funds                            DAILY ASSETS GOVERNMENT FUND
Two Portland Square                    DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Portland, Maine 04101                  DAILY ASSETS CASH FUND
(207) 879-0001                         DAILY ASSETS MUNICIPAL FUND
(800) 94FORUM

ACCOUNT INFORMATION AND SHAREHOLDER
SERVICES:

Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(207) 879-0001
(800) 94FORUM








This Statement of Additional  Information or "SAI"  supplements the Prospectuses
dated  January  1,  2001,  as  may  be  amended  from  time  to  time,  offering
Institutional Shares,  Institutional Service Shares and Investor Shares of Daily
Assets Treasury  Obligations  Fund,  Daily Assets  Government Fund, Daily Assets
Government  Obligations  Fund, Daily Assets Cash Fund and Daily Assets Municipal
Fund. This SAI is not a prospectus and should only be read in conjunction with a
prospectus.  You may obtain the Prospectuses  without charge by contacting Forum
Shareholder Services, LLC at the address or telephone number listed above.

Certain  information for the Funds included in the  Prospectuses  and the Annual
Report to shareholders is incorporated into this SAI by reference. Copies of the
Annual Report may be obtained  without  charge by contacting  Forum  Shareholder
Services, LLC at the address or telephone number listed above.



<PAGE>

TABLE OF CONTENTS

Glossary.......................................................................3
Core and Gateway(R)Structure...................................................4
Investment Policies and Risks..................................................4
Investment Limitations........................................................11
Investments by Financial Institutions.........................................14
Performance Data and Advertising..............................................15
Management....................................................................18
Portfolio Transactions........................................................25
Purchase and Redemption Information...........................................26
Taxation......................................................................28
Other Matters.................................................................31
Appendix A - Description of Securities Ratings...............................A-1
Appendix B - Performance Data................................................B-1
Appendix C - Miscellaneous Tables............................................C-1
Appendix D - Additional Advertising Materials................................D-1



                                       2
<PAGE>
GLOSSARY

"Adviser" means Forum Investment Advisors, LLC.

"Board" means the Board of Trustees of the Trust.

"Code" means the Internal Revenue Code of 1986, as amended.

"Core Trust" means Core Trust (Delaware).

"Core Trust Board" means the Board of Trustees of Core Trust.

"Custodian" means the custodian of each Fund's assets.

"FAcS" means Forum Accounting Services, LLC, fund accountant of each Fund.

"FAdS" means Forum Administrative Services, LLC, administrator of each Fund.

"FFS" means Forum Fund Services, LLC, distributor of each Fund's shares.

"FSS" means Forum  Shareholder  Services,  LLC,  transfer agent and distribution
disbursing agent of each Fund.

"Fund"  means each of Daily  Assets  Treasury  Obligations  Fund,  Daily  Assets
Government Fund,  Daily Assets  Government  Obligations  Fund, Daily Assets Cash
Fund and Daily Assets Municipal Fund, series of the Trust.

"Fitch" means Fitch IBCA, Inc.

"Government  Securities"  means  securities  issued  or  guaranteed  by the U.S.
Government, its agencies or instrumentalities (see Prospectuses).

"Moody's" means Moody's Investors Service.

"NAV" means net asset value per share (see Prospectuses).

"NRSRO" means a nationally recognized statistical rating organization.

"Portfolio"  means  each  of  Treasury  Cash  Portfolio,  Government  Portfolio,
Government Cash Portfolio,  Cash Portfolio and Municipal Cash Portfolio,  series
of Core Trust.

"SEC" means the U.S. Securities and Exchange Commission.

"S&P"  means  Standard  & Poor's  Corporation,  a Division  of the  McGraw  Hill
Companies.

"Treasury Securities" means securities issued or guaranteed by the U.S. Treasury
(see Prospectuses).

"Trust" means Forum Funds.

"1933 Act" means the Securities Act of 1933, as amended.

"1940 Act" means the Investment Company Act of 1940, as amended.


                                       3
<PAGE>
CORE AND GATEWAY(R) STRUCTURE

Each Fund is a "gateway"  fund in a Core and  Gateway(R)  structure.  Under this
structure,  each Fund  invests  substantially  all of its  assets in a  separate
Portfolio of Core Trust, another open-end,  management  investment company which
has the same investment objectives and substantially similar investment policies
as the investing Fund, as follows:

Daily Assets Treasury Obligations Fund               Treasury Cash Portfolio
Daily Assets Government Fund                         Government Portfolio
Daily Assets Government Obligations Fund             Government Cash Portfolio
Daily Assets Cash Fund                               Cash Portfolio
Daily Assets Municipal Fund                          Municipal Cash Portfolio

                   CONSIDERATIONS OF INVESTING IN A PORTFOLIO

A Fund's  investment  in a  Portfolio  may be  affected  by the actions of other
investors in the  Portfolio.  A Fund may withdraw its entire  investment  from a
Portfolio at any time if the Board  determines  that it is in the best interests
of the Fund  and its  shareholders  to do so. A  withdrawal  could  result  in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of  investments  for the Fund,  resulting  in increased  risk,  and could affect
adversely the liquidity of the Fund's portfolio.  If the Fund decided to convert
those securities to cash, it would incur  transaction  costs. If a Fund withdrew
its investment  from a Portfolio,  the Board would consider what action might be
taken,  including the  management  of the Fund's  assets in accordance  with its
investment  objective  and  policies  or the  investment  of  all of the  Fund's
investable assets in another pooled  investment entity having  substantially the
same investment objective as the Fund.

                             ADDITIONAL INFORMATION

Each  class of a Fund  (and any  other  investment  company  that  invests  in a
Portfolio)  may have a different  expense  ratio and  different  sales  charges,
including   distribution  fees,  and  each  class'  (and  investment  company's)
performance  will be  affected  by its  expenses  and  sales  charges.  For more
information   concerning  any  other  investment  companies  that  invest  in  a
Portfolio, investors may contact FFS at 800-754-8757.

INVESTMENT POLICIES AND RISKS

The following  discussion  supplements the disclosure in the Prospectuses  about
each Fund's investment objectives, principal investment strategies and principal
risks.  Unless  otherwise  indicated  below,  the  discussion of the  investment
policies  of a  Portfolio  also  refers to the  investment  policies a Fund that
invests therein.

                                  SEC RULE 2A-7

Under Rule 2a-7 of the 1940 Act,  each  Portfolio  normally must invest at least
95% of its total assets in securities  that are rated in the highest  short-term
rating  category (by NRSRO's such as S&P) for debt  obligations,  or are unrated
and  determined  to be of comparable  quality.  Each  Portfolio  will maintain a
dollar-weighted average portfolio maturity of 90 days or less, will not purchase
any instrument with a remaining  maturity  greater than 397 days or subject to a
repurchase  agreement  having a duration  of greater  than 397 days,  will limit
portfolio   investments,   including  repurchase   agreements,   to  those  U.S.
dollar-denominated  instruments that the Core Trust Board has determined present
minimal  credit risks and will comply with certain  reporting and record keeping
procedures.  Core Trust has also established procedures to ensure that portfolio
securities meet a Portfolio's high quality criteria.

Pursuant  to Rule  2a-7,  the Core Trust  Board and the Board  have  established
procedures   to  stabilize  a   Portfolio's   and  a  Fund's  net  asset  value,
respectively,  at $1.00  per  share.  These  procedures  include a review of the
extent of any deviation of net asset value per share as a result of  fluctuating
interest rates,  based on available  market rates,  from a Portfolio's or Fund's
$1.00  amortized cost price per share.  Should that deviation  exceed 1/2 of 1%,
the respective

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<PAGE>

board of  trustees  of a  Portfolio  and Fund will  consider  whether any action
should be initiated to  eliminate  or reduce  material  dilution or other unfair
results to shareholders.  Such action may include  redemption of shares in kind,
selling  portfolio  securities  prior  to  maturity,   reducing  or  withholding
distributions  and  utilizing a net asset value per share as determined by using
available market quotations.

                          SECURITY RATINGS INFORMATION

Moody's,  S&P and other NRSROs are private  services that provide ratings of the
credit  quality  of  debt  obligations,   including  convertible  securities.  A
description  of the range of ratings  assigned to various types of securities by
several  NRSROs is included in Appendix A. Each  Portfolio may use these ratings
to determine whether to purchase,  sell or hold a security.  Ratings are general
and are not absolute  standards of quality.  Securities  with the same maturity,
interest  rate and  rating  may have  different  market  prices.  If an issue of
securities  ceases to be rated or if its rating is reduced after it is purchased
by a Portfolio, the Adviser will determine whether the Portfolio should continue
to hold the security. To the extent that the ratings given by a NRSRO change, as
a result of changes in such  organizations or their rating systems,  the Adviser
will attempt to substitute  securities with comparable  ratings.  Credit ratings
attempt to evaluate  the safety of principal  and  interest  payments and do not
evaluate the risks of  fluctuations in market value.  Also,  rating agencies may
fail to make timely changes in credit  ratings.  An issuer's  current  financial
condition may be better or worse than a rating indicates.

Unrated  securities  may  not be as  actively  traded  as  rated  securities.  A
Portfolio may retain  securities  whose rating has been lowered below the lowest
permissible  rating  category (or that are unrated and determined by the Adviser
to be of  comparable  quality) if the Adviser  determines  that  retaining  such
security is in the best  interest of the  Portfolio.  Because a downgrade  often
results in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.

                           GENERAL RISKS FIXED INCOME

INTEREST RATE RISK

Changes in interest rates affect the market value of the interest-bearing  fixed
income securities held by a Portfolio. There is normally an inverse relationship
between the market value of securities  sensitive to prevailing  interest  rates
and actual  changes in interest  rates.  The longer the remaining  maturity (and
duration)  of a  security,  the more  sensitive  the  security  is to changes in
interest rates. All fixed income securities,  including  Government  Securities,
can change in value when there is a change in interest rates.

CREDIT RISK

A Portfolio's  investment  in fixed income  securities is subject to credit risk
relating to the financial  condition of the issuers of the securities  that each
Portfolio  holds.  Credit risk is the risk that a counterparty  to a transaction
will be unable to honor its  financial  obligation.  To limit credit risk,  each
Portfolio only invests in securities  rated in the highest rating category of an
NRSRO or those that are unrated and deemed to be of comparable credit quality by
the Adviser.

ASSET BACKED SECURITIES

The value of asset backed securities may be significantly affected by changes in
interest  rates,  the markets'  perception of the issuers,  the structure of the
securities and the  creditworthiness  of the parties involved.  The ability of a
Portfolio to successfully utilize asset backed securities depends, in part, upon
the ability of the Adviser to forecast interest rates and other economic factors
correctly. Some asset-backed securities have structures that make their reaction
to interest rate changes and other factors difficult to predict.

Prepayments of principal of asset backed securities by borrowers or foreclosures
on the borrowers affect the average life of asset backed securities. Prepayments
may be  triggered by various  factors,  including  the level of interest  rates,
general economic  conditions,  the location and age of the assets underlying the
security  and other  social  and  demographic  conditions.  In periods of rising
interest rates,  the prepayment rate tends to decrease;  lengthening the average
life of a pool of asset backed securities. A decrease in the rate of prepayments
may extend the effective


                                       5
<PAGE>

maturities of asset backed  securities,  increasing their sensitivity to changes
in market interest rates. In periods of falling  interest rates,  the prepayment
rate tends to  increase,  shortening  the average life of a pool and a Portfolio
may have to reinvest  the  proceeds of  prepayments  at lower  invest rates than
those of its previous  investments.  When this occurs, a Portfolio's  yield will
decline.  The volume of  prepayments  of  principal  in the assets  underlying a
particular asset-backed security will influence the yield of that security and a
Portfolio's  yield.  To the  extent  that a  Portfolio  purchases  asset  backed
securities at a premium, unscheduled prepayments,  which are made at par, result
in a loss equal to any unamortized premium.

                             FIXED INCOME SECURITIES

VARIABLE AND FLOATING RATE SECURITIES

Each Portfolio may invest in fixed income  securities  with variable or floating
rates. The yield of variable and floating rate securities  varies in relation to
changes in specific  money market rates.  A "variable"  interest rate adjusts at
predetermined  intervals  (for  example,  daily,  weekly  or  monthly),  while a
"floating"  interest rate adjusts  whenever a specified  benchmark rate (such as
the bank prime-lending rate) changes. These changes are reflected in adjustments
to the  yield  of the  variable  and  floating  rate  securities  and  different
securities may have different adjustable rates.  Accordingly,  as interest rates
increase or decrease,  the  appreciation  or  depreciation  may be less on these
obligations  than for fixed rate  obligations.  To the extent  that a  Portfolio
invests in long-term variable or floating rate securities,  the Adviser believes
that the  Portfolio  may be able to take  advantage  of the higher yield that is
usually paid on long-term securities.

Each Portfolio will only purchase  variable or floating rate  securities,  whose
interest rate is adjusted based on a single short-term rate or index such as the
Prime  Rate.  Under Rule 2a-7 of the 1940 Act,  a  Portfolio  may only  purchase
securities with maturities of greater than 397 days if they have demand features
that  meet  certain  requirements  or  they  are  certain  long-term  Government
Securities.

Cash Portfolio may purchase  variable and floating rate corporate  master notes.
Master notes with variable or floating interest rates are unsecured  obligations
that are redeemable  upon notice.  You may invest  fluctuating  amounts in these
instruments  at varying rates of interest  under a direct  arrangement  with the
issuer.  These  obligations  include  master demand  notes.  The issuer of these
obligations often has the right, after a given period, to prepay its outstanding
principal obligations upon a specified number of days' notice. These obligations
generally are not traded and there is generally no established  secondary market
for these obligations.  To the extent a demand note does not have a seven-day or
shorter  demand  feature  and  there  is no  readily  available  market  for the
obligation, it is treated as an illiquid security.

ASSET BACKED SECURITIES

Each  Portfolio  may purchase  adjustable  rate  mortgage  backed or other asset
backed  securities  (such as Small  Business  Association  Securities)  that are
Government  Securities.  Treasury Cash  Portfolio may only purchase  mortgage or
asset backed securities that are Treasury Securities.  These securities directly
or indirectly  represent a participation in, or are secured by and payable from,
adjustable  rate  mortgages or other loans that may be secured by real estate or
other assets. Most mortgage backed securities are pass-through securities, which
means that  investors  receive  payments  consisting of a pro-rata share of both
principal and interest (less  servicing and other fees),  as well as unscheduled
prepayments,  as  loans  in the  underlying  mortgage  pool  are paid off by the
borrowers.  Additional  prepayments to holders of these securities are caused by
prepayments resulting from the sale or foreclosure of the underlying property or
refinancing of the underlying loans.  Prepayments of the principal of underlying
loans may shorten the effective maturities of asset backed securities.

ADJUSTABLE RATE MORTGAGE BACKED SECURITIES

Adjustable  rate  mortgage  securities  ("ARMs")  are  pass-through   securities
representing interests in pools of mortgage loans with adjustable interest rates
that are reset at periodic intervals, usually by reference to some interest rate
index or market  interest  rate,  and that may be  subject  to  certain  limits.
Although the rate  adjustment  feature may reduce sharp  changes in the value of
adjustable  rate  securities,  these  securities  can  change in value  based on
changes in market  interest  rates or changes in the issuer's  creditworthiness.
Changes  in the  interest  rates on ARMs may lag


                                       6
<PAGE>

behind  changes  in  prevailing  market  interest  rates.  This may  result in a
slightly lower net value until the interest rate resets to market rates. Thus, a
Portfolio  could suffer some principal loss if the Portfolio sold the securities
before the interest rates on the  underlying  mortgages were adjusted to reflect
current  market rates.  Some ARMs (or the  underlying  mortgages) are subject to
caps or  floors,  that  limit the  maximum  change in  interest  rates  during a
specified period or over the life of the security.

COLLATERALIZED MORTGAGE OBLIGATIONS

Each Portfolio may purchase collateralized mortgage obligations ("CMOs"),  which
are collateralized by ARMs or by pools of conventional mortgages. CMOs typically
have a number of classes or series with different  maturities that are generally
retired in sequence.  Each class of bonds receives  periodic  interest  payments
according  to the  coupon  rate on the bonds.  However,  all  monthly  principal
payments  and any  prepayments  from the  collateral  pool are paid first to the
"Class 1"  bondholders.  The principal  payments are such that the Class 1 bonds
will be  completely  repaid no later  than,  for  example,  five years after the
offering date.  Thereafter,  all payments of principal are allocated to the next
most  senior  class of bonds  until that  class of bonds has been fully  repaid.
Although  full  payoff of each  class of bonds is  contractually  required  by a
certain  date,  any or all classes of bonds may be paid off sooner than expected
because of an  acceleration  in  prepayments of the  obligations  comprising the
collateral pool.

SMALL BUSINESS ADMINISTRATION SECURITIES

Small Business  Administration  ("SBA")  securities are variable rate securities
that are backed by the full faith and credit of the United States Government and
generally  have an interest  rate that resets  monthly or  quarterly  based on a
spread to the Prime Rate. SBA securities  generally have  maturities at issue of
up to 40 years. No Portfolio may purchase an SBA security if,  immediately after
the  purchase,  (1) the  Portfolio  would  have more than 15% of its net  assets
invested in SBA  securities or (2) the total  unamortized  premium (or the total
unaccreted discount) on SBA securities would exceed 0.25% of the Portfolio's net
assets.

FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES

Each Portfolio is currently  prohibited  from  purchasing any security issued by
the  Federal  Home  Loan  Mortgage  Corporation.  This  does  not  prohibit  the
Portfolios  from  entering  into  repurchase   agreements   collateralized  with
securities issued by the Federal Home Loan Mortgage Corporation.

MUNICIPAL SECURITIES

Municipal  Cash  Portfolio  may  invest  in  municipal   securities.   Municipal
securities are issued by the states,  territories  and possessions of the United
States,  their political  subdivisions (such as cities,  counties and towns) and
various  authorities  (such as public  housing  or  redevelopment  authorities),
instrumentalities,  public  corporations  and their special  districts  (such as
water, sewer or sanitary districts).  In addition,  municipal securities include
securities  issued  by or on behalf of public  authorities  to  finance  various
privately operated  facilities,  such as industrial  development bonds, that are
backed  only by the assets and  revenues of the  non-governmental  user (such as
hospitals and airports).

BONDS AND NOTES Municipal securities are issued to obtain funds for a variety of
public purposes, including general financing for state and local governments, or
financing for specific projects or public facilities.  Municipal  securities are
classified  as  general  obligation  bonds,  revenue  bonds and  notes.  General
obligation  securities  are  secured by the  issuer's  pledge of its full faith,
credit and taxing  power for the  payment of  principal  and  interest.  Revenue
securities are payable from revenue derived from a particular facility, class of
facilities  or the proceeds of a special  excise tax or other  specific  revenue
source but not from the issuer's  general taxing power.  Private  activity bonds
and  industrial  revenue  bonds do not  carry the  pledge  of the  credit of the
issuing municipality,  but generally,  are guaranteed by the corporate entity on
whose behalf they are issued.

LEASES State and local  governments and authorities  enter into municipal leases
to  acquire  equipment  and  facilities  such as fire and  sanitation  vehicles,
telecommunications   equipment  and  other  assets.   Municipal   leases  permit
governmental   issuers  to  acquire  property  and  equipment   without  meeting
constitutional  and  statutory  requirements  for  the  issuance  of  debt.  The
debt-issuance  limitations of many state constitutions and statutes do not apply
to


                                       7
<PAGE>

municipal  leases  that  do not  require  the  governmental  issuer  to  satisfy
underlying  obligations  unless  money is  appropriated  for that purpose by the
state legislature on a yearly or periodic basis.

PUTS AND STANDBY  COMMITMENTS ON MUNICIPAL  SECURITIES The Portfolio may acquire
"puts" on municipal securities.  A put gives the Portfolio the right to sell the
municipal  security  at a  specified  price at any time on or before a specified
date.  The  Portfolio  may  sell,  transfer  or assign a put only with the sale,
transfer or  assignment of the  underlying  security or  securities.  The amount
payable to the  Portfolio  upon its  exercise  of a "put" is  normally:  (1) the
Portfolio's  acquisition cost of the municipal securities (excluding any accrued
interest  which the  Portfolio  paid on their  acquisition),  less any amortized
market premium or plus any amortized  market or original  issue discount  during
the period the Portfolio owned the securities;  plus (2) all interest accrued on
the securities since the last interest payment date during that period.

Puts may be  acquired  by the  Portfolio  to  facilitate  the  liquidity  of its
portfolio  assets.  Puts may also be used to facilitate the  reinvestment of the
Portfolio's  assets  at a  rate  of  return  more  favorable  than  that  of the
underlying  security.  Puts may,  under certain  circumstances,  also be used to
shorten the maturity of underlying variable rate or floating rate securities for
purposes of  calculating  the  remaining  maturity of those  securities  and the
dollar-weighted  average  portfolio  maturity  of the  Portfolio's  assets.  The
Portfolio intends to enter into puts only with dealers, banks and broker-dealers
that, in the Adviser's opinion, present minimal credit risks.

The  Portfolio  may purchase  municipal  securities  together  with the right to
resell  them to the  seller or a third  party at an  agreed-upon  price or yield
within specified  periods prior to their maturity dates.  Such a right to resell
is commonly known as a "stand-by  commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by  commitment may be higher than the
price which  otherwise would be paid. The primary purpose of this practice is to
permit  the  Portfolio  to be as fully  invested  as  practicable  in  municipal
securities  while  preserving  the necessary  flexibility  and liquidity to meet
unanticipated  redemptions.  In this regard,  the  Portfolio  acquires  stand-by
commitments solely to facilitate  portfolio  liquidity and does not exercise its
rights thereunder for trading  purposes.  Stand-by  commitments  involve certain
expenses and risks,  including the inability of the issuer of the  commitment to
pay  for  the   securities   at  the   time   the   commitment   is   exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying  security and the maturity of the commitment.  The Portfolio's policy
is to enter into stand-by commitment transactions only with municipal securities
dealers that are determined to present minimal credit risks.

The  acquisition  of a stand-by  commitment  does not affect  the  valuation  or
maturity of the underlying  municipal  securities  that continue to be valued in
accordance with the amortized cost method.  Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value.  When the Portfolio
pays directly or indirectly for a stand-by commitment,  its cost is reflected as
unrealized  depreciation  for the period  during which the  commitment  is held.
Stand-by  commitments  do  not  affect  the  average  weighted  maturity  of the
Portfolio's portfolio of securities.

OTHER MUNICIPAL  OBLIGATIONS Variable Rate Demand Notes are municipal bonds with
maturities  of up to 40 years.  These  instruments  have a demand  feature  that
permits the holder to sell the instruments back to the issuer. A holder of these
instruments may exercise the demand feature at predetermined intervals,  usually
daily or  weekly.  The  interest  rate on these  securities  mirrors  prevailing
interest  rates.  Tender option bonds have  relatively long maturities and fixed
rates of interest.  Under an agreement with a third party financial institution,
a holder of these bonds may tender them to the  institution and receive the face
value of the bonds.  A holder may  exercise  this option at periodic  intervals,
usually six months to a year.

ALTERNATIVE MINIMUM TAX Municipal securities are also categorized  according to:
(1) whether the interest is or is not included in the calculation of alternative
minimum  taxes  for  individuals  and  corporations;  (2)  whether  the costs of
acquiring or carrying the bonds are or are not  deductible  in part by banks and
other financial institutions; and (3) other criteria relevant for Federal income
tax  purposes.  Due  to  the  increasing  complexity  of the  Code  and  related
requirements  governing the issuance of tax-exempt bonds,  industry practice has
uniformly   required  as  a  condition  to  the  issuance  of  such  bonds,  but
particularly for revenue bonds, an opinion of nationally recognized bond counsel
as to the tax-exempt status of interest on the bonds.

                                       8
<PAGE>

                             ZERO COUPON SECURITIES

Government Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest  components of Treasury  Securities
issued or guaranteed  under the U.S.  Treasury's  Separate Trading of Registered
Interest and Principal of Securities  ("STRIPS")  program.  These securities are
sold at  original  issue  discount  and pay no  interest  to  holders  prior  to
maturity.  Because  of this,  zero-coupon  securities  may be subject to greater
fluctuation of market value than the other securities in which the Portfolio may
invest.  All zero-coupon  securities in which the Portfolio  invests will have a
maturity of less than 13 months.

The  Portfolio  must  include  a  portion  of the  original  issue  discount  of
zero-coupon  securities,  if any, as income even though these  securities do not
pay any interest until  maturity.  Because the Portfolio  distributes all of its
net investment  income,  the Portfolio may have to sell Portfolio  securities to
distribute imputed income,  which may occur at a time when the Adviser would not
have chosen to sell such  securities  and which may result in a taxable  gain or
loss.

                  REPURCHASE AGREEMENTS AND SECURITIES LENDING

GENERAL

Each Portfolio may enter into repurchase  agreements.  Repurchase agreements are
transactions in which a Portfolio purchases securities from a bank or securities
dealer and simultaneously commits to resell the securities to the bank or dealer
at an  agreed-upon  date and at a price  reflecting  a market  rate of  interest
unrelated to the purchased security.  During the term of a repurchase agreement,
a  Portfolio's   custodian,   subcustodian  or  tri-party   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 a Portfolio to earn income on its uninvested  cash for periods as short as
overnight, while retaining the flexibility to pursue longer-term investments.

RISKS

Repurchase  agreements  involve  credit  risk.  In the  event  that  bankruptcy,
insolvency  or similar  proceedings  are  commenced  against a  counterparty,  a
Portfolio  may have  difficulties  in  exercising  its rights to the  underlying
securities.  A Portfolio may incur costs and expensive  time delays in disposing
of the  underlying  securities,  and it may suffer a loss.  Failure by the other
party to deliver a security or currency purchased by a Portfolio may result in a
missed opportunity to make an alternative investment.  Favorable insolvency laws
that allow a Portfolio,  among other things, to liquidate the collateral held in
the event of the bankruptcy of the counterparty reduce  counterparty  insolvency
risk with respect to repurchase  agreements.  A Portfolio will only enter into a
repurchase  agreement with a seller that the Adviser  believes  presents minimal
credit risk.

                                    BORROWING
GENERAL

Each  Portfolio may borrow money from banks for temporary or emergency  purposes
in an amount up to 33 1/3% of the Portfolio's  total assets.  Each Portfolio may
borrow money for other  purposes so long as such  borrowings do not exceed 5% of
the  Portfolio's  total  assets.  The purchase of  securities is prohibited if a
Portfolio's borrowing exceeds 5% or more of its total assets.

RISKS

Interest  costs on borrowing  may offset or exceed the return earned on borrowed
funds (or on the assets  that were  retained  rather than sold to meet the needs
for which funds were  borrowed).  Under adverse market  conditions,  a Portfolio
might have to sell portfolio  securities to meet interest or principle  payments
at a time when  investment  considerations  would not favor such sales.  Reverse
repurchase  agreements  and other  similar  investments  that  involve a form of
leverage  have  characteristics  similar to  borrowing,  but are not  considered
borrowing if a Portfolio maintains a segregated account.
                                       9
<PAGE>


                             WHEN-ISSUED SECURITIES

GENERAL

Each   Portfolio  may  purchase   securities   offered  on  a   when-issued   or
delayed-delivery basis. When these transactions are negotiated, the price, which
is generally  expressed in yield terms,  is fixed at the time the  commitment is
made,  but delivery and payment for the  securities  take place at a later date.
Normally,  the settlement  date occurs within a certain period of time after the
transaction,  but delayed  settlements  beyond  that  period may be  negotiated.
During the period  between a commitment and  settlement,  no payment is made for
the securities  purchased by the purchaser and thus, no interest  accrues to the
purchaser from the transaction.  At the time a Portfolio makes the commitment to
purchase  securities on a when-issued or  delayed-delivery  basis, the Portfolio
will record the transaction as a purchase and thereafter  reflect the value each
day of such securities in determining its net asset value.

RISKS

At the time a  Portfolio  makes a  commitment  to  purchase  securities  in this
manner, the Portfolio  immediately assumes the risk of ownership,  including the
risk  that  the  value  of the  security  may  decline.  The use of  when-issued
transactions  enables a  Portfolio  to protect  against  anticipated  changes in
interest  rates  and  prices,  but  may  also  increase  the  volatility  of the
Portfolio's  asset  value per  unit.  Failure  by a  counterparty  to  deliver a
security purchased by a Portfolio on a when-issued or delayed-delivery basis may
result in a loss to the Portfolio or a missed opportunity to make an alternative
investment.

                               ILLIQUID SECURITIES

GENERAL

Each  Portfolio  may invest up to 10% of its net assets in illiquid  securities.
The term "illiquid  securities"  means  repurchase  agreements not entitling the
holder to payment of principal  within seven days and  securities  with legal or
contractual restrictions on resale or the absence of a readily available market.
Certificates  of  deposit  and other  fixed  time  deposits  that carry an early
withdrawal  penalty or mature in greater than seven days are treated as illiquid
securities if there is no readily available market for the instrument.

RISKS

Limitations  on resale  may have an  adverse  effect on the  marketability  of a
security and a Portfolio  might also have to register a  restricted  security in
order to dispose of it, resulting in expense and delay. A Portfolio might not be
able to dispose of restricted or illiquid  securities  promptly or at reasonable
prices and might thereby experience difficulty-satisfying redemptions. There can
be no  assurance  that a  liquid  market  will  exist  for any  security  at any
particular time. Any security, including securities determined by the Adviser to
be liquid, can become illiquid.

DETERMINATION OF LIQUIDITY

The Adviser  determines and monitors the liquidity of the portfolio  securities.
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.


                                       10
<PAGE>
INVESTMENT LIMITATIONS

Each Fund has adopted the same investment  limitations as the Portfolio in which
it invests.  The  investment  objective of a Portfolio and Fund is  fundamental.
Each  Portfolio and Fund have also adopted a fundamental  policy which  provides
that,  notwithstanding  any  other  investment  policy or  restriction  (whether
fundamental  or not),  the Portfolio or Fund may invest all of its assets in the
securities  of a single pooled  investment  fund having  substantially  the same
investment  objectives,  policies and restrictions as the Fund or Portfolio,  as
applicable.

A  fundamental  policy of a  Portfolio  or Fund  cannot be changed  without  the
affirmative vote of the lesser of: (1) 50% of the outstanding shares of the Fund
(or  interests  of a  Portfolio);  or (2)  67% of the  shares  of the  Fund  (or
interests  of  a  Portfolio)  present  or  represented  at  a  shareholders  (or
interestholders in the case of a Portfolio) meeting at which the holders of more
than 50% of the outstanding shares of the Fund (or interests of a Portfolio) are
present or represented.  The Board may change a nonfundamental  policy of a Fund
without shareholder consent, and the Core Trust Board may change a nonfundmental
policy of a Portfolio without interestholder consent.

For purposes of all  investment  policies of a Portfolio  or Fund:  (1) the term
1940 Act includes the rules thereunder,  SEC  interpretations  and any exemptive
order upon which the Portfolio or 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 Portfolio or Fund may rely.

Except as required by the 1940 Act or the Code, if any percentage restriction on
investment or  utilization  of assets is adhered to at the time an investment is
made, a later change in percentage  resulting from a change in the market values
of a Fund's or  Portfolio's  assets or purchases and  redemptions of shares will
not be considered a violation of the limitation.

                             FUNDAMENTAL LIMITATIONS

GOVERNMENT PORTFOLIO

The Portfolio may not:

DIVERSIFICATION With respect to 75% of its assets,  purchase  securities,  other
than a  Government  Security,  of any one issuer if more than 5% of the value of
the  Portfolio's  total  assets would at the time of purchase be invested in any
one issuer.

CONCENTRATION  Purchase securities,  other than Government  Securities,  if more
than 25% of the value of the  Portfolio's  total  assets  would be  invested  in
securities of issuers  conducting their principal  business activity in the same
industry,  provided  that consumer  finance  companies  and  industrial  finance
companies are considered to be separate industries and that there is no limit on
the purchase of the securities of domestic commercial banks.

For purposes of  concentration:  (1) loan  participations  are  considered to be
issued by both the  issuing  bank and the  underlying  corporate  borrower;  (2)
utility companies are divided according to their services (for example, gas, gas
transmission,  electric  and  telephone  will  each  be  considered  a  separate
industry);  and (3) financial service companies will be classified  according to
the end users of their services,  for example,  automobile finance, bank finance
and diversified finance will each be considered a separate industry.

UNDERWRITING Act as an underwriter of securities of other issuers, except to the
extent that, in connection  with the  disposition of portfolio  securities,  the
Portfolio may be deemed to be an underwriter  for purposes of the Securities Act
of 1933.

REAL  ESTATE  Purchase or sell real estate or any  interest  therein  (including
limited  partnership  interests),  except that the  Portfolio may invest in debt
obligations  secured by real estate or interests  therein or issued by companies
that invest in real estate or interests therein.

COMMODITIES  Purchase or sell  physical  commodities  or  contracts  relating to
physical  commodities,  provided that currencies and currency-related  contracts
will not be deemed to be physical commodities.

                                       11
<PAGE>

BORROWING Borrow money,  except for temporary or emergency  purposes  (including
the meeting of redemption requests).  Total borrowings may not exceed 33 1/3% of
the  Portfolio's  total assets and  borrowing  for  purposes  other than meeting
redemptions  may not  exceed 5% of the value of the  Portfolio's  total  assets.
Outstanding  borrowings  in excess of 5% of the value of the  Portfolio's  total
assets  must  be  repaid  before  any  subsequent  investments  are  made by the
Portfolio.

SENIOR  SECURITIES Issue senior  securities except pursuant to Section 18 of the
1940 Act and except that the  Portfolio  may borrow money  subject to investment
limitations specified in the Portfolio's Prospectus.

LENDING Make loans,  except that the Portfolio may: (1) purchase debt securities
which  are  otherwise  permissible   investments;   (2)  enter  into  repurchase
agreements; and (3) lend portfolio securities, but not in an amount greater than
33 1/3% of the value of the Portfolio's total assets.

PLEDGING Pledge,  mortgage or hypothecate its assets, except to secure permitted
indebtedness. Collateralized loans of securities are not deemed to be pledges or
hypothecations for this purpose.

OPTIONS Write put and call options.

INVESTING  FOR CONTROL  Invest for the purpose of  exercising  control  over any
person.

RESTRICTED SECURITIES  Purchase restricted securities.

TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO AND MUNICIPAL
CASH PORTFOLIO

Each Portfolio may not:

DIVERSIFICATION  With  respect to 75% of its assets,  purchase a security  other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer.

CONCENTRATION Purchase securities if, immediately after the purchase,  more than
25% of the  value of the  Portfolio's  total  assets  would be  invested  in the
securities of issuers  having their  principal  business  activities in the same
industry;  provided,  however,  that  there is no limit on  investments  in U.S.
Government Securities.

For purposes of  concentration:  (1) loan  participations  are  considered to be
issued by both the  issuing  bank and the  underlying  corporate  borrower;  (2)
utility companies are divided according to their services (for example, gas, gas
transmission,  electric  and  telephone  will  each  be  considered  a  separate
industry);  and (3) financial service companies will be classified  according to
the end users of their services,  for example,  automobile finance, bank finance
and diversified finance will each be considered a separate industry.

UNDERWRITING  Underwrite securities of other issuers,  except to the extent that
the Portfolio may be  considered  to be acting as an  underwriter  in connection
with the disposition of portfolio securities.

REAL ESTATE  Purchase or sell real estate or any interest  therein,  except that
the Portfolio may invest in debt obligations secured by real estate or interests
therein or issued by companies that invest in real estate or interests therein.

COMMODITIES  Purchase or sell  physical  commodities  or  contracts  relating to
physical  commodities,  provided that currencies and currency-related  contracts
will not be deemed to be physical commodities.

BORROWING Borrow money,  except for temporary or emergency  purposes  (including
the  meeting  of  redemption  requests)  and except for  entering  into  reverse
repurchase  agreements,  provided  that  borrowings do not exceed 33 1/3% of the
value of the Portfolio's total assets.

                                       12
<PAGE>

SENIOR  SECURITIES  Issue senior  securities  except as  appropriate to evidence
indebtedness  that the  Portfolio is permitted to incur,  and provided  that the
Portfolio may issue shares of additional series or classes that the Trustees may
establish.

LENDING Make loans, except for loans of portfolio securities, through the use of
repurchase  agreements,  and through the  purchase of debt  securities  that are
otherwise permitted investments.

THRIFT INVESTOR LIMITATIONS With respect to Government Cash Portfolio,  purchase
or hold any security that: (1) a Federally chartered savings association may not
invest in, sell,  redeem,  hold or otherwise deal pursuant to law or regulation,
without limit as to percentage of the association's  assets; and (2) pursuant to
12 C.F.R.  Section 566.1 would cause shares of the Portfolio not to be deemed to
be  short  term  liquid  assets  when  owned  by  Federally   chartered  savings
associations.

                           NONFUNDAMENTAL LIMITATIONS

GOVERNMENT PORTFOLIO

The Portfolio may not:

DIVERSIFICATION  With respect to 100% of its assets,  purchase a security  other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer,  unless the
investment is permitted by Rule 2a-7 under the 1940 Act.

SECURITIES WITH VOTING RIGHTS Purchase  securities having voting rights,  except
the  Portfolio may invest in  securities  of other  investment  companies to the
extent permitted by the 1940 Act.

MARGIN;  SHORT  SALES  Purchase  securities  on margin,  or make short  sales of
securities,  except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.

LIQUIDITY Acquire securities or invest in repurchase  agreements with respect to
any  securities  if, as a result,  more than 10% of the  Portfolio's  net assets
(taken  at  current  value)  would be  invested  in  repurchase  agreements  not
entitling the holder to payment of principal within seven days and in securities
that are illiquid by virtue of legal or  contractual  restrictions  on resale or
the absence of a readily available market.

TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO AND MUNICIPAL
CASH PORTFOLIO

Each Portfolio may not:

DIVERSIFICATION  With respect to 100% of its assets,  purchase a security  other
than a U.S. Government Security if, as a result, more than 5% of the Portfolio's
total assets would be invested in the securities of a single issuer,  unless the
investment is permitted by Rule 2a-7 under the 1940 Act.

BORROWING Purchase  securities for investment while any borrowing equaling 5% or
more of the  Portfolio's  total  assets is  outstanding;  and if at any time the
Portfolio's  borrowings exceed the Portfolio's  investment  limitations due to a
decline in net assets,  such  borrowings  will be promptly  (within  three days)
reduced to the extent  necessary to comply with the  limitations.  Borrowing for
purposes other than meeting redemption  requests will not exceed 5% of the value
of the Portfolio's total assets.

SECURITIES  WITH VOTING  RIGHTS  Purchase  securities  that have voting  rights,
except the Portfolio may invest in securities of other  investment  companies to
the extent permitted by the 1940 Act.

MARGIN;  SHORT  SALES  Purchase  securities  on margin,  or make short  sales of
securities,  except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.

                                       13
<PAGE>

LIQUIDITY Acquire securities or invest in repurchase  agreements with respect to
any  securities  if, as a result,  more than 10% of the  Portfolio's  net assets
(taken  at  current  value)  would be  invested  in  repurchase  agreements  not
entitling the holder to payment of principal within seven days and in securities
that are illiquid by virtue of legal or  contractual  restrictions  on resale or
the absence of a readily available market.


INVESTMENTS BY FINANCIAL INSTITUTIONS


      INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - GOVERNMENT CASH PORTFOLIO

Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company  organized under the laws of the United States or
any state thereof,  would be assigned to a risk-weight  category of no more than
20% under the current risk based capital  guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's  investment  portfolio  will  be  modified  accordingly,   including
disposing of Portfolio  securities or other  instruments  that no longer qualify
under the  Guidelines.  In addition,  the Portfolio  does not intend to hold any
securities or instruments that would be subject to restriction as to amount held
by a national  bank under Title 12,  Section 24 (Seventh)  of the United  States
Code.  If the  Portfolio  includes  any  instruments  that would be subject to a
restriction  as to amount held by a national  bank,  investment in the Portfolio
may be limited.

The Guidelines  provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted  security or
instrument that the fund is permitted to hold. Accordingly,  Portfolio interests
should qualify for a 20%  risk-weighting  under the  Guidelines.  The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a  risk-weighting  below 100% due to  limitations  on the assets which it is
permitted  to hold,  bank  examiners  may review the  treatment of the shares to
ensure  that  they  have  been  assigned  an  appropriate  risk-weight.  In this
connection,  the Guidelines  provide that,  regardless of the  composition of an
investment  fund's  assets,  shares of a  Portfolio  may be assigned to the 100%
risk-weight  category if it is  determined  that the fund engages in  activities
that appear to be  speculative in nature or has any other  characteristics  that
are  inconsistent  with a lower  risk-weighting.  The  Adviser  has no reason to
believe that such a  determination  would be made with respect to the Portfolio.
There are  various  subjective  criteria  for  making  this  determination  and,
therefore,  it is not  possible to provide  any  assurance  as to how  Portfolio
interests will be evaluated by bank examiners.

Before acquiring shares of Daily Assets Government Obligations Fund, prospective
investors that are banks or bank holding companies,  particularly those that are
organized  under the laws of any country  other than the United States or of any
state,  territory  or other  political  subdivision  of the United  States,  and
prospective  investors  that are U.S.  branches and agencies of foreign banks or
Edge Corporations, should consult all applicable laws, regulations and policies,
as well as appropriate  regulatory bodies, to confirm that an investment in Fund
shares is permissible and in compliance with any applicable  investment or other
limits.

Shares of Daily Assets  Government  Obligations  Fund held by national banks are
generally required to be revalued periodically and reported at the lower of cost
or  market  value.  Such  shares  may  also be  subject  to  special  regulatory
reporting,  accounting and tax treatment. In addition, a bank may be required to
obtain  specific  approval  from its board of directors  before  acquiring  Fund
shares,  and thereafter may be required to review its investment in the Fund for
the purpose of  verifying  compliance  with  applicable  Federal  banking  laws,
regulations and policies.

National banks generally must review their  investment  holdings of Daily Assets
Government  Obligations  Fund at  least  quarterly  to  ensure  compliance  with
established bank policies and legal requirements.  Upon request, Government Cash
Portfolio  will make  available to Daily Assets  Government  Obligations  Fund's
investors' information relating to the size and composition of its portfolio.

                                       14
<PAGE>

               INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS -
              GOVERNMENT CASH PORTFOLIO AND TREASURY CASH PORTFOLIO

Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally  permissible for Federally  chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section  1757(7),  (8) and (15)) and the applicable rules and regulations of the
National Credit Union  Administration  (including 12 C.F.R. Part 703, Investment
and Deposit  Activities),  as such  statutes  and rules and  regulations  may be
amended.  The  Portfolios  limit  their  investments  to  Government  Securities
(including  Treasury STRIPS) and repurchase  agreements fully  collateralized by
Government Securities. Certain Government Securities owned by a Portfolio may be
mortgage or asset backed,  but no such security will be: (1) a stripped mortgage
backed security ("SMBS");  (2) a CMO or real estate mortgage  investment conduit
("REMIC")  that does not meet all of the  tests  outlined  in 12 C.F.R.  Section
703.100(e);  or (3) a residual  interest in a CMO or REMIC.  Each Portfolio also
may  invest  in  reverse  repurchase  agreements  in  accordance  with 12 C.F.R.
703.100(j) to the extent otherwise permitted herein and in the Prospectuses.

   INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT CASH
                                   PORTFOLIO

Government Cash Portfolio  limits its  investments to those legally  permissible
for  Federally  chartered  savings  associations  without limit as to percentage
under  applicable  provisions of the Home Owners' Loan Act  (including 12 U.S.C.
Section 1464) and the applicable  rules and  regulations of the Office of Thrift
Supervision,  as such  statutes  and rules and  regulations  may be amended.  In
addition, the Portfolio limits its investments to those that are permissible for
an open-end investment company to hold and would permit shares of the investment
company to qualify as liquid  assets  under 12 C.F.R.  Section  566.1(g)  and as
short-term liquid assets under 12 C.F.R. Section 566.1(h).


PERFORMANCE DATA AND ADVERTISING

                                PERFORMANCE DATA

A Fund may quote  performance  in  various  ways.  All  performance  information
supplied  in  advertising,  sales  literature,   shareholder  reports  or  other
materials is historical and is not intended to indicate future returns.

A Fund may compare any of its performance information with:

     o    Data published by independent  evaluators such as  Morningstar,  Inc.,
          Lipper Inc., iMoneyNet, Inc., CDA/Wiesenberger or other companies that
          track  the  investment  performance  of  investment  companies  ("Fund
          Tracking  Companies").
     o    The performance of other mutual funds.
     o    The performance of recognized stock, bond and other indices, including
          but not limited to U.S. Treasury bonds,  bills or notes and changes in
          the  Consumer  Price  Index as  published  by the U.S.  Department  of
          Commerce.

Performance  information  may be presented  numerically or in a table,  graph or
similar illustration.

Indices are not used in the  management  of a Fund but rather are  standards  by
which the Adviser and shareholders may compare the performance of the Fund to an
unmanaged   composite  of   securities   with   similar,   but  not   identical,
characteristics as the Fund.

A Fund may refer to: (1) general market  performance over past time periods such
as those  published by Ibbotson  Associates (for instance,  its "Stocks,  Bonds,
Bills and Inflation  Yearbook");  (2) mutual fund performance rankings and other
data  published by Fund  Tracking  Companies;  and (3) material and  comparative
mutual  fund data and  ratings  reported  in  independent  periodicals,  such as
newspapers and financial magazines.

A Fund's  performance will fluctuate in response to market  conditions and other
factors.

                                       15
<PAGE>

                            PERFORMANCE CALCULATIONS

A Fund's performance may be quoted in terms of yield or total return. Appendix B
includes certain performance information for each Fund.

SEC YIELD

Yield  quotations  for a Fund or class  will  include an  annualized  historical
yield,  carried  at  least  to  the  nearest  hundredth  of one  percent.  Yield
quotations are based on a specific  seven-calendar-day period and are calculated
by (1)  dividing  the net change in the value of the Fund  during the  seven-day
period having a balance of one share at the beginning of the period by the value
of the account at the beginning of the period and (2)  multiplying  the quotient
by 365/7.  The net  change in account  value  reflects  the value of  additional
shares  purchased  with  dividends  declared and dividends  declared on both the
original  share  and any such  additional  shares,  but would  not  reflect  any
realized  gains  or  losses  from  the  sale  of  securities  or any  unrealized
appreciation or depreciation on portfolio securities. In addition, any effective
annualized  yield  quotation  used by a Fund is  calculated by  compounding  the
current yield quotation for such period by adding 1 to the product,  raising the
sum to a  power  equal  to  365/7,  and  subtracting  1  from  the  result.  The
standardized  tax  equivalent  yield is the rate an investor  would have to earn
from a fully  taxable  investment  in order to equal a Fund's yield after taxes.
Tax equivalent yields are calculated by dividing a Fund's yield by one minus the
stated Federal or combined  Federal and state tax rate. If a portion of a Fund's
yield is tax-exempt, only that portion is adjusted in the calculation.

TOTAL RETURN CALCULATIONS

A Fund's or class' total return shows its overall change in value, assuming that
all of the Fund's or class' distributions are reinvested.

AVERAGE ANNUAL TOTAL RETURN

Average annual total return is calculated using a formula prescribed by the SEC.
To  calculate  standard  average  annual  total  returns,  a Fund or class:  (1)
determines  the  growth or  decline  in the value of a  hypothetical  historical
investment in the Fund or class over a stated  period;  and (2)  calculates  the
annually compounded  percentage rate that would have produced the same result if
the rate of growth or decline in value had been  constant  over the period.  For
example,  a  cumulative  return of 100% over ten years would  produce an average
annual  total return of 7.18%.  While  average  annual  returns are a convenient
means of  comparing  investment  alternatives,  investors  should  realize  that
performance  is not constant  over time but changes from year to year,  and that
average annual returns represent  averaged figures as opposed to the actual year
to year performance of a Fund or class.

Average annual total return is calculated according to the following formula:
               n
         P(1+T)  = ERV

         Where:

               P    =   a  hypothetical  initial  payment  of  $1,000
               T    =   average annual total return
               n    =   number of years
               ERV  =   ending redeemable value: ERV is the value, at the end of
                        the applicable period, of a hypothetical $1,000  payment
                        made at the beginning of the applicable period

Because average annual returns tend to smooth out variations in Fund's or class'
returns,  shareholders  should  recognize  that  they are not the same as actual
year-to-year results.

OTHER  MEASURES  OF  TOTAL  RETURN  Standardized  total  return  quotes  may  be
accompanied by  non-standardized  total return figures calculated by alternative
methods.

A Fund or class may quote  unaveraged or cumulative total returns that reflect a
Fund's or class's performance over a stated period of time.

                                       16
<PAGE>

Total returns may be stated in their components of income and capital (including
capital  gains  and  changes  in  share  price)  in  order  to  illustrate   the
relationship of these factors and their contributions to total return.

Any total return may be quoted as a percentage or as a dollar amount, and may be
calculated for a single  investment,  a series of investments and/or a series of
redemptions over any time period.

Period total return is calculated according to the following formula:

         PT = (ERV/P-1)

         Where:
                  PT   =    period total return
                  The other definitions are the same as in average annual  total
                  return above

                                  OTHER MATTERS

A Fund or class may also include various  information in its advertising,  sales
literature,  shareholder reports or other materials  including,  but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio  diversification  by instrument  type, by  instrument,  by location of
issuer  or  by  maturity;  (2)  statements  or  illustrations  relating  to  the
appropriateness  of types of securities and/or mutual funds that may be employed
by an investor to meet specific  financial  goals,  such as funding  retirement,
paying for children's  education and financially  supporting aging parents;  (3)
information   (including  charts  and  illustrations)  showing  the  effects  of
compounding  interest  (compounding  is  the  process  of  earning  interest  on
principal plus interest that was earned  earlier;  interest can be compounded at
different  intervals,  such as annually,  quarterly or daily);  (4)  information
relating to  inflation  and its effects on the dollar  (For  example,  after ten
years the purchasing power of $25,000 would shrink to $16,621,  $14,968, $13,465
and $12,100,  respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%,  respectively);  (5)  biographical  descriptions of a Portfolio's  portfolio
managers and the portfolio management staff of a Portfolio's Adviser,  summaries
of the views of the portfolio managers with respect to the financial markets, or
descriptions  of  the  nature  of  the  Adviser's  and  its  staff's  management
techniques; (6) the results of a hypothetical investment in a Fund or class over
a given number of years,  including the amount that the  investment  would be at
the end of the period;  (7) the effects of investing in a tax-deferred  account,
such as an individual retirement account or Section 401(k) pension plan; (8) the
net asset value,  net assets or number of  shareholders of a Fund or class as of
one or more dates; and (9) a comparison of a Fund's or class'  operations to the
operations of other funds or similar investment  products,  such as a comparison
of the nature and scope of regulation of the products and the products' weighted
average maturity, liquidity,  investment policies, and the manner of calculating
and reporting performance.

In connection with its advertisements,  a Fund or class may provide "shareholder
letters" that provide  shareholders  or investors  with an  introduction  to the
Fund's,  the  Trust's  or any of the  Trust's  service  provider's  policies  or
business practices.

                                       17
<PAGE>
MANAGEMENT

                       TRUSTEES AND OFFICERS OF THE TRUST

The names of the  Trustees and officers of the Trust,  their  position  with the
Trust,  address,  date of birth and principal  occupations  during the past five
years are set forth  below.  Each  Trustee  who is an  "interested  person"  (as
defined by the 1940 Act) of the Trust is indicated by an asterisk (*). The Board
formulates the general  policies of each Fund and meets  periodically  to review
each Fund's  performance,  monitor  investment  securities  and  practices,  and
discuss other matters affecting each Fund.
<TABLE>
<S>                           <C>                 <C>
NAME,                         POSITION WITH      PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS               THE TRUST          PAST 5 YEARS
John Y. Keffer*               Chairman and       Member  and  Director,  Forum  Financial  Group,  LLC (a mutual  fund
Born:  July 15, 1942          President          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 Azariadis              Trustee            Professor of Economics, University of California-Los Angeles
Born:  February 15, 1943                         Visiting Professor of Economics, Athens University of Economics and
Department of Economics                          Business 1998 - 1999
University of California                         Trustee of one other investment company for which Forum Financial
Los Angeles, CA 90024                            Group, LLC provides services
 ............................. .................. ......................................................................
James C. Cheng                Trustee            President, Technology Marketing Associates
Born:  July 26, 1942                             (marketing company for small and medium sized businesses in New
27 Temple Street                                 England)
Belmont, MA 02718                                Trustee of one other investment company for which Forum Financial
                                                 Group, LLC provides services
 ............................. .................. ......................................................................
J. Michael Parish             Trustee            Partner, Thelen Reid & Priest LLP (law firm) since 1995
Born:  November 9, 1943                          Trustee of one other  investment  company for which  Forum  Financial
40 West 57th Street                              Group, LLC provides services
New York, NY 10019
 ............................. .................. ......................................................................
Thomas G. Sheehan             Vice President      Director of  Relationship  Management,  Forum Financial  Group,  LLC
Born:  July 15, 1954                             since 1993
Two Portland Square                              Officer of five other investment  companies for which Forum Financial
Portland, ME 04101                               Group, LLC provides services
 ............................. .................. ......................................................................
Dale J. Denno                 Vice President     General Counsel, Forum Financial Group LLC
Born:  May 1, 1950                               Vice President of Marketing and Product Development, UNUM Provident
Two Portland Square                              Insurance Company 1995 - 2000
Portland, ME 04101
 ............................. .................. ......................................................................
Ronald H. Hirsch              Treasurer          Managing Director, Operations/Finance and Operations/Sales, Forum
Born:  October 14, 1943                          Financial Group, LLC since 1999
Two Portland Square                              Member of the Board - Citibank Germany 1991 - 1998
Portland, ME 04101                               Officer of six other  investment  companies for which Forum Financial
                                                 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 two other  investment  companies for which Forum Financial
                                                 Group, LLC provides services
</TABLE>

                                       18
<PAGE>


                      COMPENSATION OF TRUSTEES AND OFFICERS

Effective  February 7, 2000,  each Trustee of the Trust will be paid a quarterly
retainer of $1,500 for his service to the Trust. In addition,  each Trustee will
be 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 Trustee of the Trust.  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 Funds and
the Fund Complex, which includes all series of Forum Funds and Core Trust.

                                          TOTAL COMPENSATION FROM
                      COMPENSATION               TRUST AND
TRUSTEE              FROM THE FUNDS            FUND COMPLEX
John Y. Keffer             $0                       $0
Costas Azariadis         $4,566                   $17,800
James C. Cheng           $4,566                   $17,800
J. Michael Parish        $4,566                   $17,800

                       TRUSTEES AND OFFICERS OF CORE TRUST

The names of the Trustees and officers of Core Trust,  their positions with Core
Trust,  address,  date of birth and principal  occupations  during the past five
years are set forth  below.  Each  Trustee  who is an  "interested  person"  (as
defined by the 1940 Act) of Core Trust is indicated by an asterisk (*). The Core
Trust Board  supervises each  Portfolio's  activities,  monitors its contractual
arrangements  with various service providers and decides upon matters of general
policy.
<TABLE>
<S>                                <C>                 <C>
NAME,                            POSITION WITH     PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS                  THE TRUST         PAST 5 YEARS
John Y. Keffer*                  Chairman and      Member and Director,  Forum Financial  Group,  LLC (a mutual fund
Born:  July 15, 1942             President         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 Azariadis                 Trustee           Professor of Economics, University of California-Los Angeles
Born:  February 15, 1943                           Visiting Professor of Economics, Athens University of Economics
Department of Economics                            and Business 1998 - 1999
University of California                           Trustee  of  one  other   investment   company  for  which  Forum
Los Angeles, CA 90024                              Financial Group, LLC provides services
 ................................ ................. ..................................................................
James C. Cheng                   Trustee           President, Technology Marketing Associates
Born:  July 26, 1942                               (marketing company for small and medium sized businesses in New
27 Temple Street                                   England)
Belmont, MA 02718                                  Trustee  of  one  other   investment   company  for  which  Forum
                                                   Financial Group, LLC provides services
 ................................ ................. ..................................................................
J. Michael Parish                Trustee           Partner, Thelen Reid & Priest LLP (law firm) since 1995
Born:  November 9, 1943                            Trustee of one other investment company for which Forum
40 West 57th Street                                Financial Group, LLC provides services
New York, NY 10019
 ................................ ................. ..................................................................
David I. Goldstein               Vice President    Director, Forum Administrative Services, LLC and
Born: August 3, 1961                               Secretary, Forum Financial Group, LLC
Two Portland Square                                Managing Director and General Counsel, Forum Financial Group,
Portland, ME 04101                                 LLC 1991 to 2000
 ................................ ................. ..................................................................
</TABLE>

                                       19
<PAGE>

<TABLE>
<S>                                <C>                 <C>
NAME,                            POSITION WITH     PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS                  THE TRUST         PAST 5 YEARS
 ................................ ................. ..................................................................
Ronald H. Hirsch                 Treasurer         Managing  Director,  Operations and Sales, Forum Financial Group,
Born: October 14, 1943                             LLC since 1999
Two Portland Square                                Member of the Board, Citibank Germany 1991-1998
Portland, ME 04101                                 Officer  of  six  other  investment  companies  for  which  Forum
                                                   Financial 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)
Two Portland Square                                1993 - 1998
Portland, ME 04101                                  Officer  of two  other  investment  companies  for  which  Forum
                                                   Financial Group, LLC provides services
</TABLE>

                               INVESTMENT ADVISER

SERVICES

Forum  Investment  Advisors,  LLC  serves  as the  investment  Adviser  to  each
Portfolio  pursuant to an investment  advisory  agreement with Core Trust. Under
its  agreement,  the  Adviser  furnishes,  at its  own  expense,  all  necessary
services,  facilities  and personnel in  connection  with managing a Portfolio's
investments and effecting portfolio  transactions for the Portfolio.  Anthony R.
Fischer,  Jr., has been the portfolio  manager  responsible  for the  day-to-day
management of each Portfolio (except Government  Portfolio) since its inception.
Mr. Fischer has over 25 years of experience in the money market industry.

FEES

The Adviser's fees are calculated as a percentage of the Portfolio's average net
assets.

Table 1 in Appendix C shows the dollar amount  payable by each  Portfolio to the
Adviser,  the amount of fees waived by the  Adviser,  and the actual fee paid by
each Portfolio. This information is for the past three fiscal years.

OTHER

The Adviser's  agreement  with respect to a Portfolio  must be approved at least
annually by the Core Trust Board or by majority vote of the interestholders of a
Portfolio,  and in either case by a majority of the Core Trust  Trustees who are
not  parties  to  the  agreement  or  interested   persons  of  any  such  party
("Disinterested Trustees").

The agreement is terminable  with respect to each Portfolio  without  penalty by
the Core  Trust  Board on 60 days'  written  notice  when  authorized  either by
majority vote of the  Portfolio's  interestholders  or by a majority vote of the
Core Trust Board,  or by the Adviser on 90 days'  written  notice to Core Trust.
The agreement terminates immediately upon assignment.  Under the agreement,  the
Adviser is not liable for any action or  inaction  in the  absence of bad faith,
willful misconduct or gross negligence in the performance of its duties.

                                   DISTRIBUTOR

SERVICES

FFS serves as the  distributor  (also known as  principal  underwriter)  of each
Fund's  shares  pursuant  to a  distribution  agreement  with the Trust.  FFS is
located  at Two  Portland  Square,  Portland,  Maine  04101 and is a  registered
broker-dealer and member of the National Association of Securities Dealers, Inc.

                                       20
<PAGE>

FFS acts as the representative of the Trust in connection with the offering of a
Fund's shares. FFS continually  distributes shares of each Fund on a best effort
basis. FFS has no obligation to sell any specific quantity of Fund shares.

FFS may enter into  arrangements  with various  financial  institutions  through
which you may  purchase or redeem  shares.  FFS may, at its own expense and from
its own resources, compensate certain persons who provide services in connection
with the sale or expected sale of Fund shares.

FFS may enter  into  agreements  with  selected  broker-dealers,  banks or other
financial   institutions  for  distribution  of  Fund  shares.  These  financial
institutions  may charge a fee for their  services and may receive  shareholders
service fees even though Fund shares are sold with sales charges or distribution
fees. These financial  institutions may otherwise act as FFS' agents and will be
responsible for promptly transmitting purchase, redemption and other requests to
each Fund.

FEES

FFS does not receive a fee for any  distribution  services  performed  under the
Distribution Agreement.

OTHER

FFS's agreement with respect to a Fund must be approved at least annually by the
Board or by majority vote of the  shareholders  of that Fund, and in either case
by a majority of the Disinterested Trustees.

FFS's  agreement is  terminable  without  penalty by the Trust with respect to a
Fund on 60 days'  written  notice when  authorized  either by vote of the Fund's
shareholders  or by a majority vote of the Board,  or by FFS on 60 days' written
notice to the Trust.

Under the Agreement, FFS is not liable for any action or inaction in the absence
of bad faith,  willful  misconduct  gross  negligence in the  performance of its
duties.

Under the agreement,  FFS and certain related parties (such as FFS' 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  or any alleged  omission of a
material  fact  required  to be stated  in the  Registration  Statement  to make
statements  contained  therein  not  misleading.  The Trust,  however,  will not
indemnify  FFS for any such  misstatements  or  omissions  if they  were made in
reliance  upon  information  provided in writing by FFS in  connection  with the
preparation of the Registration Statement.

DISTRIBUTION PLAN - INVESTOR SHARE CLASS

In  accordance  with Rule  12b-1  under the 1940  Act,  the Trust has  adopted a
distribution  plan (the "Plan") for the Investor  Shares of each Fund.  The Plan
provides  for  payment to FFS of a Rule  12b-1 fee at the  annual  rate of up to
0.50% of the  average  daily  net  assets  of the  Investor  Shares of each Fund
(except  Daily Assets  Government  Fund) as  compensation  for FFS'  services as
distributor.  FFS also  receives a fee at an annual rate of 0.15% of the average
daily net  assets of the  Investor  Shares of Daily  Assets  Government  Fund as
compensation  for its services under the Plan. The Board's  approval of the Plan
was contingent on the Trust limiting any payments under the Plan to 0.30% of the
average  daily net  assets of the  Investor  Shares of each Fund  (except  Daily
Assets Government Fund) without further Board approval.

The Plan provides that FFS may incur expenses for activities including,  but not
limited  to:  (1)  expenses  of sales  employees  or agents of the  distributor,
including  salary,  commissions,  travel and  related  expense  for  services in
connection with the distribution of shares;  (2) payments to broker-dealers  and
financial  institutions  for services in  connection  with the  distribution  of
shares,  including fees calculated with reference to the average daily net asset
value of shares  held by  shareholders  who have a  brokerage  or other  service
relationship  with the  broker-dealer  or  institution  receiving such fees; (3)
costs  of  printing  prospectuses  and  other  materials  to be given or sent to
prospective investors; and (4) the costs of preparing, printing and distributing
sales  literature and advertising  materials used by FFS or others in connection
with the offering of Investor Class shares for sale to the public.

                                       21
<PAGE>

The Plan  provides  that all  written  agreements  relating  to the Plan must be
approved  by the  Board,  including  a  majority  of the  Trustees  who  are not
interested  persons  of the Trust and who have no direct or  indirect  financial
interest in the  operation of the Plan or in any  agreement  related to the Plan
("Disinterested  Trustees").  In addition, the Plan (as well as the Distribution
Agreement)  requires  the Trust and FFS to prepare  and submit to the Board,  at
least  quarterly,  and the Board to review,  written  reports  setting forth all
amounts  expended under the Plan and  identifying the activities for which those
expenditures  were made.  The Plan obligates each Fund to compensate FFS for its
services and not to reimburse it for expenses incurred.

The Plan  provides  that it will  remain in effect for one year from the date of
its adoption and thereafter  shall continue in effect provided it is approved at
least annually by the shareholders or by the Board,  including a majority of the
Disinterested  Trustees. The Plan further provides that it may not be amended to
materially increase the costs which the Trust bears for distribution pursuant to
the Plan without shareholder  approval and that other material amendments of the
Plan must be approved by the Disinterested Trustees. The Board may terminate the
Plan with respect to the Investor  Shares of a Fund at any time by majority vote
of the  Disinterested  Trustees.  The Plan may be  terminated  with  respect  to
Investor Shares of a Fund or by majority vote of those shareholders.

Table 2 in  Appendix C shows the dollar  amount of fees  payable  under the Plan
with  respect to each Fund.  This  information  is  provided  for the past three
years.

                          OTHER FUND SERVICE PROVIDERS

ADMINISTRATOR - THE TRUST

FAdS serves as administrator  pursuant to an  administration  agreement with the
Trust. FAdS is responsible for supervising the overall  management of the Trust,
providing  the Trust  with  general  office  facilities  and  providing  persons
satisfactory to the Board to serve as officers of the Trust.

For its services,  FAdS receives a fee from each Fund at an annual rate of 0.05%
of the average daily net assets of each Fund.

The  agreement  must be approved  at least  annually by the Board or by majority
vote of the shareholders,  and in either case by a majority of the Disinterested
Trustees.  The agreement is terminable  without  penalty by the Trust or by FAdS
with respect to a Fund on 60 days' written notice.

Under the  agreement,  FAdS is not  liable  for any  action or  inaction  in the
absence of bad faith,  willful misconduct or gross negligence in the performance
of its duties.  FAdS and certain  related  parties  (such as FAdS'  officers and
persons  who  control  FAdS) are  indemnified  by the Trust  against any and all
claims and expenses  related to FAdS' actions or omissions  that are  consistent
with FAdS' contractual standard of care.

ADMINISTRATOR - CORE TRUST

FAdS also manages all aspects of Core Trust's operations of each Portfolio. FAdS
has entered into an administration  agreement ("Core Administration  Agreement")
that will continue in effect only if such  continuance is specifically  approved
at  least   annually  by  the  Core  Trust  Board  or  by  a  majority  vote  of
interestholders  and,  in  either  case,  by a  majority  of  the  Disinterested
Trustees.  Under the Core Administration  Agreement,  FAdS performs services for
each Portfolio similar to those provided to each Fund.

The Core Administration Agreement provides that FAdS shall not be liable to Core
Trust (or any of Core Trust's interestholders) for any action or inaction in the
administration of Core Trust, except for bad faith, willful misfeasance or gross
negligence in the  performance  of FAdS' duties or  obligations  or by reason of
FAdS' reckless disregard of its duties and obligations under the agreement.  The
Core  Administration  Agreement is terminable with respect to a Portfolio at any
time,  without  penalty,  by the Core  Trust  Board or FAdS on 60 days'  written
notice.

                                       22
<PAGE>

Table 3 in Appendix C shows the dollar  amount of the fees  payable by each Fund
to FAdS,  the amount of the fee waived by FAdS, and the actual fees paid by each
Fund.  The  table  provides  similar   information  for  each  Portfolio.   This
information is for the past three fiscal years.

TRANSFER AGENT

FSS  serves as  transfer  agent and  distribution  paying  agent  pursuant  to a
transfer  agency  agreement  with the Trust.  FSS  maintains an account for each
shareholder of record of a Fund and is responsible  for processing  purchase and
redemption  requests and paying  distributions to shareholders of record. FSS is
located at Two Portland  Square,  Portland,  Maine 04101 and is  registered as a
transfer agent with the SEC.

For its  services,  each Fund pays FSS 0.25% of the average  daily net assets of
the Fund plus an annual fee of $12,000 and $18 per shareholder  account. The fee
is  accrued  daily by each Fund and is paid  monthly  based on the  average  net
assets for the previous month.

The  agreement  must be approved  at least  annually by the Board or by majority
vote of the shareholders,  and in either case by a majority of the Disinterested
Trustees.  The  agreement is terminable  without  penalty by the Trust or by FSS
with respect to a Fund on 60 days' written notice.

Under the  agreement,  FSS is not liable for any act in the  performance  of its
duties to a Fund, except for willful misfeasance,  bad faith or gross negligence
in the performance of its duties.  FSS and certain related parties (such as FSS'
officers and persons who control FSS) are  indemnified  by the Trust against any
and all  claims and  expenses  related to FSS'  actions  or  omissions  that are
consistent with FSS' contractual standard of care.

Table 4 in Appendix C shows the dollar  amount of the fees  payable by each Fund
to FSS,  the  amount  of the fee  waived  by FSS,  and  the  actual  fees.  This
information is for the past three fiscal years.

SHAREHOLDER SERVICE PLAN

The Trust has adopted a shareholder  service plan  ("Shareholder  Service Plan")
with respect to  Institutional  Service Shares and Investor Shares of each Fund.
Under the Shareholder Service Plan, a Fund may pay FAdS a shareholder  servicing
fee at an annual  rate of 0.25% of the  average  daily net assets of each class.
FAdS may pay any or all amounts of these payments to various  institutions  that
provide shareholder  servicing to their customers holding  Institutional Service
Shares or Investor Shares.

Any  material  amendment to the  Shareholder  Service Plan must be approved by a
majority  of the  Disinterested  Trustees.  The Plan may be  terminated  without
penalty at any time by a vote of a majority of the Disinterested Trustees.

FAdS may enter into shareholder  servicing  agreements with various  shareholder
servicing  agents pursuant to which those agents,  as agent for their customers,
may agree among other things to: (1) answer shareholder  inquiries regarding the
manner in which purchases,  exchanges and redemptions of shares of a Fund may be
effected  and other  matters  pertaining  to the Trust's  services;  (2) provide
necessary  personnel  and  facilities  to  establish  and  maintain  shareholder
accounts and  records;  (3) assist  shareholders  in  arranging  for  processing
purchase,  exchange and redemption  transactions;  (4) arrange for the wiring of
funds; (5) guarantee shareholder signatures in connection with redemption orders
and  transfers  and changes in  shareholder-designated  accounts;  (6) integrate
periodic  statements with other shareholder  transactions;  and (7) provide such
other related services as the shareholder may request.

In offering or redeeming Fund shares, some shareholder servicing agents also may
impose certain  conditions on their customers,  subject to the terms of a Fund's
Prospectus, in addition to or different from those imposed by the Trust, such as
requiring a minimum  initial  investment or by charging their customers a direct
fee for their  services.  Some  shareholder  servicing  agents  may also act and
receive compensation for acting as custodian, investment manager, nominee, agent
or fiduciary  for its customers or clients who are  shareholders  of a Fund with
respect to assets invested in the Fund. These  shareholder  servicing agents may
elect to credit  against the fees payable to it by

                                       23
<PAGE>

its clients or  customers  all or a portion of any fee  received  from the Trust
with respect to assets of those customers or clients invested in a Fund.

Table 5 in Appendix C shows the dollar  amount of fees  payable by each class of
each Fund to FAdS,  the amount of the fees  waived by FAdS and the  actual  fees
paid by each class.  This  information  is for the past three  fiscal  years (or
shorter period depending on a Class's commencement of operations).

FUND ACCOUNTANT - THE TRUST

FAcS serves as fund  accountant  pursuant to an  accounting  agreement  with the
Trust.  FAcS  provides fund  accounting  services to each Fund.  These  services
include  calculating  the NAV of each Fund and  preparing  the Fund's  financial
statements and tax returns.

FAcS  receives a fee from each Fund at an annual rate of $36,000 plus $2,200 for
the preparation of tax returns and certain  surcharges based upon the number and
type of the Fund's  portfolio  transactions  and  positions.  The fee is accrued
daily by each Fund and is paid monthly based on the  transactions  and positions
for the previous month.

The  agreement  must be approved  at least  annually by the Board or by majority
vote of the shareholders,  and in either case by a majority of the Disinterested
Trustees.  The agreement is terminable  without  penalty by the Trust or by FAcS
with respect to a Fund on 60 days' written notice.

Under the  agreement,  FAcS is not  liable  to the  Trust or any of the  Trust's
shareholders  for any action or inaction  in the  absence of bad faith,  willful
misconduct  or gross  negligence  in the  performance  of its  duties.  FAcS and
certain  related  parties (such as FAcS'  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' contractual  standard
of care.

Under the  agreement,  in  calculating  a Fund's NAV, FAcS is deemed not to have
committed an error if the NAV it  calculates  is within 1/10 of 1% of the actual
NAV (after  recalculation).  The  agreement  also provides that FAcS will not be
liable to a shareholder  for any loss incurred due to an NAV  difference if such
difference  is less  than or equal  1/2 of 1% or less  than or equal to $10.  In
addition,  FAcS is not liable for the errors of others,  including the companies
that supply securities prices to FAcS and the Funds.

FUND ACCOUNTANT - CORE TRUST

FAcS performs  similar  services for the Portfolios  pursuant to a portfolio and
unitholder  accounting  agreement  ("Core  Accounting   Agreement").   The  Core
Accounting Agreement must be approved annually by the Core Trust Board. The Core
Accounting  Agreement  may be  terminated  with respect to a Portfolio,  without
penalty,  by the Core  Trust  Board or FAcS on 60 days'  written  notice  to the
Trust.  FAcS is required to use its best judgment and efforts in rendering  fund
accounting  services  and is not liable to Core Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence.
 .
Table 6 in Appendix C shows the dollar  amount of the fees  payable by each Fund
to FAcS,  the amount of the fee waived by FAcS, and the actual fees paid by each
Fund.  The table also includes  similar  information  for each  Portfolio.  This
information is for the past three fiscal years.

CUSTODIAN

As  custodian,  pursuant to an  agreement  with Core  Trust,  Forum  Trust,  LLC
("Custodian")  safeguards  and controls each  Portfolio's  cash and  securities,
determines income and collects interest on Portfolio investments.  The Custodian
may employ  subcustodians  to  provide  custody of a  Portfolio's  domestic  and
foreign assets.  The Custodian is located at Two Portland Square,  Portland,  ME
04101.

                                       24
<PAGE>

For its services,  the Custodian receives an annualized  percentage of the total
average daily net assets of the  Portfolios.  Each Portfolio also pays an annual
domestic  custody fee as well as certain other  transaction  fees.  The fees are
accrued daily by the Portfolios and are paid monthly based on average net assets
and transactions for the previous month.

SUBCUSTODIAN

Union Bank of California,  N.A. serves as  subcustodian  of each Portfolio.  The
Subcustodian is located at 445 South Figueroa Street, 5th Floor, Los Angeles, CA
90071.

LEGAL COUNSEL

Seward & Kissel LLP, 1200 G Street,  N.W.,  Washington,  D.C. 20005, passes upon
legal matters in connection with the issuance of shares of the Trust.

INDEPENDENT AUDITORS

KPMG LLP, 99 High Street,  Boston, MA 02110, is the independent  auditor of each
Fund and Portfolio.  The auditor audits the annual financial  statements of each
Fund and  Portfolio.  The  auditor  also  reviews  the tax  returns  and certain
regulatory filings of each Fund and Portfolio.

PORTFOLIO TRANSACTIONS

Each Fund invests substantially all of its assets in its corresponding Portfolio
and not directly in portfolio securities.  Therefore,  a Fund does not engage in
portfolio transactions.

Purchases  and sales of  portfolio  securities  by each  Portfolio  usually  are
principal  transactions.  Portfolio  securities are normally  purchased directly
from the  issuer  or from an  underwriter  or market  maker for the  securities.
Purchases  from  underwriters  include a commission  or  concession  paid by the
issuer to the  underwriter,  and purchases from dealers serving as market makers
include  the  spread  between  the bid and asked  price.  There are  usually  no
brokerage  commissions  paid for any  purchases.  Core Trust does not anticipate
that the  Portfolios  will pay brokerage  commissions.  However,  in the event a
Portfolio pays brokerage commissions or other transaction-related  compensation,
the payments  may be made to  broker-dealers  who pay expenses of the  Portfolio
that the Portfolio would  otherwise be obligated to pay itself.  Any transaction
for which a Portfolio pays transaction-related  compensation will be effected at
the best price and  execution  available,  taking into account the amount of any
payments  made on behalf of the  Portfolio by the  broker-dealer  effecting  the
transaction.

Allocations of  transactions  to dealers and the frequency of  transactions  are
determined  for each  Portfolio  by the  Adviser in its best  judgment  and in a
manner deemed to be in the best interest of  interestholders  of that  Portfolio
rather than by any formula.  The primary  consideration  is prompt  execution of
orders in an effective  manner and at the most favorable  price  available.  The
Adviser  monitors  the  creditworthiness  of  counterparties  to  a  Portfolio's
transactions  and intends to enter into a transaction only when it believes that
the  counterparty  presents  minimal and appropriate  credit risks. No portfolio
transactions are executed with FIA or any of its affiliates.

No Portfolio  paid  brokerage  commissions  during fiscal years ended August 31,
1998, 1999 and 2000.

OTHER ACCOUNTS OF THE ADVISER

Investment  decisions for a Portfolio are made  independently  from those of any
other account or investment  company that is or may in the future become advised
by the Adviser or its affiliates.  Investment  decisions are the product of many
factors,  including  suitability  for the particular  client  involved.  Thus, a
particular  security  may be bought or sold for certain  clients  even though it
could have been bought or sold for other clients at the same time.  Likewise,  a
particular  security  may be  bought  for one or more  clients  when one or more
clients are  selling  the  security.  In some  instances,  one client may sell a
particular  security to another  client.  In  addition,  two or more clients may
simultaneously  purchase or sell the same security,  in which event,  each day's
transactions in such security are, insofar as is possible,  averaged as to price
and allocated between such clients in a manner which, in the Adviser's

                                       25
<PAGE>

opinion,  is equitable to each and in accordance with the amount being purchased
or sold by  each.  There  may be  circumstances  when  purchases  or  sales of a
portfolio security for one client could have an adverse effect on another client
that  has a  position  in that  security.  When  purchases  or sales of the same
security for a Portfolio and other client accounts managed by the Adviser occurs
contemporaneously,  the  purchase or sale orders may be  aggregated  in order to
obtain any price advantages available to large denomination purchases or sales.

SECURITIES OF REGULAR BROKER-DEALERS

Table 7 of  Appendix C details a  Portfolio's  investments  in dealers (or their
parent companies) with whom it conducted portfolio transactions as of August 31,
2000.

PURCHASE AND REDEMPTION INFORMATION

                               GENERAL INFORMATION

Shareholders  of record may purchase or redeem shares or request any shareholder
privilege  in person at the  offices  of FSS  located  at Two  Portland  Square,
Portland, Maine 04101.

Each Fund  accepts  orders  for the  purchase  or  redemption  of shares on each
weekday except on Federal  holidays and other days that the Federal Reserve Bank
of San Francisco is closed ("Fund Business  Days").  A Fund cannot accept orders
that request a particular day or price for the  transaction or any other special
conditions.

Not all classes or funds of the Trust may be available  for sale in the state in
which you reside. Please check with your investment  professional to determine a
class or fund's availability.

                         ADDITIONAL PURCHASE INFORMATION

The distributor sells shares of each Fund on a continuous basis.

Each Fund reserves the right to refuse any purchase request.  There is currently
no limit on exchanges, but each Fund reserves the right to limit exchanges.

Fund shares are  normally  issued for cash only.  At the  Adviser's  discretion,
however,  a Fund may  accept  portfolio  securities  that  meet  the  investment
objective  and policies of a Fund as payment for Fund  shares.  A Fund will only
accept securities that: (1) are not restricted as to transfer by law and are not
illiquid;  and  (2)  have  a  value  that  is  readily  ascertainable  (and  not
established only by valuation procedures).

IRAS

All contributions into an IRA through systematic  investments are treated as IRA
contributions made during the year the investment is received.

Each Fund,  except Daily Assets  Municipal  Fund,  may be a suitable  investment
vehicle for part or all of the assets  held in  Traditional  or Roth  Individual
Retirement Accounts  (collectively,  "IRAs"). Call the Funds at 1-800-94FORUM to
obtain an IRA account application.  Generally,  all contributions and investment
earnings in an IRA will be tax-deferred until withdrawn. If certain requirements
are met,  investment  earnings  held in a Roth IRA will not be taxed  even  when
withdrawn.   You  may  contribute  up  to  $2,000   annually  to  an  IRA.  Only
contributions  to  Traditional  IRAs  are  tax-deductible  (subject  to  certain
requirements).  However,  that deduction may be reduced if you or your spouse is
an active  participant  in an  employer-sponsored  retirement  plan and you have
adjusted gross income above certain levels. Your ability to contribute to a Roth
IRA also may be  restricted  if you or, if you are married,  you and your spouse
have adjusted gross income above certain levels.

Your  employer may also  contribute  to your IRA as part of a Savings  Incentive
Match Plan for Employees, or "SIMPLE plan," established after December 31, 1996.
Under a SIMPLE plan, you may  contribute up to $6,000  annually to your IRA, and
your employer must generally  match such  contributions  up to 3% of your annual
salary.  Alternatively,  your employer may elect to contribute to your IRA 2% of
the lesser of your earned income or $160,000.

                                       26
<PAGE>

This information on IRAs is based on regulations in effect as of January 1, 1998
and summarizes only some of the important federal tax  considerations  affecting
IRA  contributions.  These  comments  are not meant to be a  substitute  for tax
planning. Consult your tax advisors about your specific tax situation.

UGMAS/UTMAS

These custodial  accounts  provide a way to give money to a child and obtain tax
benefits.  Depending on state laws, you can set up a custodial account under the
Uniform Gift to Minors Act ("UFMA") or Uniform  Transfer to Minors Act ("UTMA").
If the  custodian's  name is not in the account  registration  of a UGMA or UTMA
account,  the custodian must sign instructions in a manner indicating  custodial
capacity.

PURCHASES THROUGH FINANCIAL INSTITUTIONS

You may purchase and redeem shares  through  certain  broker-dealers,  banks and
other financial institutions.  Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to a Fund.

If you purchase shares through a financial  institution,  you will be subject to
the institution's procedures, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable when you invest in a Fund directly. When you purchase a Fund's shares
through a financial institution, you may or may not be the shareholder of record
and,  subject  to your  institution's  procedures;  you  may  have  Fund  shares
transferred into your name. There is typically a three-day settlement period for
purchases and redemptions through broker-dealers. Certain financial institutions
may also enter purchase orders with payment to follow.

You may not be  eligible  for certain  shareholder  services  when you  purchase
shares through a financial  institution.  Contact your  institution  for further
information.  If you hold  shares  through a financial  institution,  a Fund may
confirm  purchases  and  redemptions  to the financial  institution,  which will
provide  you  with  confirmations  and  periodic  statements.   A  Fund  is  not
responsible  for the  failure  of any  financial  institution  to carry  out its
obligations.

In offering or redeeming Fund shares, some shareholder servicing agents also may
impose certain conditions on their customers, subject to the terms of the Funds'
Prospectus, in addition to or different from those imposed by the Trust, such as
requiring a minimum  initial  investment or by charging their customers a direct
fee for their  services.  Some  shareholder  servicing  agents  may also act and
receive compensation for acting as custodian, investment manager, nominee, agent
or fiduciary for its customers or clients who are shareholders of the Funds with
respect to assets invested in the Funds. These shareholder  servicing agents may
elect to credit  against the fees payable to it by its clients or customers  all
or a portion of any fee received  from the Trust with respect to assets of those
customers or clients invested in the Funds.

Investors  purchasing  shares of a Fund through a financial  institution  should
read any materials and  information  provided by the  financial  institution  to
acquaint  themselves  with its procedures and any fees that the  institution may
charge.

LOST ACCOUNTS

FSS will consider your account lost if  correspondence to your address of record
is returned as  undeliverable,  unless FSS 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 FSS will
be reinvested and the checks will be cancelled.

                        ADDITIONAL REDEMPTION INFORMATION

A Fund  may  redeem  shares  involuntarily  to  reimburse  the Fund for any loss
sustained  by reason of the failure of a  shareholder  to make full  payment for
shares  purchased  by the  shareholder  or to  collect  any charge  relating  to
transactions  effected for the benefit of a shareholder which is applicable to a
Fund's shares as provided in the Prospectus or herein.

                                       27
<PAGE>

A delay may  occur in cases of very  large  redemptions,  excessive  trading  or
during  unusual  market  conditions.  Normally,  redemption  proceeds  are  paid
immediately  following  receipt of a  redemption  order in proper  form.  In any
event, you will be paid within 7 days, unless: (1) your bank has not cleared the
check to  purchase  the shares  (which may take up to 15 days);  (2) the Federal
Reserve Bank of San Francisco is closed for any reason other than normal weekend
or holiday closings;  (3) there is an emergency in which it is not practical for
the Fund to sell its  portfolio  securities or for the Fund to determine its net
asset value; or (4) the SEC deems it inappropriate for redemption proceeds to be
paid.  You can avoid the delay of  waiting  for your bank to clear your check by
paying for shares with wire transfers.  Unless otherwise  indicated,  redemption
proceeds normally are paid by check mailed to your record address.

SUSPENSION OF RIGHT OF REDEMPTION

The right of  redemption  may not be  suspended,  except for any  period  during
which:  (1) the New York Stock Exchange is closed (other than customary  weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted;  (2) an emergency  (as  determined by the SEC) exists as a result of
which disposal by a Fund of its securities is not reasonably practicable or as a
result of which it is not reasonably  practicable for a Fund fairly to determine
the  value  of its  net  assets;  or (3) the SEC  may by  order  permit  for the
protection of the shareholders of a Fund.

REDEMPTION IN KIND

Redemption  proceeds  normally are paid in cash.  Payments may be made wholly or
partly in  portfolio  securities,  however,  if the Core Trust Board  determines
conditions  exist  which  would  make  payment in cash  detrimental  to the best
interests  of a Portfolio  or if the amount to be  redeemed  is large  enough to
affect a Portfolio's operations,  payment in portfolio securities may be denied.
If  redemption  proceeds  are paid  wholly or partly  in  portfolio  securities,
shareholders may incur brokerage costs by converting the securities to cash. The
Trust  has  filed an  election  with the SEC  pursuant  to which a Fund may only
effect a redemption in portfolio  securities if the  particular  shareholder  is
redeeming more than $250,000 or 1% of the Fund's total net assets,  whichever is
less, during any 90-day period.

                                  DISTRIBUTIONS

Distributions  of net  investment  income will be reinvested at a Fund's NAV per
share as of the last  business  day of the  period  with  respect  to which  the
distribution  is paid.  Distributions  of capital gain will be reinvested at the
NAV per share of a Fund on the payment date for the distribution.  Cash payments
may be made more than seven days following the date on which distributions would
otherwise be reinvested.

As described in the Prospectuses,  under certain  circumstances a Fund may close
early  and  advance  the time by which  the Fund  must  receive  a  purchase  or
redemption  order and  payments.  In this case,  if an investor  places an order
after the cut-off time,  the order will be processed on the  follow-up  business
day and your access to the Fund will be temporarily limited.


TAXATION

The tax  information set forth in the  Prospectuses  and the information in this
section relates solely to U.S. Federal income tax law and assumes that each Fund
qualifies  as  a  regulated   investment  company  (as  discussed  below).  This
information is only a summary of certain key Federal  income tax  considerations
affecting each Fund and its shareholders.  No attempt has been made to present a
complete  explanation  of  the  Federal  tax  treatment  of  the  Funds  or  the
implications to  shareholders.  The discussions here and in the Prospectuses are
not intended as substitutes for careful tax planning.

The tax-year  end of each Fund is August 31 (the same as the Fund's  fiscal year
end).

                                       28
<PAGE>

This section is based on the Code and  applicable  regulations  in effect on the
date hereof. Future legislative or administrative changes or court decisions may
significantly   change  the  tax  rules   applicable  to  the  Funds  and  their
shareholders.  Any of these  changes or court  decisions  may have a retroactive
effect.

The sale or exchange of Fund shares is a taxable  transaction for Federal income
tax  purposes.  All  investors  should  consult  their own tax adviser as to the
Federal, state, local and foreign tax provisions applicable to them.

                 QUALIFICATION AS A REGULATED INVESTMENT COMPANY

Each  Fund  intends  for each tax year to  qualify  as a  "regulated  investment
company"  under the  Code.  This  qualification  does not  involve  governmental
supervision of management or investment practices or policies of a Fund.

MEANING OF QUALIFICATION

As a regulated  investment company, a Fund will not be subject to Federal income
tax on the portion of its  investment  company  taxable income (that is, taxable
interest,  short-term  capital gains and other taxable ordinary  income,  net of
expenses) and net capital gain (that is, the excess of its net long-term capital
gain over its net short-term  capital loss) that it distributes to shareholders.
In order to qualify as a regulated  investment  company, a Fund must satisfy the
following requirements:

     o    The Fund  must  distribute  at  least  90% of its  investment  company
          taxable  income (and 90% of its  tax-exempt  interest  income,  net of
          expenses)  for the tax  year.  (Certain  distributions  made by a Fund
          after  the  close  of  its  tax  year  are  considered   distributions
          attributable  to the previous tax year for purposes of satisfying this
          requirement.)

     o    The Fund must  derive at least 90% of its gross  income  from  certain
          types of income  derived  with respect to its business of investing in
          securities.

     o    The Fund must satisfy the following asset  diversification test at the
          close of each quarter of the Fund's tax year:  (1) at least 50% of the
          value of the  Fund's  assets  must  consist  of cash  and cash  items,
          Government  Securities,   securities  of  other  regulated  investment
          companies and securities of other issuers; and (2) no more than 25% of
          the value of the Fund's total assets may be invested in the securities
          of any one issuer (other than Government  Securities and securities of
          other regulated investment  companies) or in two or more issuers which
          the Fund controls and which are engaged in the same or similar  trades
          or businesses.

FAILURE TO QUALIFY

If for any tax year a Fund does not qualify as a regulated  investment  company,
all of its taxable  income  (including  its net capital gain) will be subject to
tax  at  regular   corporate  rates  without  any  deduction  for  dividends  to
shareholders,  and the  distributions  will be  taxable to the  shareholders  as
ordinary income to the extent of a Fund's current and  accumulated  earnings and
profits.  A portion of these  distributions  generally  may be eligible  for the
dividends-received deduction in the case of corporate shareholders.

Failure to  qualify  as a  regulated  investment  company  would have a negative
impact on a Fund's income and  performance.  It is possible that a Fund will not
qualify as a regulated investment company in any given tax year.

                               FUND DISTRIBUTIONS

Each  Fund  anticipates  distributing  substantially  all of its net  investment
income for each tax year.

Each Fund anticipates distributing substantially all of its net capital gain, if
any, for each tax year. These distributions generally are made only once a year,
but a Fund may make  additional  distributions  of net capital  gain at any time
during the year.  These  distributions  are taxable to you as long-term  capital
gain, regardless of how long you have held shares.

                                       29
<PAGE>

All  distributions  by a Fund will be  treated  in the  manner  described  above
regardless  of  whether  the  distribution  is paid in  cash  or  reinvested  in
additional  shares of the Fund.  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.

Distributions  by a Fund that do not  constitute  ordinary  income  dividends or
capital gain dividends will be treated as a return of capital. Return of capital
distributions reduce your tax basis in the shares.

All  distributions  by a Fund will be  treated  in the  manner  described  above
regardless  of  whether  the  distribution  is paid in  cash  or  reinvested  in
additional  shares  of  the  Fund  (or  of  another  Fund).  If  you  receive  a
distribution in the form of additional shares, it will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.

Ordinarily, you are required to take distributions by a Fund into account in the
year in which they are made.  A  distribution  declared in October,  November or
December  of any year and payable to you on a  specified  date in those  months,
however,  is deemed to be  received by you (and made by the Fund) on December 31
of that  calendar year even if the  distribution  is actually paid in January of
the following year.

You will be advised  annually as to the U.S.  Federal income tax consequences of
distributions made (or deemed made) during the year.

                               FEDERAL EXCISE TAX

A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to  distribute  in each  calendar  year an amount equal to: (1) 98% of its
ordinary  taxable  income for the calendar year; and (2) 98% of its capital gain
net income for the one-year period ended on October 31 of the calendar year. The
balance of each Fund's  investment must be distributed  during the next calendar
year. Each Fund will be treated as having  distributed any amount on which it is
subject to income tax for any tax year.

For purposes of  calculating  the excise tax, each Fund reduces its capital gain
net  income  (but not  below  its net  capital  gain) by the  amount  of any net
ordinary loss for the calendar year.

Each Fund  intends to make  sufficient  distributions  of its  ordinary  taxable
income and capital  gain net income  prior to the end of each  calendar  year to
avoid liability for the excise tax. Investors should note, however,  that a Fund
might in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.

                               BACKUP WITHHOLDING

A Fund will be  required  in  certain  cases to  withhold  and remit to the U.S.
Treasury 31% of distributions,  and the proceeds of redemptions of shares,  paid
to  any  shareholder:   (1)  who  has  failed  to  provide  a  correct  taxpayer
identification  number; (2) who is subject to backup withholding by the Internal
Revenue Service for failure to report the receipt of interest or dividend income
properly;  or (3) who has failed to certify to a Fund that it is not  subject to
backup  withholding  or that it is a corporation  or other  "exempt  recipient."
Backup  withholding  is not an  additional  tax;  any amounts so withheld may be
credited against a shareholder's Federal income tax liability or refunded.

                              FOREIGN SHAREHOLDERS

Taxation  of  a  shareholder  who,  under  the  Code,  is  a  nonresident  alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign  shareholder"),   depends  on  whether  the  income  from  a  Fund  is
"effectively  connected" with a U.S. trade or business carried on by the foreign
shareholder.

If the income  from a Fund is not  effectively  connected  with a U.S.  trade or
business carried on by a foreign shareholder, ordinary income distributions paid
to a foreign shareholder will be subject to U.S.  withholding tax at the rate of
30% (or lower applicable treaty rate) upon the gross amount of the distribution.
The foreign shareholder


                                       30
<PAGE>

generally  will be exempt from U.S.  Federal  income tax on gain realized on the
sale of shares of a Fund capital  gain  distributions  from a Fund,  and amounts
retained by a Fund that are designated as undistributed capital gain.

In the case of a non-corporate  foreign  shareholder,  a Fund may be required to
withhold  U.S.  Federal  income tax at a rate of 31% on  distributions  that are
otherwise exempt from withholding (or taxable at a reduced treaty rate),  unless
the  shareholder  furnishes  the Fund with  proper  notification  of its foreign
status.

The tax consequences to a foreign shareholder  entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.

The tax rules of other countries, with respect to distributions from a Fund, can
differ from the U.S.  Federal  income  taxation  rules  described  above.  These
foreign  rules  are not  discussed  herein.  Foreign  shareholders  are urged to
consult  their  own  tax  advisers  as to the  foreign  tax  consequences  of an
investment in a Fund.

                              STATE AND LOCAL TAXES

The tax rules of the various  states of the U.S. and their local  jurisdictions,
with  respect to  distributions  from a Fund,  can differ from the U.S.  Federal
income  taxation  rules  described  above.  These  state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
state and local tax consequences of an investment in a Fund.

OTHER MATTERS

                         THE TRUST AND ITS SHAREHOLDERS

GENERAL INFORMATION

The Trust  was  organized  as a  business  trust  under the laws of the State of
Delaware on August 29,  1995.  On January 5, 1996,  the Trust  succeeded  to the
assets  and   liabilities  of  Forum  Funds,   Inc.  No  Fund  expects  to  hold
shareholders'  meetings unless required by Federal or Delaware law. Shareholders
of each Fund are  entitled  to vote at  shareholders'  meetings  unless a matter
relates  only to a specific  series or class  (such as  approval  of an advisory
agreement  for a  Fund  or a  distribution  plan).  From  time  to  time,  large
shareholders may control a class of a Fund, a Fund or the Trust.

The Trust is registered as an open-end,  management investment company under the
1940 Act. The Trust offers  shares of beneficial  interest in its series.  As of
the date hereof, the Trust consisted of:

Austin Global Equity Fund                     Investors Equity Fund
BrownIA Growth Equity Fund                    Investors Growth Fund
BrownIA Small-Cap Growth Fund                 Investors High Grade Bond Fund
BrownIA Maryland Bond Fund                    Maine TaxSaver Bond Fund
Daily Assets Cash Fund(1)                     Mastrapasqua Growth Value Fund
Daily Assets Government Fund(1)               New Hampshire TaxSaver Bond Fund
Daily Assets Government Obligations Fund(1)   Payson Balanced Fund
Daily Assets Municipal Fund(1)                Payson Value Fund
Daily Assets Treasury Obligations Fund(1)     Polaris Global Value Fund
Equity Index Fund                             TaxSaver Bond Fund
Investors Bond Fund                           The Advocacy Fund

(1)  The  Trust  offers   shares  of  beneficial   interest  in   Institutional,
     Institutional  Service and Investor Shares of these series. Each class of a
     Fund may have a different  expense  ratio and its expenses will affect each
     class' performance.

The Trust has an unlimited number of authorized  shares of beneficial  interest.
The Board may, without shareholder  approval,  divide the authorized shares into
an  unlimited  number of separate  series and may divide  series into classes of
shares; the costs of doing so will be borne by the Trust.

                                       31
<PAGE>

Not all classes or Funds of the Trust may be available in the state in which you
reside.  Please check with your investment  professional to determine a class or
fund's availability.

The Funds are not required to maintain a code of ethics  pursuant to Rule 17j-1,
as amended, of the 1940 Act (the "Rule").  However,  the Portfolios'  investment
adviser and the Funds'  distributor have adopted codes of ethics under the Rule;
these  codes  permit  personnel  subject  to the codes to invest in  securities,
including securities that may be purchased or held by the Portfolios.

The Trust and each Fund will continue indefinitely until terminated.

SHAREHOLDER VOTING AND OTHER RIGHTS

Each  share of each  series  of the Trust  and each  class of  shares  has equal
distribution, liquidation and voting rights. Fractional shares have these rights
proportionately,  except that expenses related to the distribution of the shares
of each class (and certain other expenses such as transfer  agency,  shareholder
service and  administration  expenses)  are borne solely by those  shares.  Each
class votes  separately  with respect to the  provisions  of any Rule 12b-1 plan
which pertains to the class and other matters for which separate class voting is
appropriate under applicable law. Generally,  shares will be voted separately by
individual series except if: (1) the 1940 Act requires shares to be voted in the
aggregate and not by individual series; and (2) when the Trustees determine that
the matter  affects more than one series and all affected  series must vote. The
Trustees may also  determine that a matter only affects  certain  classes of the
Trust and thus only those  classes are entitled to vote on the matter.  Delaware
law does not require the Trust to hold annual meetings of  shareholders,  and it
is anticipated  that  shareholder  meetings will be held only when  specifically
required by Federal or state law.  There are no conversion or preemptive  rights
in connection with shares of the Trust.

All shares,  when issued in accordance  with the terms of the offering,  will be
fully paid and nonassessable.

A shareholder in a series is entitled to the shareholder's pro-rata share of all
distributions  arising from that series' assets and, upon redeeming shares, will
receive  the  portion of the  series'  net assets  represented  by the  redeemed
shares.

Shareholders  representing  10% or more of the Trust's (or a series) shares may,
as set forth in the Trust Instrument, call meetings of the Trust (or series) for
any  purpose  related  to the Trust  (or  series),  including,  in the case of a
meeting of the Trust, the purpose of voting on removal of one or more Trustees.

CERTAIN REORGANIZATION TRANSACTIONS

The Trust or any  series  may be  terminated  upon the sale of its assets to, or
merger with, another open-end,  management investment company or series thereof,
or upon liquidation and distribution of its assets.  Generally such terminations
must be approved  by the vote of the  holders of a majority  of the  outstanding
shares of the Trust or a Fund.  The  Trustees  may,  without  prior  shareholder
approval, change the form of organization of the Trust by merger,  consolidation
or  incorporation.  Under  the  Trust  Instrument,  the  Trustees  may,  without
shareholder vote, cause the Trust or certain series to merge or consolidate into
one or more  trusts,  partnerships  or  corporations  or cause  the  Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end,
management  investment  company  that  will  succeed  to or assume  the  Trust's
registration statement.

                                 FUND OWNERSHIP

As of December 1, 2000,  the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding Shares of each Fund and class.

Also as of that date, certain  shareholders of record owned 5% or more of a Fund
or  class.  These  shareholders  and  any  shareholder  known  by a Fund  to own
beneficially 5% or more of a Fund are listed in Table 8 in Appendix C.

From time to time, certain shareholders may own a large percentage of the shares
of a Fund or class.  Accordingly,  those shareholders may be able to require the
Trust to hold a shareholder meeting to vote on certain issues and may

                                       32
<PAGE>

be able to greatly affect (if not determine) the outcome of a shareholder  vote.
As of December 1, 2000, the following  persons  beneficially  or of record owned
25% or more of the shares of a Fund or class (or of the Trust) and may be deemed
to control the Fund or the class (or the Trust).  For each person listed that is
a company, the jurisdiction under the laws of which the company is organized (if
applicable) and the company's parents are listed.

CONTROLLING PERSON INFORMATION
<TABLE>
<S>                                  <C>                                   <C>                    <C>            <C>
DAILY ASSETS TREASURY OBLIGATIONS    NAME AND ADDRESS                        SHARES          % OF CLASS       % OF FUND
FUND
 .................................... .................................. ................. .............. ...............
Investor Shares                      Cheryl Barnes                             1,882.960          94.38            0.00
                                     FBO Margaret Ann Jones
                                     3840 N Broadway #30
                                     Boulder, CO 80304
 .................................... .................................. ................. .............. ...............
Institutional Shares                 Stratevest & Co.                     79,206,474.290          54.60           51.02
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
                                     .................................. ................. .............. ...............
                                     Stratevest & Co.                     65,830,523.000          45.38           42.41
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
Institutional Service Shares         Stratevest & Co.                      2,810,898.820          27.62            1.81
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
DAILY ASSETS GOVERNMENT FUND
 .................................... .................................. ................. .............. ...............
Investor Shares                      Sanwa Bank California                   501,372.030          61.04            1.15
                                     1 Front Street
                                     Floor 23
                                     San Francisco, CA 94111
 .................................... .................................. ................. .............. ...............
Institutional Shares                 H.M. Payson & Co                     24,922,378.940          62.75           57.10
                                     Custody Account
                                     P.O. Box 31
                                     Portland, ME 04112
                                     .................................. ................. .............. ...............
                                     H.M. Payson & Co                     14,559,511.180          36.66           33.36
                                     Trust Account
                                     P.O. Box 31
                                     Portland, ME 04112
 .................................... .................................. ................. .............. ...............
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
 .................................... .................................. ................. .............. ...............
INVESTOR SHARES                      Central Computer Associates             162,794.650          52.13            0.16
                                     DBA Techknowledge
                                     P.O. Box 2668
                                     227 Water Street
                                     Augusta, ME 04338
 ....................................
 .................................... .................................. ................. .............. ...............
                                     Robots Road Associates                  149,402.830          47.84            0.15
                                     C/O Boulos Property Management
                                     One Canal Plaza
                                     Portland, ME 04101
                                     .................................. ................. .............. ...............
Institutional Shares                 Stratevest & Co.                     33,076,331.110          69.59           33.06
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
                                     .................................. ................. .............. ...............
                                     Stratevest & Co.                     13,332,101.020          28.05           13.32
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
</TABLE>

                                       33
<PAGE>
<TABLE>
<S>                                     <C>                                    <C>               <C>             <C>
 .................................... .................................. ................. .............. ...............
DAILY ASSETS GOVERNMENT              NAME AND ADDRESS                          SHARES        % OF CLASS       % OF FUND
OBLIGATIONS FUND
(CONTINUED)
 .................................... .................................. ................. .............. ...............
Institutional Service Shares         Stratevest & Co.                     20,525,250.870          39.26           20.50
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
DAILY ASSETS CASH FUND
 .................................... .................................. ................. .............. ...............
INVESTOR SHARES                      Employee Benefit Management             261,424.440          56.73            0.32
                                     47 Portland Street
                                     Portland, ME 04101
                                     .................................. ................. .............. ...............
                                     J. K. MacMillan, Trustee                141,234.140          30.65            0.17
                                     3621 Maplewood Avenue
                                     Los Angeles, CA 90066
                                     .................................. ................. .............. ...............
Institutional Shares                 Stratevest & Co.                      7,874,617.960          27.35            9.56
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
DAILY ASSETS MUNICIPAL FUND          NAME AND ADDRESS                          SHARES        % OF CLASS       % OF FUND
 .................................... .................................. ................. .............. ...............
INVESTOR SHARES                      William A. Roberts                       11,396.660          88.47            0.01
                                     P.O. Box 579
                                     Hinsdale, IL 60522
                                     .................................. ................. .............. ...............
Institutional Shares                 Stratevest & Co.                      8,220,961.570          61.59           54.56
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
                                     Stratevest & Co.                      5,031,560.310          37.70           33.39
                                     P.O. Box 2499
                                     Brattleboro, VT 05303
 .................................... .................................. ................. .............. ...............
Institutional Service Shares         Amherst Nursing Home, Inc.              995,029.760          58.26            6.60
                                     150 University Drive
                                     Amherst, MA 01002
</TABLE>

              LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY

Delaware  law  provides  that  Fund   shareholders  are  entitled  to  the  same
limitations  of  personal   liability   extended  to   stockholders  of  private
corporations for profit. The Trust's Trust Instrument (the document that governs
the  operation  of the Trust)  contains  an express  disclaimer  of  shareholder
liability for the debts, liabilities, obligations and expenses of the Trust. The
Trust Instrument provides for indemnification out of each Fund's property of any
shareholder or former  shareholder held personally liable for the obligations of
the Fund. The Trust Instrument also provides that each Fund shall, upon request,
assume the  defense of any claim made  against  any  shareholder  for any act or
obligation of the series and satisfy any judgment  thereon.  Thus, the risk of a
shareholder  incurring  financial  loss on account of  shareholder  liability is
limited to  circumstances  in which Delaware law does not apply,  no contractual
limitation  of  liability  was in  effect,  and a Fund is  unable  to  meet  its
obligations.

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. A Trustee is not, however,  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.

                             REGISTRATION STATEMENT

This SAI and the Prospectuses do not contain all the information included in the
Trust's  registration  statement  filed  with  the SEC  under  the 1933 Act with
respect to the securities offered hereby. The registration statement,  including
the  exhibits  filed  therewith,  may be  examined  at the  office of the SEC in
Washington,  D.C.  You may also review the  registration  statement at the SEC's
internet website at www.sec.gov.

                                       34
<PAGE>

Statements  contained  herein and in the  Prospectuses as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by reference to the copy of such contract or other documents filed
as exhibits to the registration statement.

                              FINANCIAL STATEMENTS

The financial statements of the Funds and their corresponding Portfolios for the
year ended August 31, 2000,  which are included in the Funds'  Annual  Report to
Shareholders are incorporated  herein by reference.  These financial  statements
are  the  schedules  of  investments,  statements  of  assets  and  liabilities,
statements  of  operations,  statements  of  changes  in net  assets,  financial
highlights, notes and independent auditors' reports.







                                       35
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

                                 CORPORATE BONDS

MOODY'S

AAA  Bonds that are rated Aaa are judged to be of the best  quality.  They carry
     the smallest  degree of investment  risk and are  generally  referred to as
     "gilt  edged."  Interest  payments  are  protected  by a  large  or  by  an
     exceptionally  stable  margin and  principal  is secure.  While the various
     protective elements are likely to change, such changes as can be visualized
     are most  unlikely  to impair the  fundamentally  strong  position  of such
     issues.

AA   Bonds that are rated Aa are judged to be of high quality by all  standards.
     Together  with the Aaa group  they  comprise  what are  generally  known as
     high-grade  bonds. They are rated lower than the best bonds because margins
     of protection  may not be as large as in Aaa  securities or  fluctuation of
     protective  elements  may be of  greater  amplitude  or there  may be other
     elements  present that make the long-term risk appear  somewhat larger than
     the Aaa securities.

A    Bonds that are rated A possess many favorable investment attributes and are
     to be considered as upper-medium-grade obligations. Factors giving security
     to  principal  and interest are  considered  adequate,  but elements may be
     present  which  suggest a  susceptibility  to  impairment  some time in the
     future.

NOTE Moody's  applies  numerical  modifiers 1, 2, and 3 in each  generic  rating
     classification  from Aa through  Caa.  The  modifier 1  indicates  that the
     obligation  ranks in the higher end of its  generic  rating  category;  the
     modifier 2 indicates a mid-range  ranking;  and the  modifier 3 indicates a
     ranking in the lower end of that generic rating category.

S&P

AAA  An  obligation  rated AAA has the  highest  rating  assigned  by Standard &
     Poor's.  The  obligor's  capacity to meet its  financial  commitment on the
     obligation is extremely strong.

AA   An obligation rated AA differs from the  highest-rated  obligations only in
     small degree.  The obligor's  capacity to meet its financial  commitment on
     the obligation is very strong.

A    An obligation  rated A is somewhat more  susceptible to the adverse effects
     of changes in  circumstances  and economic  conditions than  obligations in
     higher-rated  categories.  However,  the  obligor's  capacity  to meet  its
     financial  commitment on the  obligation is still strong.

NOTE Plus (+) or minus (-).  The  ratings  from AA to A may be  modified  by the
     addition of a plus or minus sign to show relative standing within the major
     rating categories. The `r' symbol is attached to the ratings of instruments
     with  significant  noncredit  risks.  It  highlights  risks to principal or
     volatility of expected returns that are not addressed in the credit rating.
     Examples include: obligations linked or indexed to equities, currencies, or
     commodities;   obligations  exposed  to  severe  prepayment   risk-such  as
     interest-only or principal-only  mortgage securities;  and obligations with
     unusually risky interest terms, such as inverse floaters.

                                      A-1
<PAGE>

FITCH

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.

                               SHORT TERM RATINGS

MOODY'S

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.

NOT PRIME  Issuers  rated Not Prime do not fall  within any of the Prime  rating
        categories.

S&P

A-1  A short-term  obligation rated A-1 is rated in the highest category by S&P.
     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-2
<PAGE>


FITCH

F1   Obligations  assigned  this  rating have the  highest  capacity  for timely
     repayment under Fitch'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.


                                      A-3
<PAGE>
APPENDIX B - PERFORMANCE DATA

For the seven-day  period ended August 31, 2000, the  annualized  yields of each
class of each Fund were as follows:

                                           CURRENT YIELD   EFFECTIVE YIELD
DAILY ASSETS TREASURY OBLIGATIONS FUND
     Investor Shares                           5.62%            5.78%
     Institutional Service Shares              6.07%            6.25%
     Institutional Shares                      6.32%            6.52%
DAILY ASSETS GOVERNMENT FUND
     Investor Shares                           5.85%            6.02%
     Institutional Service Shares              6.15%            6.34%
     Institutional Shares                      6.40%            6.61%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
     Investor Shares                           5.75%            5.91%
     Institutional Service Shares              6.20%            6.39%
     Institutional Shares                      6.45%            6.65%
DAILY ASSETS CASH FUND
     Investor Shares                           5.82%            5.99%
     Institutional Service Shares              6.27%            6.47%
     Institutional Shares                      6.52%            6.73%
DAILY ASSETS MUNICIPAL FUND
     Investor Shares                           3.28%            3.34%
     Institutional Service Shares              3.73%            3.80%
     Institutional Shares                      4.18%            4.27%


                                      B-1
<PAGE>
APPENDIX C - MISCELLANEOUS TABLES

TABLE 1- INVESTMENT ADVISORY FEES ($)

The fees payable by the Portfolios under the Investment Advisory Agreement were:

                                 CONTRACTUAL FEE     FEE WAIVED  FEE PAID
TREASURY CASH PORTFOLIO
     Year ended August 31, 2000      140,443            (0)      140,443
     Year ended August 31, 1999      105,930            (0)      105,930
     Year ended August 31, 1998       55,735            (0)       55,735
GOVERNMENT PORTFOLIO
     Year ended August 31, 2000       16,754       (16,754)            0
     Year ended August 31, 1999       20,197            (0)       20,197
     Year ended August 31, 1998       23,813            (0)       23,813
GOVERNMENT CASH PORTFOLIO
     Year ended August 31, 2000      288,058            (0)      288,058
     Year ended August 31, 1999      303,532            (0)      303,532
     Year ended August 31, 1998      238,860            (0)      238,860
CASH PORTFOLIO
     Year ended August 31, 2000      565,516            (0)      565,516
     Year ended August 31, 1999      266,660            (0)      266,660
     Year ended August 31, 1998      158,716            (0)      158,716
MUNICIPAL CASH PORTFOLIO
     Year ended August 31, 2000       10,882       (10,882)            0
     Year ended August 31, 1999       14,330            (0)       14,330
     Year ended August 31, 1998        1,937            (0)        1,937

                                      C-1
<PAGE>


TABLE 2 - INVESTOR SHARES' DISTRIBUTION FEES ($)

The fees payable by the Funds under the 12b-1 Distribution Plan were:

                                          CONTRACTUAL FEE  FEE WAIVED   FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
     Year ended August 31, 2000                   80           (80)           0
     Year ended August 31, 1999                   49           (49)           0
     Year ended August 31, 1998                    0            (0)           0
DAILY ASSETS GOVERNMENT FUND
     Year ended August 31, 2000                  994          (994)           0
     Year ended August 31, 1999                  712          (712)           0
     Period ended August 31, 1998                  0            (0)           0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
     Year ended August 31, 2000                  945          (153)         792
     Year ended August 31, 1999                   26           (26)           0
     Year ended August 31, 1998                    0            (0)           0
DAILY ASSETS CASH FUND
     Year ended August 31, 2000                6,585        (2,950)       3,635
     Year ended August 31, 1999                  640          (640)           0
     Period ended August 31, 1998                  0            (0)           0
DAILY ASSETS MUNICIPAL FUND
     Year ended August 31, 2000                  260          (260)           0
     Year ended August 31, 1999                  139          (139)           0
     Year ended August 31, 1998                    0            (0)           0

                                      C-2
<PAGE>


TABLE 3 - ADMINISTRATION FEES ($)

The fees payable by the Funds under the Administration Agreement were:

                                       CONTRACTUAL FEE    FEE WAIVED    FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
     Year ended August 31, 2000              57,610         (57,610)           0
     Year ended August 31, 1999              52,465         (52,465)           0
     Year ended August 31, 1998              24,549         (24,549)           0
DAILY ASSETS GOVERNMENT FUND
     Year ended August 31, 2000              16,705         (16,705)           0
     Year ended August 31, 1999              20,109         (20,109)           0
     Year ended August 31, 1998              28,110          (2,864)      25,246
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
     Year ended August 31, 2000              34,779         (31,040)       3,739
     Year ended August 31, 1999              22,178         (22,178)           0
     Year ended August 31, 1998               4,115          (4,115)           0
DAILY ASSETS CASH FUND
     Year ended August 31, 2000              44,941         (39,394)       5,547
     Year ended August 31, 1999              35,746         (35,746)           0
     Year ended August 31, 1998              10,505         (10,505)           0
DAILY ASSETS MUNICIPAL FUND
     Year ended August 31, 2000              10,867         (10,867)           0
     Year ended August 31, 1999              14,310         (14,310)           0
     Year ended August 31, 1998               1,934          (1,934)           0

The fees payable by the Portfolios under the Core Administration Agreement were:

                                      CONTRACTUAL FEE      FEE WAIVED   FEE PAID

TREASURY CASH PORTFOLIO
     Year ended August 31, 2000             212,726              (0)     212,726
     Year ended August 31, 1999             153,011              (0)     153,011
     Year ended August 31, 1998              74,964         (29,678)      45,286
GOVERNMENT PORTFOLIO
     Year ended August 31, 2000              16,754         (16,754)           0
     Year ended August 31, 1999              20,197         (20,197)           0
     Year ended August 31, 1998              28,796         (28,796)           0
GOVERNMENT CASH PORTFOLIO
     Year ended August 31, 2000             436,043              (0)     436,043
     Year ended August 31, 1999             438,060              (0)     438,060
     Year ended August 31, 1998             317,754              (0)     317,754
CASH PORTFOLIO
     Year ended August 31, 2000             857,926              (0)     857,926
     Year ended August 31, 1999             385,799              (0)     385,799
     Year ended August 31, 1998             212,800              (0)     212,800
MUNICIPAL CASH PORTFOLIO
     Year ended August 31, 2000              10,882         (10,882)           0
     Year ended August 31, 1999              14,330         (14,330)           0
     Year ended August 31, 1998               1,937          (1,937)           0

                                      C-3

<PAGE>


TABLE 4 - TRANSFER AGENCY FEES ($)

The fees payable by the Funds under the Transfer Agency Agreement were:

                                        CONTRACTUAL FEE  FEE WAIVED   FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
     Year ended August 31, 2000                 21,871     (11,569)   10,302
     Year ended August 31, 1999                 19,157      (7,223)   11,934
     Year ended August 31, 1998                  6,071      (6,069)        2
Institutional Shares
     Year ended August 31, 2000                 68,496      (5,745)   62,751
     Year ended August 31, 1999                 63,155     (36,847)   26,308
     Year ended August 31, 1998                 31,381     (31,036)      345
Investor Shares
     Year ended August 31, 2000                 12,178      (4,060)    8,118
     Year ended August 31, 1999                 12,098     (12,098)        0
     Year ended August 31, 1998                    843        (843)        0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
     Year ended August 31, 2000                 17,322      (8,518)    8,804
     Year ended August 31, 1999                 21,102     (11,025)   10,077
     Year ended August 31, 1998                 68,534     (53,276)   15,258
Institutional Shares
     Year ended August 31, 2000                 27,395     (18,354)    9,041
     Year ended August 31, 1999                 29,243     (20,824)      819
     Year ended August 31, 1998                  4,874      (4,853)       21
Investor Shares
     Year ended August 31, 2000                 14,255      (5,879)    8,376
     Year ended August 31, 1999                 12,707     (12,688)       19
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
     Year ended August 31, 2000                 48,623     (11,569)   37,054
     Year ended August 31, 1999                 26,211          (0)   26,211
     Year ended August 31, 1998                  6,869      (6,866)        3
Institutional Shares
     Year ended August 31, 2000                 30,893      (9,364)   21,529
     Year ended August 31, 1999                 28,042     (20,559)    7,483
     Year ended August 31, 1998                 10,816     (10,762)       54
Investor Shares
     Year ended August 31, 2000                 12,864      (4,711)    8,153
     Year ended August 31, 1999                 12,062     (12,062)        0
     Year ended August 31, 1998                    843        (843)        0
DAILY ASSETS CASH FUND
Institutional Service Shares
     Year ended August 31, 2000                 62,582     (10,670)   51,912
     Year ended August 31, 1999                 44,383          (0)   44,383
     Year ended August 31, 1998                 27,955     (15,294)   12,661
Institutional Shares
     Year ended August 31, 2000                 33,738     (12,708)   21,030
     Year ended August 31, 1999                 33,137     (18,933)   14,204
     Year ended August 31, 1998                  9,362      (9,311)       51
Investor Shares
     Year ended August 31, 2000                 18,316      (8,819)    9,497
     Year ended August 31, 1999                 13,095          (0)   13,095
     Year ended August 31, 1998                    843        (843)        0

                                      C-4
<PAGE>

                                        CONTRACTUAL FEE  FEE WAIVED   FEE PAID
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
     Year ended August 31, 2000                 14,024      (4,933)    9,091
     Year ended August 31, 1999                 14,718      (8,585)    6,133
     Year ended August 31, 1998                    842        (842)        0
Institutional Shares
     Year ended August 31, 2000                 22,712      (5,767)   16,945
     Year ended August 31, 1999                 25,585     (25,072)      513
     Year ended August 31, 1998                  4,150      (4,126)       24
Investor Shares
     Year ended August 31, 2000                 12,309      (4,135)    8,174
     Year ended August 31, 1999                 12,173     (12,172)        1
     Year ended August 31, 1998                    843        (843)        0



                                      C-5
<PAGE>


TABLE 5 - SHAREHOLDER SERVICE FEES ($)

The fees payable by the funds under the Shareholder Services Plan were:

                                       CONTRACTUAL FEE  FEE WAIVED  FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
     Year ended August 31, 2000                23,735      (9,886)    13,849
     Year ended August 31, 1999                17,320     (17,320)         0
     Year ended August 31, 1998                 2,600      (2,600)         0
Investor Shares
     Year ended August 31, 2000                    67         (67)         0
     Year ended August 31, 1999                    45         (45)         0
     Period ended August 31, 1998                   0          (0)         0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
     Year ended August 31, 2000                10,188     (10,188)         0
     Year ended August 31, 1999                17,533     (17,533)         0
     Period ended August 31, 1998              78,274     (78,274)         0
Investor Shares
     Year ended August 31, 2000                 1,657      (1,657)         0
     Year ended August 31, 1999                 1,186      (1,186)         0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
     Year ended August 31, 2000                86,205     (21,140)    65,065
     Year ended August 31, 1999                33,862     (29,859)     4,033
     Year ended August 31, 1998                 2,018      (2,018)         0
Investor Shares
     Year ended August 31, 2000                   787        (337)       450
     Year ended August 31, 1999                    26         (26)         0
     Period ended August 31, 1998                   0          (0)         0
DAILY ASSETS CASH FUND
Institutional Service Shares
     Year ended August 31, 2000               118,498     (28,787)    89,711
     Year ended August 31, 1999                77,200     (46,584)    30,616
     Year ended August 31, 1998                22,439     (22,439)         0
Investor Shares
     Year ended August 31, 2000                 5,487        (944)     4,543
     Year ended August 31, 1999                   540        (540)         0
     Period ended August 31, 1998                   0          (0)         0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
     Year ended August 31, 2000                 4,593      (1,914)     2,679
     Year ended August 31, 1999                 6,491      (6,491)         0
     Year ended August 31, 1998                     0          (0)         0
Investor Shares
     Year ended August 31, 2000                   217        (217)         0
     Year ended August 31, 1999                   120        (120)         0
     Period ended August 31, 1998                   0          (0)         0

                                      C-6
<PAGE>


TABLE 6 - FUND ACCOUNTING FEES ($)

The fees payable by the Funds under the Fund Accounting Agreement were:


                                       CONTRACTUAL FEE  FEE WAIVED   FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
     Year ended August 31, 2000               37,500      (37,500)          0
     Year ended August 31, 1999               37,250      (37,250)          0
     Year ended August 31, 1998               13,323      (13,323)          0
DAILY ASSETS GOVERNMENT FUND
     Year ended August 31, 2000               37,500      (37,500)          0
     Year ended August 31, 1999               37,250      (37,250)          0
     Year ended August 31, 1998               14,000       (4,000)     10,000
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
     Year ended August 31, 2000               37,500      (37,500)          0
     Year ended August 31, 1999               37,250      (37,250)          0
     Year ended August 31, 1998               14,064      (14,064)          0
DAILY ASSETS CASH FUND
     Year ended August 31, 2000               37,500      (37,500)          0
     Year ended August 31, 1999               37,250      (37,250)          0
     Year ended August 31, 1998               18,999      (12,999)      6,000
DAILY ASSETS MUNICIPAL FUND
     Year ended August 31, 2000               37,500      (37,500)          0
     Year ended August 31, 1999               37,250      (37,250)          0
     Year ended August 31, 1998                4,198       (4,198)          0

The fees payable by the Portfolios under the Core Accounting Agreement were:

                                   CONTRACTUAL FEE     FEE WAIVED    FEE PAID
TREASURY CASH PORTFOLIO
     Year ended August 31, 2000         49,500                (0)      49,500
     Year ended August 31, 1999         49,500                (0)      49,500
     Year ended August 31, 1998         48,000                (0)      48,000
GOVERNMENT PORTFOLIO
     Year ended August 31, 2000         49,500           (16,000)      33,500
     Year ended August 31, 1999         49,500           (39,899)       9,601
     Year ended August 31, 1998         48,000           (37,946)      10,054
GOVERNMENT CASH PORTFOLIO
     Year ended August 31, 2000         49,500                (0)      49,500
     Year ended August 31, 1999         49,500                (0)      49,500
     Year ended August 31, 1998         48,000                (0)      48,000
CASH PORTFOLIO
     Year ended August 31, 2000         49,500                (0)      49,500
     Year ended August 31, 1999         49,500                (0)      49,500
     Year ended August 31, 1998         48,000                (0)      48,000
MUNICIPAL CASH PORTFOLIO
     Year ended August 31, 2000         61,500           (61,500)           0
     Year ended August 31, 1999         49,500           (46,497)       3,003
     Year ended August 31, 1998          8,800            (8,800)           0


                                      C-7
<PAGE>


TABLE 7 - SECURITIES OF REGULAR BROKER-DEALERS ($)

As of August 31, 2000,  a  Portfolio's  investments  in dealers (or their parent
companies) with whom it conducted portfolio transactions were:

                          VALUE
CASH PORTFOLIO
Bank of America        95,000,000
Bear Stearns           75,000,000

                                      C-8
<PAGE>

TABLE 8 - 5% SHAREHOLDERS

As of December 1, 2000, the shareholders listed below owned of record 5% or more
of the  outstanding  shares  of each  class of shares  of the  Trust.  As noted,
certain of these  shareholders  are known to the Trust to hold  their  shares of
record only and have no beneficial interest, including the right to vote, in the
shares.

As of the same  date,  no  shareholder  beneficially  owned more than 25% of the
outstanding shares of the Trust as a whole.
<TABLE>
<S>                                <C>                                     <C>                 <C>              <C>
                                  NAME AND ADDRESS                             SHARES      % OF CLASS       % OF FUND

DAILY ASSETS TREASURY             Cheryl Barnes                             1,882.960           94.38            0.00
OBLIGATIONS FUND                  FBO Margaret Ann Jones
Investor Shares                   3840 N Broadway #30
                                  Boulder, CO 80304

                                  Forum Financial Group                       112.070            5.62            0.00
                                  2 Portland Square
                                  Portland, ME 04101

Institutional Shares              Stratevest & Co.                     79,206,474.290           54.60           51.02
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  Stratevest & Co.                     65,830,523.000           45.38           42.41
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

Institutional Service Shares      Stratevest & Co.                      2,810,898.820           27.62            1.81
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  Holland Company, Inc.                 2,081,290.580           20.45            1.34
                                  153 Howland Ave.
                                  Adams, MA 01220

                                  Canyon Ranch Mgmt. LLC                1,288,966.160           12.67            0.83
                                  C/O Midland Loan Services, Inc.
                                  210 W 10th Street
                                  Kansas City, MO 64105

                                  Adams Plumbing & Heating Inc.         1,048,939.190           10.31            0.68
                                  P.O. Box 126
                                  Adams, MA 01220

                                  Village Ventures Services, Inc.         915,086.910            8.99            0.59
                                  1476 Massachusetts Ave
                                  North Adams, MA 01247

                                  Goodless Brothers Electric Co,          761,401.910            7.48            0.49
                                  Inc.
                                  100 Memorial Ave
                                  P.O. Box 925
                                  West Springfield, MA 01090
</TABLE>


                                      C-9
<PAGE>

<TABLE>
<S>                                <C>                                     <C>                 <C>              <C>
                                NAME AND ADDRESS                               SHARES      % OF CLASS       % OF FUND

DAILY ASSETS GOVERNMENT FUND    Sanwa Bank California                     501,372.030           61.04            1.15
Investor Shares                 1 Front Street
                                Floor 23
                                San Francisco, CA 94111

Institutional Shares            H.M. Payson & Co                       24,922,378.940           62.75           57.10
                                Custody Account
                                P.O. Box 31
                                Portland, ME 04112

                                H.M. Payson & Co                       14,559,511.180           36.66           33.36
                                Trust Account
                                P.O. Box 31
                                Portland, ME 04112

Institutional Service Shares    Lansdowne Parking Associates LP           555,604.560           17.89            1.27
                                C/O Meredith Management
                                One Bridge Street #300
                                Newton, MA 02458

                                Edgar W. Flavell, Trustee                 422,712.180           13.61            0.97
                                2448 Sharon Oaks Drive
                                Menlo Park, CA 94025

                                Forum Trust LLC                           382,850.960           12.33            0.88
                                IRA FBO Merne E. Young
                                18751 San Rufino
                                Irvine, CA 92612

                                Retirement Planning Strategies            311,921.510           10.04            0.71
                                MFS Small Cap Fund NY

                                Forum Trust LLC                           246,370.000            7.93            0.56
                                IRA FBO Howard H. Stevenson
                                P.O. Box 277
                                Southborough, MA 01772

                                Retirement Planning Strategies            216,974.420            6.99            0.50
                                TCW Balanced Fund NY

                                Forum Trust LLC                           166,576.530            5.36            0.38
                                IRA FBO Peggy L. Meehan
                                1109 Laurel Avenue
                                East Palo Alto, CA 94303
</TABLE>


                                      C-10
<PAGE>
<TABLE>
<S>                                <C>                                        <C>              <C>               <C>
                                  NAME AND ADDRESS                             SHARES      % OF CLASS       % OF FUND

DAILY ASSETS GOVERNMENT           Central Computer Associates             162,794.650           52.13            0.16
OBLIGATIONS FUND                  DBA Techknowledge
Investor Shares                   P.O. Box 2668
                                  227 Water Street
                                  Augusta, ME 04338

                                  Robots Road Associates                  149,402.830           47.84            0.15
                                  C/O Boulos Property Management
                                  One Canal Plaza
                                  Portland, ME 04101

Institutional Shares              Stratevest & Co.                     33,076,331.110           69.59           33.06
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  Stratevest & Co.                     13,332,101.020           28.05           13.32
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

Institutional Service Shares      Stratevest & Co.                     20,525,250.870           39.26           20.50
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  The Dennis Group, Inc.               11,841,849.630           22.65           11.83
                                  1391 Main Street
                                  Springfield, MA 01103

                                  Auer & Co.                            3,480,332.800            6.66            3.48
                                  C/O Bankers Trust Co.
                                  648 Grassmere Park Road
                                  Nashville, TN 37211

DAILY ASSETS CASH FUND            Employee Benefit Management             261,424.440           56.73            0.32
Investor Shares                   47 Portland Street
                                  Portland, ME 04101

                                  J. K. MacMillan, Trustee                141,234.140           30.65            0.17
                                  3621 Maplewood Avenue
                                  Los Angeles, CA 90066

INSTITUTIONAL SHARES              Stratevest & Co.                      7,874,617.960           27.35            9.56
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  H.M. Payson & Co.                     6,366,541.830           22.12            7.73
                                  Trust Account
                                  P. O. Box 31
                                  Portland, ME 04112
</TABLE>

                                      C-11
<PAGE>
<TABLE>
<S>                                <C>                                        <C>              <C>               <C>
                                  NAME AND ADDRESS                             SHARES      % OF CLASS       % OF FUND

DAILY ASSETS CASH FUND            H.M. Payson & Co.                     4,764,411.000           16.55            5.78
Institutional Shares (continued)  Custody Account
                                  P. O. Box 31
                                  Portland, ME 04112

                                  Maine Mutual Fire Insurance           3,825,178.580           13.29            4.64
                                  44 Maysville Road
                                  P. O. Box 729
                                  Presque Isle, ME 04769

                                  Stratevest & Co.                      3,360,879.320           11.67            4.08
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  Spectrum Medical Group, PA            2,479,301.790            8.61            3.01
                                  300 Professional Drive
                                  Sarborough, ME 04074

Institutional Service Shares      A.W. Hastings & Co. LLC               5,238,800.360            9.86            6.36
                                  2 Pearson Way
                                  Enfield, CT 06082

                                  Auer & Co.                            3,070,921.700            5.78            3.73
                                  C/O Bankers Trust Co.
                                  648 Grassmere Park Road
                                  Nashville, TN 37211

                                  Auer & Co.                            2,696,467.980            5.07            3.27
                                  C/O Bankers Trust Co.
                                  648 Grassmere Park Road
                                  Nashville, TN 37211

DAILY ASSETS MUNICIPAL FUND       William A. Roberts                       11,396.660           88.47            0.01
Investor Shares                   P.O. Box 579
                                  Hinsdale, IL 60522

                                  Dennis Orzo                               1,376.690           10.69            0.00
                                  39 Amanda Lane
                                  New Rochelle, NY 10804

Institutional Shares              Stratevest & Co.                      8,220,961.570           61.59           54.56
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

                                  Stratevest & Co.                      5,031,560.310           37.70           33.39
                                  P.O. Box 2499
                                  Brattleboro, VT 05303

Institutional Service Shares      Amherst Nursing Home, Inc.              995,029.760           58.26            6.60
                                  150 University Drive
                                  Amherst, MA 01002
</TABLE>

                                      C-12
<PAGE>
<TABLE>
<S>                                <C>                                        <C>              <C>              <C>
                                  NAME AND ADDRESS                             SHARES      % OF CLASS       % OF FUND
DAILY ASSETS MUNICIPAL FUND       Partyka Business Trust                  359,111.410           21.03            2.38
Institutional Service Shares      495 Springfield Street
(continued)                       Chicopee, MA 01013

                                  Auer & Co.                              254,322.750           14.89            1.69
                                  C/O Bankers Trust Co.
                                  648 Grassmere Park Road
                                  Nashville, TN 37211

                                  PRM Environmental, Inc                   99,391.700            5.82            0.66
                                  495 Springfield Street
                                  Chicopee, MA 01013-2806
</TABLE>




                                      C-13
<PAGE>
APPENDIX D - ADDITIONAL ADVERTISING MATERIALS

                             TEXT OF FORUM BROCHURE


In connection with its  advertisements,  a Fund may provide a description of the
Fund's investment adviser and its affiliates, which are service providers to the
Fund. A form of the text is set forth below.

"FORUM FINANCIAL GROUP OF COMPANIES

Forum Financial Group of Companies  represents more than a decade of diversified
experience  with every  aspect of mutual  funds.  The Forum  Family of Funds has
benefited from the informed,  sharply  focused  perspective on mutual funds that
experience makes possible.

The Forum Family of Funds has been created and managed by  affiliated  companies
of Portland-based  Forum Financial Group, among the nation's largest mutual fund
administrators  providing clients with a full line of services for every type of
mutual fund.

The Forum  Family of Funds is designed to give  investment  representatives  and
investors a broad choice of carefully  structured  and  diversified  portfolios,
portfolios  that can satisfy a wide  variety of  immediate  as well as long-term
investment goals.

Forum  Financial Group has developed its "brand name" family of mutual funds and
has made them available to the investment public and to institutions on both the
national and regional levels.

For more than a decade Forum has had direct  experience with mutual funds from a
different  perspective,  a perspective  made  possible by Forum's  position as a
leading designer and full-service  administrator  and manager of mutual funds of
all types.


Today Forum  Financial  Group  administers  and  provides  services for over 181
mutual  funds for 17  different  fund  managers,  with more than $70  billion in
client assets. Forum has its headquarters in Portland, Maine, and has offices in
Seattle, Bermuda, and Warsaw, Poland. In a joint venture with Bank Handlowy, the
largest  and  oldest  commercial  bank  in  Poland,   Forum  operates  the  only
independent  transfer agent and mutual fund accounting business in Poland. Forum
directs an off-shore and hedge fund administration  business through its Bermuda
office. It employs more than 390 professionals worldwide.


From the  beginning,  Forum  developed a plan of action that was effective  with
both start-up funds, and funds that needed  restructuring  and improved services
in order to live up to their potential.  The success of its innovative  approach
is  evident  in  Forum's  growth  rate over the  years,  a growth  rate that has
consistently outstripped that of the mutual fund industry as a whole, as well as
that of the fund service outsource industry.

Forum has worked with both  domestic  and  international  mutual fund  sponsors,
designing  unique  mutual  fund  structures,  positioning  new funds  within the
sponsors' own corporate planning and targeted markets.

Forum's staff of experienced lawyers, many of whom have been associated with the
Securities  and  Exchange  Commission,  have  been  available  to work with fund
sponsors to customize  fund  components and to evaluate the potential of various
fund structures.

Forum has introduced fund sponsors to its unique proprietary Core and Gateway(R)
partnership,  helping them to take advantage of this full-service  master/feeder
structure.

Fund sponsors  understand that even the most efficiently and creatively designed
fund can disappoint  shareholders  if it is inadequately  serviced.  That is the
reason why fund  sponsors  have relied on Forum to meet all of a fund's  complex
compliance, regulatory, and filing needs.

                                      D-1
<PAGE>

Forum's full service commitment includes providing  state-of-the-art  accounting
support (Forum has 7 CPAs on staff, as well as senior  accountants who have been
associated with Big 6 accounting firms).  Forum's proprietary  accounting system
is continually upgraded and can provide custom-built modules to satisfy a fund's
specific  requirements.   This  service  is  joined  with  transfer  agency  and
shareholder  service  groups that draw their strength both from the high caliber
of the people staffing each unit and from Forum's  advanced  technology  support
system.

More than a decade of  experience  with mutual  funds has given Forum  practical
hands-on  experience and knowledge of how mutual funds function "from the inside
out."

Forum has put that  experience to work by creating the Forum Family of Funds,  a
family where each member is designed  and  positioned  for your best  investment
advantage,  and where each fund is  serviced  with the utmost  attention  to the
delivery of timely, accurate, and comprehensive shareholder information.

INVESTMENT ADVISERS

Forum Investment  Advisors,  LLC offers the services of portfolio  managers with
the highest  qualifications  -- because without such direction,  a comprehensive
and goal-oriented  investment  program and ongoing  investment  strategy are not
possible.  Serving  as  portfolio  managers  for the  Forum  Family of Funds are
individuals  with  decades  of  experience  with  some  of the  country's  major
financial institutions.

Forum Funds are also  managed by the  portfolio  managers of H.M.  Payson & Co.,
founded in Portland, Maine in 1854 and one of the oldest investment firms in the
country. Payson has approximately $1.25 billion in assets under management, with
clients that include  pension plans,  endowment  funds,  and  institutional  and
individual accounts.

FORUM INVESTMENT ADVISORS, LLC

Forum Investment  Advisors,  LLC is the largest Maine based  investment  adviser
with  approximately  $3.3  billion in assets  under  management.  The  portfolio
managers have decades of combined experience in a cross section of the country's
financial  markets.  The managers have  specific,  day-to-day  experience in the
asset class  portfolios  they manage,  bringing  critical  focus to meeting each
fund's explicit investment objectives. The portfolio managers have been involved
in investing the assets of large  insurance  companies,  banks,  pension  plans,
individuals,  and of course mutual funds. Forum Investment  Advisors,  LLC has a
staff of analysts and investment  administrators  to meet the demands of serving
shareholders in our funds.

FORUM FAMILY OF FUNDS

It has been said that  mutual  fund  investment  offerings--of  which  there are
nearly  10,000,  with assets spread across stock,  bond,  and money market funds
worth  more  than  $4  trillion--come  in  a  rainbow  of  varieties.  A  better
description  would be a "spectrum" of varieties,  the spectrum graded from green
through  amber  and on to red.  In  simpler  terms,  from low risk  investments,
through  moderate  to high  risk.  The lower the  risk,  the lower the  possible
rewards -- the higher the risk, the higher the potential reward.

The Forum Family of Funds provides  conservative  investment  opportunities that
reduce the risk of loss of capital,  using underlying  money market  investments
U.S. Government  securities  (although the shares of the Forum Funds are neither
insured nor guaranteed by the U.S. Government or its agencies),  thus cushioning
the investment  against  market  volatility.  These funds offer regular  income,
ready access to your money, and flexibility to buy or sell at any time.

In the less  conservative  but still not  aggressive  category  are funds in the
Forum Family that seek to provide steady income and, in certain cases,  tax-free
earnings.  Such investments  provide important  diversification to an investment
portfolio.

Growth funds in the Forum Family more  aggressively  pursue a high return at the
risk of market volatility.  These funds include domestic and international stock
mutual funds."

                                      D-2
<PAGE>

                      TEXT OF PEOPLES HERITAGE NEWS RELEASE

Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has
formed an alliance with a major mutual fund provider and an investment  advisory
firm to expand its mutual fund  offerings.  The  alliance  with Forum  Financial
Group and H.M.  Payson & Company will result in 18 funds,  including  the unique
Maine Municipal Bond Fund and New Hampshire Bond Fund, being offered through the
branches  of Peoples'  affiliate  banks in Maine,  New  Hampshire  and  northern
Massachusetts and the Company's trust and investment subsidiaries

'There is no secret to where  financial  services  are moving,  under one roof,"
said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples
Heritage.   "One  only  has  to  watch  the  virtually  daily  announcements  of
consolidations  in  the  financial  sector  to  understand  that  customers  are
demanding and receiving 'one-stop' financial services.

"We think we are adding the additional  competitive  advantage of funds that are
managed and administered close to home."

Eighteen  Forum funds will be offered  including two Payson funds.  The tax-free
Maine and New Hampshire  state bond funds are the only two such funds  available
and usually  invest 80% of total  assets in  municipal  securities.  Other funds
being provided by the alliance include money market, debt and equity funds.

Forum Financial, based in Portland, Maine since 1987, administers 124 funds with
more than $29 billion in assets.  Forum  manages  mutual  funds for  independent
investment advisers such as Payson and for banks. Forum Investment Advisors, LLC
an affiliate,  is the largest Maine-based  investment adviser with approximately
$1.95 billion in fund assets under management.

"We are providing a great product set to the customers served by Peoples' nearly
200 branches in northern New  England,"  said John Y.  Keffer,  Forum  Financial
president,  "The key today is to link a wide variety of investment  options with
convergent, easy access for customers. I believe this alliance does just that."

H.M.  Payson & Co.,  founded in 1854, is one of the nation's  oldest  investment
firms with nearly $1.25 billion in assets under  management  and $412 million in
non-managed  custodial accounts.  The Payson Value Fund and Payson Balanced Fund
are among the 18 offerings.

"I believe we have all the  ingredients  of a  tremendous  alliance,"  said John
Walker,  Payson President and Managing  Director.  "We have the region's premier
community banking company,  a community-based  investment  adviser,  and a local
mutual fund company that operates  nationally  and  specializes  in working with
banks. We are poised to provide solid investment performance and service."

People's  Heritage  Financial  Group  is a  $10  billion  multi-state  bank  and
financial services holding company  headquartered in Portland,  Maine. Its Maine
banking affiliate, Peoples Heritage Bank, has the state's leading deposit market
share.  Its New Hampshire  banking  affiliate,  Bank of New  Hampshire,  has the
state's leading deposit market share.  Family Bank, the Company's  Massachusetts
banking  subsidiary,  has the state's tenth largest deposit market share and the
leading  market  share  in many of the  northern  Massachusetts  communities  it
serves.  Peoples affiliate banks also operate subsidiaries in leasing, trust and
investment services and insurance.

FORUM FINANCIAL GROUP:
Headquarters:   Two Portland Square, Portland, Maine 04101
President:      John Y. Keffer
Offices:        Portland, Seattle, Warsaw, Bermuda and Malta

*    Established in 1986 to administer  mutual funds for independent  investment
     advisers   and  banks  *Among  the  nation's   largest   third-party   fund
     administrators

*    Uses proprietary in-house systems and custom programming capabilities

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*    Administration and Distribution Services:  Regulatory,  compliance, expense
     accounting, budgeting for all funds

*    Fund  Accounting  Services:  Portfolio  valuation,   accounting,   dividend
     declaration, and tax advice

*    Shareholder  Services:  Preparation  of statements,  distribution  support,
     inquiries and processing of trades

*    Client Assets under Administration and Distribution: $73 billion

*    Client Assets Processed by Fund Accounting: $53 billion

*    Client Funds under  Administration and Distribution:  181 mutual funds with
     89 share classes

*    International Ventures: Joint venture with Bank Handlowy in Warsaw, Poland,
     using  Forum's  proprietary  transfer  agency  and  distribution   systems;
     Off-shore investment fund  administration,  using Bermuda as Forum's center
     of operations

*    Forum Employees: United States -215, Poland - 180, Bermuda - 4


FORUM CONTACTS:

Tony Santaniello, Director of Marketing, (207) 879-1900 X 6175

H.M. PAYSON & CO.:
Headquarters:  One Portland Square, Portland, Maine
President and Managing Director: John Walker
Quality investment services and conservative wealth management since 1854
   *Assets under Management: $1.25 Billion
   *Non-managed Custody Assets: $412 Million
   *Client Base: 85% individuals; 15% institutional
   *Owned by 11 shareholders; 10 managing directors
   *Payson Balanced Fund and Payson Value Fund (administrative and shareholder
    services provided by Forum Financial Group)
   *Employees: 45

H.M. PAYSON & CO. CONTACT:
Joel Harris, Marketing Coordinator, (207) 772-3761

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