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As filed with the Securities and Exchange Commission on January 3, 1997
File No. 811-8858
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7
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CORE TRUST (DELAWARE)
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 207-879-1900
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David I. Goldstein, Esq.
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
(Name and Address of Agent for Service)
Copies to:
R. Darrell Mounts, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., N.W. 2nd Floor
Washington, D.C. 20036-1800
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EXPLANATORY NOTE
This Registration Statement is being filed by Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended. Beneficial interests in
the series of Registrant are not being registered under the Securities Act of
1933, as amended, because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of that act. Investments in Registrant's series may
only be made by certain institutional investors, whether organized within or
without the United States (excluding individuals, S corporations, partnerships,
and grantor trusts beneficially owned by any individuals, S corporations, or
partnerships). This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interests in any
series of Registrant.
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PART A
CORE TRUST (DELAWARE)
INDEX PORTFOLIO
SMALL COMPANY PORTFOLIO
INTERNATIONAL PORTFOLIO
INTERNATIONAL PORTFOLIO II
No changes are effected by this Post-Effective Amendment to the disclosure
regarding Index Portfolio, Small Company Portfolio, International Portfolio and
International Portfolio II, included in Post-Effective Amendment No. 6 to
Registrant's Registration Statement filed October 11, 1996.
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PART A
CORE TRUST (DELAWARE)
TREASURY PORTFOLIO
No changes are effected by this Post-Effective Amendment to the disclosure
regarding Treasury Portfolio included in Post-Effective Amendment No. 4 to
Registrant's Registration Statement filed July 31, 1996.
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PART B
CORE TRUST (DELAWARE)
INDEX PORTFOLIO
SMALL COMPANY PORTFOLIO
INTERNATIONAL PORTFOLIO
INTERNATIONAL PORTFOLIO II
No changes are effected by this Post-Effective Amendment to the disclosure
regarding Index Portfolio, Small Company Portfolio, International Portfolio and
International Portfolio II, included in Post-Effective Amendment No. 6 to
Registrant's Registration Statement filed October 11, 1996.
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PART B
CORE TRUST (DELAWARE)
TREASURY PORTFOLIO
No changes are effected by this Post-Effective Amendment to the disclosure
regarding Treasury Portfolio included in Post-Effective Amendment No. 4 to
Registrant's Registration Statement filed July 31, 1996.
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PART A
CORE TRUST (DELAWARE)
TREASURY CASH PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
Responses to Items 1, 2, 3 and 5A have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT
Core Trust (Delaware) (the "Trust") is a no-load, open-end management investment
company which was organized as a business trust under the laws of the State of
Delaware pursuant to a Trust Instrument dated September 1, 1994, as amended and
restated November 1, 1994.
Beneficial interests in the Trust are divided into eight separate diversified
subtrusts or "series," each having a distinct investment objective and distinct
investment policies. Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio (each a "Portfolio"), three of the subtrusts, are expected to
commence operations on September 1, 1995. The assets of each Portfolio belong
only to that Portfolio, and the assets belonging to a portfolio of the Trust
shall be charged with the liabilities of that Portfolio and all expenses, costs,
charges and reserves attributable to that portfolio. The Trust is empowered to
establish, without investor approval, additional portfolios which may have
different investment objectives and policies.
Beneficial interests in the Portfolios are offered solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act").
Investments in each Portfolio may only be made by certain institutional
investors, whether organized within or without the United States (excluding
individuals, S corporations, partnerships, and grantor trusts beneficially owned
by any individuals, S corporations, or partnerships). This registration
statement does not constitute an offer to sell, or the solicitation of an offer
to buy, any "security" within the meaning of the 1933 Act.
Linden Asset Management, Inc. (the "Adviser"), serves as the investment adviser
of each Portfolio. Forum Advisors, Inc. ("Forum Advisors") serves as the
investment subadviser of each Portfolio. Forum Financial Services, Inc.
("Forum") serves as the administrator of each Portfolio and its affiliate, Forum
Financial Corp. ("FFC"), serves as the transfer agent and fund accountant of
each Portfolio.
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INVESTMENT OBJECTIVES
The investment objective of each portfolio is to provide high current income to
the extent consistent with the preservation of capital and the maintenance of
liquidity.
The investment objective of each Portfolio is fundamental and may not be changed
without investor approval. There can be no assurance that any Portfolio will
achieve its investment objective.
INVESTMENT POLICIES
The Portfolios invest only in high quality, short-term money market instruments
that are determined by the Adviser, pursuant to procedures adopted by the
Trust's Board of Trustees (the "Board"), to be eligible for purchase and to
present minimal credit risks. High quality instruments include those that (i)
are rated (or, if unrated, are issued by an issuer with comparable outstanding
short-term debt that is rated) in one of the two highest rating categories by
two nationally recognized statistical rating organizations ("NRSROs") or, if
only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise unrated
and determined by the Adviser to be of comparable quality. A description of the
rating categories of certain NRSROs, such as Standard & Poor's Corporation and
Moody's Investors Service, Inc., is contained in Part B.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act")) and maintains a dollar-weighted
average portfolio maturity of 90 days or less. Except to the limited extent
permitted by Rule 2a-7 and except for U.S. Government Securities, each Portfolio
will not invest more than 5% of its total assets in the securities of any one
issuer. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. As used
herein, "U.S. Government Securities" means obligations issued or guaranteed as
to principal and interest by the United States Government, its agencies or
instrumentalities.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
Additional investment techniques, features and restrictions concerning the
Portfolios' investment programs are described in Part B.
TREASURY CASH PORTFOLIO
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Treasury Cash Portfolio seeks to attain its investment objective by investing
primarily in obligations of the U.S. Treasury, such as U.S. Treasury bills and
notes and other U.S. Government Securities which are guaranteed as to principal
and interest by the U.S. Treasury ("U.S. Treasury Securities"). Under normal
conditions, the Portfolio will invest at least 65% of its total assets in U.S.
Treasury Securities. The Portfolio's other investments only may include other
U.S. Government Securities and repurchase agreements backed by U.S. Treasury
Securities.
GOVERNMENT CASH PORTFOLIO
Government Cash Portfolio seeks to attain its investment objective by investing
primarily in U.S. Government Securities. Under normal conditions, the Portfolio
will invest at least 65% of its total assets in U.S. Government Securities. The
Portfolio's other investments only may include repurchase agreements backed by
U.S. Government Securities.
UNITED STATES GOVERNMENT SECURITIES. The U.S. Government Securities in which
the Portfolio may invest include U.S. Treasury Securities and obligations issued
or guaranteed by U.S. Government agencies and instrumentalities and backed by
the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration. In addition, the U.S. Government Securities
in which the Portfolio may invest include securities supported primarily or
solely by the creditworthiness of the issuer, such as securities of the Federal
National Mortgage Association. There is no guarantee that the U.S. Government
will support securities not backed by its full faith and credit. Accordingly,
although these securities have historically involved little risk of loss of
principal if held to maturity, they may involve more risk than securities backed
by the U.S. Government's full faith and credit.
CASH PORTFOLIO
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments.
OBLIGATIONS OF FINANCIAL INSTITUTIONS. The Portfolio may invest in obligations
of financial institutions, including negotiable certificates of deposit,
bankers' acceptances and time deposits of U.S. banks (including savings banks
and savings associations) and their foreign branches. The Portfolio limits its
investments in bank obligations to banks which at the time of investment have
total assets in excess of one billion dollars.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution
that earn a specified interest rate over a given period. Certificates of
deposit and fixed time deposits, which are payable at the stated maturity date
and bear a fixed rate of interest, generally may be withdrawn on demand by the
Portfolio but may be subject to early withdrawal penalties which could reduce
the Portfolio's yield. Deposits subject to early withdrawal
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penalties or that mature in more than seven days are treated as illiquid
securities if there is no readily available market for the securities.
UNITED STATES GOVERNMENT SECURITIES. The Portfolio may invest without limit in
the types of securities eligible for purchase by Government Cash Portfolio. See
"Item 4. General Description of Registrant - Investment Policies - Government
Cash Portfolio."
CORPORATE DEBT OBLIGATIONS. The Portfolio may invest in corporate debt
obligations of domestic issuers, such as commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the 1933 Act. These "restricted securities" are restricted as to disposition
under the Federal securities laws in that any sale of these securities may not
be made absent registration under the 1933 Act or an appropriate exemption
therefrom. Pursuant to guidelines adopted by the Board, the Adviser will
determine whether each such investment is liquid.
OTHER INVESTMENT POLICIES AND LIMITATIONS
All investment policies and limitations of a Portfolio that are designated as
fundamental, and each Portfolio's investment objective, may not be changed
without approval of the holders of a majority of the outstanding voting
interests (defined in the same manner as the phrase "vote of a majority of the
outstanding voting securities is defined in the 1940 Act) of the Portfolio. All
other investment policies and limitations of the Portfolios are not fundamental
and may be changed by the Board without investor approval. Except as otherwise
indicated herein or in Part B, investment policies of a Portfolio may be changed
by the Board without shareholder approval.
Each Portfolio may borrow money for temporary or emergency purposes (including
the meeting of redemption requests), but not in excess of 33 1/3% of the value
of the Portfolio's total assets. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets. Each Portfolio is permitted to hold cash in any amount pending
investment in securities. A further description of the Portfolios' investment
policies is contained in Part B.
REPURCHASE AGREEMENTS
Each Portfolio may seek additional income by entering into repurchase
agreements. Repurchase agreements are transactions in which a Portfolio
purchases a security and simultaneously commits to resell that security to the
seller at an agreed-upon price on an agreed-upon future date, normally one to
seven days later. The resale price reflects a market rate of interest that is
not related to the coupon rate or maturity of the purchased security. The Trust
holds the underlying collateral, which is maintained at not less than 100% of
the repurchase price. Repurchase agreements involve certain risks not associated
with direct investment in securities. The Portfolios, however, intend to enter
into repurchase agreements only with sellers which the Adviser believes present
minimal credit risks in accordance with guidelines established by the
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Board. In the event that a seller defaulted on its repurchase obligation,
however, a Portfolio might suffer a loss.
WHEN-ISSUED SECURITIES
In order to assure itself of being able to obtain securities at prices which the
Adviser believes might not be available at a future time, each Portfolio may
purchase securities on a when-issued or delayed delivery basis. Securities so
purchased are subject to market price fluctuation and no interest on the
securities accrues to a Portfolio until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Commitments for when-issued or delayed delivery
transactions will be entered into only when a Portfolio has the intention of
actually acquiring the securities. Failure by the other party to deliver a
security purchased by a Portfolio may result in a loss or missed opportunity to
make an alternative investment.
VARIABLE AND FLOATING RATE SECURITIES
The securities in which the Portfolios invest may have variable or floating
rates of interest. These securities pay interest at rates that are adjusted
periodically according to a specified formula, usually with reference to some
interest rate index or market interest rate. The interest paid on these
securities is a function primarily of the index or market rate upon which the
interest rate adjustments are based. Those securities with ultimate maturities
of greater than 397 days may be purchased only pursuant to Rule 2a-7. Under
that Rule, only those long-term instruments that have demand features which
comply with certain requirements and certain U.S. Government Securities may be
purchased. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
short-term market rates. All variable and floating rate securities purchased by
a Portfolio will have an interest rate that is adjusted based on a single
short-term rate or index, such as the Prime Rate.
There may not be an active secondary market for any particular floating or
variable rate instrument which could make it difficult for a Portfolio to
dispose of the instrument if the issuer defaulted on its repayment obligation
during periods that the Portfolio is not entitled to exercise its demand rights.
A Portfolio could, for this or other reasons, suffer a loss with respect to an
instrument. The Adviser monitors the liquidity of the Portfolios' investments
in variable and floating rate instruments, but there can be no guarantee that an
active secondary market will exist.
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FINANCIAL INSTITUTION GUIDELINES
Treasury Cash Portfolio and Government Cash Portfolio invest 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. In addition, these
Portfolios limit their investments to those permissible for Federally chartered
credit unions under applicable provisions of the Federal Credit Union Act and
the applicable rules and regulations of the National Credit Union
Administration. Government Cash Portfolio limits its investments to investments
that are legally permissible for Federally chartered savings associations
without limit as to percentage and to investments that permit interests in the
Portfolio to qualify as liquid assets and as short-term liquid assets.
ITEM 5. MANAGEMENT OF THE PORTFOLIOS
TRUSTEES AND OFFICERS
The business of the Trust is managed under the direction of the Board of
Trustees. Forum provides persons satisfactory to the Board to serve as officers
of the Trust. Part B contains general background information about each Trustee
and officer of the Trust.
INVESTMENT ADVISERS
The Adviser serves as investment adviser of each Portfolio pursuant to
investment advisory agreements between the Adviser and the Trust. Subject to
the general supervision of the Board, the Adviser makes investment decisions for
the Portfolios and monitors the Portfolios' investments. The Adviser, which is
located at 812 North Linden Drive, Beverly Hills, California 90210, is
controlled by Anthony R. Fischer, Jr., who acts as each Portfolio's portfolio
manager. The Portfolios are currently the only investment companies actively
advised by the Adviser.
Pursuant to an investment advisory agreement among the Trust, the Adviser and
Forum Advisors, from time to time Forum Advisors may provide the Adviser with
assistance regarding certain of the Adviser's responsibilities under its
investment advisory agreement. These services may include management of part of
or all of the Portfolios' investment portfolios. Forum Advisors, which is
located at Two Portland Square, Portland, Maine 04101, provides investment
advisory services to five other mutual funds.
The Adviser and Forum Advisors are required to furnish at their expense all
services, facilities and personnel necessary in connection with managing the
Portfolios' investments and effecting portfolio transactions for the Portfolios.
For its services under the investment advisory agreement, the Adviser receives
from each Portfolio an advisory fee based upon the total average daily net
assets of the three Portfolios
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("Total Portfolio Assets") that is calculated on a cumulative basis as follows:
0.06% of the first $200 million of Total Portfolio Assets, 0.04% of the next
$300 million of Total Portfolio Assets, and 0.03% of the remaining Total
Portfolio Assets. To the extent the Adviser has delegated its responsibilities
to Forum Advisors, the Adviser pays the advisory fee accrued for such period of
time to Forum Advisors. It is anticipated that the Adviser will delegate
responsibility for portfolio management infrequently to Forum Advisors.
CUSTODIAN
Imperial Trust Company serves as the custodian for each Portfolio and may
appoint certain subcustodians to custody the Portfolios' securities and other
assets. Imperial Trust Company is compensated at an annual rate of 0.025% of
the average daily net assets of each Portfolio.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Pursuant to an administrative agreement with the Trust, Forum supervises the
overall management of the Trust, including overseeing the Trust's receipt of
services, advising the Trust and the Trustees on matters concerning the Trust
and its affairs, and providing the Trust with general office facilities and
certain persons to serve as officers. For these services and facilities, Forum
receives a fee at an annual rate of 0.05% of the average daily net assets of
each Portfolio. Forum may, from time to time, from its own resources pay a fee
to broker-dealers or other persons for distribution or other services related to
the Portfolios.
As of January 1, 1997 Forum acted as administrator and distributor of registered
investment companies with assets of approximately $17 billion. Forum, whose
principal business address is Two Portland Square, Portland, Maine 04101, is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc. As of September 1, 1995, Forum, Forum Advisors and the
FFC were each directly controlled by John Y. Keffer, an officer and Trustee of
the Trust.
FFC, Two Portland Square, Portland, Maine 04101, is the Trust's transfer agent
and fund accountant. For these services, FFC receives a fee of the lesser of
0.05% of the average daily net assets of the Portfolios or $48,000 for each
investor in a Portfolio above one (excluding Forum and its affiliates), $6,000
per year. In addition, Forum may receive increased fees from a Portfolio
depending on the number and type of securities held by the Portfolio.
EXPENSES
Each Portfolio is obligated to pay for all of its expenses. These expenses
include: governmental fees; interest charges; taxes; brokerage fees and
commissions; insurance premiums; investment advisory, custodial, administrative
and transfer agency and fund accounting fees, as described above; compensation
of certain of the Trust's Trustees, costs of membership in trade associations;
fee and expenses of independent auditors and legal counsel to the Trust; and
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expenses of calculating the net asset value of and the net income of the
Portfolios. Each Portfolio's expenses comprise Trust expenses attributable to
the Portfolio, which are allocated to the Portfolio, and expenses not
attributable to the Portfolio, which are allocated among all portfolios in
proportion to their average net assets or as otherwise determined by the Board.
All fees of the Adviser, Forum Advisors, Forum, FFC and the custodian are
accrued daily and paid monthly. Each service provider may each elect to waive
(or continue to waive) all or a portion of its fees and may reimburse a
Portfolio for certain expenses. Any such waivers or reimbursements will have
the effect of increasing the Portfolio's performance for the period during which
the waiver or reimbursement is in effect. No fee waivers may be recouped at a
later date.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
The Trust was organized as a business trust under the laws of the State of
Delaware. Under the Trust Instrument, the Trustees are authorized to issue
beneficial interests in separate subtrusts or "series" of the Trust. The Trust
currently has eight series; the Trust reserves the right to create and issue
additional series.
Each investor in a Portfolio is entitled to participate equally in the
Portfolio's earnings and assets and to a vote in proportion to the amount of its
investment in the Portfolio or in the Trust as a whole. Investments in a
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value ("NAV").
Investments in a Portfolio have no preemptive or conversion rights and are fully
paid and non assessable, except as set forth below. The Trust is not required
and has no current intention to hold annual meetings of investors, but the Trust
will hold special meetings of investors when in the Trustees' judgment it is
necessary or desirable to submit matters to an investor vote. Generally,
beneficial interests will be voted in the aggregate without reference to a
particular Portfolio, except if the matter affects only one Portfolio or
Portfolio voting is required, in which case interests will be voted separately
by Portfolio. Investors have the right to remove one or more Trustees without a
meeting by a declaration in writing by a specified number of investors. Upon
liquidation of a Portfolio, investors will be entitled to share pro rata in the
Portfolio's net assets available for distribution to investors.
A Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discount), and other
income, including any net realized gains on the Portfolio's assets, less (2) all
actual and accrued expenses of the Portfolio, amortization of any premium, and
net realized losses on the Portfolio's assets, all as determined in accordance
with generally accepted accounting principles. All of a Portfolio's net income
is allocated pro rata among the investors in the Portfolio. Each Portfolio's
net income generally is distributed to the investors in the Portfolio on a daily
basis.
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Under the anticipated method of the Portfolios' operations, they will not be
subject to any income tax. However, each investor in a Portfolio will be
taxable on its proportionate share (as determined in accordance with the Trust's
Trust Instrument and the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder) of the Portfolio's ordinary income
and capital gain. It is intended that each Portfolio's assets, income, and
distributions will be managed in such a way that an investor in the Portfolio
will be able to satisfy the requirements of Subchapter M of the Code, assuming
that the investor invested all of its assets in the Portfolio.
Investor inquiries may be directed to Forum Financial Services, Inc.
ITEM 7. PURCHASE OF SECURITIES
Beneficial interests in the Portfolios are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "Item 4. General Description of Registrant."
All investments in the Portfolios are made without a sales load, at the NAV next
determined after an order is received by the Portfolio.
The NAV of each Portfolio is determined as of 4:00 p.m., Eastern time
("Valuation Time"), on all weekdays, except Federal holidays and other days that
the Federal reserve bank of San Francisco is closed ("Business Day").
Each investor in a Portfolio may add to or reduce its investment in a Portfolio.
At the Valuation Time on each Business Day, the value of each investor's
beneficial interest in a Portfolio will be determined by multiplying the
Portfolio's NAV by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions to or withdrawals of those interests which are to be effected on that
day will then be effected. Each investor's share of the aggregate beneficial
interests in the Portfolio then will be recomputed using the percentage equal to
the fraction (1) the numerator of which is the value of the investor's
investment in the Portfolio as of the Valuation Time on that day plus or minus,
as the case may be, the amount of any additions to or withdrawals from such
investment effected on that day and (2) the denominator of which is the
Portfolio's aggregate NAV as of the Valuation Time on that day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors. The percentages so
determined then will be applied to determine the value of each investor's
respective interest in the Portfolio as of the Valuation Time on the following
Business Day.
In order to more easily maintain a stable net asset value per share, each
Portfolio's portfolio securities are valued at their amortized cost (acquisition
cost adjusted for amortization of premium or accretion of discount) in
accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Board believes that it fairly reflects the
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based net asset value per share. The Portfolios' other assets, if any, are
valued at fair value by or under the direction of the Board.
There is no minimum initial or subsequent investment in a Portfolio. However,
since each Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the return on its assets, investments
must be made in Federal funds (i.e., monies credited to the account of the
Portfolios' custodian by a Federal Reserve Bank).
The Trust reserves the right to cease accepting investments in a Portfolio at
any time or to reject any investment order.
The exclusive placement agent for the Trust is Forum. Forum receives no
compensation for serving as the exclusive placement agent for the Trust.
ITEM 8. REDEMPTION OR REPURCHASE
An investor in a Portfolio may withdraw all or any portion of its investment in
the Portfolio at the NAV next determined after a withdrawal request in proper
form is furnished by the investor to the Trust. The proceeds of a withdrawal
will be paid by a Portfolio in Federal funds normally on the Business Day after
the withdrawal is effected, but in any event within seven days. Investments in
a Portfolio may not be transferred. The right of redemption may not be
suspended nor the payment dates postponed for more than seven days except when
the New York Stock Exchange is closed (or when trading thereon is restricted)
for any reason other than its customary weekend or holiday closings or under any
emergency or other circumstances as determined by the Commission.
Redemptions from a Portfolio may be made wholly or partially in portfolio
securities if the Board determines that payment in cash would be detrimental to
the best interests of the Portfolio. The Trust has filed an election with the
Commission pursuant to which each Portfolio will only consider effecting a
redemption in portfolio securities if the particular holder of beneficial
interest is redeeming more than $250,000 or 1% of the Portfolio's NAV, whichever
is less, during any 90-day period.
ITEM 9. PENDING LEGAL PROCEEDINGS
Not applicable.
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PART B
CORE TRUST (DELAWARE)
TREASURY CASH PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
ITEM 10. COVER PAGE
Not applicable.
ITEM 11. TABLE OF CONTENTS
General Information and History. . . . . . . . . . . . . . . . B-1
Investment Objectives and Policies . . . . . . . . . . . . . . B-1
Management of the Trust. . . . . . . . . . . . . . . . . . . . B-9
Control Persons and Principal Holders of Securities. . . . . . B-11
Investment Advisory and Other Services . . . . . . . . . . . . B-11
Brokerage Allocation and Other Practices . . . . . . . . . . . B-12
Capital Stock and Other Securities . . . . . . . . . . . . . . B-12
Purchase, Redemption and Pricing of Securities . . . . . . . . B-13
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . B-13
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . B-13
Calculations of Performance Data . . . . . . . . . . . . . . . B-13
Financial Statements . . . . . . . . . . . . . . . . . . . . . B-14
ITEM 12. GENERAL INFORMATION AND HISTORY
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES
Part A contains information about the investment objectives, policies and
restrictions of Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each a "Portfolio" and collectively the "Portfolios") of Core Trust
(Delaware) (the "Trust"). The following discussion is intended to supplement
the disclosure in Part A concerning the Portfolios' investments, investment
techniques and strategies and the risks associated therewith. No Portfolio may
make any investment or employ any investment technique or strategy not
referenced in Part A as it relates to that Portfolio. This Part B should be
read only in conjunction with Part A.
DEFINITIONS
As used in Part B, the following terms shall have the meanings listed:
"Adviser" shall mean Linden Asset Management, Inc.
"Board" shall mean the Board of Trustees of Core Trust.
"Core Trust" shall mean the Core Trust (Delaware).
"FFC" shall mean Forum Financial Corp.
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"Forum" shall mean Forum Financial Services, Inc.
"Forum Advisors" shall mean Forum Advisors, Inc.
"NRSRO" shall mean a nationally recognized statistical rating organization.
"Portfolio" shall mean each of Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"U.S. Government Securities" shall mean obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
INVESTMENT POLICIES
The Portfolios currently are prohibited from purchasing any security issued by
the Federal Home Loan Mortgage Corporation. This does not prohibit the
Portfolios from entering into repurchase agreements collateralized with
securities issued by the Federal Home Loan Mortgage Corporation.
RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other NRSROs are private services that provide ratings of the credit
quality of debt obligations. The Portfolios use these ratings in determining
whether to purchase, sell or hold a security. It should be emphasized, however,
that ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. Subsequent to its purchase by a Portfolio, an
issue of securities may cease to be rated or its rating may be reduced. The
Adviser, and in certain cases the Board, will consider such an event in
determining whether the Portfolio should continue to hold the obligation.
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 in response to
developments and events, so that an issuer's current financial condition may be
better or worse than the rating indicates.
CORPORATE BONDS - MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Bonds which are
rated Aaa are judged by Moody's 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.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
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CORPORATE BONDS - STANDARD & POOR'S CORPORATION ("S&P"). Bonds rated AAA have
the highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
CORPORATE BONDS - FITCH INVESTORS SERVICE, INC. ("FITCH"). AAA Bonds are
considered to be investment grade and of the highest credit quality. The
obligor has an exceptionally strong ability to pay interest and repay principal,
which is unlikely to be affected by reasonably foreseeable events.
A Bonds are considered to be investment grade of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus and minus signs are used with a rating symbol to indicate the relative
level of credit quality within the rating category. Plus and minus signs,
however, are not used in the AAA category.
COMMERCIAL PAPER - MOODY'S INVESTORS SERVICE, INC. Moody's two highest ratings
for short-term debt, including commercial paper, are Prime-1 and Prime-2; both
are judged investment grade, to indicate the relative repayment ability of rated
issuers.
Issuers (or supporting institutions) rated Prime-1 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:
- - Leading market positions in well-established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- - Broad margins in earnings, coverage of fixed financial charges and high
internal cash generation.
- - Well-established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 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.
COMMERCIAL PAPER - STANDARD & POOR'S CORPORATION. S&P's two highest commercial
paper ratings are A and B. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety. An A-1
designation indicates that the degree of safety regarding timely payment is
strong. Those issues determined to
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possess extremely strong safety characteristics are denoted with a plus (+) sign
designation. The capacity for timely payment on issues with an A-2 designation
is satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1. A-3 issues have an adequate capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. Issues rated B
are regarded as having only a speculative capacity for timely payment.
COMMERCIAL PAPER - FITCH INVESTORS SERVICE, INC. Fitch's short-term ratings
apply to debt obligations that are payable on demand or have original maturities
of generally up to three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
F-1+. Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ or F-1 ratings.
SMALL BUSINESS ADMINISTRATION SECURITIES
Each Portfolio may purchase securities issued by the Small Business
Administration ("SBA"). SBA securities are variable rate securities that carry
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 25 years. No
Portfolio may purchase an SBA Security if, immediately after the purchase, (i)
the Portfolio would have more than 15% of its net assets invested in SBA
securities or (ii) the unamortized premium minus the unaccreted discount on SBA
Securities held by the Portfolio divided by the sum of the securities' par
amount would exceed 2.5% (0.025).
MORTGAGE BACKED SECURITIES
The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities (such as SBA securities) that are U.S. Government Securities
or, in the case of Treasury Cash Portfolio, that are U.S. Treasury Securities.
These securities directly or indirectly represent a participation in, or are
secured by and payable from, adjustable rate mortgage or other loans which may
be secured by real estate or other assets. Unlike traditional debt instruments,
payments on these securities include both interest and a partial payment of
principal. Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities. Some adjustable rate U.S. Government
Securities (or the underlying loans) are subject to caps or floors that limit
the maximum change in interest rate during a specified period or over the life
of the security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. Government Cash Portfolio and
Cash Portfolio will only invest in adjustable rate MBSs that are U.S. Government
Securities. MBSs represent an interest in a pool of mortgages made by lenders
such as commercial banks, savings associations, mortgage bankers and mortgage
brokers and may be issued by governmental or government-related entities or by
non-governmental entities such as commercial banks, savings associations,
mortgage bankers and other secondary market issuers.
Interests in pools of MBSs differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. In contrast, MBSs
provide periodic payments which consist of interest and, in most cases,
principal. In effect, these payments are a "pass-through" of the periodic
payments and optional prepayments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments to holders of MBSs are caused by prepayments
resulting from the sale of the underlying property or the refinancing or
foreclosure of the
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underlying mortgage loans. Such prepayments may significantly shorten the
effective maturities of MBSs, and occur more often during periods of declining
interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.
During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will
have "caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.
Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities.
As new types of these securities are developed and offered to investors, the
Adviser may, consistent with the investment objective and policies of a
Portfolio, consider making investments in such new types of securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of 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 transactions as a purchase
and thereafter reflect the value each day of such securities in determining its
net asset value. If a Portfolio chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with the disposition
of any other portfolio obligation, incur a gain or loss due to market
fluctuation. Failure of an issuer to
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deliver the security may result in the Portfolio incurring a loss or missing an
opportunity to make an alternative investment. When a Portfolio agrees to
purchase a security on a when-issued or delayed delivery basis, its custodian
will set aside and maintain in a segregated account cash, U.S. Government
Securities or other liquid, high-grade debt securities with a market value at
all times at least equal to the amount of its commitment.
ILLIQUID SECURITIES
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
The Board has ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to the Adviser and, with respect
to certain types of restricted securities which may be deemed to be liquid, has
adopted guidelines to be followed by the Adviser. 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; (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; (5) whether the security is registered; and (6) if
the security is not traded in the United States, whether it can be freely traded
in a liquid foreign securities market. The Adviser monitors the liquidity of
the securities in each Portfolio's portfolio and reports periodically to the
Board.
Certificates of deposit and fixed time deposits that carry an early withdrawal
penalty or mature in greater than seven days are treated by the Portfolio as
illiquid securities if there is no readily available market for the instrument.
REPURCHASE AGREEMENTS
In connection with entering into repurchase agreements, the Portfolios require
continual maintenance by the Trust's custodian of the market value of the
underlying collateral in amounts equal to, or in excess of, the repurchase price
plus the transaction costs (including loss of interest) that the Portfolios
could expect to incur upon liquidation of the collateral if the counterparty
defaults. In the event a counterparty defaults on its repurchase obligation, a
Portfolio might suffer a loss to the extent that the proceeds from the sale of
the collateral were less than the repurchase price. In the event of a
counterparty's bankruptcy, a Portfolio might be delayed in, or prevented from,
selling the collateral for the Portfolio's benefit. The Adviser monitors the
creditworthiness of its repurchase agreement counterparties and securities
borrowers under the Board's general supervision and pursuant to specific Board
adopted procedures.
VARIABLE AND FLOATING RATE SECURITIES
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
the Adviser believes that the Portfolios may be able to take advantage of the
higher yield that is usually paid on long-term securities.
Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations
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generally are not traded, nor generally is there an established secondary market
for these obligations. To the extent a demand note does not have a seven day or
shorter demand feature and there is no readily available market for the
obligation, it is treated as an illiquid security.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on two interest
rates or indexes, on an interest rate or index that materially lags short-term
market rates. All variable and floating rate securities purchased by the
Portfolio have an interest rate that is adjusted based on a single short-term
rate or index, such as the Prime Rate.
INVESTMENT COMPANY SECURITIES
In connection with managing their cash positions, the Portfolios may invest in
the securities of other investment companies within the limits proscribed by the
1940 Act. Under normal circumstances, each Portfolio intends to invest less
than 5% of the value of its net assets in the securities of other investment
companies. In addition to a Portfolio's expenses (including the various fees),
as a shareholder in another investment company, a Portfolio would bear its pro
rata portion of the other investment company's expenses (including fees).
ZERO-COUPON SECURITIES
All zero-coupon securities in which the Portfolio invests will have a maturity
of less than 13 months.
INVESTMENT LIMITATIONS
FUNDAMENTAL LIMITATIONS
The Portfolios have adopted the following fundamental investment limitations
that cannot be changed without the affirmative vote of the lesser of (i) more
than 50% of the outstanding interests of the Portfolio or (ii) 67% of the shares
of the Portfolio present or represented at an interestholders meeting at which
the holders of more than 50% of the outstanding interests of the Portfolio are
present or represented. Each Portfolio may not:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
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(7) 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.
(8) 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.
(9) With respect to Government Cash Portfolio, purchase or hold any
security that (i) a Federally chartered savings association may not invest
in, sell, redeem, hold or otherwise deal pursuant to law or regulation,
without limit as to percentage of the association's assets and (ii)
pursuant to 12 C.F.R. Section 566.1 would cause shares of the Portfolio not
to be deemed to be short term liquid assets when owned by Federally
chartered savings associations.
In addition the Portfolios have adopted a fundamental policy which provides
that, notwithstanding any other investment policy or restriction (whether
fundamental), the Portfolio 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 Portfolio.
NONFUNDAMENTAL LIMITATIONS
The Portfolios have adopted the following nonfundamental investment limitations
that may be changed by the Board without interestholder approval. Each
Portfolio may not:
(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) Invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous operations
for less than three years, including the operations of predecessors (unless
guaranteed as to principal and interest by an issuer in whose securities
the Portfolio could invest), if as a result, more than 5% of the value of
the Portfolio's total assets would be so invested.
(f) Invest in or hold securities of any issuer other than the Portfolio
if, to the Portfolio's knowledge, those Trustees and officers of the Trust
or the Portfolio's investment adviser, individually owning beneficially
more than 1/2 of 1% of the securities of the issuer, in the aggregate own
more than 5% of the issuer's securities.
(g) Invest in oil, gas or other mineral exploration or development
programs, or leases, or in real estate limited partnerships; provided that
the Portfolio may invest in securities issued by companies engaged in such
activities.
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(h) 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.
OTHER INFORMATION
Except as required by the 1940 Act, if a 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
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation. For
purposes of limitation (2): (i) loan participations are considered to be issued
by both the issuing bank and the underlying corporate borrower; (ii) utility
companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
ITEM 14. MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and their 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.
John Y. Keffer*, Chairman and President (age 54).
President and Director, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Financial Corp. (a registered transfer agent) and
Forum Advisors, Inc. (a registered investment adviser). Mr. Keffer is a
Trustee/Director and/or officer of various registered investment companies
for which Forum Financial Services, Inc. serves as manager, administrator
and/or distributor. His address is Two Portland Square, Portland, Maine
04101.
Costas Azariadis, Trustee (age 52).
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Professor of Economics, University of California, Los Angeles, since July
1992. Prior thereto, Dr. Azariadis was Professor of Economics at the
University of Pennsylvania. His address is Department of Economics,
University of California, Los Angeles, 405 Hilgard Avenue, Los Angeles,
California 90024.
James C. Cheng, Trustee (age 53).
Founder and President, Technology Marketing Associates (a marketing company
for small and medium size businesses in New England) since 1991. During
November 1991 to September 1994, Mr. Cheng provided marketing and sales
support to Forum. Mr. Cheng was President of Network Dynamics, Inc. (a
software development company). Prior thereto His address is 27 Temple
Street, Belmont, MA 02718.
J. Michael Parish, Trustee (age 52).
Partner at the law firm of Reid & Priest. Prior to 1995, Mr. Parish was a
partner at Winthrop Stimson Putnam & Roberts since 1989. His address is 40
West 57th Street, New York, New York.
Sara M. Clark, Vice President, Assistant Secretary and Assistant Treasurer (age
__).
Managing Director, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, from 1991 to 1994 Ms. Clark was
Controller of Wright Express Corporation (a national credit card company)
and for six years prior thereto was employed at Deloitte & Touche LLP as an
accountant. Ms. Clark is also an officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.
Thomas G. Sheehan, Vice President and Assistant Secretary (age 42).
Counsel, Forum Financial Services, Inc. since October, 1993. Prior
thereto, Mr. Sheehan was a Special Counsel in the Division of Investment
Management of the U.S. Securities and Exchange Commission in Washington,
D.C. His address is Two Portland Square, Portland, Maine 04101.
Richard C. Butt, Treasurer (age __).
CPA, Managing Director, Operations, Forum Financial Corp. since 1996.
Prior thereto, Mr. Butt was a consultant in the financial services division
of KPMG Peat Marwick LLP ("KPMG"). Prior to his employment at KPMG, Mr.
Butt was President of 440 Financial Distributors, Inc., the distribution
subsidiary of 440 Financial Group, and Senior Vice President of the parent
company. Prior thereto, he was a Vice President at Fidelity Services
Company. Mr. Butt is responsible for fund accounting and transfer agency
at Forum. His address is Two Portland Square, Portland, Maine 04101.
David I. Goldstein, Secretary (age 35).
Counsel, Forum Financial Services, Inc., with which he has been associated
since 1991. Prior thereto, Mr. Goldstein was associated with the law firm
of Kirkpatrick & Lockhart, LLP. Mr. Goldstein is also an officer of various
registered investment companies for which Forum Financial Services, Inc.
serves as manager, administrator and/or distributor. His address is Two
Portland Square, Portland, Maine 04101.
Renee A. Walker, Assistant Secretary (age __).
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Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, Ms. Walker was an administrator at
Longwood Partners (the manager of a hedge fund partnership) for a year.
From 1991 to 1993, Ms. Walker was a sales representative assistant at
PaineWebber Incorporated (a broker-dealer). Her address is Two Portland
Square, Portland, Maine 04101.
Each Trustee of the Trust (other than persons who are interested persons of the
Trust) is paid $1,000 for each Board meeting attended (whether in person or by
electronic communication) plus $100 per active portfolio of the Trust and is
paid $1,000 for each Committee meeting attended on a date when a Board meeting
is not held. To the extent a meeting relates to only certain portfolios of the
Trust, Trustees are paid the $100 fee only with respect to those portfolios.
Trustees are also reimbursed for travel and related expenses incurred in
attending meetings of the Board. No officer of the Trust is compensated by the
Trust.
The following table provides the aggregate compensation paid to the Trustees of
the Trust by the Trust. Information is presented for the year ended August 31,
1996, the Portfolios' fiscal year end.
Total Compensation
from the Trust
Costas Azariadis $5,300
James C. Cheng $5,300
J. Michael Parish $5,300
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Prior to the commencement of each Portfolio's operations Forum Financial
Services, Inc. owned all of the outstanding interests in each Portfolio. It is
expected that, at the time of each Portfolio's commencement of operations,
Treasury Cash Fund, Government Cash Fund and Cash Fund, separate series of
Monarch Funds, a Delaware business trust registered with the SEC as an open-end
management investment company, will invest all of their investable assets in
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio,
respectively, and control the Portfolios.
Monarch Funds has informed the Trust that whenever a fund of Monarch Funds is
requested to vote on matters pertaining to a Portfolio, the fund will hold a
meeting of its shareholders and will cast its vote as instructed by its
shareholders. This only applies to matters for which the fund would be required
to have a shareholder meeting if it directly held investment securities rather
than invested in a Portfolio. It is anticipated that any other registered
investment company (or series thereof) that may in the future invest in a
Portfolio will follow the same or a similar practice.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY SERVICES
Linden Asset Management, Inc. acts as investment adviser to each Portfolio
pursuant to an investment advisory agreement with the Trust and is required to
furnish at its expense all services, facilities and personnel necessary in
connection with managing the investments of, and effecting portfolio
transactions for, the Portfolios. Forum Advisors, Inc. serves as an investment
subadviser to each Portfolio pursuant to an investment advisory agreement with
the Adviser and the Trust. Pursuant to its agreement, from time to time Forum
Advisors provides the Adviser with assistance regarding certain of the Adviser's
responsibilities to the Portfolios, including management of all or part of the
Portfolios' investment portfolios.
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The investment advisory agreements for each Portfolio will continue in effect
only if such continuance is specifically approved at least annually by the Board
or by vote of the interestholders of the Portfolio, and, in either case, by a
majority of the Trustees who are not parties to the agreement or interested
persons of any such party, at a meeting called for the purpose of voting on the
agreement.
The Adviser's investment advisory agreement with respect to a Portfolio is
terminable without the payment of penalty, (i) by the Board or by a vote of a
majority of the Portfolio's outstanding voting securities (as defined in the
1940 Act) on 60 days' written notice to the Adviser, or (ii) by the Adviser on
60 days' written notice to the Trust. Forum Advisor's The Adviser's investment
advisory agreement with respect to a Portfolio is terminable without the payment
of penalty, (i) by the Board or by a vote of a majority of the Portfolio's
outstanding voting securities (as defined in the 1940 Act) on 60 days' written
notice to the Adviser, or (ii) by the Adviser or Forum Advisors on 60 days'
written notice to the Trust. With respect to each Portfolio, each investment
advisory agreement terminates automatically upon its assignment.
The investment advisory agreements provide that the Adviser and Forum Advisors
may render service to others.
ADMINISTRATIVE SERVICES
Pursuant to an administration agreement with the Trust, Forum supervises the
overall administration of the Trust which includes, among other
responsibilities, overseeing the performance of administrative and professional
services rendered to the Trust by others, including its custodian, transfer
agent and fund accountant as well as legal and auditing services; preparing and
printing the periodic updating of the Trust's registration statement, tax
returns, and reports to interestholders and the SEC; preparing, filing and
maintaining the Trust's governing documents; preparing and disseminating
materials for meetings of the Board; and providing the Trust with general office
facilities.
The Administration Agreement between Forum and the Trust will continue in effect
with respect to a Portfolio only if such continuance is specifically approved at
least annually by the Board or by the interestholders of that portfolio and, in
either case, by a majority of the Trustees who are not parties to the agreement
or interested persons of any such party.
The Administration Agreement with respect to each Portfolio may be terminated
without the payment of any penalty, (i) by the Board or by vote of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940) Act on 60
days' written notice to Forum or (ii) by Forum on 60 days' written notice to the
Trust.
CUSTODIAN
Pursuant to a Custodian Contract with the Trust, Imperial Trust Company, 201 N.
Figueroa Street, Suite 610, Los Angeles, California 90012, a subsidiary of
Imperial Bank, acts as the custodian of each Portfolio's assets. The
custodian's responsibilities include safeguarding and controlling the Portfolios
cash and securities and determining income payable on and collecting interest on
Portfolio investments. The Trust pays the custodian a fee at an annual rate of
0.025% of each Portfolio's average daily net assets.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serves as independent auditors for the Portfolios.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES
Purchases and sales of portfolio securities for each Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters of portfolio securities 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.
While the Trust does not anticipate that the Portfolios will pay any amounts of
commission, in the event a Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to
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broker-dealers who pay expenses of the Portfolio that it 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 to the
Portfolio.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by the Adviser, Forum Advisors or their respective affiliates. If,
however, a Portfolio and other investment companies or accounts managed by the
Adviser or Forum Advisors are contemporaneously engaged in the purchase or sale
of the same security, the transactions may be averaged as to price and allocated
equitably to each account. In some cases, this policy might adversely affect
the price paid or received by a Portfolio or the size of the position obtainable
for the Portfolio. In addition, when purchases or sales of the same security
for a Portfolio and for other investment companies managed by the Adviser or
Forum Advisors occur contemporaneously, the purchase or sale orders may be
aggregated in order to obtain any price advantages available to large
denomination purchases or sales.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
Under the Trust Instrument, the Trustees are authorized to issue beneficial
interest in one or more separate and distinct series. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Each investor in a
Portfolio is entitled to a vote in proportion to the amount of its investment
therein. Investors in the Portfolios will all vote together in certain
circumstances (e.g., election of the Trustees and ratification of auditors, as
required by the 1940 Act and the rules thereunder). One or more Portfolios
could control the outcome of these votes. Investors do not have cumulative
voting rights, and investors holding more than 50 percent of the aggregate
interests in the Trust or in a Portfolio, as the case may be, may control the
outcome of votes. The Trust is not required and has no current intention to
hold annual meetings of investors, but the Trust will hold special meetings of
investors when (1) a majority of the Trustees determines to do so or
(2) investors holding at least 10 percent of the interests in the Trust (or a
Portfolio) request in writing a meeting of investors in the Trust (or
Portfolio). Except for certain matters specifically described in the Trust
Instrument, the Trustees may amend the Trust's Trust Instrument without the vote
of investors.
The Trust, with respect to a Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the Trust's Board. A Portfolio may be terminated (1) upon liquidation and
distribution of its assets, if approved by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act) or (2) by
the Trustees on written notice to the Portfolio's investors. Upon liquidation
or dissolution of any Portfolio, the investors therein would be entitled to
share pro rate in its net assets available for distribution to investors.
The Trust is organized as a business trust under the laws of the State of
Delaware. The Trust's interestholders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust Act
provides that an interestholder of a Delaware business trust shall be entitled
to the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust interestholder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or an interestholder
is subject to the jurisdiction of courts in those states, the courts may not
apply Delaware law, and may thereby subject the Trust to liability. To guard
against this risk, the Trust Instrument of the Trust disclaims liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation and instrument entered into by the Trust or
its Trustees, and provides for indemnification out of Trust property of any
interestholder held personally liable for the obligations of the Trust. Thus,
the risk of an interestholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refuses to apply Delaware law, (2) no contractual limitation of liability
is in effect, and (3) the Trust itself is unable to
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meet its obligations. In light of Delaware law, the nature of the Trust's
business, and the nature of its assets, the Board believes that the risk of
personal liability to a Trust interestholder is extremely remote.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES
Interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of section 4(2) of
the 1933 Act. See Items 4, 7 and 8 in Part A.
ITEM 20. TAX STATUS
Each Portfolio will be classified for federal income tax purposes as a separate
partnership that will not be a "publicly traded partnership." As a result, no
Portfolio will be subject to federal income tax; instead, each investor in a
Portfolio will be required to take into account in determining its federal
income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also will not be subject to
Delaware income or franchise tax.
Each investor in a Portfolio will be deemed to own a proportionate share of the
Portfolio's assets, and to earn a proportionate share of the Portfolio's income,
for, among other things, purposes of determining whether the investor satisfies
the requirements to qualify as a regulated investment company ("RIC").
Accordingly, each Portfolio intends to conduct its operations so that its
investors that intend to qualify as RICs ("RIC investors") will be able to
satisfy all those requirements.
Distributions to an investor from a Portfolio (whether pursuant to a partial or
complete withdrawal or otherwise) will not result in the investor's recognition
of any gain or loss for federal income tax purposes, except that (1) gain will
be recognized to the extent any cash that is distributed exceeds the investor's
basis for its interest in the Portfolio before the distribution, (2) income or
gain will be recognized if the distribution is in liquidation of the investor's
entire interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized receivables,
and (4) gain or loss may be recognized on a distribution to an investor that
contributed property to the Portfolio. An investor's basis for its interest in
a Portfolio generally will equal the amount of cash and the basis of any
property it invests in the Portfolio, increased by the investor's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the investor and (b) the
investor's share of the Portfolio's losses.
ITEM 21. UNDERWRITERS
Forum Financial Services, Inc., Two Portland Square, Portland, Maine 04101, the
Portfolios' administrator, will serve as the Trust's placement agent. Forum
will receive no compensation for such placement agent services.
ITEM 22. CALCULATIONS OF PERFORMANCE DATA
Not applicable.
ITEM 23. FINANCIAL STATEMENTS
The Schedules of Investments, Statements of Assets and Liabilities, Statements
of Operations, Statements of Changes in Net Assets, and notes thereto, of the
Portfolios for the fiscal year ended August 31, 1996 and the Independent
Auditors' Report thereon are incorporated herein by reference.
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PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS.
INCLUDED IN PART A
Not Applicable.
INCLUDED IN PART B
Schedules of Investments, Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, and
notes thereto, of the Portfolios for the fiscal year ended August 31,
1996 and the Independent Auditors' Report thereon, were filed with the
Securities and Exchange Commission on November 8, 1996 pursuant to
Rule 30b2-1 under the Investment Company Act of 1940, as amended, and
incorporated herein by reference.
(B) EXHIBITS:
(1) Copy of Trust Instrument (See Note A).
(2) Not Applicable.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Copy of the Investment Advisory Agreement between Registrant and
Norwest Bank Minnesota, N.A ("Norwest") (See Note B).
(b) Copy of the Investment Advisory Agreement between Registrant and
Schroder Capital Management International Inc.(See Note B).
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(c) Copy of the amended Investment Advisory Agreement between
Registrant and Linden Asset Management, Inc., (See Note C).
(d) Copy of the Investment Advisory Agreement among Registrant,
Linden Asset Management, Inc. and Forum Advisors, Inc. (See Note
B).
(e) Copy of the Investment Advisory Agreement between Registrant and
Forum Advisors, Inc. relating to the Treasury Portfolio of
Registrant (See Note B).
(f) Copy of the Investment Advisory Agreement among Registrant, Forum
Advisors, Inc., and Linden Asset Management, Inc. relating to the
Treasury Portfolio of Registrant (See Note B).
(g) Copy of the Investment Advisory Agreement between Registrant and
Linden Asset Management, Inc. relating to the Treasury Portfolio
of Registrant (See Note B).
(6) Not required.
(7) Not Applicable.
(8) (a) Copy of the Custodian Agreement between Registrant and Norwest
(See Note B).
(b) Copy of the Custodian Agreement between Registrant and The Chase
Manhattan Bank, N.A. ("Chase") (See Note B).
(c) Copy of the Foreign Subcustody Agreement between Chase and
various foreign subcustodians (See Note A).
(d) Copy of the Custodian Agreement between Registrant and Imperial
Trust Company (See Note B).
(e) Copy of the Custodian Agreement between Registrant and First
National Bank of Boston, N.A. (See Note B).
(9) (a) Copy of the Administration Agreement between Registrant and Forum
Financial Services, Inc. (See Note B).
(b) Copy of the Fund Accounting Agreement between Registrant and
Forum Financial Corp. (See Note B).
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(c) Copy of the Placement Agent Agreement between Registrant and
Forum. (See Note B).
(d) Copy of the Administration Agreement between Registrant and Forum
with respect to Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio and Treasury Portfolio. (See Note B).
(e) Copy of the Fund Accounting Agreement between Registrant and
Forum Financial Corp. with respect to Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio and Treasury Portfolio.
(See Note B).
(f) Copy of the Placement Agent Agreement between Registrant and
Forum with respect to Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio and Treasury Portfolio. (See Note B).
(10) Not required.
(11) Not required.
(12) Not required.
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
Note A: Filed in Registrant's Registration Statement on November 10, 1994.
Note B: Filed in Amendment No. 5 to Registrant's Registration Statement on
September 30, 1996.
Note C: Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
As of December 31, 1996 substantially all of the securities of International
Portfolio, International Portfolio II, Small Company Portfolio and Index
Portfolio were owned by various series of Norwest Advantage Funds, a registered
open-end management investment company. Also as of December 31, 1996,
substantially all of the securities of Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio were owned by various series of Monarch Funds, a
registered-open-end management investment company.
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ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF DECEMBER 31, 1996
Title of Class of Shares
of Beneficial Interest Number of Holders
------------------------ -----------------
International Portfolio 2
International Portfolio II 6
Small Company Portfolio 6
Index Portfolio 5
Treasury Cash Portfolio 2
Government Cash Portfolio 2
Cash Portfolio 3
Treasury Portfolio 2
ITEM 27. INDEMNIFICATION.
The Trust currently holds a directors' and officers' errors and omissions
insurance policy jointly with Forum Funds, the terms of which are consistent
with industry standards. The policy provides generally for the indemnification
against loss by the insured in connection with a judgment of liability in
certain litigation arising from the insured's wrongful act or an error, act or
omission by a person for whom the insured becomes legally responsible. The
policy provides coverage in the amount of $6,000,000. The policy premiums are
allocated between the Trust and Forum Funds based upon the pro rata share of
assets of each insured. The Trust's trustees and officers also are insured
under the Trust's fidelity bond purchased pursuant to Rule 17j-1 under the
Investment Company Act of 1940, as amended (the "Act").
The general effect of Article 5 of Registrant's Trust Instrument is to
indemnify existing or former trustees and officers of the Trust to the fullest
extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
the Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Article 5 of Registrant's Trust Instrument as filed in Amendment No. 6 to
Registrant's Registration Statement on October 11, 1996, and incorporated herein
by reference.
Provisions of each of Registrant's investment advisory agreements provide
that the respective investment adviser shall not be liable for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing shall be deemed to protect, or purport to protect, the investment
adviser against any liability to Registrant or to Registrant's interestholders
to which the investment adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the investment
adviser's duties, or by reason of the investment adviser's reckless disregard of
its obligations and duties hereunder. This description is modified in its
entirety by the provisions of Registrant's Investment Advisory Agreements
contained in Amendment No. 6 to Registrant's Registration Statement on October
11, 1996, and incorporated herein by reference.
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As custodian to certain portfolios of the Trust, under Section 18 of its
custodian agreement Norwest is not liable for any action taken in good faith
reliance upon the advice or statements of certain experts. Under that
agreement, the Trust has agreed to indemnify and hold Norwest harmless for any
loss, claim, damage or expense arising out of the custodian relationship;
provided such loss, claim, damage or expense is not the direct result of the
Custodian's negligence or willful misconduct. This description is modified in
its entirety by the provisions of Registrant's Custodian Agreement as filed in
Amendment No. 6 to Registrant's Registration Statement on October 11, 1996, and
incorporated herein by reference.
The indemnification provisions set forth under Section 1 paragraphs (f) and
(g) of the Placement Agent Agreement between FFSI (defined as "Forum" under the
agreement) and the Trust, specifically provide as follows:
(f) The Trust agrees to indemnify, defend and hold Forum, its several
officers and directors, and any person who controls Forum within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities
Exchange Act of 1934 (the "1934 Act") (for purposes of this Section
1(f), collectively, "Covered Persons") free and harmless from and
against any and all claims, demands, liabilities and any counsel fees
incurred in connection therewith) which any Covered Person may incur
under the 1933 Act, the 1934 Act, common law or otherwise, arising out
of or based on any untrue statement of a material fact contained in
any registration statement, private placement memorandum or other
offering material ("Offering Material") or arising out of or based on
any omission to state a material fact required to be stated in any
Offering Material or necessary to make the statements in any Offering
Material not misleading, provided, however, that the Trust's agreement
to indemnify Covered Persons shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any financial and
other statements as are furnished in writing to the Trust by Forum in
its capacity as Placement Agent for use in the answers to any items of
any registration statement or in any statements made in any Offering
Material, or arising out of or based on any omission or alleged
omission to state a material fact in connection with the giving of
such information required to be stated in such answers or necessary to
make the answers not misleading; and further provided that the Trust's
agreement to Section 1(e)shall not be deemed to cover any liability to
the Trust or its investors to which a Covered Person would otherwise
be subject by reason or willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of a Covered
Person's reckless disregard of its obligations and duties under this
Agreement. The Trust shall be notified of any action brought against
a Covered Person, such notification to be given by letter or by
telegram addressed to the Secretary of the Trust, promptly after the
summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to notify the
Trust of any such action shall not relieve the Trust from any
liability except to the extent that the Trust shall have been
prejudiced by such failure, or from any liability that the Trust may
have to the
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Covered Person against whom such action is brought by reason of any such
untrue statement or omission, otherwise than on account of the Trust's
indemnity agreement contained in this Section 1(f). The Trust will be
entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but in such case such defense shall be
conducted by counsel chosen by the Trust and approved by Forum, the
defendant or defendants in such suit shall bear the fees and expenses of
any additional counsel retained by any of them; but in case the Trust does
not elect to assume the defense of any such suit, or in case Forum
reasonably does not approve of counsel chosen by the Trust, the Trust will
reimburse the Covered Person named as defendant in such suit, for the fees
and expenses of any counsel retained by Forum or such Covered Person. The
Trust's indemnification agreement contained in this Section (f) and the
Trust's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of Covered Persons, and shall survive the delivery of any
Interests. This agreement of indemnity will inure exclusively to Covered
Persons and their successors. The Trust agrees to notify Forum promptly of
the commencement of any litigation or proceedings against the Trust or any
of its officers or Trustees in connection with the issue and sale of any
Interests.
(g) Forum agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for
purposes of this Section 1(g) collectively, "Covered Persons") free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the costs of investigating or defending such claims,
demands, liabilities and any counsel fees incurred in connection therewith)
that Covered Persons may incur under the 1933 Act, the 1934 Act, or common
law or otherwise, but only to the extent that such liability or expense
incurred by a Covered Person resulting from such claims or demands shall
arise out of or be based on any untrue statement of a material fact
contained in information furnished in writing by Forum in its capacity as
Placement Agent to the Trust for use in the answers to any of the items of
any registration statement or in any statements in any Offering Material or
shall arise out of or be based on any omission to state a material fact in
connection with such information furnished in writing by Forum to the Trust
required to be stated in such answers or necessary to make such information
not misleading. Forum shall be notified of any action brought against a
Covered Person, such notification to be given by letter or telegram
addressed to Forum, Attention: Legal Department, promptly after the summons
or other first legal process shall have been duly and completely served
upon such Covered Person. Forum shall have the right of first control of
the defense of the action with counsel of its own choosing satisfactory to
the Trust if such action is based solely on such alleged misstatement or
omission on Forum's part, and in any other event each Covered Person shall
have the right to participate in the defense or preparation of the defense
of any such action. The failure to so notify Forum of any such action
shall not relieve Forum from any liability except to the extent that
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Forum shall have been prejudiced by such failure, or from any liability
that Forum may have to Covered Persons by reason of any such untrue or
alleged untrue statement, or omission or alleged omission, otherwise than
on account of Forum's indemnity agreement contained in this Section 1(g).
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Trust pursuant to the foregoing provisions, or otherwise, the Trust has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Trust of expenses incurred or
paid by a trustee, officer or controlling person of the Trust in the successful
defense of any action, suit or proceeding) is asserted by such trustee, officer
or controlling person in connection with the securities being registered, the
Trust will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
NORWEST BANK MINNESOTA, N.A.
The description of Norwest Bank Minnesota, N.A. in Parts A and B of this
Registration Statement are incorporated by reference herein.
The following are the directors and principal executive officers of Norwest Bank
Minnesota, N.A., including their business connections which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A., is Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, MN 55479. Unless otherwise indicated below, the principal business
address of any company with which the directors and principal executive officers
are connected is also Sixth Street and Marquette Avenue, Minneapolis, MN 55479.
James R. Campbell, Director, President and Chief Executive Officer, has
held this position for the last two years. Mr. Campbell is also Executive
Vice President of Norwest Corporation, Director and Chairman of Norwest
Investment Advisors, Inc., and a Director of Flore Properties, Inc.,
Centennial Investment Corporation and Peregrine Capital Management, Inc.,
which is located at LaSalle Plaza, 800 LaSalle Avenue, Suite 1850,
Minneapolis, Minnesota 55402-2056. Mr. Campbell is also a Director of a
number of non-profit organizations located in Minneapolis, Minnesota.
Within the last two years Mr. Campbell was a Director of Norwest Insurance,
Inc. and Norwest Equipment Finance, Inc.
Michael A. Graf, Controller and Cashier, also serves as Senior Vice
President and Controller of Norwest Corporation.
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A. Rodney Boren, Jr., Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its
affiliates during the last two years. Mr. Boren is also a Director of
Norwest Trust Company, New York, New York and Norwest Foundation.
P. Jay Kiedrowski, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its
affiliates since August 1987. Mr. Kiedrowski is also a Director and
Chairman of the Board of Norwest Investment Management, Inc. and President
of Norwest Investment Management, a part of Norwest.
Scott A. Kisting, Director and Executive Vice President, is also a Director
of Norwest Insurance, Inc., IntraWest Insurance Company and Fidelity
National Life Insurance Company.
Edgar M. Morsman, Jr., Executive Vice President and Chief Lending Officer,
has served in various capacities as an employee of Norwest Bank Minnesota,
N.A. and/or its affiliates during the last two years. Mr. Morsman is also
a Director of Centennial Investment Corporation, First Interstate Equipment
Finance, Inc., Flore Properties, Inc., Norwest Credit, Inc., Norwest
Business Credit, Inc., R.D. Leasing, Inc. and Norwest Equipment Finance,
Inc., which is located at 733 Marquette Avenue, Suite 300, Minneapolis, MN
55479-2048.
Dharani P. Narayana, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its
affiliates during the last two years. Mr. Narayana is also a Director and
Chairman of Norwest Bank International, Director and Secretary of Norwest
Investments Limited, a Director of Norwest Bank International, Colorado, a
Director and Vice President of Norwest Bank International, Iowa, and a
Director of Norwest Bank International, Wisconsin. Mr. Narayana is also a
Director and Secretary of Minnetonka Overseas Investments Limited, and a
Director of Minnetonka Representaocoes Commerciais Ltda. and Nortico
Investments Ltd. all of which are located at Grand Cayman, Cayman Islands,
British West Indies.
William H. Queenan, Director, is also Executive Vice President of Norwest
Corporation.
John T. Thornton, Director, is also Executive Vice President and Chief
Financial Officer of Norwest Corporation. Mr. Thornton is also a Director
of Northern Prairie Indemnity, Limited, Grand Cayman, Cayman Islands,
British West Indies, a Director of Norwest Capital Markets, Inc. Mr.
Thornton is also a Director of Norwest Growth Fund, Inc., Norwest Venture
Capital Management, Inc. and Norwest Equity Capital, Inc., and Director,
President and Treasurer of Norwest Investors, Inc., and Director, President
and CEO of Norwest Limited, Inc., all located at 2800 Piper Jaffray Tower,
222 South Ninth Street, Minneapolis, MN 54402. Mr. Thornton is also
Director and President of Superior Guaranty Insurance Company and Norwest
Holding Company, and a Director of Bettendorf Asset Management, Inc. Mr.
Thornton is also a Director of Eau Claire Asset Management, Inc., Green Bay
Asset Management, Inc., Iowa Asset Management, Inc.,
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LaCrosse Asset Management, Inc., South Bend Asset Management, Inc., South
Dakota Asset Management, Inc., Waupun Asset Management, Inc., all located
at 100 West Commons Blvd., Suite 303, New Castle, DE 19720.
Richard C. Westergaard, Executive Vice President, has served in various
capacities as an employee of Norwest Bank Minnesota, N.A. and/or its
affiliates during the last two years. Mr. Westergaard is also a Director
of Norwest Business Credit, Inc., Norwest Credit, Inc., First Interstate
Equipment Finance, Inc. and R.D. Leasing, Inc. and a Director of Norwest
Equipment Finance, Inc. and Commonwealth Leasing Corporation, located at
Investors Building, 733 Marquette, Suite 300, Minneapolis, MN 55479-2048.
Charles D. White, Senior Vice President, has served in various capacities
as an employee of Norwest Bank Minnesota, N.A. and/or its affiliates during
the last two years. Mr. White is also Treasurer and Chief Financial
Officer of Norwest Limited, Inc. Mr. White is also a Director of
Bettendorf Asset Management, Inc., Eau Claire Asset Management, Inc., Green
Bay Asset Management, Inc., IntraWest Asset Management, Inc., Iowa Asset
Management, Inc., LaCrosse Asset Management, Inc., South Bend Asset
Management, Inc., South Dakota Asset Management, Inc., and Waupun Asset
Management, Inc., located at 100 West Commons Boulevard, Suite 303, New
Castle, DE 19720.
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL, INC.
The description of Schroder Capital Management International Inc. ("Schroder")
in Parts A and B of the Registration Statement are incorporated by reference
herein.
The following are the directors and principal officers of Schroder, including
their business connections which are of a substantial nature. The address of
each company listed, unless otherwise noted, is 33 Gutter Lane, London EC2V 8AS,
United Kingdom. Schroder Capital Management International Limited ("Schroder
Ltd.") is a United Kingdom affiliate of Schroder which provides investment
management services international clients located principally in the United
States.
I. Peter Sedgwick, Chairman. Mr. Sedgwick is also Group Managing Director
- Investment Management of Schroders PLC, 120 Cheapside, London EC2V 6DS,
United Kingdom, the holding company of the various Schroder companies,
Chairman and Director of Schroder Ltd., Director and Chief Executive
Officer of Schroder Investment Management Limited, an investment management
company, Director of Schroder Investment Management (UK) Limited, Schroder
Personal Financial Management Limited, Schroder Investment Management
(Europe) Limited, Schroder Investment Trust Management Limited and Church,
Charity & Local Authorities Fund Managers Limited, 2 Fore Street, London
EC2Y 5AQ, United Kingdom, each an investment management company, and
Director, The Equitable Life Assurance Company, Walton Street, Aylesbury,
Bucks, United Kingdom, a life assurance company. Mr. Sedgwick is also a
director of various nominee companies and of various unit trust companies,
investment
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trusts and closed end investment companies for which Schroder and/or its
affiliates provide investment services.
David M. Salisbury, Chief Executive Officer. Mr. Salisbury is also the
Chief Executive Officer of Schroder Ltd. and Director of Dimensional
Fund Advisors Inc., 1299 Ocean Avenue, Santa Monica, California, an
investment advisory company and DFA Securities Inc., a broker dealer
subsidiary of Dimensional Fund Advisors Inc. located at the same address.
Until October 1992 Mr. Salisbury was Chairman of Schroder Capital
Distributors Inc. ("Schroder Distributors"), 787 Seventh Avenue, New York,
New York, a broker dealer. Mr. Salisbury is a director or former director
of various investment trust companies and closed end investment companies
for which Schroder and/or its affiliates provide investment services.
John S. Ager, Director. Mr. Ager is also a Director of Schroder Ltd.
Richard R. Foulkes, Deputy Chairman and Director. Mr. Foulkes is also a
Director of Schroder Ltd. and Schroder Distributors.
Laura E. Luckyn-Malone, Managing Director. Ms. Luckyn-Malone is also a
Director of Schroder Wertheim Investment Services, Inc. and Schroder Ltd.
and President and Director of a closed-end investment company for which
Schroder and/or its affiliates provide investment services. Director and
President of Schroder Advisors.
David J. Mumford, Director. Mr. Mumford is also a Director of Schroder
Ltd. and Schroder Investment Management Limited and is Chairman of
Schroders Guernsey Limited, St. Julian's Avenue, St. Peter Port, Guernsey
C.J., a Guernsey based bank, and Director of J. Henry Schroder Wagg &
Company Limited, 120 Cheapside London EC2V 6DS, United Kingdom, a United
Kingdom based bank.
Gavin D.L. Ralston, Director. Mr. Ralston is also a Director of Schroder
Ltd.
Mark J. Smith, Director. Mr. Smith is also Director, Schroder Ltd. and
Schroder Investment Management (Guernsey) Limited, an investment management
company, and Director and Vice President of Schroder Distributors and
Director and Vice President of Schroder Advisors. Mr. Smith is also a
director of various investment trusts and open end investment companies for
which Schroder and/or its affiliates provide investment services.
Ton F. Tija, Director. Mr. Tija is also a Director of Schroder Ltd.
John A. Trioano, Managing Director. Mr. Trioano is also a Director of
Schroder Ltd. and Schroder Advisors, Chairman of Schroder Distributors and
President and Director open end investment companies for which Schroder
and/or its affiliates provide investment services.
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Jane P. Lucas, Director. Ms. Lucas is also a Director of Schroder Wertheim
Investment Services, Inc. and Assistant Director of Schroder Investment
Management, Ltd.
Kathleen Adams, Vice President. Ms. Adams is also Vice President of
Schroder Distributors.
Mark J. Astley, Vice President.
Andrew R. Barker, First Vice President. Mr. Barker is also First Vice
President of Schroder Ltd.
David A.W. Butler, First Vice President. Mr. Butler is also First Vice
President and Treasurer of Schroder Ltd. and an officer of open end
investment companies for which Schroder and/or its affiliates provide
investment services.
Richard J. Conyers, Vice President. Mr. Conyers is also Vice President of
Schroder Ltd. and Manger of Schroder Investment Management Limited.
Heather F. Crighton, Fund Manger. Ms. Crighton is also Fund Manager of
Schroder Ltd.
Louise Crouset, First Vice President. Mr. Crouset is also First Vice
President of Schroder Ltd. and, until October 1993, was Vice President of
Wellington Management, an investment adviser.
Robert C. Davy, Director. Mr. Davy is also a Director of Schroder Ltd. and
an officer of open end investment companies for which Schroder and/or its
affiliates provide investment services.
Margaret H. Douglas-Hamilton, Secretary. Ms. Douglas-Hamilton is also
First Vice President and General Counsel of Schroders Incorporated
("Schroders Inc."), 787 Seventh Avenue, New York, New York, the holding
company for various United States based Schroder affiliates. Ms.
Douglas-Hamilton is also Secretary to various Schroder affiliates,
including Schroder Distributors.
Lyn M. Fox, Vice President.
Stephen M. Futrell, Comptroller. Mr. Futrell is Treasurer of Schroders
Inc., President, Treasurer and Director of Schroder Distributors and an
officer of various open end investment companies for which Schroder and/or
its affiliates provide investment services.
David Gibson, First Vice President. Mr. Gibson is also First Vice
President of Schroder Ltd. and Assistant Director of Schroder Investment
Management Limited.
Simon C. Hallett, Fund Manager. Mr. Hallett is also Fund Manager of
Schroder Ltd.
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Nicholas J. A. Melhuish, Fund Manager. Mr. Melhuish is also Fund Manager of
Schroder Ltd.
Laurette J. Oat, First Vice President. Within the last two years, Ms. Oat
was a Senior Vice President of NatWest Investment Bank, 65 East 55th
Street, New York, New York 10002.
John Stainsby, First Vice President. Mr. Stainsby is also First Vice
President of Schroder Ltd.
Fariba Talebi, First Vice President. Mr. Talebi is also an officer of
various open end investment companies for which Schroder and/or its
affiliates provide investment services.
Jan Kees van Heusde, First Vice President. Mr. van Heusde is also First
Vice President of Schroder Ltd.
Patrick Vermeulen, Vice First President. Mr. Vermeulen is also Vice First
President of Schroder Ltd.
Susan M. Belson, Vice President.
Alan Gilston, Vice President.
Abdallah Nauphal, First Vice President.
Ellen B. Sullivan, First Vice President.
Ira L. Unschuld, Vice President.
Catherine A. Mazza, Vice President. Ms. Mazza is also Senior Vice President
of Schroder Advisors.
Robert Jackowitz, Vice President. Mr. Jackowitz is also Vice President and
Treasurer of Schroder Wertheim Investment Services, Inc., Treasurer of
Schroder Advisors and Assistant Treasurer of Schroders Incorporated.
FORUM ADVISORS, INC.
The description of Forum Advisors, Inc. ("Forum Advisors") in Parts A and B of
the Registration Statement are incorporated by reference herein.
The following are the directors and principal officers of Forum Advisors, Two
Portland Square, Portland, Maine 04101, including their business connections
which are of a substantial nature.
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John Y. Keffer, Director, President and Secretary.
Chairman and President of the Registrant; President and Secretary of
Forum Financial Services, Inc. and of Forum Financial Corp. Mr.
Keffer is a director and/or officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor.
David R. Keffer, Vice President and Treasurer.
Vice President, Assistant Secretary and Assistant Treasurer of the
Registrant; Vice President and Treasurer of Forum Financial Services,
Inc. and of Forum Financial Corp. Mr. Keffer is an officer of various
registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor.
LINDEN ASSET MANAGEMENT, INC.
The description of Linden Asset Management, Inc. ("Linden") in Parts A and B of
the Registration Statement are incorporated by reference herein.
The following are the directors and principal officers of Linden, 812 North
Linden Drive, Beverly Hills, California 90212, including their business
connections which are of a substantial nature.
Anthony R. Fischer, Jr., Director, President and Secretary.
President and Secretary of Linden Asset Management, Inc. since its
incorporation. Since September 1989 Mr. Fischer has managed his own
personal investments and performed independent research. Prior
thereto, he was Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Not applicable.
(b) Not applicable.
(c) Not Applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Act and the Rules thereunder are maintained
at the offices of Forum Financial Services, Inc. and Forum Financial Corp., Two
Portland Square, Portland, Maine
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04104. The records required to be maintained under Rule 31a-1(b)(1) with
respect to journals of receipts and deliveries of securities and receipts and
disbursements of cash are maintained at the offices of the Registrant's
custodians, as listed under "Custodian" in Part B to this Registration
Statement. The records required to be maintained under Rule 31a-1(b)(5), (6)
and (9) are maintained at the offices of Registrant's investment advisers, as
listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to contain in its Trust Instrument provisions for
assisting shareholder communications and for the removal of trustees
substantially similar to those provided for in Section 16(c) of the Act, except
to the extent such provisions are mandatory or prohibited under applicable
Delaware law.
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SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Core Trust (Delaware) has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Portland and the State of Maine on the 3rd day
of January, 1997.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
-------------------------
John Y. Keffer, President
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INDEX TO EXHIBITS
Sequential
Exhibit Page Number
- ------- -----------
(5)(c) Investment Advisory Agreement between Registrant and
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Linden Asset Management, Inc.
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CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 1st day of September, 1995, and amended this 1st day of
January, 1997, between Core Trust (Delaware) (the "Trust"), a business trust
organized under the laws of the State of Delaware with its principal place of
business at Two Portland Square, Portland, Maine 04101, and Linden Asset
Management, Inc. (the "Adviser"), a corporation organized under the laws of
State of California with its principal place of business at 812 North Linden
Drive, Beverly Hills, California 90210.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each a "Portfolio," and collectively the "Portfolios"), and the
Adviser is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue eight series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and
supervision of the Board, to manage the investment and reinvestment of the
assets in each Portfolio and, without limiting the generality of the foregoing,
to provide other services specified in Section 3 hereof.
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SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Portfolio. To carry out
such decisions, the Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Portfolios. In all purchases, sales and other transactions in securities for
the Portfolios, the Adviser is authorized to exercise full discretion and act
for the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolios and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Portfolios' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the
Portfolios' maintain investments. The Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolios as the Adviser may believe appropriate or as the Board reasonably may
request.
(c) In making purchases and sales of securities for the Portfolios, the
Adviser will follow and comply with the policies set from time to time by the
Board as well as the limitations imposed by the Trust's Trust Instrument and
Registration Statement under the Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies and the investment objectives, policies and restrictions of the
Portfolios.
(d) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly qualified to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on
the Trust's behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers, dealers
and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Portfolios or
select an introducing broker who shall, as part of its transaction charges,
monitor such performance. Such persons may be affiliated with the Adviser, any
investment subadviser or other affiliates of the Trust to the extent permitted
by the Act.
(f) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents
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and records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request
of the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. SUBADVISERS
The Adviser may carry out any of its obligations under this Agreement by
employing, subject to the Board's supervision, one or more persons who are
registered as investment advisers pursuant to the Investment Advisers Act of
1940, as amended, (the "Advisers Act") or who are exempt from registration
thereunder ("SubAdvisers"). Each SubAdviser's employment will be evidenced by a
separate written agreement approved by the Trustees of the Trust and the
interestholders of the applicable Portfolios. The Adviser shall not be liable
for any act or omission of any SubAdviser except with respect to matters as to
which the Adviser specifically assumes responsibility in writing.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and the
costs of other personnel performing services for the Trust; costs of Trust
meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
the Trust's interests are sold; state securities law registration fees and
related expenses; and fees and out-of-pocket expenses payable to Forum Financial
Services, Inc. under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for error
of judgment or mistake of law, for any loss arising out of any investment, or in
any event whatsoever, provided that nothing herein shall be deemed to protect,
or purport to protect, the Adviser against any liability to the
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Trust or to the security holders of the Trust to which it would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or the Adviser, from
liability in violation of Sections 17(h), 17(i) or 36(b) of the Act.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss in not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and shall
be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by the Adviser pursuant to this Agreement, the
Trust shall pay the Adviser, with respect to each of the Portfolios, a fee based
upon the total average daily net assets of the Portfolios ("Total Portfolio
Assets"). The Trust shall pay the Adviser a total fee of 0.06% for the first
$200 million of Total Portfolio Assets, 0.04% of the next $300 million of Total
Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. Such fees
shall be accrued by the Trust daily with respect to each Portfolio in the
proportion that Portfolio's average daily net assets bear to Total Portfolio
Assets and shall be payable monthly in arrears on the first day of each calendar
month. Upon the termination of this Agreement, the Trust shall pay to the
Adviser such compensation as shall be payable prior to the effective date of
such termination. The Adviser shall be paid a minimum annual fee of $50,000 for
its services to the Trust with respect to the Portfolios. To the extent the
Adviser has delegated its responsibilities with respect to a Portfolio to a
SubAdviser, the Adviser shall pay the advisory fee to that SubAdviser.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Portfolio
immediately upon approval by a majority of the outstanding voting interests of
that Portfolio.
(b) This Agreement shall remain in effect with respect to a Portfolio for
a period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Portfolio; provided that such continuance
is specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Portfolio, and, in either
case, (ii) by a majority of the Trust's trustees who are not parties to this
Agreement or interested persons of any such party (other than as trustees of the
Trust); provided further, however, that if this Agreement or the continuation of
this Agreement is not approved as to a
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Portfolio, the Adviser may continue to render to that Portfolio the services
described herein in the manner and to the extent permitted by the Act and the
rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser or (ii) by the Adviser on 60 days' written notice
to the Trust. This agreement shall terminate upon assignment.
SECTION 9. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and will
during the entire period this Agreement is in effect be registered, as an
investment adviser under the Advisers Act.
SECTION 10. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and the Adviser agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Portfolio to which the Adviser's rights or claims relate in settlement of
such rights or claims, and not to the Trustees of the Trust or the
interestholders of the Portfolios.
SECTION 11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
and if to the Adviser at:
812 North Linden Drive
Beverly Hills, California 90210
Attention: President
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SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Portfolios thereby affected. No amendment
to this Agreement or the termination of this Agreement with respect to a
Portfolio shall effect this Agreement as it pertains to any other Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
__________________________
John Y. Keffer
President
LINDEN ASSET MANAGEMENT, INC.
________________________
Anthony R. Fischer, Jr.
President
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