As filed with the Securities and Exchange Commission on February 12, 1999
File No. 811-8858
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
CORE TRUST (DELAWARE)
Two Portland Square
Portland, Maine 04101
207-879-1900
David I. Goldstein, Esq.
Forum Administrative Services LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue NW 2nd Floor
Washington, DC 20036-1800
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)
PRIVATE PLACEMENT MEMORANDUM
FEBRUARY 12, 1999
This Private Placement Memorandum relates to beneficial interests ("Interests")
in International Equity Portfolio (the "Portfolio"), a diversified portfolio of
Core Trust (Delaware) (the "Trust"), a registered, open-end management
investment company.
Investments in the Portfolio may only be made by certain institutional
investors, whether organized within or outside the United States (excluding
individuals, S corporations, partnerships, and grantor trusts beneficially owned
by any individuals, S corporations, or partnerships). An investor in the
Portfolio must also be an "accredited investor," as that term is defined under
Rule 501(a) of Regulation D under the Securities Act of 1933, as amended ("1933
Act").
The Trust has filed with the Securities and Exchange Commission ("SEC") a Part B
to this Private Placement Memorandum (the "Statement of Additional Information"
or "SAI") for the Portfolio of the same date as this Private Placement
Memorandum. The SAI may be amended from time to time and contains additional
information about the Trust and the Portfolio and is incorporated into this
Private Placement Memorandum by reference. A prospective investor may obtain a
copy of the SAI without charge by contacting Forum Financial Services, Inc.
("FFSI"), the Trust`s placement agent (the "Placement Agent") at Two Portland
Square, Portland, Maine 04101 or by calling (207) 879-1900.
This Private Placement Memorandum does not constitute an offer to sell, or the
solicitation of an offer to buy, Interests in the Portfolio. An investor may
subscribe for an Interest in the Portfolio by contacting the Placement Agent at
Two Portland Square, Portland, Maine 04101, (207) 879-1900, for a complete
subscription package, including a subscription agreement. The Trust and the
Placement Agent reserve the right to refuse to accept any subscription for any
reason.
TABLE OF CONTENTS PAGE
Glossary 2
General Description of Registrant 2
Investment Objective 2
Principal Investment Strategies 3
Risk Considerations 3
Management of the Portfolio 4
Description of Beneficial Interests 5
Information Regarding Net Income and Taxes 6
Purchase of Interests 6
Redemption or Repurchase of Interests 7
Pending Legal Proceedings 7
THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST INSTRUMENT OF THE
TRUST AND (2) THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
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GLOSSARY
This Glossary of frequently used terms will help in understanding the discussion
of the Portfolio's objectives, policies, and risks. Defined terms are
capitalized when used in this Part A.
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<S> <C> <C>
Term Definition
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Board The Board of Trustees of Core Trust (Delaware).
Fundamental Requiring shareholder approval to change.
Emerging Markets Markets associated with a country that is considered by international financial
organizations, such as the International Finance Corporation and the
International Bank for Reconstruction and Development, and the international
financial community to have an "emerging" stock market. Such markets may be
under-capitalized, have less-developed legal and financial systems or may have
less stable currencies than markets in the developed world.
Market Capitalization The total market value of a company's outstanding common stock.
SEC The U.S. Securities and Exchange Commission.
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GENERAL DESCRIPTION OF REGISTRANT
Core Trust (Delaware) (the "Trust") is an 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. The Trust offers units of Interest without any sales
charge and units may be redeemed without charge.
Beneficial interests in the Trust are divided into 22 separate diversified
series (the "Portfolios"), each having a distinct investment objective and
distinct investment policies. The Portfolio is one of those series. The Trust is
empowered to establish, without investor approval, additional series that may
have different investment objectives and policies.
Beneficial interests in the Portfolio are offered solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in the Portfolio may only be made by
certain institutional investors, whether organized within or outside 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" as that term is defined in the 1933 Act.
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), serves as the investment adviser of
the Portfolio. Wells Capital Management Incorporated ("WCM"), a wholly owned
subsidiary of Wells Fargo Bank, is the investment subadviser of the Portfolio.
Wells Fargo Bank and WCM may be collectively referred to as the "Advisers" or as
applicable, individually, as the "Adviser."
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is fundamental and may not be changed
without investor approval. There can be no assurance that the Portfolio will
achieve its investment objective.
INTERNATIONAL EQUITY PORTFOLIO'S investment objective is to seek to earn total
return, with an emphasis on capital appreciation, over the long-term, by
investing primarily in equity securities of non-United States companies.
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PRINCIPAL INVESTMENT STRATEGIES
The Portfolio seeks to earn total return by investing at least 80% of its assets
in a diversified portfolio of common stock of companies located or operating in
developed and emerging markets of the world. It is expected that the securities
held by the Portfolio will be traded on a stock exchange or other market in the
country in which the issuer is based, but they also may be traded in other
countries, including the United States. The Portfolio must invest its assets in
the securities of at least five different countries other than the United
States. The Portfolio may also invest in ADRs, EDRs, and similar instruments.
The Adviser applies a fundamentals-driven, value-oriented analysis to identify
companies with above-average potential for long-term growth. The Adviser
examines financial data including the company's historical performances and its
projected future earnings. The Adviser also considers other key criteria such as
a company's local, regional or global franchise; history of effective management
demonstrated by expanding revenues and earnings growth; prudent financial and
accounting policies and ability to take advantage of a changing business
environment. In allocating among countries, regions and industry sectors, the
Adviser considers factors such as economic growth prospects, monetary and fiscal
policies, political stability, currency trends, market liquidity and investor
sentiment.
The Portfolio may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations, shares of other mutual funds
and repurchase agreements, or make other short-term investments, either to
maintain liquidity or for short-term defensive purposes in response to adverse
market, economic, political or other conditions, When the Portfolio assumes a
temporary defensive strategy, it may not be investing to achieve its investment
objective.
RISK CONSIDERATIONS
There can be no assurance that the Portfolio will achieve its investment
objective. The Portfolio's net asset value will fluctuate based upon changes in
the value of its portfolio securities. Upon redemption, an investment in the
Portfolio may be worth more or less than its original value. The Portfolio is
designed for investment of that portion of an investor's funds that can
appropriately bear the special risks associated with investments in securities
of foreign companies.
This section describes the principal risks that may apply to the Portfolio.
CURRENCY RISK
The risk that a change in the exchange rate between U.S. dollars and a foreign
currency may reduce the value of an investment made in a security denominated in
that foreign currency.
EMERGING MARKET RISK
The risk that the emerging market, as defined in the glossary, may be more
sensitive to certain economic changes. For example, emerging market countries
are often dependent on international trade and are therefore often vulnerable to
recessions in other countries. They may have obsolete financial systems, have
volatile currencies and may be more sensitive than more mature markets to a
variety of economic factors. Emerging market securities may also be less liquid
than securities of more developed countries and could be difficult to sell,
particularly during a market downturn.
FOREIGN RISK
The risk that foreign investments may be subject to political and economic
instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues. This
risk may be greater for investments in issuers in emerging or developing
markets.
MARKET RISK
The risk that the market value of the Portfolio's investments will fluctuate as
the stock and bond markets fluctuate generally. Market risk may affect a single
issuer, industry or section of the economy or may affect the market as a whole.
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REGULATORY RISK
The risk that changes in government regulations will adversely affect the value
of a security. Also the risk that an insufficiently regulated market might
permit inappropriate trading practices.
YEAR 2000 RISK
Many computer software systems in use today cannot distinguish the Year 2000
from the Year 1900. Most of the services provided to the Portfolio depend on the
proper functioning of computer systems. Any failure to adapt these systems in
time could hamper the Portfolio's operations and services. The Portfolio's
principal service providers have advised the Portfolio that they are working on
the necessary changes to their systems and that they expect their systems to be
adapted in time. There can, of course, be no assurance of success. In addition,
because the Year 2000 issue affects virtually all organizations and governments,
the companies or entities in which the Portfolio invests also could be adversely
impacted by the Year 2000 issue. The extent of such impact cannot be predicted.
MANAGEMENT OF THE PORTFOLIO
INVESTMENT ADVISER
Wells Fargo Bank serves as the Portfolio's investment adviser. In this capacity,
Wells Fargo Bank makes investment decisions for and administers the Portfolio's
investment program. Wells Fargo Bank is located at 525 Market Street, San
Francisco, California 94163.
SUBADVISER
Wells Fargo Bank and the Portfolio have retained WCM, as a subadviser to make
investment decisions for and administer the investment program of the Portfolio.
Wells Fargo Bank decides which portion of the assets of the Portfolio the
subadviser should manage and supervises the subadviser's performance of its
duties. Currently, WCM manages all of the assets of the Portfolio. WCM, which is
located at, 525 Market Street, 10th Floor, San Francisco, California 94163, is a
wholly owned subsidiary of Wells Fargo Bank. WCM provides investment advisory
services to various open-end management investment companies.
PORTFOLIO MANAGERS
Katherine Schapiro, CFA and Stacey Ho, CFA are responsible for day-to-day
management of the Portfolio. Ms. Schapiro has been associated with Wells Fargo
Bank since 1992. Ms. Schapiro directs the international equity strategy for WCM
and manages international equity funds and institutional accounts. Prior thereto
she was a vice president and fund manager for Newport Pacific Management, an
international investment advisory firm based in San Francisco. Currently, Ms.
Schapiro is President of the Security Analysts of San Francisco. Ms. Ho has been
associated with WCM since 1997 and is co-manager for the international equity
portfolios and funds. Prior thereto, she was a senior portfolio manager at
Clemente Capital Management, an international investment advisory firm based in
New York (1995-1996). Prior thereto, Ms. Ho managed Japanese and U.S. equity
portfolios at Edison International (1990-1995).
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ADVISORY FEES
For its investment advisory services, Wells Fargo Bank is entitled to receive a
monthly fee from the Portfolio at an annual rate of 1.20% of the Portfolio's
average daily net assets.
For its services, WCM receives investment subadvisory fees at an annual rate of
0.25% of the first $200 million of the Portfolio's average daily net assets,
0.20% of the next $200 million of the Portfolio's average daily net assets, and
0.15% of the Portfolio's average daily net assets over $400 million. Wells Fargo
Bank, not the Portfolio, pays WCM for its sub-advisory services. This
compensation does not increase the amount paid by the Portfolio to Wells Fargo
Bank for investment advisory services.
WCM places orders for the purchase and sale of assets it manages with brokers
and dealers selected by and in the discretion of WCM. Subject to seeking the
most favorable price and execution available, the Portfolio may conduct
brokerage transactions through certain affiliates of the Advisers. The Trust has
adopted policies to ensure that these transactions are reasonable and fair and
that the commission charged is comparable to those charged by non-affiliated
qualified broker-dealers. The Portfolio may pay higher than the lowest available
commission rates when WCM believes it is reasonable to do so in light of the
value of the brokerage and research services provided by the broker effecting
the transaction.
ADMINISTRATOR, INTERESTHOLDER RECORDKEEPER AND FUND ACCOUNTANT
Forum Administrative Services, Limited Liability Company ("FAdS") supervises the
overall management of the Portfolio, including the Portfolio's receipt of
services for which the Trust is obligated to pay, and provides the Trust and
Portfolio with general office facilities pursuant to an Administration Agreement
with the Trust. As of December 31, 1998, FAdS and its affiliates provided
management and administrative services to registered investment companies and
collective investment funds with assets of approximately $29 billion. For its
services FAdS receives a fee at an annual rate of 0.05% of the Portfolio's
average daily net assets.
Forum Accounting Services, LLC ("FAcS") is the Trust`s interestholder
recordkeeper and fund accountant. FAcS is an affiliate of FAdS. For its
services, FAcS receives a base fee of $48,000 per year plus additional amounts
depending on the assets of the Portfolio, the number of interestholders of the
Portfolio, the number and type of securities held by the Portfolio and the
portfolio turnover rate of the Portfolio.
FAdS and FAcS are located at Two Portland Square, Portland, Maine 04101.
EXPENSES
The Portfolio is obligated to pay for all of its expenses. The 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 other Portfolios, if applicable, in proportion to
their average net assets or as otherwise determined by the Board. 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 trade associations; fees
and expenses of independent auditors and legal counsel to the Trust; and
expenses of calculating the net asset value of and the net income of the
Portfolio.
DESCRIPTION OF BENEFICIAL INTERESTS
Each investor in the 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. Investments in the 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"). In determining the outcome of
interestholder votes, the Trust normally counts votes on an Interest by Interest
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basis. This means that interestholders of Portfolios with comparatively high net
assets values will have a comparatively smaller impact on the outcome of votes
by all of the Portfolios than do shareholders of Portfolios with comparatively
low net asset values.
From time to time, an investor may own a large percentage of Interests of the
Portfolio and accordingly, may be able to greatly affect (if not determine) the
outcome of an Interestholder vote. Investments in the 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, interests will be voted in the aggregate
without reference to particular Portfolios, 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 the Portfolio, investors will be entitled to
share pro rata in the Portfolio's net assets available for distribution to
investors.
INFORMATION REGARDING NET INCOME AND TAXES
The 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 the Portfolio's net income
is allocated pro rata among the investors in the Portfolio. The Portfolio's net
income generally is not distributed to the investors in the Portfolio, except as
determined by the Board from time to time, but instead is included in the NAV of
the investors' respective Interests in the Portfolio.
The Portfolio is operated so that it should not be subject to any income tax.
However, each investor in the 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 the Portfolio's assets and income 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 FFSI.
PURCHASE OF INTERESTS
Interests in the Portfolio 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. All investments in the Portfolio are made without a sales load, at
the NAV next determined after an order is received by the Portfolio.
The NAV is determined as of 4:00 P.M., Eastern Time ("Valuation Time"), on all
weekdays, except New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving and Christmas ("Business Day"). Net asset value per Interest
is calculated by dividing the aggregate value of the Portfolio's assets less all
liabilities by the number of Interests outstanding. The Portfolio values
portfolio securities at current market value if market quotations are readily
available. If market quotations are not readily available, the Portfolio values
those securities at fair value as determined by or pursuant to procedures
adopted by the Board.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio. At the Valuation Time on each Business Day, the value of each
investor's Interest in the 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 Interests in the Portfolio. Any additions to
or withdrawals of those interests that are to be effected on that day will then
be effected. Each investor's share of the aggregate Interests in the Portfolio
then will be recomputed using the percentage equal to the fraction (1) the
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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.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Business Day. Trading in foreign
securities, however, may not take place on all Business Days or may take place
on days other than Business Days. Accordingly, the net asset value of the
Portfolio's shares may change on days when the Portfolio's interestholders will
be unable to purchase or redeem shares. The determination of the prices of
foreign securities may be based on the latest market quotations for the
securities markets. If events occur that affect the securities' value after the
close of the markets on which they trade, the Portfolio may make adjustments to
the value of the securities for purposes of determining net asset value.
For purposes of determining NAV, the Portfolio converts all assets and
liabilities denominated in foreign currencies into U.S. dollars at the mean of
the bid and asked prices of such currencies against the U.S. dollar last quoted
by a major bank prior to the time of conversion.
There is no minimum initial or subsequent investment amount in the Portfolio.
However, since the 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
Trust's custodian by a Federal Reserve Bank).
The exclusive placement agent for the Trust is FFSI. Please contact FFSI at Two
Portland Square, Portland, Maine 04101, (207) 879-1900, for a complete
subscription package. The Trust reserves the right to refuse any subscription
for any reason. Forum receives no compensation for serving as the exclusive
placement agent for the Trust.
REDEMPTION OR REPURCHASE OF INTERESTS
An investor in the 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 the Portfolio in federal funds normally on the business day
after the withdrawal is effected, but in any event within seven days.
Investments in the 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 SEC.
Redemptions from the Portfolio may be made wholly or partially in portfolio
securities. The Trust has filed an election with the SEC pursuant to which the
Portfolio will only consider effecting a redemption in portfolio securities if
the particular interestholder is redeeming more than $250,000 or 1% of the
Portfolio's NAV, whichever is less, during any 90-day period.
PENDING LEGAL PROCEEDINGS
None.
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PART B
CORE TRUST (DELAWARE)
PRIVATE PLACEMENT MEMORANDUM
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 12, 1999
This Part B to the Private Placement Memorandum (the "Statement of Additional
Information" or "SAI") relates to beneficial interests in the INTERNATIONAL
EQUITY PORTFOLIO (the "Portfolio") of Core Trust (Delaware) (the "Trust"), a
registered, open-end management investment company. This SAI supplements Part A
of the Private Placement Memorandum ("Part A") dated February 12, 1999, relating
to the Portfolio.
This SAI does not constitute an offer to sell, or the solicitation of an offer
to buy, beneficial interests in the Portfolio. An investor may subscribe for a
beneficial interest in the Portfolio by contacting Forum Financial Services,
Inc. ("Forum"), the Trust's Placement Agent (the "Placement Agent"), at Two
Portland Square, Portland, Maine 04101, (207) 879-1900, for a complete
subscription package, including Part A and a subscription agreement. The Trust
and the Placement Agent reserve the right to refuses to accept any subscription
for any reason.
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Table of Contents
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Page
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Introduction.........................................................2
Additional Information Regarding Investments and Strategies..........4
Risk Considerations.................................................18
Investment Limitations..............................................22
Management of the Trust.............................................26
Control Persons and Principal Holders of Securities.................29
Investment Advisory and Other Services..............................30
Brokerage Allocation and Other Practices............................37
Capital Stock and Other Securities..................................40
Purchase, Redemption and Pricing of Securities......................42
Tax Status..........................................................43
Underwriters........................................................45
Financial Statements................................................46
Appendix A: Descriptions of Securities Ratings....................A-1
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THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST INSTRUMENT OF THE
TRUST AND (2) THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
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INTRODUCTION
THE PORTFOLIO
International Equity Portfolio commenced operations on February 16, 1999. The
assets of the Portfolio belong only to the Portfolio, and its assets are charged
with the liabilities of the Portfolio and all expenses, costs, charges and
reserves attributable to the Portfolio.
DEFINITIONS
"Advisers" or "Investment Advisers" shall mean, collectively, Wells Fargo Bank,
N.A. ("Wells Fargo Bank") and Wells Capital Management Incorporated ("WCM").
"Board" shall mean the Board of Trustees of the Trust.
"Capitalization" shall mean the total number of a company's outstanding shares
of stock multiplied by the price per share. This is an accepted method of
determining a company's size.
"CFTC" shall mean the U.S. Commodities Futures Trading Commission.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Custodian" shall mean Norwest acting in its capacity as custodian of the
Portfolio.
"FAcS" shall mean Forum Accounting Services, Limited Liability Company, the
Trust's fund accountant.
"FAdS" shall mean Forum Administrative Services, Limited Liability Company, the
Trust's administrator.
"Fitch" shall mean Fitch IBCA, Inc.
"FFSI" shall mean Forum Financial Services, LLC, a registered broker-dealer and
placement agent of the Trust.
"Index Futures" shall mean futures contracts that relate to broadly based stock
indices.
"Moody's" shall mean Moody's Investors Service, Inc.
"Norwest Bank" shall mean Norwest Bank Minnesota, N.A., a subsidiary of Norwest
Corporation.
"NRSRO" shall mean a nationally recognized statistical rating organization.
"Portfolio" shall mean the International Equity Portfolio of the Trust to which
this Private Placement Memorandum relates.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"S&P" shall mean Standard & Poor's , A Division of The McGraw Hill Companies.
"Subadviser" or "Investment Subadviser" shall mean WCM.
"Trust" shall mean Core Trust (Delaware), an open-end, management investment
company registered under the 1940 Act.
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"U.S. Government Securities" shall mean obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
"WCM" shall mean Wells Capital Management Incorporated, a wholly owned
subsidiary of Wells Fargo Bank, N.A.
"Wells Fargo Bank" shall mean Wells Fargo Bank, N.A., a wholly owned subsidiary
of Wells Fargo & Company, a national bank holding company.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
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ADDITIONAL INFORMATION REGARDING INVESTMENTS AND STRATEGIES
GENERAL INFORMATION
This section discusses in greater detail than the Part A certain of the
investments the Portfolio may make. The Portfolio will make only those
investments described below that are in accordance with its investment
objectives and policies.
The Portfolio's investment objective and all investment policies of the
Portfolio that are designated as fundamental may not be changed without approval
by the lesser of: (i) more than 50% of the outstanding interests of the
Portfolio, or (ii) 67% or more of the interests present or represented at an
investors' meeting, if more than 50% of the outstanding interests of the
Portfolio are present or represented at the meeting in person or by proxy. All
other investment policies of the Portfolio may be changed by the Trust's Board
of Trustees (the "Board" or the "Trustees") upon appropriate notice to
investors.
EMERGING MARKET SECURITIES
The Portfolio may invest up to 25% of its assets in equity securities of
companies in "emerging markets." The Portfolio considers countries with emerging
markets to include the following: (i) countries with an emerging stock market as
defined by the International Finance Corporation; (ii) countries with low- to
middle-income economies according to the International Bank for Reconstruction
and Development (more commonly referred to as the World Bank); and (iii)
countries listed in World Bank publications as developing. The advisor may
invest in those emerging markets that have a relatively low gross national
product per capita, compared to the world's major economies, and which exhibit
potential for rapid economic growth. The advisor believes that investment in
equity securities of emerging market issuers offers significant potential for
long-term capital appreciation.
Equity securities of emerging market issuers may include common stock, preferred
stocks (including convertible preferred stocks) and warrants; bonds, notes and
debentures convertible into common or preferred stock; equity interests in
foreign investment funds or trusts and real estate investment trust securities.
The Portfolio may invest in American Depositary Receipts ("ADRs"), Canadian
Depositary Receipts ("CDRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and International Depositary Receipts ("IDRs") of
such issuers.
Emerging market countries include, but are not limited to: Argentina, Brazil,
Chile, China, the Czech Republic, Columbia, Ecuador, Greece, Hong Kong,
Indonesia, India, Korea, Malaysia, Mexico, the Philippines, Poland, Portugal,
Peru, Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is
considered in a country, market or region if it conducts its principal business
activities there, namely, if it derives a significant portion (at least 50%) of
its revenues or profits from goods produced or sold, investments made, or
services performed therein or has at least 50% of its assets situated in such
country, market or region.
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There are special risks involved in investing in emerging-market countries. Many
investments in emerging markets can be considered speculative, and their prices
can be much more volatile than in the more developed nations of the world. This
difference reflects the greater uncertainties of investing in less established
markets and economies. The financial markets of emerging markets countries are
generally less well capitalized and thus securities of issuers based in such
countries may be less liquid. Most are heavily dependent on international trade,
and some are especially vulnerable to recessions in other countries. Many of
these countries are also sensitive to world commodity prices. Some countries may
still have obsolete financial systems, economic problems or archaic legal
systems. The currencies of certain emerging market countries, and therefore the
value of securities denominated in such currencies, may be more volatile than
currencies of developed countries. In addition, many of these nations are
experiencing political and social uncertainties.
FOREIGN OBLIGATIONS AND SECURITIES
The foreign securities in which the Portfolio may invest include common stocks,
preferred stocks, warrants, convertible securities and other securities of
issuers organized under the laws of countries other than the United States. Such
securities also include equity interests in foreign investment funds or trusts,
real estate investment trust securities and any other equity or equity-related
investment whether denominated in foreign currencies or U.S. dollars.
The Portfolio may invest in foreign securities through American Depositary
Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"), European Depositary
Receipts ("EDRs"), International Depositary Receipts ("IDRs") and Global
Depositary Receipts ("GDRs") or other similar securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs (sponsored or unsponsored) are receipts typically issued by a
U.S. bank or trust company and traded on a U.S. stock exchange, and CDRs are
receipts typically issued by a Canadian bank or trust company that evidence
ownership of underlying foreign securities. Issuers of unsponsored ADRs are not
contractually obligated to disclose material information in the U.S. and,
therefore, such information may not correlate to the market value of the
unsponsored ADR. EDRs and IDRs are receipts typically issued by European banks
and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S.
banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe.
For temporary defensive purposes, the Portfolio may invest in fixed income
securities of non-U.S. governmental and private issuers. Such investments may
include bonds, notes, debentures and other similar debt securities, including
convertible securities.
Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic securities. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries.
From time to time, investments in other investment companies may be the most
effective available means by which the Portfolio may invest in securities of
issuers in certain countries. Investment in such investment companies may
involve the payment of management expenses and, in connection with some
purchases, sales loads, and payment of substantial premiums above the value of
such companies' portfolio securities. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. The Portfolio may
invest in these investment funds and in registered investment companies subject
to the provisions of the Investment Company Act of 1940 ("1940 Act"). Such
investment funds or investment companies may be "passive foreign investment
companies" (as described in "Federal Income Taxes" in this SAI) and may result
in special federal income tax consequences.
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Investment income on certain foreign securities in which the Portfolio may
invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign taxes
to which the Portfolio would be subject.
The Portfolio's investments in foreign securities involve currency risks. The
U.S. dollar value of a foreign security tends to decrease when the value of the
U.S. dollar rises against the foreign currency in which the security is
denominated, and tends to increase when the value of the U.S. dollar falls
against such currency. To attempt to minimize risks to the Portfolio from
adverse changes in the relationship between the U.S. dollar and foreign
currencies, the Portfolio may engage in foreign currency transactions on a spot
(I.E., cash) basis and may purchase or sell forward foreign currency exchange
contracts ("forward contracts"). The Portfolio may also purchase and sell
foreign currency futures contracts (see "Purchase and Sale of Currency Futures
Contracts"). A forward contract is an obligation to purchase or sell a specific
currency for an agreed price at a future date that is individually negotiated
and privately traded by currency traders and their customers.
Forward contracts establish an exchange rate at a future date. These contracts
are transferable in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and is traded at a net price without
commission. The Portfolio will direct its custodian, to the extent required by
applicable regulations, to segregate high-grade liquid assets in an amount at
least equal to its obligations under each forward contract. Neither spot
transactions nor forward contracts eliminate fluctuations in the prices of the
Portfolio's investment portfolio securities or in foreign exchange rates, or
prevent loss if the prices of these securities should decline.
The Portfolio may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security (a
"transaction hedge"). In addition, when the Adviser believes that a foreign
currency may suffer a substantial decline against the U.S. dollar, it may enter
into a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Portfolio's securities denominated
in such foreign currency, or when the Adviser believes that the U.S. dollar may
suffer a substantial decline against the foreign currency, it may enter into a
forward purchase contract to buy that foreign currency for a fixed dollar amount
(a "position hedge").
The Portfolio may, in the alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. dollar amount where the Adviser
believes that the U.S. dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the U.S. dollar value
of the currency in which the portfolio securities are denominated (a
"cross-hedge").
Foreign currency hedging transactions are an attempt to protect the Portfolio
against changes in foreign currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. The precise matching of the forward
contract amount and the value of the securities involved will not generally be
possible because the future value of these securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the date the forward contract is entered into and date it matures.
The Portfolio's custodian will, to the extent required by applicable
regulations, segregate cash, U.S. Government securities or other high-quality
debt securities having a value equal to the aggregate amount of the Portfolio's
commitments under forward contracts entered into with respect to position hedges
and cross-hedges. If the value of the segregated securities declines, additional
cash or securities will be segregated on a daily basis so that the value of the
segregated securities will equal the amount of the Portfolio's commitments with
respect to such contracts.
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The cost to the Portfolio of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because transactions in currency exchange
usually are conducted on a principal basis, no fees or commissions are involved.
The Adviser considers on an ongoing basis the creditworthiness of the
institutions with which the Portfolio enters into foreign currency transactions.
The use of forward currency exchange contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. If devaluation generally is
anticipated, the Portfolio may not be able to contract to sell the currency at a
price above the devaluation level it anticipates.
FOREIGN CURRENCY FUTURES CONTRACTS
IN GENERAL. A foreign currency futures contract is an agreement between two
parties for the future delivery of a specified currency at a specified time and
at a specified price. A "sale" of a futures contract means the contractual
obligation to deliver the currency at a specified price on a specified date, or
to make the cash settlement called for by the contract. Futures contracts have
been designed by exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed through a
brokerage firm, known as a futures commission merchant, which is a member of the
relevant contract market. Futures contracts trade on these markets, and the
exchanges, through their clearing organizations, guarantee that the contracts
will be performed as between the clearing members of the exchange.
While futures contracts based on currencies do provide for the delivery and
acceptance of a particular currency, such deliveries and acceptances are very
seldom made. Generally, entering into an offsetting transaction terminates a
futures contract. The Portfolio will incur brokerage fees when it purchases and
sells futures contracts. At the time such a purchase or sale is made, the
Portfolio must provide cash or money market securities as a deposit known as
"margin." The initial deposit required will vary, but may be as low as 2% or
less of a contract's face value. Daily thereafter, the futures contract is
valued through a process known as "marking to market," and the Portfolio may
receive or be required to pay "variation margin" as the futures contract becomes
more or less valuable.
PURCHASE AND SALE OF CURRENCY FUTURES CONTRACTS. In order to hedge its
investment portfolio and to protect it against possible variations in foreign
exchange rates pending the settlement of securities transactions, the Portfolio
may buy or sell currency futures contracts. If a fall in exchange rates for a
particular currency is anticipated, the Portfolio may sell a currency futures
contract as a hedge. If it is anticipated that exchange rates will rise, the
Portfolio may purchase a currency futures contract to protect against an
increase in the price of securities denominated in a particular currency the
Portfolio intends to purchase. These futures contracts will be used only as a
hedge against anticipated currency rate changes.
A currency futures contract sale creates an obligation by the Portfolio, as
seller, to deliver the amount of currency called for in the contract at a
specified futures time for a special price. A currency futures contract purchase
creates an obligation by the Portfolio, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the
making or taking of delivery of the currency. Closing out of a currency futures
contract is effected by entering into an offsetting purchase or sale
transaction.
In connection with transactions in foreign currency futures, the Portfolio will
be required to deposit as "initial margin" an amount of cash or short-term
government securities equal to from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from the
broker to reflect changes in the value of the futures contract.
RISK FACTORS ASSOCIATED WITH FUTURES TRANSACTIONS. The effective use of futures
strategies depends on, among other things, the Portfolio's ability to terminate
futures positions at times when the Adviser deems it desirable to do so.
Although the Portfolio will not enter into a futures position unless the Adviser
believes that a liquid secondary market exists for such future, there is no
assurance that the Portfolio will be able to effect closing transactions at any
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particular time or at an acceptable price. The Portfolio generally expects that
its futures transactions will be conducted on recognized U.S. and foreign
securities and commodity exchanges.
Futures markets can be highly volatile and transactions of this type carry a
high risk of loss. Moreover, a relatively small adverse market movement with
respect to these transactions may result not only in loss of the original
investment but also in unquantifiable further loss exceeding any margin
deposited.
The use of futures involves the risk of imperfect correlation between movements
in futures prices and movements in the price of currencies, which are the
subject of the hedge. The successful use of futures strategies also depends on
the ability of the adviser to correctly forecast interest rate movements,
currency rate movements and general stock market price movements.
In addition to the foregoing risk factors, the following sets forth certain
information regarding the potential risks associated with the Portfolio's
futures transactions.
RISK OF IMPERFECT CORRELATION. The Portfolio's ability effectively to hedge
currency risk through transactions in foreign currency futures depends on the
degree to which movements in the value of the currency underlying such hedging
instrument correlate with movements in the value of the relevant securities held
by the Portfolio. If the values of the securities being hedged do not move in
the same amount or direction as the underlying currency, the hedging strategy
for the Portfolio might not be successful and the Portfolio could sustain losses
on its hedging transactions which would not be offset by gains on its portfolio.
It is also possible that there may be a negative correlation between the
currency underlying a futures contract and the portfolio securities being
hedged, which could result in losses both on the hedging transaction and the
portfolio securities. In such instances, the Portfolio's overall return could be
less than if the hedging transactions had not been undertaken.
Under certain extreme market conditions, it is possible that the Portfolio will
not be able to establish hedging positions, or that any hedging strategy adopted
will be insufficient to completely protect the Portfolio.
The Portfolio will purchase or sell futures contracts only if, in the Adviser's
judgment, there is expected to be a sufficient degree of correlation between
movements in the value of such instruments and changes in the value of the
relevant portion of the Portfolio's investment portfolio for the hedge to be
effective.
There can be no assurance that the Adviser's judgment will be accurate.
POTENTIAL LACK OF A LIQUID SECONDARY MARKET. The ordinary spreads between prices
in the cash and futures markets, due to differences in the natures of those
markets, are subject to distortions. First, all participants in the futures
market are subject to initial deposit and variation margin requirements. This
could require the Portfolio to post additional cash or cash equivalents as the
value of the position fluctuates. Further, rather than meeting additional
variation margin requirements, investors may close futures contracts through
offsetting transactions that could distort the normal relationship between the
cash and futures markets. Second, the liquidity of the futures market may be
lacking. Prior to exercise or expiration, a futures position may be terminated
only by entering into a closing purchase or sale transaction, which requires a
secondary market on the exchange on which the position was originally
established. While the Portfolio will establish a futures position only if there
appears to be a liquid secondary market therefor, there can be no assurance that
such a market will exist for any particular futures contract at any specific
time. In such event, it may not be possible to close out a position held by the
Portfolio, which could require the Portfolio to purchase or sell the instrument
underlying the position, make or receive a cash settlement, or meet ongoing
variation margin requirements. The inability to close out futures positions also
could have an adverse impact on the Portfolio's ability effectively to hedge its
securities, or the relevant portion thereof.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges, which
limit the amount of fluctuation in the price of a contract during a single
trading day and prohibit trading beyond such limits once they have been reached.
The trading of futures contracts also is subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
<PAGE>
intervention, insolvency of the brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
TRADING AND POSITION LIMITS. Each contract market on which futures contracts are
traded has established a number of limitations governing the maximum number of
positions that may be held by a trader, whether acting alone or in concert with
others. The Adviser does not believe that these trading and position limits will
have an adverse impact on the hedging strategies regarding the Portfolio's
investments.
REGULATIONS ON THE USE OF FUTURES CONTRACTS. Regulations of the CFTC require
that the Portfolio enter into transactions in futures contracts for hedging
purposes only, in order to assure that it is not deemed to be a "commodity pool"
under such regulations. In particular, CFTC regulations require that all short
futures positions be entered into for the purpose of hedging the value of
investment securities held by the Portfolio, and that all long futures positions
either constitute bona fide hedging transactions, as defined in such
regulations, or have a total value not in excess of an amount determined by
reference to certain cash and securities positions maintained for the Portfolio,
and accrued profits on such positions. In addition, the Portfolio may not
purchase or sell such instruments if, immediately thereafter, the sum of the
amount of initial margin deposits on its existing futures positions and premiums
paid for options on futures contracts would exceed 5% of the market value of the
Portfolio's total assets.
When the Portfolio purchases a futures contract, an amount of cash or cash
equivalents or high quality debt securities will be segregated with the
Portfolio's custodian so that the amount so segregated, plus the initial deposit
and variation margin held in the account of its broker, will at all times equal
the value of the futures contract, thereby insuring that the use of such futures
is unleveraged.
The Portfolio's ability to engage in the hedging transactions described herein
may be limited by the policies and concerns of various Federal and state
regulatory agencies. Such policies may be changed by vote of the Board of
Trustees.
The Adviser uses a variety of internal risk management procedures to ensure that
derivatives use is consistent with the Portfolio's investment objective, does
not expose the Portfolio to undue risk and is closely monitored. These
procedures include providing periodic reports to the Board of Trustees
concerning the use of derivatives.
FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS
The Portfolio may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment basis
involve a risk of loss if the value of the security to be purchased declines, or
the value of the security to be sold increases, before the settlement date.
Although the Portfolio will generally purchase securities with the intention of
acquiring them, the Portfolio may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the Adviser. Securities purchased on a when-issued or
forward commitment basis may expose the Portfolio to risk because they may
experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued or forward commitment basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
The Portfolio will segregate cash, U.S. Government obligations or other
high-quality debt instruments in an amount at least equal in value to the
Portfolio's commitments to purchase when-issued securities. If the value of
these assets declines, the Portfolio will segregate additional liquid assets on
a daily basis so that the value of the segregated assets is equal to the amount
of such commitments.
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FOREIGN FIXED INCOME SECURITIES
The Portfolio may invest in foreign fixed income securities, including:
FOREIGN PRIVATE DEBT. The Portfolio may invest in fixed income securities of
private issuers, provided that they are rated, at the time of investment, within
the top four rating categories by an NRSRO or determined to be of equivalent
quality by the Adviser. Fixed income securities in which the Portfolio may
invest include, without limitation, corporate bonds, notes, debentures and other
similar corporate debt securities, including convertible securities. In
addition, such securities may or may not have warrants attached. For a
discussion of the risks associated with investing in foreign securities, see
"Risk Factors" in the Prospectus.
FOREIGN SOVEREIGN DEBT. The Portfolio may invest in debt securities or
obligations of foreign governments and their political subdivisions or agencies
("Sovereign Debt") provided that they are rated, at the time of investment,
within the top four rating categories by a Nationally Recognized Statistical
Ratings Organization ("NRSRO") or determined to be of equivalent quality by the
Adviser. Investments in Sovereign Debt involve special risks. The issuer of the
debt or the governmental authorities that control the repayment of the debt may
be unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt, and the Portfolio may have limited legal recourse
in the event of a default.
Sovereign Debt differs from debt obligations issued by private entities in that,
generally, remedies for defaults must be pursued in the courts of the defaulting
party. Legal recourse is therefore somewhat diminished. Political conditions,
especially a sovereign entity's willingness to meet the terms of its debt
obligations, are of considerable significance. Also, there can be no assurance
that the holders of commercial bank debt issued by the same sovereign entity may
not contest payments to the holders of Sovereign Debt in the event of default
under commercial bank loan agreements.
A sovereign debtor's willingness or ability to repay principal and interest due
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Increased protectionism on the part of a
country's trading partners, or political changes in those countries, could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any, or the credit standing of a particular local government
or agency.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Portfolio's
investments. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While the Adviser manages the Portfolio's investment
portfolio in a manner that is intended to minimize the exposure to such risks,
there can be no assurance that adverse political changes will not cause the
Portfolio to suffer a loss of interest or principal on any of its holdings.
BRADY BONDS. The Portfolio may invest a portion of its assets in Brady Bonds,
which are securities created through the exchange of existing commercial bank
loans to sovereign entities for new obligations in connection with debt
restructurings. Brady Bonds may be collateralized or uncollateralized and are
issued in various currencies (primarily the U.S. dollar). Brady bonds are not
considered U.S. government securities.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero coupon bonds having the same maturity as the
Brady Bonds. Interest payments on these Brady Bonds generally are collateralized
on a one-year or longer rolling-forward basis by cash or securities in an amount
that, in the case of fixed rate bonds, is equal to at least one year of interest
payments or, in the case of floating rate bonds, initially is equal to at least
one year's interest payments based on the applicable interest rate at that time
and is adjusted at regular intervals thereafter. Certain Brady Bonds are
entitled to "value recovery payments" in certain circumstances, which in effect
<PAGE>
constitute supplemental interest payments but generally are not collateralized.
Brady Bonds are often viewed as having three or four valuation components: (i)
the collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest payments;
and (iv) any uncollateralized repayment of principal at maturity (these
uncollateralized amounts constitute the "residual risk").
Brady Bonds involve various risk factors including the history of defaults with
respect to commercial bank loans by public and private entities of countries
issuing Brady Bonds. There can be no assurance that Brady Bonds in which the
Portfolio may invest will not be subject to restructuring arrangements or to
requests for new credit, which may cause the Portfolio to suffer a loss of
interest or principal on any of its holdings.
HEDGING AND RELATED STRATEGIES
The Portfolio may attempt to protect the U.S. dollar equivalent value of one or
more of its investments (hedge) by purchasing and selling foreign currency
futures contracts and by purchasing and selling currencies on a spot (I.E.,
cash) or forward basis. Foreign currency futures contracts are bilateral
agreements pursuant to which one party agrees to make, and the other party
agrees to accept, delivery of a specified type of currency at a specified future
time and at a specified price. Although such futures contracts by their terms
call for actual delivery or acceptance of currency, in most cases the contracts
are closed out before the settlement date without the making or taking of
delivery. A forward currency contract involves an obligation to purchase or sell
a specific currency at a specified future date, which may be any fixed number of
days from the contract date agreed upon by the parties, at a price set at the
time the contract is entered into.
The Portfolio may enter into forward currency contracts for the purchase or sale
of a specified currency at a specified future date either with respect to
specific transactions or with respect to portfolio positions. For example, the
Portfolio may enter into a forward currency contract to sell an amount of a
foreign currency approximating the value of some or all of the Portfolio's
securities denominated in such currency. The Portfolio may use forward contracts
in one currency or a basket of currencies to hedge against fluctuations in the
value of another currency when the Adviser anticipates there will be a
correlation between the two and may use forward currency contracts to shift the
Portfolio's exposure to foreign currency fluctuations from one country to
another. The purpose of entering into these contracts is to minimize the risk to
the Portfolio from adverse changes in the relationship between the U.S. dollar
and foreign currencies.
The Adviser might not employ any of the strategies described above, and there
can be no assurance that any strategy used will succeed. If the Adviser
incorrectly forecasts exchange rates, market values or other economic factors in
utilizing a strategy for the Portfolio, the Portfolio might have been in a
better position had it not hedged at all. The use of these strategies involves
certain special risks, including (1) the fact that skills needed to use hedging
instruments are different from those needed to select the Portfolio's
securities, (2) possible imperfect correlation, or even no correlation, between
price movements of hedging instruments and price movements of the investments
being hedged, (3) the fact that, while hedging strategies can reduce the risk of
loss, they can also reduce the opportunity for gain, or even result in losses,
by offsetting favorable price movements in hedged investments and (4) the
possible inability of the Portfolio to purchase or sell a portfolio security at
a time that otherwise would be favorable for it to do so, or the possible need
for the Portfolio to sell a portfolio security at a disadvantageous time, due to
the need for the Portfolio to maintain "cover" or to segregate securities in
connection with hedging transactions and the possible inability of the Portfolio
to close out or to liquidate its hedged position.
New financial products and risk management techniques continue to be developed.
The Portfolio may use these instruments and techniques to the extent consistent
with its investment objectives and regulatory and tax considerations.
<PAGE>
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS
The Portfolio may invest in the following types of high quality money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moody's
or "A-1" or "A-1--" by S&P, or, if unrated, of comparable quality as determined
by The Adviser, as investment advisor; and (iv) repurchase agreements. The
Portfolio also may invest in short-term U.S. dollar-denominated obligations of
foreign banks (including U.S. branches) that at the time of investment: (i) have
more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) are among the 75 largest foreign banks in the world as determined on the
basis of assets; (iii) have branches or agencies in the United States; and (iv)
in the opinion of the Adviser, are of comparable quality to obligations of U.S.
banks which may be purchased by the Portfolio.
LETTERS OF CREDIT. Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Portfolio may purchase may be backed by an unconditional and irrevocable letter
of credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of the Adviser, are of comparable quality to
issuers of other permitted investments of the Portfolio may be used for letter
of credit-backed investments.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements,
wherein the seller of a security to the Portfolio agrees to repurchase that
security from the Portfolio at a mutually agreed upon time and price. The
Portfolio may enter into repurchase agreements only with respect to securities
that could otherwise be purchased by the Portfolio. All repurchase agreements
will be fully collateralized at 102% based on values that are marked to market
daily. The maturities of the underlying securities in a repurchase agreement
transaction may be greater than twelve months, although the maximum term of a
repurchase agreement will always be less than twelve months. If the seller
defaults and the value of the underlying securities has declined, the Portfolio
may incur a loss. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, the Portfolio's disposition of the
security may be delayed or limited.
The Portfolio may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 15% of the market value of the
Portfolio's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Portfolio will only enter into repurchase agreements with
primary broker/dealers and commercial banks that meet guidelines established by
the Board of Trustees and that are not affiliated with the investment advisor.
The Portfolio may participate in pooled repurchase agreement transactions with
other funds advised by The Adviser.
OTHER INVESTMENT COMPANIES
The Portfolio may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, the Portfolio's investment in such securities currently is limited
to, subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Portfolio's net assets with respect to any
one investment company and (iii) 10% of such Portfolio's net assets in
aggregate. Other investment companies in which the Portfolio may invest can be
expected to charge fees for operating expenses such as investment advisory and
administration fees that would be in addition to those charged by the Portfolio.
<PAGE>
PRIVATELY ISSUED SECURITIES
The Portfolio may invest in privately issued securities, including those which
may be resold only in accordance with Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). Rule 144A Securities are restricted securities that
are not publicly traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Delay or difficulty in selling such securities
may result in a loss to the Portfolio. Privately issued or Rule 144A securities
that are determined by the investment advisor to be "illiquid" are subject to
the Portfolio's policy of not investing more than 15% of its net assets in
illiquid securities. The investment advisor, under guidelines approved by Board
of Trustees, will evaluate the liquidity characteristics of each Rule 144A
Security proposed for purchase by the Portfolio on a case-by-case basis and will
consider the following factors, among others, in their evaluation: (1) the
frequency of trades and quotes for the Rule 144A Security; (2) the number of
dealers willing to purchase or sell the Rule 144A Security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the Rule
144A Security; and (4) the nature of the Rule 144A Security and the nature of
the marketplace trades (E.G., the time needed to dispose of the Rule 144A
Security, the method of soliciting offers and the mechanics of transfer).
UNRATED INVESTMENTS
The Portfolio may purchase instruments that are not rated if, in the opinion of
the Adviser, such obligations are of investment quality comparable to other
rated investments that are permitted to be purchased by the Portfolio. After
purchase by the Portfolio, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Portfolio. Neither event
will require a sale of such security by the Portfolio. To the extent the ratings
given by Moody's or S&P may change as a result of changes in such organizations
or their rating systems, the Portfolio will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in its Prospectus and in this SAI. The ratings of Moody's and S&P are more fully
described in the SAI.
U.S. GOVERNMENT OBLIGATIONS
The Portfolio may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government will provide financial support to its agencies or instrumentalities
where it is not obligated to do so. In addition, U.S. Government obligations are
subject to fluctuations in market value due to fluctuations in market interest
rates. As a general matter, the value of debt instruments, including U.S.
Government obligations, declines when market interest rates increase and rises
when market interest rates decrease. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
<PAGE>
WARRANTS
The Portfolio may invest up to 5% of its net assets at the time of purchase in
warrants (other than those that have been acquired in units or attached to other
securities), and not more than 2% of its net assets in warrants which are not
listed on the New York or American Stock Exchange. Warrants represent rights to
purchase securities at a specific price valid for a specific period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. The Portfolio may only purchase warrants on securities in
which the Portfolio may invest directly.
ZERO COUPON BONDS
The Portfolio may invest in zero coupon bonds. Zero coupon bonds are securities
that make no periodic interest payments, but are instead sold at discounts from
face value. The buyer of such a bond receives the rate of return by the gradual
appreciation of the security, which is redeemed at face value on a specified
maturity date. Because zero coupon bonds bear no interest, they are more
sensitive to interest-rate changes and are therefore more volatile. When
interest rates rise, the discount to face value of the security deepens and the
securities decrease more rapidly in value, when interest rates fall, zero coupon
securities rise more rapidly in value because the bonds carry fixed interest
rates that become more attractive in a falling interest rate environment.
NATIONALLY RECOGNIZED STATISTICAL RATINGS ORGANIZATIONS
The ratings of Moody's Investors Service, Inc., Standard & Poor's Ratings Group,
Division of McGraw Hill, Duff & Phelps Credit Rating Co., Fitch Investors
Service, Inc. Thomson Bank Watch and IBCA Inc. represent their opinions as to
the quality of debt securities. It should be emphasized, however, that ratings
are general and not absolute standards of quality, and debt securities with the
same maturity, interest rate and rating may have different yields while debt
securities of the same maturity and interest rate with different ratings may
have the same yield. Subsequent to purchase by the Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by the Portfolio. The advisor will consider such an
event in determining whether the Portfolio should continue to hold the
obligation.
<PAGE>
RISK CONSIDERATIONS
The following supplements the risk disclosure information provided in
the Private Placement Memorandum.
CREDIT RISK
The Portfolio's investment in debt instruments is subject to credit rate risk.
Credit risk is the risk that issuers of the debt instruments in which the
Portfolio invests will be unable to make interest payments or repay principal on
schedule. If an issuer does default, the affected security could lose all of its
value, or be renegotiated at a lower rate or principal amount. Affected
securities might also lose liquidity or, in other words, the ability to readily
sell a security at fair price.. Credit risk also includes the risk that a party
in a transaction may not be able to complete the transaction as agreed.
INTEREST RATE RISK
The Portfolio's investment in debt instruments is subject to interest rate risk.
Interest-rate risk is the risk that fluctuations in interest rates can affect
the value of an existing security. Generally, when interest rates increase, the
value of debt securities decreases. The effect is usually more pronounced for
securities with longer maturity dates. Debt securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities can be reduced, but
not eliminated, by variable and floating-rate features.
COUNTER-PARTY RISK
The Portfolio's investment in repurchase agreements, debt securities, forward
commitments, when-issued purchases and delayed-delivery transactions are subject
to counter-party risk. Counter-party risk is the risk that the other party to a
repurchase agreement or other transaction will not fulfill its contract
obligation.
GEOGRAPHIC CONCENTRATION RISK
The Portfolio's ability to invest up to 50% of its assets in securities of
issuers located in one country may subject the Portfolio to geographic
concentration risk. Geographic concentration risk is the risk that factors
adversely affecting the Portfolio's investments in issuers located in a country
or region will affect the Portfolio's net asset value more than if the Portfolio
made more geographically diverse investments. .
<PAGE>
NON-INVESTMENT GRADE SECURITIES.
Securities rated in the fourth highest rating category are regarded by S&P as
having an adequate capacity to pay interest and repay principal, but changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make such repayments. Moody's considers such securities as having
speculative characteristics. Subsequent to its purchase by the Portfolio, an
issue of securities may cease to be rated or its rating may be reduced below the
minimum rating required for purchase by the Portfolio. The advisor will consider
such an event in determining whether the Portfolio should continue to hold the
obligation. Securities rated below the fourth highest rating category (sometimes
called "junk bonds") are often considered to be speculative and involve greater
risk of default or price changes due to changes in the issuer's
credit-worthiness. The market prices of these securities may fluctuate more than
higher quality securities and may decline significantly in periods of general
economic difficulty.
FOREIGN SECURITIES
Investing in the securities of issuers in any foreign country, including
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs")
and similar securities, involves special risks and considerations not typically
associated with investing in U.S. companies. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political, social and monetary
or diplomatic developments that could affect U.S. investments in foreign
countries. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and volume
than domestic securities and, therefore, may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates also will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar. The Portfolio's performance may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.
EMERGING MARKETS
There are special risks involved in investing in emerging-market countries. Many
investments in emerging markets can be considered speculative, and their prices
can be much more volatile than in the more developed nations of the world. This
difference reflects the greater uncertainties of investing in less established
markets and economies. In addition, the financial markets of emerging markets
countries are generally less well capitalized and thus securities of issuers
based in such countries may be less liquid. Further, such markets may be
vulnerable to high inflation and interest rates. Most are heavily dependent on
<PAGE>
international trade, and some are especially vulnerable to recessions in other
countries. Some of these countries are also sensitive to world commodity prices
and may be subject to political and social uncertainties.
SMALL CAPITALIZATION STOCKS
Although the Portfolio will normally invest in issuers with an average market
Capitalization of $10 billion or more, it may invest in equity securities of
issuers with market Capitalization as low as $250 million. Investments in small,
unseasoned issuers generally carry greater risk than is customarily associated
with larger, more seasoned companies. Smaller companies may have higher failure
rates than larger companies and their securities may be more difficult to sell
because the trading volume of the securities is normally lower than that of
larger companies. It is also more difficult to forecast how a small or
unseasoned issuer might react to various economic conditions.
Shares of small and new companies are generally more sensitive to purchase and
sale transactions, changes in demand, and changes in the issuer's financial
condition and, therefore, the prices of such stocks may be more volatile than
those of larger company stocks and may be subject to more abrupt price movements
than securities of larger companies. ILLIQUID SECURITIES
Illiquid securities, which may include certain restricted securities, may be
difficult to sell promptly at an acceptable price. Certain restricted securities
may be subject to legal restrictions on resale. Delay or difficulty in selling
securities may result in a loss or be costly to the Portfolio.
DERIVATIVE INVESTMENTS
The adviser may use certain derivative investments or techniques, such as
entering into currency exchange contracts or swap agreements, to adjust the risk
and return characteristics of the Portfolio's investment portfolio. Derivatives
are financial instruments whose value is derived, at least in part, from the
price of another security or a specified asset, index or rate. Some derivatives
may be more sensitive than direct securities to changes in interest rates or
sudden market moves. Some derivatives also may be susceptible to fluctuations in
yield or value due to their structure or contract terms. If the Portfolio's
adviser judges market conditions incorrectly, the use of certain derivatives
could result in a loss, regardless of the adviser's intent in using the
derivatives.
PORTFOLIO TURNOVER RATE
Portfolio turnover rate is the percentage of the securities held by the
Portfolio, other than short-term securities, that were bought or sold within a
year. The Advisers do not anticipate that the Portfolio's turnover ratio to
exceed 100% under normal market conditions, but this target will not limit the
Adviser's discretion in buying and selling securities. Portfolio turnover
generally involves some expense to the Portfolio, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and the reinvestment in other securities. Portfolio turnover also can
generate short-term capital gains tax consequences. There is, of course, no
assurance that the Portfolio will achieve its investment objective or be
successful in preventing or minimizing the risk of loss that is inherent in
investing in particular types of investment products.
INVESTMENT LIMITATIONS
For purposes of all fundamental and non-fundamental investment policies of the
Portfolio: (1) the term 1940 Act includes the rules thereunder, SEC
interpretations and any exemptive order upon which the Portfolio may rely and
(2) the term Code includes the rules thereunder, IRS interpretations and any
private letter ruling or similar authority upon which the Portfolio may rely.
Except as required by the 1940 Act, if any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of the
Portfolio's assets or purchases and redemptions of interests will not be
considered a violation of the limitation.
FUNDAMENTAL LIMITATIONS
The Portfolio has adopted the following investment limitations which are
fundamental policies of the Portfolio and cannot be changed without the
affirmative vote of the lesser of (a) more than 50% of the outstanding interests
of the Portfolio or (b) 67% or more of the interests present at an
interestholders' meeting if more than 50% of the outstanding interests of the
Portfolio are represented at the meeting in person or by proxy.
The Portfolio, may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Portfolio's investments in that industry would be 25%
or more of the current value of the Portfolio's total assets, provided that
there is no limitation with respect to investments in obligations of the United
States Government, its agencies or instrumentalities;
(2) issue senior securities, except as permitted by applicable law;
(3) purchase securities of any issuer (except securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities, including
government-sponsored enterprises) if, as a result, more than 5% of the value of
the Portfolio's total assets would be invested in the securities of any one
issuer or the Portfolio would hold more than 10% of the outstanding voting
securities of such issuer, except that up to 25% of the Portfolio's total assets
may be invested without regard to these limitations; nor
<PAGE>
(4) borrow money, except as permitted by applicable law.
(5) purchase or sell real estate or real estate limited partnerships (other than
securities secured by real estate or interests therein or securities issued by
companies that invest in real estate or interests therein);
(6) underwrite securities of other issuers, except to the extent that the
purchase of securities directly from the issuer thereof or from an underwriter
for an issuer and the later disposition of such securities in accordance with
the Portfolio's investment program may be deemed to be an underwriting;
(7) make investments for the purpose of exercising control or management;
(8) make loans, except as permitted by applicable law;
(9) purchase or sell commodities or commodities contracts, except that the
Portfolio may, on such conditions as may be set forth in the Portfolio's
Prospectus and this Statement of Additional Information, purchase, sell or enter
into futures contracts, foreign currency forward contracts, options on futures
contracts, foreign currency forward contracts, foreign currency options, or any
interest rate, securities-related or foreign currency-related hedging
instrument, subject to compliance with any applicable provisions of the federal
securities or commodities laws.
<PAGE>
NONFUNDAMENTAL LIMITATIONS
The Portfolio has adopted the following investment limitations, which are not
fundamental policies of the Portfolio and may be changed without interestholder
action.
(1) The Portfolio may invest in shares of other open-end management investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act. Under
the 1940 Act, a Portfolio's investment in such securities currently is limited
to, subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Portfolio's net assets with respect to any
one investment company, and (iii) 10% of such Portfolio's net assets in the
aggregate. Other investment companies in which the Portfolio invests can be
expected to charge fees for operating expenses, such as investment advisory and
administration fees, that would be in addition to those charged by the
Portfolio.
(2) The Portfolio may not invest or hold more than 15% of the Portfolio's net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale, (b)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, and (c) repurchase agreements not terminable
within seven days.
(3) The Portfolio may lend securities from its portfolio to brokers, dealers and
financial institutions, in amounts not to exceed (in the aggregate) one-third of
the Portfolio's total assets. Any such loans of portfolio securities will be
fully collateralized based on values that are marked to market daily. The
Portfolio will not enter into any portfolio security lending arrangements having
a duration of longer than one year.
The Portfolio does not invest in the following types of derivatives that
generally are considered to be potentially volatile: capped floaters, leveraged
floaters, range floaters, dual index floaters or inverse floaters. Additionally,
the Portfolio will not invest in securities whose interest rate reset provisions
materially lag short-term interest rates, such as Cost of Funds Index Floaters
or other derivative instruments the Portfolio considers to have the potential
for excessive volatility.
MANAGEMENT OF THE TRUST
The business and affairs of the Trust are managed under the direction of the
Board is responsible for overseeing the management of the Trust. The Board
formulates the general policies of the Portfolio and generally meets quarterly
to review the results of the Portfolio, monitor investment activities and
practices and discuss other matters affecting the Portfolio and the Trust. 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.
- --------------------------------------------------------------------------------
NAME, POSITION WITH THE TRUST, PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS PAST 5 YEARS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Y. Keffer*,Chairman & President (Trust's underwriter)
(age 54) President, Forum Financial Chairman & President*, Forum
Group(a mutual Two Portland Square Funds and Norwest Advantage
fund services holding company) Funds (registered investment
Portland, Maine 04101 President, companies) Vice President,
Forum Financial Services, Inc. Schroder Capital Funds ( a
registered investment
company)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
NAME, POSITION WITH TRUST, PRINCIPAL OCCUPATION(S) DURING
AGE AND ADDRESS PAST 5 YEARS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Costas Azariadas, Trustee (age 55) Professor of Economics,
Department of Economics University of California
University of California -Los Angeles
Los Angeles, CA 90024 Trustee, Forum Funds
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
James C. Cheng, Trustee (age 56) President, Technology Marketing Associates
27 Temple Street (marketing company for small and medium size
Belmont, MA 02718 businesses in New England)
Trustee, Forum Funds
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
J. Michael Parish, Trustee (age 54) Partner-Reid & Priest LLP
40 West 57th Street (law firm) since 1995
New York, NY 10019 Partner-Winthrop, Stimson,
Putnam & Roberts (law firm)
from 1989-1995 Trustee,
Forum Funds
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas G. Sheehan, Vice President (age 43) Managing Director-Forum Financial Group
Two Portland Square Asst. Treasurer/Asst. Secretary, Schroder
Portland, Maine 04101 Capital Funds
Vice President/Asst. Secretary, Norwest
Advantage Funds
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stacey Hong, Treasurer (age 32) Director, Fund Accounting, Forum Financial
Two Portland Square Group
Portland, Maine 04101
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David I. Goldstein, Secretary (age 37) General Counsel, Forum Financial Group
Two Portland Square Secretary, Forum Financial Services, Inc.
Portland, Maine 04101 (Trust's underwriter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Leslie K. Klenk, Asst. Secretary (age 34) Assistant Counsel, Forum Financial Group
Two Portland Square since 1998
Portland, Maine 04101 Vice President/Associate General Counsel,
Smith Barney Inc. from 1993 through 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pamela Stutch, Asst. Secretary (age 31) Fund Administrator, Forum Financial Group
Two Portland Square since 1998
Portland, Maine 04101 Law Student, Temple University from 1994-1997
- --------------------------------------------------------------------------------
</TABLE>
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 May 31,
1998, the Portfolios' fiscal year end.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Compensation Total Compensation from Trust
Trustee from Trust Benefits Retirement and Fund Complex
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
John Y. Keffer $0.00 None None $0.00
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
Costas Azariadis $11,500.00 $0 $0 $26,300.00
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
James C. Cheng $11,500.00 $0 $0 $26,300.00
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
- ---------------------- ---------------- ------------ ----------------- -------------------------------------
J. Michael Parish $11,500.00 $0 $0 $26,300.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
From time to time, certain interestholders may own a large percentage of the
shares of the Portfolio. Accordingly, those interestholders may be able to
greatly affect (if not determine) the outcome of an imterestholder vote.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY SERVICES
Wells Fargo Bank acts as investment adviser to the Portfolio and furnishes
investment guidance and policy direction in connection with the daily portfolio
management of the Portfolio. Wells Fargo Bank is a wholly owned subsidiary of
Wells Fargo & Company, a national bank holding company. Wells Fargo Bank
furnishes to the Trust's Board periodic reports on the investment strategy and
performance of the Portfolio. Wells Fargo Bank provides the Portfolio with,
among other things, money market security and fixed-income research, analysis
and statistical and economic data and information concerning interest rate and
securities markets trends, portfolio composition, and credit conditions 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 Portfolio.
WCM is the investment subadviser of the Portfolio. Subject to the direction of
the Trust's Board and the overall supervision and control of Wells Fargo Bank
and the Trust, WCM makes recommendations regarding the investment and
reinvestment of the Portfolio's assets. WCM furnishes to Wells Fargo Bank
periodic reports on the investment activity and performance of the Portfolio.
WCM and also furnishes such additional reports and information as Wells Fargo
Bank and the Trust's Board of Trustees and officers may reasonably request.
The investment advisory agreement for the Portfolio ("Advisory Agreement") will
remain in effect for a period of two years from the date of its effectiveness
and thereafter shall continue for successive one-year periods provided 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 Advisory Agreement or interested persons
of any such party (other than as trustees of the Trust).
The Advisory Agreement with respect to the 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 Wells Fargo Bank, or (ii) by Wells Fargo Bank on 60
days' written notice to the Trust. The Advisory Agreement terminates
automatically upon its assignment. The Advisory Agreement with respect to the
Portfolio also provides that, with respect to the Portfolio, the Adviser shall
not be liable for any mistake of judgment or in any event whatsoever except for
willful misfeasance, reckless disregard, bad faith or gross negligence in the
performance of its duties under the Investment Advisory Agreement.
The Investment Subadvisory Agreement (the "Subadvisory Agreement") for the
Portfolio will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided 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 Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust). The
<PAGE>
Portfolio's Subadvisory Agreement is terminable without penalty by the Board or
a majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Subadviser or by the Subadviser on 60 days' written notice
to the Trust when authorized either by vote of the Portfolio's shareholders or
by a vote of a majority of the Board, or by the Subadvisor on not more than 60
days' nor less than 30 days' written notice, and will automatically terminate in
the event of its assignment. The Subadvisory Agreement for the Portfolio also
provides that the Subadvisor will not be liable for any mistake of judgment or
in any event except for willful misfeasance, reckless disregard, bad faith or
gross negligence in the performance of its obligations and duties under the
Subadvisory Advisory Agreement. The Portfolio's Subadvisory Advisory Agreement
provides that the Subadviser may render services to others.
The advisory fees, as described in Part A, are accrued daily and paid monthly.
The adviser in its sole discretion, may waive all or any portion of its advisory
fee with respect to the Portfolio. The Advisory Agreement provides that the
Advisers may render service to others. The advisory fee rates are set forth in
Part A. The investment subadvisory fees payable to WCM may be paid by Wells
Fargo Bank or directly by the portfolio. If the subadvisory fee is paid directly
by the Portfolio, the compensation paid to Wells Fargo Bank for advisory fees
will be reduced accordingly.
The advisory fee rates are set forth in Part A.
ADMINISTRATIVE SERVICES
Pursuant to an Administration Agreement with the Trust, FAdS supervises the
overall administration of the Portfolio 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 Portfolio 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 FAdS and the Trust will continue in effect
with respect to the Portfolio only if such continuance is specifically approved
at least annually by the Board or by a majority of the outstanding voting
securities of the Portfolio the interestholders of the Portfolio and, in either
case, by a majority of the Trustees who are not parties to the Administration
Agreement or interested persons of any such party (other than as Trustees of the
Trust).
The administration agreement may be terminated without penalty by the Board on
60 days' written notice to FAdS or by FAdS on 60 days' written notice to the
Trust. The Administration Agreement also provides that FAdS shall not be liable
for any action or inaction except for bad faith, willful misfeasance, gross
negligence or reckless disregard in the performance of its duties and
obligations under the Administration Agreement.
PORTFOLIO ACCOUNTING
Pursuant to a Portfolio and Unitholder Accounting Agreement (the "Accounting
Agreement") with the Trust, FAcS, an affiliate of FAdS, performs portfolio
accounting services for the Portfolio. Under the Accounting Agreement, FAcS
prepares and maintains books and records of the Portfolio on behalf of the Trust
that are required to be maintained under the 1940 Act, calculates the net asset
value per share of the Portfolio and dividends and capital gain distributions
and prepares periodic reports to interestholders and the SEC.
The Accounting Agreement will continue in effect with respect to the Portfolio
only if such continuance is specifically approved at least annually by the
Board. The Accounting Agreement may be terminated with respect to the Portfolio
at any time without penalty, by the Board on 60 days' written notice to FAcS or
<PAGE>
by FAcS on 60 days' written notice to the Board. The Accounting Agreement
provides that FAcS shall not be liable for any action or inaction except for bad
faith, willful misfeasance, gross negligence or reckless disregard in the
performance of its duties and obligations under the Accounting Agreement.
For its accounting services, FAcS receives from the Trust with respect to the
Portfolio a fee of $48,000 per year plus certain amounts based upon the number
of interestholders, the type of Portfolio, and number and types of portfolio
transactions within the Portfolio
FAcS whose principal business address is Two Portland Square, Portland, Maine
04101 also acts as dividend disbursing agent for the Trust.
INDEPENDENT AUDITORS
KPMG LLP, 99 High Street, Boston, MA 02110 is the independent auditor for the
Portfolio.
CUSTODIAN
Norwest Bank, 733 Marquette Avenue, Minneapolis, Minnesota 55479-0040, is the
custodian of the Portfolio's assets. For its custodial services, Norwest Bank
receives a fee at an annual rate of 0.07% of the Portfolio's average daily net
assets. Norwest has appointed Chase Manhattan Bank as sub-custodian of the
Portfolio's assets. Pursuant to rules adopted under the 1940 Act, the Portfolio
may maintain its foreign securities and cash in the custody of certain eligible
foreign banks and securities depositories. Selection of these foreign custodial
institutions is made by the Board following a consideration of a number of
factors. Chase Manhattan Bank employs qualified foreign subcustodians to provide
custody of the Portfolio's assets in accordance with applicable regulations.
Neither Norwest nor Chase Manhattan Bank plays making any investment decisions
on behalf of the Portfolio.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Investment decisions for the Portfolio will be made independently from those for
any other client account or investment company that is or may in the future
become managed by an Adviser or their affiliates. Investment decisions are the
product of many factors including basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more clients are selling the security. In some instances, one client may
sell a particular security to another client. It also sometimes happens that two
or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as is possible,
averaged as to price and allocated between such clients in a manner which, in an
Adviser's opinion, is equitable to each and in accordance with the amount being
purchased or sold by each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients. In addition, when purchases or sales of the same security for the
Portfolio and other client accounts managed by an Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
Purchases and sales of fixed income portfolio securities are generally effected
as principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. 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 ask prices In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup In underwritten offerings, the price includes a disclosed
fixed commission or discount.
<PAGE>
Purchases and sales of equity securities on exchanges are generally effected
through brokers who charge commissions except in the over-the-counter markets.
Allocations of transactions to brokers and dealers and the frequency of
transactions are determined by the Adviser in its best judgment and in a manner
deemed to be in the best interest of holders of beneficial interests of the
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. In transactions on stock exchanges in the United
States, these commissions are negotiated, whereas on foreign stock exchanges
these commissions are generally fixed. Where transactions are executed in the
over-the-counter market, the Portfolio will seek to deal with the primary market
makers; but where necessary in order to obtain best execution, it will utilize
the services of others. In all cases the Portfolio will attempt to negotiate
best execution.
The Portfolio may not always pay the lowest commission or spread available.
Rather, in determining the amount of commission, including certain dealer
spreads, paid in connection with securities transactions, the Adviser takes into
account such factors as size of the order, difficulty of execution, efficiency
of the executing broker's facilities (including the services described below)
and any risk assumed by the executing broker. The Adviser may also take into
account payments made by brokers effecting transactions for the Portfolio (i) to
the Portfolio or (ii) to other persons on behalf of the Portfolio for services
provided to it for which it would be obligated to pay.
In addition, the Adviser may give consideration to research services furnished
by brokers for their use and may cause the Portfolio to pay these brokers a
higher amount of commission than may be charged by other brokers. Such research
and analysis may be used by the Adviser in connection with services to clients
other than the Portfolio, and advisory fees are not reduced by reason of their
receipt of the research services. Research products and/or services include
proprietary research publications, rating service reports and trading quotation
systems and services such as Bloomberg, ILX and Telerate. In instances where a
product or a service is of "mixed-use" (or includes a research and a
non-research component), WCM makes a good faith effort to determine the amount
attributable to research and pays the non-research portion in hard dollars.
Subject to the general policies regarding allocation of portfolio brokerage as
set forth above, the Board has authorized the Adviser to employ its respective
affiliates to effect securities transactions of the Portfolio, provided certain
other conditions are satisfied. Payment of brokerage commissions to an affiliate
of the Adviser, as applicable, for effecting such transactions is subject to
Section 17(e) of the 1940 Act, which requires, among other things, that
commissions for transactions on securities exchanges paid by a registered
investment company to a broker which is an affiliated person of such investment
company, or an affiliated person of another person so affiliated, not exceed the
usual and customary brokers' commissions for such transactions. It is the
Portfolio's policy that commissions paid to affiliates of the Adviser will, in
the judgment of the adviser responsible for making portfolio decisions and
selecting brokers, be (i) at least as favorable as commissions contemporaneously
charged by the affiliate on comparable transactions for its most favored
unaffiliated customers and (ii) at least as favorable as those which would be
charged on comparable transactions by other qualified brokers having comparable
execution capability. The Board, including a majority of the non-interested
Trustees, has adopted procedures to ensure that commissions paid to affiliates
of the Adviser by the Portfolio satisfy the foregoing standards.
The Trust has no understanding or arrangement to direct any specific portion of
its brokerage to an affiliate of the Adviser, and will not direct brokerage to
an affiliate of the Adviser in recognition of research services.
Transactions in futures contracts are executed through futures commission
merchants ("FCMs"), who receive brokerage commissions for their services. The
Trust's procedures in selecting FCMs to execute the Trust's transactions in
futures contracts, including procedures permitting the use of affiliates of the
Adviser, are similar to those in effect with respect to brokerage transactions
in securities.
The Trust will not purchase securities that are offered in underwritings in
which any affiliate of the Adviser is a member of the underwriting or selling
group, except pursuant to procedures adopted by the Board pursuant to Rule 10f-3
under the 1940 Act. Among other things, these procedures require that the spread
or commission paid in connection with such a purchase be reasonable and fair,
the purchase be at not more than the public offering price prior to the end of
the first business day after the date of the public offering and the Adviser or
any affiliates thereof not participate in or benefit from the sale to the Trust.
<PAGE>
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 Portfolio 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% 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% 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 meet its obligations.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
Interests in the Portfolio 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 "General Description of Registrant," "Purchase of Securities,"
and "Redemption or Repurchase" in Part A.
Pursuant to an amended exemptive order effective August 6, 1996, Norwest
Advantage Funds are permitted to invest all or a portion of its assets in a
Portfolio of the Trust, irrespective of investment style. The amended exemptive
order removed certain restrictions imposed on the Trust thereby permitting the
Trust to accept investments from persons other than Norwest Advantage Funds.
TAX STATUS
The Portfolio is classified for federal income tax purposes as a separate
partnership that is not a "publicly traded partnership." As a result, the
Portfolio is not subject to federal income tax; instead, each investor in the
Portfolio is 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. The Portfolio also is not subject to Delaware income or franchise
tax.
<PAGE>
Each investor in the Portfolio is deemed to own a proportionate share of the
Portfolio's assets, and to earn a proportionate share of the Portfolio's income,
for purposes of determining whether the investor satisfies the requirements to
qualify as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended. Accordingly, the 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 the 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 the 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.
Dividends and interest received by the Portfolio may be subject to income,
withholding, or other taxes imposed by foreign countries and; U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors.
The Portfolio may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a RIC that holds stock of a
PFIC indirectly through its interest in the Portfolio will be subject to federal
income tax on its proportionate share of a portion of any "excess distribution"
received by the Portfolio on the stock or of any gain on disposition of the
stock (collectively "PFIC income"), plus interest thereon, even if the RIC
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the RIC's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
If the Portfolio invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund," then in lieu of the foregoing tax and interest obligation, each
RIC investor in the Portfolio would be required to include in income each year
its proportionate share of the Portfolio's pro rata share of the qualified
electing fund's annual ordinary earnings and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the RIC investor to satisfy the distribution
requirements applicable to it -- even if those earnings and gain were not
received by it. In most instances it will be very difficult, if not impossible,
to make this election because of certain requirements thereof.
Proposed regulations have been published pursuant to which certain RICs would be
entitled to elect to "mark to market" their stock in certain PFICs. "Marking to
market," in this context, means recognizing as gain for each taxable year the
excess, as of the end of that year, of the fair market value of each such PFIC's
stock over the adjusted basis in that stock (including mark-to-market gain for
each prior year for which an election was in effect).
The Portfolio's use of hedging strategies, such as entering into forward
contracts, involves complex rules that will determine for income tax purposes
the character and timing of recognition of the gains and losses the Portfolio
realizes in connection therewith. For the Portfolio, gains from the disposition
of foreign currencies (except certain gains that may be excluded by future
regulations), and gains from hedging instruments derived by it with respect to
its business of investing in securities or foreign currencies, will qualify as
permissible income for its RIC investors under the requirement that at least 90%
of a RIC's gross income each taxable year consist of specified types of income.
However, income from the disposition by the Portfolio of hedging instruments
(other than those on foreign currencies) held for less than three months will be
subject to the requirement applicable to its RIC investors that less than 30% of
a RIC's gross income each taxable year consist of certain short-term gains
<PAGE>
("Short-Short Limitation"). Income from the disposition of foreign currencies,
and hedging instruments on foreign currencies, that are not directly related to
the Portfolio's principal business of investing in securities also will be
subject to the Short-Short Limitation for its RIC investors if they are held for
less than three months.
If the Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether its RIC investors
satisfy the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. The Portfolio will consider whether it should seek to qualify for
this treatment for its hedging transactions. To the extent the Portfolio does
not so qualify, it may be forced to defer the closing out of certain hedging
instruments beyond the time when it otherwise would be advantageous to do so, in
order for its RIC investors to qualify or continue to qualify as RICs.
UNDERWRITERS
FFSI, Two Portland Square, Portland, Maine 04101, serves as the Trust's
placement agent. FFSI receives no compensation for such placement agent
services.
FINANCIAL STATEMENTS
Not applicable.
<PAGE>
PART B
CORE TRUST (DELAWARE)
PRIVATE PLACEMENT MEMORANDUM
STATEMENT OF ADDITIONAL INFORMATION
APPENDIX A
DESCRIPTIONS OF SECURITIES RATINGS
PREFERRED STOCK
MOODY'S
Moody's rates preferred stock as follows:
An issue rated AAA is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
within the universe of preferred stock.
An issue rated AA is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance the earnings and asset protection
will remain relatively well maintained in the foreseeable future.
An issue rated A is considered to be an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the AAA and AA
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
An issue rated BAA is considered to be a medium-grade preferred stock, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
An issue rated BA is considered to have speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
An issue that is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
An issue that is rated caa is likely to be in arrears on dividend payments. This
rating designation does not purport to indicate the future status of payments.
An issue that is rated ca is speculative in a high degree and is likely to be in
arrears on dividends with little likelihood of eventual payment.
An issue which is rated C can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issuer ranks in the lower end of its
generic rating category.
<PAGE>
S&P
S&P rates preferred stock as follows:
AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.
A preferred stock issue rated AA also qualifies as a high-quality, fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.
An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
An issue rated BBB is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the A category.
Preferred stock rated BB, B, and CCC is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations. BB indicates the lowest degree of speculation and CCC the highest
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
The rating CC is reserved for a preferred stock issue in arrears on dividends or
sinking fund payments but that is currently paying.
A preferred stock rated C is a non-paying issue.
A preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.
To provide more detailed indications of preferred stock quality, the ratings
from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign
to show relative standing within the major rating categories.
FITCH
Fitch utilizes the same ratings criteria in rating preferred stock as it does in
rating corporate bond issues, as described earlier in this Appendix.
SHORT TERM DEBT (INCLUDING COMMERCIAL PAPER)
MOODY'S
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 capacity of rated issuers.
Issuers rated PRIME-1 have a superior capacity for repayment of short-term
promissory obligations. PRIME-1 repayment capacity will normally be evidenced by
the following characteristics: Leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures 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 have a strong capacity for repayment of short-term
promissory 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, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
<PAGE>
S&P
A S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. An A-1
designation indicates the highest category and that the degree of safety
regarding timely payment is strong. Those issues determined to 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. Issues carrying an A-3 designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
FITCH
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.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
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 rating.
F-3. Fair credit quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate; however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-5. Weak credit quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D. Default. Issues assigned this rating are in actual or imminent payment
default.
LOC. The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant dated November 1, 1994 as amended April
4, 1995 and August 30, 1995 (see Note 1).
(b) Not applicable.
(c) Not applicable.
(d)(1) Investment Advisory Agreement between Registrant and Norwest Investment
Management, Inc. relating to Money Market Portfolio, Prime Money Market
Portfolio, Index Portfolio, Small Company Stock Portfolio, Small
Company Growth Portfolio, Small Company Value Portfolio, Large Company
Growth Portfolio, Income Equity Portfolio, Managed Fixed Income
Portfolio, Positive Return Bond Portfolio, Stable Income Portfolio,
Disciplined Growth Portfolio, Small Cap Value Portfolio, Strategic
Value Bond Portfolio and Small Cap Index Portfolio dated October 1,
1997 (see Note 1).
(2) Investment Advisory Agreement between Registrant and Schroder Capital
Management International Inc. relating to International Portfolio dated
November 9, 1994 (see Note 2).
(3) Investment Advisory Agreement between Registrant and Forum Investment
Advisors, LLC relating to Treasury Cash Portfolio, Government
Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal Cash
Portfolio dated December 30, 1997 (see Note 3).
(4) Form of Investment Advisory Agreement between Registrant and Wells
Fargo Bank, N.A. dated as of February 12, 1999 relating to
International Equity Portfolio (filed herewith).
(5) Investment Subadvisory Agreement between Norwest Investment Management,
Inc. and Crestone Capital Management, Inc. relating to Small Company
Stock Portfolio dated June 1, 1997 (see Note 3).
(6) Investment Subadvisory Agreement between Norwest Investment Management,
Inc. and Peregrine Capital Management, Inc. relating to Small Company
Growth Portfolio, Large Company Growth Portfolio, Small Company Value
Portfolio and Positive Return Portfolio dated June 1, 1997 (see Note
3).
(7) Investment Subadvisory Agreement between Norwest Investment Management,
Inc. and Galliard Capital Management, Inc. relating to Stable Income
Portfolio and Managed Fixed Income Portfolio dated October 1, 1997 (see
Note 3).
(8) Investment Subadvisory Agreement between Norwest Investment Management,
Inc. and Smith Asset Management, LP relating to Disciplined Growth
Portfolio and Small Cap Value Portfolio dated October 1, 1997 (see Note
3).
(9) Form of Investment Subadvisory Agreement between Wells Fargo Bank, N.A.
and Wells Capital Management Incorporated dated as of February 12, 1999
relating to International Equity Portfolio (filed herewith).
(e) Not required.
(f) Not applicable.
(g)(1) Custodian Agreement between Registrant and Norwest Bank Minnesota, N.A.
dated as of November 9, 1994, as amended June 1, 1997 and February 11,
1999 (filed herewith).
(2) Custodian Agreement between Registrant and Imperial Trust Company dated
September 1, 1995, as amended August 31, 1998 (see Note 4).
(3) Custody Agreement between Morgan Stanley Trust Company and Norwest Bank
Minnesota, N.A. dated June 18, 1993, as amended April 1, 1996
(filed herewith).
(h)(1) Administration Agreement between Registrant and Forum Administrative
Services, LLC relating to Prime Money Market Portfolio, Money Market
Portfolio, Positive Return Bond Portfolio, Stable Income Portfolio,
Strategic Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small Company
Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Cash
Portfolio, Government Cash Portfolio, Treasury Cash Portfolio,
<PAGE>
Government Portfolio and Municipal Cash Portfolio dated December 1,
1997 (see Note 3).
(2) Fund Portfolio and Unitholder Accounting Agreement between Registrant
and Forum Accounting Services, LLC relating to International Equity
Portfolio, Prime Money Market Portfolio, Money Market Portfolio,
Positive Return Bond Portfolio, Stable Income Portfolio, Strategic
Value Bond Portfolio, Managed Fixed Income Portfolio, Index Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio, Disciplined
Growth Portfolio, Small Cap Index Portfolio, Small Company Stock
Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Cash
Portfolio, Government Cash Portfolio, Treasury Cash Portfolio,
Government Portfolio and Municipal Cash Portfolio dated as of June 1,
1997 and amended February 11, 1999 (filed herewith).
(3) Placement Agent Agreement between Registrant and Forum Financial
Services, Inc. relating to Prime Money Market Portfolio, Money Market
Portfolio, Positive Return Bond Portfolio, Stable Income Portfolio,
Strategic Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small Company
Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International Portfolio and
International Equity Portfolio dated November 9, 1994 as amended
February 11, 1999(filed herewith).
(4) Placement Agent Agreement between Registrant and Forum Fund Services,
LLC relating to Treasury Cash Portfolio, Government Cash Portfolio,
Cash Portfolio, Government Portfolio, and Municipal Cash Portfolio
dated September 1, 1995 (see Note 1).
(5) Form of Placement Agent Agreement between Registrant and Forum Fund
Services, LLC relating to Prime Money Market Portfolio, Money Market
Portfolio, Positive Return Bond Portfolio, Stable Income Portfolio,
Strategic Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small Company
Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, and International Portfolio (see
Note 5).
(6) Form of Placement Agent Agreement between Registrant and Forum Fund
Services, LLC relating to Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio, Government Portfolio, and Municipal Cash
Portfolio (see Note 5).
(i) Not required.
(j)(1) Independent Auditors' Report of KPMG Peat Marwick LLP, Report of
Independent Accountants of PricewaterhouseCoopers LLP, Statements of
Assets and Liabilities, Statements of Operations, Statements of Changes
in Net Assets, Financial Highlights, Notes to Financial Statements,
Schedules of Investments and Notes to Schedules of Investments for
Stable Income Portfolio, Managed Fixed Income Portfolio, Positive
Return Bond Portfolio, Strategic Value Bond Portfolio, Index Portfolio,
Income Equity Portfolio, Disciplined Growth Portfolio, Large Company
Growth Portfolio, Small Cap Index Portfolio, Small Company Stock
Portfolio, Small Cap Value Portfolio, Small Company Value Portfolio,
Small Company Growth Portfolio and International Portfolio dated May
31, 1998 (see Note 1).
(2) Independent Auditors' Report of KPMG LLP, Statements of Assets and
Liabilities, Statements of Operations, Statements of Changes in Net
Assets, Financial Highlights, Notes to Financial Statements and
Schedules of Investments for Prime Money Market Portfolio and Money
Market Portfolio dated May 31, 1998 (see Note 1).
(3) Independent Auditors' Report of KPMG LLP, Schedule of Investments,
Notes to Schedule of Investments, Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, and
Notes to Financial Statements for Treasury Cash Portfolio, Government
Cash Portfolio, Government Portfolio, Cash Portfolio, and Municipal
Cash Portfolio (see Note 6).
(k) Not required.
(l) Not applicable.
(m) Not applicable.
(n) Financial Data Schedules (see Note 6).
(o) Not applicable.
<PAGE>
- ---------------
Note 1 Exhibit incorporated by reference as filed in Amendment No. 13 via EDGAR
on September 28, 1998, accession number 0001004402-98-000524.
Note 2 Exhibit incorporated by reference as filed in Amendment No. 5 via EDGAR
on September 30, 1996 accession number 000912057-96-021568.
Note 3 Exhibit incorporated by reference as filed in Amendment No. 12 via EDGAR
on January 2, 1998 accession number 0001004402-98-000003.
Note 4 Exhibit incorporated by referenced as filed in Amendment No.14 via Edgar
on November 30, 1998 accession number 0001004402-98-000622.
Note 5 Exhibit incorporated by referenced as filed in Amendment No.16 via Edgar
on December 31, 1998 accession number 0001004402-98-000674.
Note 6 Exhibit incorporated by referenced as filed in Amendment No.15 via Edgar
on November 30, 1998 accession number 0001004402-98-000618.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. 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 contained in this Registration
Statement as Exhibit 1 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 this Registration Statement as Exhibit 5 and
incorporated herein by reference.
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 contained in this Registration
Statement as Exhibit 8(a) and incorporated herein by reference.
<PAGE>
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 Securities Act of 1933 ("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 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
<PAGE>
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 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 1933 Act 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Norwest Investment Management, Inc.
The description of Norwest Investment Management, Inc. ("NIM") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
NIM, including their business connections, which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), which is the parent of NIM, 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.
<TABLE>
<S> <C> <C> <C>
----------------------------------- ------------------------------------- ----------------------------------
Name Title Business Connection
----------------------------------- ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman, Chief Executive Officer, Norwest Investment Management,
President Inc.
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
James W. Paulsen Senior Vice President, Chief Norwest Investment Management,
Investment Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David S. Lunt Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard C. Villars Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Eileen A. Kuhry Investment Compliance Specialist Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(b) Schroder Capital Management International Inc.
The description of Schroder Capital Management International Inc.
("SCMI") in Parts A and B of the Registration Statement is
incorporated by reference herein.
The following are the directors and principal officers of SCMI,
including their business connections of a substantial nature. The
address of each company listed, unless otherwise noted, is 787 Seventh
Avenue, 34th Floor, New York, NY 10019. Schroder Capital Management
International Limited ("Schroder Ltd.") is a United Kingdom affiliate
of Schroder, which provides investment management services to
international clients, located principally in the United States.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David M. Salisbury Chairman, Director SCMI
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
Director Schroders plc.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director, Senior Vice President Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc.
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open-end management
investment companies for which
SCMI and/or its affiliates
provide investment services.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open-end management
investment companies for which
SCMI and/or its affiliates provide
investment services.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
*Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London EC2V
7QA, United Kingdom.
(c) Crestone Capital Management, Inc.
The description of Crestone Capital Management, Inc. ("Crestone") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Crestone, including their business connections, which are of a
substantial nature. The address of Crestone is 7720 East Belleview
Avenue, Suite 220, Englewood Colorado 80111-2614 and, unless otherwise
indicated below, that address is the principal business address of any
company with which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Kirk McCown President, Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen P. Gianoli Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Senior Vice President, Chief Norwest Investment Management,
Minneapolis, MN 55479 Executive Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan Koonsman Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
1740 Broadway President Norwest Investments & Trust
Denver, CO 80274
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
(d) Peregrine Capital Management, Inc.
The description of Peregrine Capital Management, Inc. ("Peregrine") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Peregrine, including their business connections, which are of a
substantial nature. The address of Peregrine is LaSalle Plaza, 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
James R. Campbell Director Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., President, Chief Executive Norwest Bank
Minneapolis, MN 55479-0116 Officer, Director
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Patricia D. Burns Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Tasso H. Coin Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John S. Dale Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Julie M. Gerend Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
William D. Giese Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Daniel J. Hagen Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ronald G. Hoffman Senior Vice President, Secretary Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Frank T. Matthews Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jeannine McCormick Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Barbara K. McFadden Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management,
Executive Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gary E. Nussbaum Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
James P. Ross Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Norwest Bank (prior to November,
1996)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jay H. Strohmaier Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul E. von Kuster Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Janelle M. Walter Assistant Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul R. Wurm Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
J. Daniel Vendermark Vice President Peregrine Capital Management,
Sixth and Marquette Avenue Inc.
Minneapolis, MN 55479-1013
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Albert J. Edwards Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President/Marketing U.S. Trust Company of California
(prior to June 9, 1997)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(e) Galliard Capital Management, Inc.
The description of Galliard Capital Management, Inc. ("Galliard") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Galliard, including their business connections, which are of a
substantial nature. The address of Galliard is LaSalle Plaza, Suite
2060, 800 LaSalle Avenue, Minneapolis, Minnesota 55479 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman Galliard Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard Merriam Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
John Caswell Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Karl Tourville Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Laura Gideon Senior Vice President of Marketing Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Leela Scattum Vice President of Operations Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(f) Smith Asset Management Group, L.P.
The description of Smith Asset Management Group, L.P. ("Smith") in
Parts A and B of this Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Smith, including their business connections, which are of a substantial
nature. The address of Smith is 300 Crescent Court, Suite 750, Dallas,
Texas 75201 and, unless otherwise indicated below, that address is the
principal business address of any company with which the directors and
principal executive officers are connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen S. Smith President, Chief Executive Officer Smith Asset Management Group
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Partner Discovery Management
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen J. Summers Chief Operating Officer Smith Asset Management Group
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Partner Discovery Management
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sarah C. Castleman Vice President Smith Asset Management Group
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Partner Discovery Management
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Assistant Vice President NationsBank (formerly)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(g) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC in Parts A and B of
this Registration Statement is incorporated by reference herein.
The following are the members of Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101, including their business
connections, which are of a substantial nature.
Forum Holdings Corp. I., Member.
Forum Trust, LLC, Member.
Both Forum Holdings Corp. I. and Forum Trust are controlled indirectly
by John Y. Keffer, Chairman and President of the Registrant. Mr.
Keffer is President of Forum Trust and Forum Financial Group, LLC. Mr.
Keffer is also a director and/or officer of various registered
investment companies for which the various Forum Financial Group's
operating subsidiaries provide services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial nature.
Each officer may serve as an officer of various registered investment
companies for which the Forum Financial Group provides services.
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC.
------------------------------------ ----------------------------------
Chief Financial Officer Forum Financial Group, LLC.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Other Forum affiliated companies
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David I. Goldstein Secretary Forum Investment Advisors, LLC.
------------------------------------- ----------------------------------
General Counsel Forum Financial Group, LLC.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Officer Other Forum affiliated companies
----------------------------------- ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark D. Kaplan Director Forum Investment Advisors, LLC.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(h) Wells Fargo Bank, N.A.
The description of Wells Fargo Bank, N.A. ("Wells Fargo Bank") in
Parts A and B of this Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Wells Fargo Bank, including their business connections, which are of a
substantial nature. The address of Wells Fargo Bank is 420 Montgomery
Street, San Francisco, California 94105 and, unless otherwise
indicated below, that address is the principal business address of any
company with which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
H. Jesse Arnelle Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
455 Market Senior Partner Arnelle, Hastie, McGee, Willis &
Street San Francisco, CA 94105 Greene
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Armstrong World Industries, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Eastman Chemical Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director FPL Group, Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Michael R. Bowlin Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Highway 150 Chairman of the Board of Directors, Atlantic Richfield Co. (ARCO)
Santa Paula, CA 93060 Chief Executive Officer, Chief
Operating Officer and President
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Edward Carson Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
633 West Fifth Street Chairman of the Board and Chief First Interstate Bancorp
Los Angeles, CA 90071 Executive Officer
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Aztar Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Castle & Cook, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Terra Industries, Inc.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
----------------------------------- ------------------------------------- ----------------------------------
William S. Davilla Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
618 Michillinda Ave. President (Emeritus) and Director The Vons Companies, Inc.
Arcadia, CA 91007
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Pacific Gas & Electric Company
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Rayburn S. Dezember Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
3200 San Fernando Road Director CalMat Co.
Los Angeles, CA 90065
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Tejon Ranch Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director The Bakersfield Californian
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Trustee Whittier College
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Paul Hazen Chairman of the Board of Directors Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chairman of the Board of Directors Wells Fargo & Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Phelps Dodge Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Safeway, Inc.
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Robert K. Jaedicke Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Graduate School of Business Professor (Emeritus) Graduate School of Business
Stanford University Stanford University
Stanford, CA 94305
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Bailard Biehl & Kaiser Real
Estate Investment Trust, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Boise Cascade Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director California Water Service Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Enron Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director GenCorp, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Homestake Mining Company
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Thomas L. Lee Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
10302 Avenue 7 1/2 Chairman and Chief Executive Officer The Newhall Land and Farming
Firebaugh, CA 93622 Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director CalMat Co.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director First Interstate Bancorp
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Ellen Newman Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
323 Geary Street President Ellen Newman Associates
Suite 507
San Francisco, CA 94102
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chair (Emeritus) of the Board of University of California at San
Trustees Francisco Foundation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director California Chamber of Commerce
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Philip J. Quigley Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
130 Kearney Street Rm. 3700 San Chairman, President and Chief Pacific Telesis Group
Francisco, CA 94108 Executive Officer
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
----------------------------------- ------------------------------------- ----------------------------------
Carl E. Reichardt Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Columbia/HCA Healthcare
Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Ford Motor Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Newhall Management Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Pacific Gas and Electric Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Retired Chairman of the Board of Wells Fargo & Company
Directors and Chief Executive
Officer
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Donald B. Rice Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
2049 Century Park East President and Chief Executive Teledyne, Inc.
Los Angeles, CA 90067 Officer
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Retired Secretary The United States Air Force
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Vulcan Materials Company
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Richard J. Stegemeier Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chairman (Emeritus) Unocal Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Foundation Health Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Halliburton Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Northrop Grumman Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Outboard Marine Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Pacific Enterprises
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director First Interstate Bancorp
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Susan G. Swenson Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
651 Gateway Blvd. President and Chief Executive Cellular One
San Francisco, CA 94080 Officer
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David M. Tellep Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Retired Chairman of the Board and Martin Lockheed Corporation
Chief Executive Officer
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Edison International and
Southern California Edison
Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director First Interstate Bancorp
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
Chang-Lin Tien Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Chancellor University of California at
Berkeley
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Raychem Corporation
----------------------------------- ------------------------------------- ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
John A. Young Director Wells Fargo Bank
------------------------------------- ----------------------------------
3000 Hanover Street President, Chief Executive Officer Hewlett-Packard Company
Palo Alto, CA 9434 and Director
------------------------------------- ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------- ----------------------------------
Director Chevron Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Lucent Technologies
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Novell, Inc.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director Shaman Pharmaceuticals Inc.
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
----------------------------------- ------------------------------------- ----------------------------------
William F. Zuendt Director Wells Fargo Bank
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
President Wells Fargo & Company
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director 3Com Corporation
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Director California Chamber of Commerce
----------------------------------- ------------------------------------- ----------------------------------
</TABLE>
(i) Wells Capital Management Incorporated
The description of Wells Capital Management Incorporated ("WCM") in
Parts A and B of this Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
WCM, including their business connections, which are of a substantial
nature. The address of WCM is 525 Market Street, San Francisco,
California 94105 and, unless otherwise indicated below, that address
is the principal business address of any company with which the
directors and principal executive officers are connected.
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Allen J. Ayvazian Chief Equity Officer WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert Willis President and Chief Investment WCM
Officer
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Brigid Breen Chief Compliance Officer WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John Burgess Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Financial Investment Adviser Independent Financial Adviser
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jose Casas Chief Operating Officer WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Larry Fernandes Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jacqueline Anne Flippin Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President and Investment McMorgan & Company (until 1/98)
Portfolio Manager
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen Galiani Senior Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Qualivest Capital Management,
Inc. (until 5/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Madeleine Gish Senior Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Frank Greene Investment Portfolio Manager WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Daniel Kokoska Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Assistant Portfolio Manager Bradford & Marzac, Inc. (until
2/98)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
David Klug Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Kelli Ann Lee Managing Director WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Group Human Resource Manager Wells Fargo Bank, N.A. (until
11/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Kenneth Lee Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Associate Portfolio Manager Wells Fargo Bank, N.A. (until
2/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Melvin Lindsey Managing Director WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
4/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Clark Messman Chief Legal Officer WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Laura Milner Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Brian Mulligan Managing Director WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael Neitzke Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Thomas O'Malley Managing Director WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Clyde Ostler Director WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Guy Rounsaville Director WCM
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Katherine Schapiro Senior Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gary Schlossberg Economist WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Economist Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul Single Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Scott Smith Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Cynthia Tusan Performance Analyst/Investment WCM
Portfolio Manager
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mary Walton Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Rex Wardlaw Senior Principal WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jeffrey Weaver Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Allen Wisniewski Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Thomas Zeifang Investment Portfolio Manager WCM
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Investment Portfolio Manager Wells Fargo Bank, N.A. (until
1/97)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Financial Services, Inc. is the Registrant's placement agent.
Registrant has no underwriters.
(b) Not applicable.
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Act and the Rules thereunder are maintained
at the offices of Forum Financial Services, Inc., Forum Financial Corp. and
Forum Accounting Services, LLC, Two Portland Square, Portland, Maine 04101. The
records required to be maintained under Rule 31a-1(b)(1) with respect to
journals of receipts and deliveries of securities and receipts and disbursements
of cash are maintained at the offices of the Registrant's 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 26 hereof.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this amendment to its registration statement to
be signed on its behalf by the undersigned, duly authorized, in the City of
Portland and the State of Maine on the 12th day of February, 1999.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
--------------------------
John Y. Keffer
President
<PAGE>
INDEX TO EXHIBITS
(d)(4) Form of Investment Advisory Agreement between Registrant and Wells
Fargo Bank, N.A. dated as of February 12, 1999 relating to
International Equity Portfolio.
(d)(9) Form of Investment Subadvisory Agreement between Wells Fargo Bank,
N.A. and Wells Capital Management Incorporated dated as of February
12, 1999 relating to International Equity Portfolio.
(g)(1) Custodian Agreement between Registrant and Norwest Bank Minnesota,
N.A. dated as of November 9, 1994, as amended June 1, 1997 and
February 11, 1999.
(g)(3) Custody Agreement between Morgan Stanley Trust Company and Norwest
Bank Minnesota, N.A. dated June 18, 1993, as amended April 1, 1996.
(h)(2) Fund Portfolio and Unitholder Accounting Agreement between Registrant
and Forum Accounting Services, LLC relating to International Equity
Portfolio, Prime Money Market Portfolio, Money Market Portfolio,
Positive Return Bond Portfolio, Stable Income Portfolio, Strategic
Value Bond Portfolio, Managed Fixed Income Portfolio, Index Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio, Disciplined
Growth Portfolio, Small Cap Index Portfolio, Small Company Stock
Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Cash
Portfolio, Government Cash Portfolio, Treasury Cash Portfolio,
Government Portfolio and Municipal Cash Portfolio dated as of June 1,
1997 and amended February 11, 1999.
(h)(3) Placement Agent Agreement between Registrant and Forum Financial
Services, Inc. relating to Prime Money Market Portfolio, Money Market
Portfolio, Positive Return Bond Portfolio, Stable Income Portfolio,
Strategic Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small Company
Stock Portfolio, Small Company Growth Portfolio, Small Company Value
Portfolio, Small Cap Value Portfolio, International Portfolio and
International Equity Portfolio dated November 9, 1994 as amended
February 11, 1999.
Exhibit (d)(4)
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
February 12, 1999
AGREEMENT made this 12th day of February, 1999, 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 Wells Fargo Bank, N.A. (the "Adviser"), a national
banking association with its principal place of business at 525 Market Street,
San Francisco, California 94105.
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 each Portfolio listed in Appendix A (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; and
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 twenty-two 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 Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Adviser, subject to the direction and control
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.
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. In making purchases and sales of securities for the Portfolios, the
Adviser will bear in mind the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Trust Instrument and Registration
<PAGE>
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.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted 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.
(d) 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 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 that 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. 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 who are not officers
of the Adviser or of Forum Financial Services, Inc. or affiliated persons of
either; 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 5. STANDARD OF CARE
The Trust shall expect of the Adviser, and the Adviser will give the
Trust the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an inducement to the Adviser's undertaking these
services the Adviser shall not be liable hereunder for any mistake of judgment
or in any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, the Adviser against
any liability to the Trust or to the Trust's interestholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of the Adviser's duties hereunder, or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder. As used in this Section 5, the term "Adviser" shall include any
affiliates of the Adviser performing services for the Portfolios contemplated
hereby and directors, officers and employees of the Adviser as well as the
Adviser itself.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Portfolios, a fee at an annual rate as listed in
Appendix A hereto. Such fees shall be accrued by the Trust daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month.
<PAGE>
SECTION 7. 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 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 8. ACTIVITIES OF THE ADVISER
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.
SECTION 9. 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 10. 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)
--------------------------
By: John Y. Keffer
President
WELLS FARGO BANK, N.A.
------------------------
By: [NAME]
[TITLE]
<PAGE>
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
Annual Fee as a % of
the Average Daily
Portfolios of the Trust Net Assets of the Portfolio
- ----------------------- ---------------------------
International Equity Portfolio 1.20%
<PAGE>
Exhibit (d)(9)
CORE TRUST (DELAWARE)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 12th day of February, 1999, among 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, Wells Fargo Bank, N.A. (the "Adviser"), a national banking
association with its principal place of business at 525 Market Street, San
Francisco, California 94105, and Wells Capital Management Incorporated ("WCM"),
(the "Subadviser"), a wholly owned subsidiary of Wells Fargo Bank with its
principal place of business at 525 Market Street, 10th Floor, San Francisco,
California 94105.
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 its beneficial interests ("Interests"), no par value, in
separate series; and
WHEREAS, the Trust and the Adviser desire that the Subadviser perform
investment advisory services for each series of the Trust as listed in Appendix
A hereto (each, a "Portfolio" and collectively, the "Portfolios"), and the
Subadviser is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW THEREFORE, the Trust, the Adviser and the Subadviser 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 twenty-two series of interests and
the Board is authorized to issue interests in any number of additional series.
The Trust has delivered to the Subadviser copies of the Trust's Trust Instrument
and Registration Statement and will from time to time furnish Subadviser with
any amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
Subject to the direction and control of the Board, the Adviser manages
the investment and reinvestment of the assets of the Portfolios and provides for
certain management and services as specified in the Investment Advisory
Agreement between the Trust and the Adviser with respect to the Portfolios.
Subject to the direction and control of the Board and the Adviser, the
Subadviser shall manage the investment and reinvestment of the assets of each
Portfolio and, without limiting the generality of the foregoing, shall provide
the management and other services specified below, all in such manner and to
such extent as may be directed from time to time by the Adviser.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser 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 Subadviser 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 Subadviser 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.
<PAGE>
(b) The Subadviser 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
Subadviser, and on its own initiative, will furnish the Board from time to time
with such information as the Subadviser may believe appropriate for this
purpose, whether concerning the individual companies whose securities are
included in a Portfolio's holdings, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in which a
Portfolio maintains investments. The Subadviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolios as the Subadviser may believe appropriate or as the Board reasonably
may request. In making purchases and sales of securities for the Portfolios, the
Subadviser will bear in mind 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 objective, policies and restrictions of each Portfolio.
(c) The Subadviser may from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's behalf in any such respect.
(d) The Subadviser 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 Subadviser 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 and
records relating to the services provided by the Subadviser 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 Securities and Exchange Commission
and the Internal Revenue Service. The books and records pertaining to the Trust,
which are in possession of the Subadviser, 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 Subadviser's normal business hours.
Upon the reasonable request of the Trust, copies of any such books and records
shall be provided promptly by the Subadviser to the Trust or the Trust's
authorized representatives.
SECTION 4. EXPENSES
Subject to any expense reimbursement arrangements between the Adviser
or others and the Trust, the Trust shall be responsible and shall assume the
obligation for payment of all of the Trust's expenses.
SECTION 5. STANDARD OF CARE
The Trust shall expect of the Subadviser, and the Subadviser will give
the Trust the benefit of, the Subadviser's best judgment and efforts in
rendering its services to the Trust, and as an inducement to the Subadviser's
undertaking these services the Subadviser shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
the Subadviser against any liability to the Trust or to the Trust's
interestholders to which the Subadviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Subadviser's duties hereunder, or by reason of the Subadviser's reckless
disregard of its obligations and duties hereunder.
SECTION 6. COMPENSATION
In consideration of the foregoing, the Adviser and not the Trust shall
pay the Subadviser a fee as shall be determined from time to time in writing
between the Adviser and the Subadviser.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date first above
written.
(b) This Agreement shall remain in effect for a period of two years
from the date of its effectiveness and thereafter shall continue in effect for
successive one-year periods; provided that such continuance is specifically
<PAGE>
approved at least annually: (i) by the Board or by the vote of a majority of the
outstanding voting securities 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, the Subadviser may continue to render 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 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 Subadviser,
or (ii) by the Subadviser on 60 days' written notice to the Trust. This
Agreement shall terminate upon assignment unless prior approval of the Board is
obtained.
SECTION 8. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser'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.
SECTION 9. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of a Portfolio shall
not be liable for any obligations of the Trust or of the Portfolio under this
Agreement, and the Subadviser 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 Subadviser'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 Portfolio.
SECTION 10. 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 securities of the Portfolio thereby affected.
(b) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(c) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Delaware.
(d) The terms "vote of a majority of the outstanding voting
securities", "interested person", "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed effective as of the day and year first above written.
CORE TRUST (DELAWARE)
---------------------------
By: John Y. Keffer
President
WELLS FARGO BANK, N.A.
--------------------------
By: [Name]
[Title]
WELLS CAPITAL MANAGEMENT INCORPORATED
----------------------------
By: [Name]
[Title]
<PAGE>
CORE TRUST (DELAWARE)
INVESTMENT SUBADVISORY AGREEMENT
APPENDIX A
International Equity Portfolio
<PAGE>
CORE TRUST (DELAWARE)
INVESTMENT SUBADVISORY AGREEMENT
FEE AGREEMENT
February 12, 1999
This fee agreement is made as of the 12th day of February, 1999 by and
between Wells Fargo Bank, N.A. (the "Adviser") and Wells Capital Management (the
"Subadviser"); and
WHEREAS, the parties and Core Trust (Delaware) (the "Trust") have
entered into an Investment Subadvisory Agreement ("Subadvisory Agreement")
whereby the Subadviser provides investment management advice to the series of
the Trust as listed in Appendix A to the Subadvisory Agreement (the
"Portfolio"); and
WHEREAS, the Subadvisory Agreement provides that the fees to be paid to
the Subadviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the
Subadviser under the Subadvisory Agreement shall be calculated as follows on a
monthly basis by applying the following annual rates per Portfolio:
International Equity Portfolio
a. 0.25% on the first $200,000,000.00;
b. 0.20% on the next $200,000,000.00;
c. 0.15% on all sums in excess of $400,000,000.00;
The net assets under management against which the foregoing fees are to
be applied are the month-end net assets. If this fee agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this agreement is in effect
shall be subject to a pro rata adjustment based on the number of days elapsed in
the current month as a percentage of the total number of days in such month. At
any month-end period when the determination of net asset value is suspended, the
net asset value for the last day prior to such suspension shall for this purpose
be deemed to be the net asset value at month-end.
The foregoing fee schedule shall remain in effect until changed in
writing by the parties.
WELLS FARGO BANK, N.A.
--------------------------
By: [Name]
[Title]
WELLS CAPITAL MANAGEMENT
--------------------------
By: [Name]
[Title]
Exhibit (g)(1)
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
AGREEMENT, dated as of November 9, 1994, as amended June 1, 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 Norwest Bank Minnesota, N.A. (the
"Custodian"), a banking association organized under the laws of the United
States of America with its principal place of business at 733 Marquette Avenue,
Minneapolis, Minnesota 55479.
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 its interests, no par value, in separate series;
WHEREAS, the Trust desires to appoint Norwest Bank Minnesota, N.A.,
custodian of its securities and cash and Norwest Bank Minnesota, N.A. is willing
to act in such capacity upon the terms and conditions set forth below; and
WHEREAS, pursuant to a separate agreement between the Trust and Forum
Financial Corp. (the "Transfer Agency Agreement"), Forum Financial Corp. will
perform the duties of transfer agent of the Trust
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow.
(a) Act: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.
(b) Board: The term Board shall mean the Board of Trustees of the
Trust.
(c) Book-Entry Account: The term Book-Entry Account shall mean an
account maintained by a Federal Reserve Bank in which Book-Entry Securities are
held.
(d) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system
maintained by a Federal Reserve Bank.
(e) Custodian: The term Custodian shall mean Norwest Bank, Minnesota,
N.A., in its capacity as custodian under this Agreement.
(f) Foreign Securities: The term Foreign Securities shall mean "Foreign
Securities" as that term is defined in Rule 17f-5 under the Act.
(g) Foreign Sub-Custodian: The term Foreign Sub-Custodian shall mean
"Eligible Foreign Sub-Custodian" as that term is defined in Rule 17f-5 under the
Act.
(h) Fund Business Day: The term Fund Business Day shall mean a day that
is a business day for a Series as defined in the Series' prospectus.
(i) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good faith
by the Custodian to be a person or persons authorized by a resolution of the
<PAGE>
Board to give Oral Instructions on behalf of the Trust. Each Oral Instruction
shall specify whether it is applicable to the entire Trust or a specific Series
of the Trust.
(j) Securities: The term Securities shall mean bonds, debentures,
notes, stocks, Interests, evidences of indebtedness, and other securities and
investments from time to time owned by the Trust.
(k) Securities Depository: The term Securities Depository shall mean a
system, domestic or foreign, for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the securities and shall include any system
for the issuance of Book-Entry Securities.
(l) Series: The term Series shall mean the Series listed in Appendix A
or any series that the Trust and Custodian may in the future agree are subject
to this Agreement.
(m) Interestholders: The term Interestholders shall mean the registered
owners from time to time of the Interests, as reflected on the interest registry
records of the Trust.
(n) Interests: The term Interests shall mean the issued and outstanding
Interests of beneficial interest, no par value, of the Trust, including any
fractions thereof.
(o) Sub-Custodian: The term Sub-Custodian shall mean any person
selected by the Custodian under Section 20 hereof and in accordance with the
requirements of the Act to custody any or all of the Securities and cash of the
Trust, and shall include Foreign Sub-Custodians.
(p) Trust: The term Trust shall mean Norwest Funds.
(q) Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures, or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board to
give Written Instructions on behalf of the Trust. Each Written Instruction shall
specify whether it is applicable to the entire Trust or a specific Series of the
Trust.
(r) 1934 Act: The term 1934 Act shall mean the Securities Exchange Act
of 1934, as amended from time to time.
SECTION 2. APPOINTMENT. The Trust hereby appoints the Custodian as
custodian of the Securities and cash of each Series from time to time on deposit
hereunder. The Securities and cash of the Trust shall be and remain the sole
property of the Trust and the Custodian shall have only custody thereof. The
Custodian shall hold, earmark and physically segregate for the appropriate
Series account of the Trust all non-cash property, including all Securities that
are not maintained pursuant to Section 6 in a Securities Depository or
Book-Entry Account. The Custodian will collect from time to time the dividends
and interest of the Securities held by the Custodian.
The Custodian shall open and maintain a separate bank or trust account
or accounts in the name of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Notwithstanding the foregoing, a separate
bank account may be established by the Trust to be used as a petty cash account
in accordance with Rule 17f-3 under the Act and the Custodian shall have not
duty or liability with regard to such account.
Upon receipt of Written Instructions, funds held by the Custodian for
the Trust may be deposited by the Custodian to its credit in the banking
department of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable. Such funds shall be deposited by
the Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
SECTION 3. DELIVERY OF BOARD RESOLUTIONS. The Trust shall, as
necessary, file with the Custodian a certified copy of the operative resolution
of the Board authorizing execution of Written Instructions and the number of
<PAGE>
signatories required and setting forth authentic signatures of all signatories
authorized to sign on behalf of the Trust or any Series thereof. Such resolution
shall constitute conclusive evidence of the authority of all signatories
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance thereon, until the Custodian
receives a certified copy of a replacement resolution adding or deleting a
person or persons authorized to give written Instructions.
The Trust shall, as necessary, file with the Custodian a certified copy
of the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Trust or any Series. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
SECTION 4. INSTRUCTIONS. For all purposes under this Agreement, the
Custodian is authorized to act upon receipt of the first of any Written or Oral
Instruction it receives. If the first Instruction is an Oral Instruction, the
Trust shall deliver or have delivered to the Custodian a confirmatory Written
Instruction; and if the Custodian receives an Instruction, whether Written or
Oral, with respect to a Securities transaction, the Trust shall cause the broker
or dealer to send a written confirmation of the transaction to the Custodian.
The Custodian shall be entitled to rely on the first Instruction received and,
for any act or omission undertaken in compliance therewith, shall be free of
liability and fully indemnified and held harmless by the Trust. The sole
obligation of the Custodian with respect to any confirmatory Written Instruction
or broker or dealer written confirmation shall be to make reasonable efforts to
detect any discrepancy between the original Instruction and such confirmation
and to report such discrepancy to the Trust. The Trust shall be responsible, at
the Trust's expense, for taking any action, including any reprocessing,
necessary to correct any discrepancy or error, and to the extent such action
requires the Custodian to act, the Trust shall give the Custodian specific
Written Instructions as to the action required.
SECTION 5. DEPOSIT OF TRUST ASSETS. The Trust will initially transfer
and deposit or cause to be transferred and deposited with the Custodian all of
the Securities, other property and cash owned by the Trust at the time this
Agreement becomes effective, provided that the Custodian shall have the right,
in its sole discretion, to refuse to accept any securities or other property
that are not in proper form for deposit or any reason. Such transfer and deposit
shall be evidenced by appropriate schedules duly executed by the Trust. The
Trust may deposit with the Custodian additional Securities of the Trust and
dividends or interest collected on such Securities as the same are acquired from
time to time.
The Trust will cause to be deposited with the Custodian from time to
time (i) the net proceeds of Securities sold, (ii) the applicable net asset
value of Interests sold, whether representing initial issue or any other
securities and (iii) cash as may be acquired. Deposits with respect to sales of
Interests shall be accompanied by Written or Oral Instructions stating the
amount to be deposited with the Custodian and registration instructions.
SECTION 6. DEPOSIT OF TRUST ASSETS WITH THIRD PARTIES. The Trust hereby
authorizes the Custodian to deposit assets of the Trust as follows:
(a) With the Custodian or any other bank licensed and regularly
examined by the United States or any state thereof assets held in the Option
Account created pursuant to Section 13(b).
(b) In the Custodian's or Sub-Custodian's account(s) with any
Securities Depository as the Trust shall permit by Written or Oral Instruction.
(c) Book-Entry Securities belonging to the Trust in a Book-Entry
Account maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained
for the Trust, the Custodian shall: (i) deposit the Securities in an account
that includes only assets held by the Custodian for customers; (ii) send the
Trust a confirmation (i.e., an advice of notice of transaction) of any transfers
of the Trust to or from the account; (iii) with respect to Securities of the
Trust transferred to the account, identify as belonging to the Trust a quantity
of securities in a fungible bulk of securities that are registered in the name
of the Custodian or its nominee, or credited to the Custodian's account on the
<PAGE>
books of a Securities Depository or the Custodian's agent; (iv) promptly send to
the Trust all reports it receives from the appropriate Federal Reserve Bank or
Securities Depository on its respective system of internal accounting control;
and (v) send to the Trust such reports of the systems of internal accounting
control of the Custodian and its agents through which Securities are deposited
as are available and as the Trust may reasonably request from time to time.
The Custodian shall be liable to the Trust for any loss or damage to
the Trust resulting from the negligence (including failure to act), fault or
willful misconduct of the Custodian, its agents or employees in selecting a
Securities Depository or Book-Entry Account. The Custodian shall not waive any
rights it may have against a Securities Depository or Federal Reserve Bank. The
Trust may elect to be subrogated to the rights of the Custodian against the
Securities Depository or Federal Reserve Bank or any other person with respect
to any claim that the Custodian may have as a consequence of any such loss or
damage, if and to the extent that the Trust has not been made whole for any such
loss or damage.
SECTION 7. REGISTRATION OF SECURITIES. The Securities held by the
Custodian, unless payable to bearer or maintained in a Securities Depository or
Book-Entry Account pursuant to Section 6, shall be registered in the name of the
Custodian or in the name of its nominee, or if directed by Written Instructions,
in the name of the Trust or its nominee. In the event that any Securities are
registered in the name of the Trust or its nominee, the Trust will endorse, or
cause to be endorsed, to the Custodian dividend and interest checks, or will
issue appropriate orders to the issuers of the Securities to pay dividends and
interest to the Custodian. Securities, excepting bearer securities, delivered
from time to time to the Custodian shall, in all cases, be in due form for
transfer, or registered as above provided.
SECTION 8. DISBURSEMENTS OF CASH. The Custodian is hereby authorized
and directed to disburse cash to or from the Trust from time to time as follows:
(a) For the purchase of Securities by the Trust, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank.
(b) For transferring funds, including mark-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii)
written agreement to repurchase the Securities from the Trust.
(c) For transferring funds to a duly-designated redemption paying agent
to redeem or repurchase Interests, upon receipt of Written or Oral Instructions
stating the applicable redemption price.
(d) For exercising warrants and rights received upon the Securities,
upon timely receipt of Written or Oral Instructions authorizing the exercise of
such warrants and rights and stating the consideration to be paid.
(e) For repaying, in whole or in part, any loan of the Trust, or
returning cash collateral for Securities loaned by the Trust, upon receipt of
Written or Oral Instructions directing payment and stating the Securities, if
any, to be received against payment.
(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Trust deems
appropriate to include in dividends or distributions declared on the Interests.
(g) For paying or reimbursing the Trust for other corporate
expenditures, upon receipt of Written or Oral Instructions stating that such
expenditures are or were authorized by resolution of the Board and specifying
the amount of payment, the purposes for which such payment is to be made, and
the person or persons to whom payment is to be made.
<PAGE>
(h) For transferring funds to any Sub-Custodian, upon receipt of
Written or Oral Instructions and upon agreement by the Custodian.
(i) To advance or pay out accrued interest on bonds purchased,
dividends on stocks sold and similar items.
(j) To pay proper compensation and expenses of the Custodian.
(k) To pay, or provide the Trust with money to pay, taxes, upon receipt
of appropriate Written or Oral Instructions.
(l) To transfer funds to a separate checking account maintained by the
Trust.
(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.
Before making any payments or disbursements, however, the Custodian
shall receive, and may conclusively rely upon, Written or Oral Instructions
requesting such payment or disbursement and stating that it is for one or more
or the purposes enumerated above. Notwithstanding the foregoing, the Custodian
may disburse cash for other corporate purposes; provided, however, that such
disbursement maybe made only upon receipt of Written or Oral Instructions
stating that such disbursement was authorized by resolution of the Board.
SECTION 9. DELIVERY OF SECURITIES. The Custodian is hereby authorized
and directed to deliver Securities of the Trust from time to time as follows:
(a) For completing sales of Securities sold by the Trust, upon receipt
of (i) Written or Oral Instructions specifying the Securities sold, the amount
to be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.
(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.
(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment or otherwise, upon timely receipt of (i) Written
or Oral Instructions authorizing such exchange or conversion and stating the
manner in which such exchange or conversion is to be made and (ii) the
Securities, certificates of deposit, interim receipts, and/or cash to be
received as specified in the Written or Oral Instructions.
(d) For presenting for payment Securities that have matured or have
been called for redemption;
(e) For delivering Securities upon redemption of Interests in kind,
upon receipt of appropriate Written or Oral Instructions.
(f) For depositing with the lender Securities to be held as collateral
for a loan to the Trust or depositing with a borrower Securities to be loaned by
the Trust, (i) upon receipt of Written or Oral Instructions directing delivery
to the lender or borrower and suitable collateral, if Securities are loaned or
(ii) pursuant to the terms of a separate securities lending agreement.
(g) For complying with a repurchase agreement, upon receipt of Written
or Oral Instructions stating (i) the securities to be delivered and the payment
to be received and (ii) payment.
<PAGE>
(h) For depositing with a depository agent in connection with a tender
or other similar offer to purchase Securities of the Trust, upon receipt of
Written or Oral Instructions.
(i) For depositing Securities with the issuer thereof, or its agents,
for the purpose of transferring such Securities into the name of the Trust, the
Custodian or any nominee of either in accordance with Section 7.
(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
(k) Notwithstanding the foregoing, the Custodian may, without Written
or Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.
SECTION 10. BORROWINGS. The Trust will cause any person (including the
Custodian) from which it borrows money using Securities as collateral to deliver
to the Custodian a notice of undertaking in the form currently employed by the
lender setting forth the amount that the lender will loan to the Trust against
delivery of a stated amount of collateral. The Trust shall promptly deliver to
the Custodian Written or Oral Instructions for each loan, stating (i) the name
of the lender, (ii) the amount and terms of the loan, which terms may be
specified by incorporating by reference an attached promissory note or loan
agreement duly endorsed by the Trust, (iii) the time and date, if known, on
which the loan will be consummated (the "borrowing date"), (iv) the date on
which the loan becomes due and payable, (v) the total amount payable to the
Trust on the borrowing date, (vi) the market value of Securities to be delivered
as collateral for such loan and (vii) the name of the issuer, the title and the
number of Interests or principal amount of the Securities to be delivered as
collateral. The Custodian shall deliver on the borrowing date such specified
collateral and the executed promissory note, if any, and receive from the lender
the total amount of the loan proceeds; provided, however, that no delivery of
Securities shall occur if the amount of loan proceeds does not conform to the
amount set forth in the Written or Oral Instructions, or if such Instruction do
not contain the requirements of (vii) above. The Custodian may, at the option of
the lender, keep such collateral in its possession; provided such collateral is
subject to all rights given the lender by any promissory note or loan agreement
executed by the Trust.
The Custodian shall deliver, from time to time, any Securities required
as additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Trust shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 11. INDEBTEDNESS TO CUSTODIAN. If, in its sole discretion, the
Custodian advances funds to the Trust to pay for the purchase of Securities, to
cover an overdraft of the Trust's account with the Custodian, or to pay any
other indebtedness to the Custodian, the Trust's indebtedness shall be deemed to
be a loan by the Custodian to the Trust, payable on demand and bearing interest
at the rate then charged by the Custodian for such loans; provided, however,
that the Custodian shall give the Trust notice of any such advance that exceeds
five percent of the value of the Securities and cash held by the Custodian at
the time of the advance. The Trust hereby agrees that the Custodian shall have a
continuing lien and security interest, to the extent of any such overdraft or
indebtedness, in any property then held by the Custodian or its agents for the
benefit of the Trust, or in which the Trust may have an interest. The Trust
authorizes the Custodian, in its sole discretion at any time, to charge any such
overdraft or indebtedness, together with interest due thereon, against any
balance then credited to the Trust on the Custodian's books.
SECTION 12. SECURITIES LOANS. The Custodian may from time to time lend
securities of the Trust in accordance with and pursuant to a separate securities
lending agreement.
SECTION 13. OPTION CONTRACTS. The Custodian's responsibilities regarding
option contracts will be governed by the following sub-paragraphs:
(a) Unless more particularly described below, Written or Oral
Instructions regarding option contracts purchased or sold by any Series shall
state (i) the price at which the underlying Security may be bought or sold, (ii)
the issuer, the title and number of the Interests or principal amount of such
Security, (iii) the premium to be paid, (iv) the expiration date of the option
<PAGE>
contract, (v) if the transaction is a "closing sale transaction," whether the
sale requires delivery of a certificate of ownership to the broker through whom
the sale is made and (vi) if the transaction is a purchase of an option
contract, the requirement that payment of the premium be made only upon receipt
of a certificate of ownership executed by the broker through whom the purchase
is made.
(b) Whenever a Series sells an option contract, Written or Oral
Instructions to the Custodian must state (ii) the issuer, the title and number
of Interests or principal amount of the Security subject to the option contract,
(ii) the exercise price of the option contract, (iii) the expiration date of the
option contract, (iv) the premium to be received by the Series, (v) the name of
the broker from whom the premium is to be received and (vi) if the option is a
call, whether it is covered.
If the option contract sold is a put, the Written or Oral Instructions
shall also state (i) the amount and kind of collateral required by the broker or
(ii) the amount and kind of assets of the Series, if any, that shall be
segregated from the general assets of the Series and held by the Custodian in a
segregated option account (the "Option Account"). If collateral is required, the
Custodian shall deliver the collateral directly to the broker through whom such
option was written and receive in return a receipt and a confirmation of the
option transaction, in accordance with the customs prevailing among brokers in
such securities. If an Option Account is established, the Custodian shall
maintain it as specified in Written or Oral Instructions.
(c) If the Custodian (i) acts as escrow agent with respect to a covered
call option contract, (ii) maintains securities underlying a covered call option
contract with a Securities Depository or (iii) holds assets in the Option
Account in connection with a put option contract, the Custodian shall deliver,
or cause to be delivered, all receipts required by the customs prevailing among
dealers in such securities.
(d) If an option contract purchased or sold by any Series expires, the
Trust will deliver to the Custodian Written or Oral Instructions containing the
information specified in paragraph (b) above and instructing the Custodian to
(i) delete such option contract from the list of holdings that the Custodian
maintains for that Series and (ii) either remove from the Option Account
specified assets held with respect to such option or remove the restriction on
any securities underlying a covered call option contract, as the case may be.
Upon the return and/or cancellation or expiration of any receipts issued
pursuant to paragraph (c) above, the Custodian shall remove such restriction,
delete the option from the list of holdings maintained by the Custodian and
transfer the assets to the general account maintained by the Custodian for the
benefit of the Series. Collateral delivered by a broker with whom it was
previously deposited pursuant to paragraph (b) above shall, if identical with
the collateral specified in the receipt previously issued by such broker, be
accepted by the Custodian and held in the general account maintained by the
Custodian for the benefit of the Series. The Custodian shall accept delivery of
collateral not specified in such a receipt only upon receipt of Written or Oral
Instructions.
(e) If a covered call option sold by a Series is exercised, the Trust
shall promptly furnish the Custodian with Written or Oral Instructions stating
(i) the issuer, the title and number of Interests or principal amount of the
Security subject to the option contract, (ii) the person to whom the underlying
Securities are to be delivered, (iii) the amount to be received and held by the
Custodian upon delivery and (iv) the assets, if any, to be removed from the
Option Account or the collateral, if any, to be returned by a broker with whom
it was deposited under paragraph (b) above.
(f) If a put option contract sold by a Series is exercised, the Trust
shall promptly furnish the Custodian with Written or Oral Instructions stating
(i) the issuer, the title and number of Interests or principal amount of the
Security subject to the option contract, (ii) the name of the person whom the
Custodian will pay for Securities subject to the put, in return for receipt of
such Securities, (iii) the amount of such payment and (iv) the assets, if any,
to be removed from the Option Account or the collateral, if any, to be returned
by a broker with whom it was deposited under paragraph (b) above.
(g) In the event a Series purchases, in a "closing purchase
transaction," an option contract identical to a previously sold option contract
in order to liquidate its position as a seller of a call option contract, the
Trust will deliver to the Custodian Written or Oral Instructions stating (i) the
issuer, the title and number of Interests or principal amount of the Security
subject to the option contract, (ii) the exercise price of the option contract,
(iii) the premium to be paid, (iv) the expiration date of the option contract
and (v) the name of the person to whom the premium is to be paid. Upon the
Custodian's payment of the premium and the return and/or cancellation of any
receipts issued pursuant to paragraph (c) above, the Custodian shall (i) either
remove from the Option Account the assets held therein or remove the
<PAGE>
previously-composed restrictions on the Securities underlying the option that is
liquidated by reason of the Closing Purchase Transaction, (ii) delete such
option from the list of holdings maintained by that Series and (iii) transfer
such Securities or assets to the general account maintained by the Custodian for
the benefit of the Series. Collateral delivered by a broker with whom it was
previously deposited pursuant to paragraph (b) above shall, if identical with
the collateral specified in the receipt previously issued by such broker, be
accepted by the Custodian and transferred to the general account maintained by
the Custodian for the benefit of the Series. The Custodian shall accept delivery
of collateral not specified in such a receipt only upon receipt of Written or
Oral Instructions.
(h) If a Series exercises an option contract held by the Custodian, the
Trust shall deliver to the Custodian, at least 24 hours before the last business
day on which such option contract may be exercised, Written or Oral Instructions
containing the information required under paragraph (a) above and instructing
the Custodian (i) in the case of a put option contract, to deliver the
securities subject the put to the broker specified in the Written or Oral
Instructions, in return for receipt of the exercise price or (ii) in the case of
a covered call option contract, to pay the exercise price of the option contract
to the broker specified in the Written or Oral Instructions, in return for
receipt of the Securities subject to the call.
(i) The Custodian shall have no duty or obligation to see that a Series
has deposited or is maintaining adequate margin, if required, with any broker in
connection with an option contract. The Custodian shall have no duty or
obligation to present such option contract to the broker unless it receives
Written or Oral Instructions from the Trust. The Custodian shall have no
responsibility for (i) the legality of any option contract purchased or sold on
behalf of a Series, (ii) the propriety of any such purchase or sale and (iii)
the adequacy of any collateral delivered to a broker in connection with an
option or held in the Option Account.
SECTION 14. EXERCISE OF POWERS WITH RESPECT TO SECURITIES. The
Custodian assumes no duty, obligation or responsibility whatsoever to exercise
any voting or consent powers with respect to the Securities held by it from time
to time hereunder. The Trust or such persons as it may designate shall have the
right to vote, consent or otherwise act with respect to Securities. The
Custodian will exercise its best efforts (as defined in Section 16) to furnish
to the Trust in a timely manner all proxies or other appropriate authorizations
with respect to Securities registered in the name of the Custodian or its
nominee, so that the Trust or its designee may vote, consent or otherwise act.
SECTION 15. COMPENSATION.
(a) The Trust agrees to pay to the Custodian compensation for its
services as set forth in Appendix B hereto, or as shall be set forth in written
amendments to Appendix B approved by the Trust and the Custodian from time to
time.
(b) The Trust shall pay all fees and expenses of any Sub-Custodian
approved by the Trust.
SECTION 16. CORPORATE ACTIVITY. The Custodian will exercise its best
efforts to forward to the Trust in a timely manner all notices of interestholder
meetings, proxy statements, annual reports, conversion notices, call notices, or
other notices or written materials of any kind (excluding dividend, principal
and interest payments) sent to the Custodian as registered owner of Securities.
Best efforts as used in this Agreement shall mean the efforts reasonably
believed in good faith by the Custodian to be adequate in the circumstances.
Upon receipt of warrants or rights issued in connection with the assets
of the Trust, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Trust of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
Custodian shall take all reasonable actions, as agreed to by the Trust
and the Custodian, to assist the Trust in obtaining from year to year favorable
opinions from the Trust's independent auditors with respect to the Custodian's
activities hereunder.
SECTION 17. RECORDS. The Custodian acknowledges and agrees that all
books and records maintained for the Trust in any capacity under this Agreement
are the property of the Trust and may be inspected by the Trust or any
authorized regulatory agency at any reasonable time. Upon request all such books
and records will be surrendered promptly to the Trust. The Custodian agrees to
<PAGE>
make available upon request and to preserve for the periods prescribed in Rule
31a-2 of the Act any records related to services provided under this Agreement
and required to be maintained by Rule 31a-1 under the Act.
SECTION 18. LIABILITY. The Custodian assumes only the usual duties and
obligations normally performed by custodians of open-end investment companies.
The Custodian specifically assumes no responsibility for the management,
investment or reinvestment of the Securities from time to time owned by the
Trust, whether or not on deposit hereunder. The Custodian assumes no duty,
obligation or responsibility whatsoever with respect to Securities not deposited
with the Custodian.
The Custodian may rely upon the advice of counsel, who may be counsel
for the Trust or for the Custodian, and upon statements of accountants, brokers
or other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for any
action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Trust or its
officers, or information furnished by the Trust or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.
No liability of any kind, other than to the Trust, shall attach to the
Custodian by reason of its custody of the Securities and cash held by the
Custodian hereunder or otherwise as a result of its custodianship. In the event
that any claim shall be made against the Custodian, it shall have the right to
pay the claim and reimburse itself from the assets of the Trust; provided,
however, that no such reimbursement shall occur unless the Trust is notified of
the claim and is afforded an opportunity to contest or defend the claim, if it
so elects. The Trust agrees to indemnify and hold the Custodian harmless for any
loss, claim, damage or expense arising out of the custodian relationship under
this Agreement; provided such loss, claim, damage or expense is not the direct
result of the Custodian's negligence or willful misconduct.
SECTION 19. TAXES. The Custodian shall not be liable for any taxes,
assessments or governmental charges that may be levied or assessed upon the
Securities held by it hereunder, or upon the income therefrom. Upon Written or
Oral Instruction, the Custodian may pay any such tax, assessment or charge and
reimburse itself out of the monies of the Trust or the Securities held
hereunder.
SECTION 20. SUB-CUSTODIANS.
(a) The Custodian may from time to time request appointment of one or
more Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing
the use of a Sub-Custodian, the Custodian shall appoint one or more
Sub-Custodians or Foreign Sub-Custodians of Securities and cash owned by the
Trust from time to time.
(b) Custodian shall cause Foreign Securities and amounts of cash
reasonably required to effect Trust's Foreign Securities transactions in the
Custodian Account to be held in such countries or other jurisdictions as Trust
shall direct in Written or Oral Instructions.
Custodian may hold Foreign Securities and cash in sub-custody accounts,
which shall be deemed part of the Custodian Account and which have been
established by Custodian or by a Sub-Custodian with those Foreign Sub-Custodians
as Trust shall approve in Written or Oral Instructions.
Each Foreign Sub-Custodian is authorized to hold Foreign Securities in
an account with any foreign Securities Depository as Trust shall approve in
Written or Oral Instructions.
The contractual agreement between the Custodian and any Foreign
Sub-Custodian must provide at a minimum that the Foreign Sub-Custodian shall
provide, obtain or use its best efforts to assist the Trust in obtaining
information responsive to the "notes" to Rule 17f-5 under the Act with respect
to (i) each country or jurisdiction where the Trust's assets are proposed to be
maintained, are maintained or in the future may be maintained and (ii) each
Foreign Sub-Custodian which is proposed to hold, holds or in the future may hold
Foreign Securities or cash of the Trust. Notwithstanding any other provisions of
this Agreement, each Foreign Sub-Custodian's undertaking to assist Trust in
obtaining such information shall neither increase the Foreign Sub-Custodian's
duty of care nor reduce Trust's responsibility to determine for itself the
prudence of entrusting its assets to any particular Foreign Sub-Custodian or
foreign Securities Depository.
<PAGE>
The Custodian shall deposit Foreign Securities and cash of the Trust
with a Foreign Sub-Custodian only in an account of the Foreign Sub-Custodian
which holds only assets held by Custodian as custodian for its customers. In the
event that a Foreign Sub-Custodian is authorized to hold any of the Foreign
Securities placed in its care in a foreign Securities Depository, Custodian will
direct the Foreign Sub-Custodian to identify the Foreign Securities on the books
of the foreign Securities Depository as being held for the account of Custodian
as custodian for its customers.
(c) The Custodian shall have no liability to the Trust by reason of any
act or omission of any Sub-Custodian approved by the Trust, and the Trust shall
indemnify the Custodian and hold it harmless from and against any and all
actions, suits, claims, losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising directly or indirectly out of or in connection
with the performance of any Sub-Custodian approved by the Trust. The Custodian
assigns to the Trust any and all claims for any losses, costs, expenses, or
damages that may be incurred by the Trust by reason of the negligence, gross
negligence or misconduct of any Sub-Custodian approved by the Trust, or by
reason of the failure of a Sub-Custodian approved by the Trust to perform in
accordance with any applicable agreement, including instructions of the
Custodian. The Custodian shall be under no obligation to prosecute or to defend
any action, suit or claim arising out of, or in connection with, the performance
of any Sub-Custodian approved by the Trust, if, in the opinion of the
Custodian's counsel, such action will involve expense or liability to the
Custodian. The Trust shall, upon request, furnish the Custodian with
satisfactory indemnity against such expense or liability, and upon request of
the Custodian, the Trust shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity.
With respect to each Sub-Custodian not approved by the Trust, which may
not be a Foreign Sub-Custodian, the Custodian shall be liable to the Trust for
any loss which shall occur as a result of the failure of the Sub-Custodian to
exercise reasonable care with respect to the safekeeping of assets to the same
extent that the Custodian would be liable to the Trust if the Custodian were
holding such assets in its own premises. The Custodian shall be liable to the
Trust under this paragraph only to the extent of the Trust's direct damages, to
be determined based on the market value of the assets which are subject to loss
and without reference to any special conditions or circumstances.
SECTION 21. EFFECTIVENESS, DURATION AND TERMINATION.
(a) This Agreement may be executed in more than one counterpart, each
of which shall be deemed to be an original, and shall become effective on the
date hereof. This Agreement shall remain in effect for a period of one year from
the date of its effectiveness and shall continue in effect for successive
twelve-month periods; provided that such continuance is specifically approved at
least annually by the Board and by a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party.
(b) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Trust shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Trust as its own custodian. Each successor custodian
shall be a person qualified to serve under the Act. Promptly following receipt
of written notice from the Trust of the appointment of a successor custodian and
receipt of Written or Oral Instructions, the Custodian shall deliver all
Securities and cash it then holds directly to the successor custodian and shall,
upon request of the Trust and the successor custodian and upon payment of the
Custodian's reasonable charges and disbursements, (i) execute and deliver to the
successor custodian an instrument approved by the successor custodian's counsel
transferring to the successor custodian all the rights, duties and obligations
of the Custodian, (ii) transfer to the successor custodian the originals or
copies of all books and records maintained by the Custodian hereunder and (iii)
cooperate with, and provide reasonable assistance to, the successor custodian in
the establishment of the books and records necessary to carry out the successor
custodian's responsibilities hereunder. Upon delivery of the Securities and
other assets of the Trust and compliance with the other requirements of this
Section 21, the Custodian shall have no further duty or liability hereunder.
Every successor custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, duties and obligations of the predecessor custodian.
SECTION 22. REQUIRED PERFORMANCE ON FUND BUSINESS DAYS. Nothing
contained in this Agreement is intended to or shall require the Custodian, in
any capacity hereunder, to perform any functions or duties on any day other than
<PAGE>
a Fund Business Day. Functions or duties normally scheduled to be performed on
any day which is not a Fund Business Day shall be performed on, and as of, the
next Fund Business Day unless otherwise required by law.
SECTION 23. MISCELLANEOUS.
(a) This Agreement shall extend to and bind the parties hereto and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Trust without the written consent of the
Custodian, or by the Custodian without the written consent of the Trust.
Notwithstanding the foregoing, either party may assign this Agreement without
the consent of the other party so long as the assignee is an affiliate, parent
or subsidiary of the assigning party and the assignee of the Custodian is
qualified to serve as custodian under the Act.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
(c) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
NORWEST FUNDS
--------------------------
John Y. Keffer
President
NORWEST BANK MINNESOTA, N.A.
------------------------
Jay Kiedrowski
Executive Vice President
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
APPENDIX A
SERIES OF THE TRUST
AS OF SEPTEMBER 22, 1997
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
APPENDIX A
SERIES OF THE TRUST
AS OF MARCH 18, 1998
Small Company Growth Portfolio
Small Company Value Portfolio
Small Cap Index Portfolio
Large Company Growth Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
APPENDIX A
SERIES OF THE TRUST
AS OF FEBRUARY 11, 1999
Small Company Growth Portfolio
Small Company Value Portfolio
Small Cap Index Portfolio
Large Company Growth Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
International Equity Portfolio
<PAGE>
CORE TRUST (DELAWARE)
CUSTODIAN AGREEMENT
APPENDIX B
COMPENSATION
(a) Account Administrative Fee. $0.20/1000 up to $100 million;
$0.15/1000 on next $100 million; and $0.10/1000 on over $200 million with
respect to all Portfolios except International Portfolio and $0.70/1000 with
respect to International Portfolio. Based on the fair market value of custody
assets. Market value charges will be based on the average size of the account
during the year using monthly valuations.
(b) Holding Fee Per Issue. $20.00/Book entry item and $25.00/Physical
item per annum. Charges are based on the average number of assets held during
the year using quarterly valuations.
(c) Transaction Fee. $15.00/Book entry transaction and $20.00/Physical
transaction for any asset movement defined as a purchase or sale. No transaction
charge will be made for the initial receipt of securities related to the opening
of any account.
(d) Limitation. The Custodian's total fees for the services rendered by
it pursuant to this Agreement shall not exceed, with respect to Money Market
Portfolio and Prime Money Market Portfolio, 0.03% of the average daily net
assets of such Series, and with respect to all other Series, 0.05% of the
average daily net assets of such Series, computed and paid monthly, with the
exception of International Portfolio, which will pay all fees and expenses of
any Sub-Custodian approved by the Trust, without limitation.
Exhibit (g)(3)
CUSTODY AGREEMENT
-----------------
This Custody Agreement is dated June 18, 1993, between MORGAN STANLEY
TRUST COMPANY, a New York State chartered trust company (the "Custodian"), and
Norwest Bank Minnesota, N.A. (the "Client").
1. The Client hereby appoints the Custodian as a custodian of
securities and other property owned or under the control of the Client which are
delivered to the Custodian, or any Subcustodian as appointed below, from time to
time to be held in custody for the benefit of the Client. The Client instructs
the Custodian to establish on the books and records of the Custodian one or more
accounts (the "Accounts") in the name of the Client. The Custodian shall record
in the Accounts and shall have general responsibility for the safekeeping of all
securities ("Securities"), cash and other property (all such Securities, cash
and other property being collectively the "Property") of the Client so delivered
for custody. It is understood that the specific procedures the Custodian will
use in carrying out its responsibilities under this Agreement are set forth in
the procedures manual (the "Procedures Manual") prepared by the Custodian and
delivered to the Client, as such Procedures Manual may be amended from time to
time by the Custodian by written notice to the Client. The Client acknowledges
that the Procedures Manual constitutes an integral part of this Agreement.
2. The Property may be held in custody and deposit accounts that have
been established by the Custodian with one or more domestic or foreign banks, or
through the facilities of one or more clearing agencies or central securities
depositories, as listed on Exhibit A hereto (the "Subcustodians"), as such
Exhibit may be amended from time to time by the Custodian by written notice to
the Client. The Custodian may hold Property for all of its customers with a
Subcustodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers. Any Subcustodian may hold Property
in a securities depository and may utilize a clearing agency. The Client agrees
that the Property may be physically held outside the United States. The
Custodian shall not be liable for any loss resulting from the physical presence
of any Property in a foreign country including, but not limited to, losses
resulting from nationalization, expropriation, exchange controls or acts of war
or terrorism. Except as provided in the previous sentence, the liability of the
Custodian for losses incurred by the Client in respect of Securities shall not
be affected by the Custodian's use of Subcustodians.
3. With respect to Property held by a Subcustodian pursuant to Section 2:
(a) The Custodian will identify on its books as belonging to the Client
any Property held by a Subcustodian for the Custodian's account;
(b) The Custodian will hold Property through a Subcustodian only if
(i) such Subcustodian and any securities depository or clearing agency
in which such Subcustodian holds Property, or any of their creditors,
may not assert any right, charge, security interest, lien, encumbrance
or other claim of any kind to such Property except a claim of payment
for its safe custody or administration and (ii) beneficial ownership
of such Property may be freely transferred without the payment of money
or value other than for safe custody or administration;
(c) The Custodian shall require that Property held by the
Subcustodian for the Custodian's account be identified on the
Subcustodian's books as separate from any property held by the
Subcustodian other than property of the Custodian's customers and as
held solely for the benefit of customers of the Custodian; and
(d) In the event that the Subcustodian holds Property in a securities
depository or clearing agency, such Subcustodian will be required
by its agreement with the Custodian to identify on its books such
Property as being held for the account of the Custodian as a custodian
for its customers.
4. The Custodian shall allow the Client's accountants reasonable access to
the Custodian's records relating to the Property held by the Custodian as such
accountants may reasonably require in connection with their examination of the
Client's affairs. The Custodian shall also obtain from any Subcustodian (and
will require each Subcustodian to use reasonable efforts to obtain from any
securities depository or clearing agency in which it deposits Property) an
undertaking, to the extent consistent with local practice and the laws of the
jurisdiction or jurisdictions to which such Subcustodian, securities depository
or clearing agency is subject, to permit independent public accountants such
reasonable access to the records of such Subcustodian, securities depository or
clearing agency as may be reasonably required in connection with the examination
of the Client's affairs or to take such other action as the Custodian in its
judgment may deem sufficient to ensure such reasonable access.
5. The Custodian shall provide such reports and other information to the
Client and to such persons as the Client directs as the Custodian and the Client
may agree from time to time.
6. The Custodian shall make or cause any Subcustodian to make payments from
monies being held in the Accounts only:
<PAGE>
(a) upon the purchase of Securities and then, to the extent consistent with
practice in the jurisdiction in which settlement occurs, upon the delivery
of such Securities;
(b) for payments to be made in connection with the conversion, exchange or
surrender of Securities;
(c) upon a request of the Client that the Custodian return monies being
held in the Accounts;
(d) upon a request of the Client that monies be exchanged for or used to
purchase monies denominated in a different currency;
(e) as provided in Sections 8 and 12 hereof;
(f) upon termination of this Custody Agreement as hereinafter set forth;
and
(g) for any other purpose upon receipt of Authorized Instructions (as
hereinafter defined).
Except as provided in the last two sentences of this Section 6 and as
provided in Section 8, all payments pursuant to this Section 6 will be made only
upon receipt by the Custodian of Authorized Instructions. In the event that it
is not possible to make a payment in accordance with Authorized Instructions,
the Custodian shall proceed in accordance with the procedures set forth in the
Procedures Manual. Any payment pursuant to subsection (f) of this Section 6 will
be made in accordance with Section 16.
7. The Custodian will make or cause any Subcustodian to make transfers,
exchanges or deliveries of Securities only:
(a) upon sale of such Securities and then, to the extent consistent with
practice in the jurisdiction in which settlement occurs, upon receipt of
payment therefor;
(b) upon exercise of conversion, subscription, purchase, exchange or other
similar rights pertaining to such Securities and, if applicable to such
exercise and if consistent with practice in applicable jurisdiction, only
on receipt of substitute or additional securities to be received upon such
exercise;
(c) as provided in Section 8 hereof;
(d) upon the termination of this Custody Agreement as hereinafter set
forth; and
(e) for any other purpose upon receipt of Authorized Instructions. Except
as provided in the last two sentences of this Section 7 and as provided in
Section 8, all transfers, exchanges or deliveries of Securities pursuant to
this Section 7 will be made only upon receipt by the Custodian of
Authorized Instructions. In the event that it is not possible to transfer
Securities in accordance with Authorized Instructions of the Client, the
Custodian shall proceed in accordance with the procedures set forth in the
Procedures Manual. Any transfer or delivery pursuant to subsection (d) of
this Section 7 will be made in accordance with Section 16.
8. In the absence of Authorized Instructions to the contrary, the Custodian
may, and may authorize any Subcustodian to:
(a) make payments to itself or others for expenses of handling Property or
other similar items relating to its duties under this Agreement, provided
that all such payments shall be accounted for to the Client;
(b) receive and collect all income and principal with respect to Securities
and to credit cash receipts to the Accounts;
(c) exchange Securities when the exchange is purely ministerial (including,
without limitation, the exchange of interim receipts or temporary
securities for securities in definitive form and the exchange of warrants,
or other documents of entitlement to securities, for the securities
themselves);
(d) surrender Securities at maturity or when called for redemption upon
receiving payment therefor;
(e) execute in the Client's name such ownership and other certificates as
may be required to obtain the payment of income from Securities;
(f) pay or cause to be paid, from the Accounts, any and all taxes and
levies in the nature of taxes imposed on Property by any governmental
authority in connection with custody of and transactions in such Property;
(g) endorse for collection, in the name of the Client, checks, drafts and
other negotiable instruments; and
(h) in general, attend to all nondiscretionary details in connection with
the custody, sale, purchase, transfer and other dealings with the Property.
9. "Authorized Instructions" of the Client shall mean instructions received
by telecopy, tested telex, electronic link or other electronic means or by such
other means as may be agreed in writing pursuant to the Procedures Manual or
otherwise in advance between the Client and the Custodian. The Custodian shall
be entitled to act, and shall have no liability for acting, in accordance with
the terms of this Agreement or upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to be genuine and to
have been properly executed by or on behalf of the Client.
10. Securities which must be held in registered form may be registered in
the name of the Custodian's nominee or, in the case of Securities in the custody
of an entity other than the Custodian, in the name of such entity's nominee. The
Client agrees to hold the Custodian and Subcustodians and any such nominee
<PAGE>
harmless from any liability arising out of any such person acting as a holder of
record of such Securities, provided, however, that the Client shall not be
liable for any such liability incurred as a result of the negligence or willful
miconduct of the Custodian or a Subcustodian. The Custodian may without notice
to the Client cause any Securities to cease to be registered in the name of any
such nominee and to be registered in the name of the Client.
11. Unless the Client and the Custodian otherwise agree, all cash received
by the Custodian for the Accounts shall be placed in deposit accounts maintained
by the Custodian for the benefit of its customers with Subcustodians or other
domestic or foreign deposit taking institutions identified to the Client. The
Client understands that such deposit accounts may not be accompanied by the
benefit of any governmental insurance. If the Custodian and the Client have
agreed in writing in advance that certain cash in the Accounts shall bear
interest, the Custodian shall be responsible for crediting the Accounts with
interest on such cash at the rates and times as agreed between the Client and
the Custodian from time to time and such rates may be greater than or less than
the rates paid on deposits by the applicable deposit taking institution. Any
difference between the interest so paid to the Client and the interest so paid
by the Subcustodians and other deposit taking institutions shall be for the
account of the Custodian.
12.From time to time, the Custodian may extend or arrange short-term credit
for the Client which is (i) necessary in connection with payment and clearance
of securities and foreign exchange transactions or (ii) pursuant to an agreed
schedule, as and if set forth in the Procedures Manual, of credits for dividends
and interest payments on Securities. All such extensions of credit shall be
repayable by the Client on demand. The Custodian shall be entitled to charge the
Client interest for any such credit extension at rates to be agreed upon from
time to time. In addition to any other remedies available, the Custodian shall
be entitled to a right of set-off against the Property to satisfy the repayment
of such credit extensions and the payment of accrued interest thereon. The
Custodian may act as the Client's agent or act as a principal in foreign
exchange transactions at such rates as are agreed from time to time between the
Client and the Custodian.
13. The Client represents that (i) the execution, delivery and performance
of this Agreement (including, without limitation, the ability to obtain the
short-term extensions of credit in accordance with Section 12) are within the
Client's power and authority and have been duly authorized by all requisite
action (corporate or otherwise) and (ii) this Agreement and each extension of
short-term credit extended or arranged for the benefit of the Client in
accordance with Section 12 will at all times constitute a legal, valid and
binding obligation of the Client and be enforceable against the Client in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
in general and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law). The Custodian
represents that the execution, delivery and performance of this Agreement is
within the Custodian's power and authority and has been duly authorized by all
requisite action of the Custodian. This Agreement constitutes the legal, valid
and binding obligation of the Custodian enforceable against the Custodian in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights in general and
subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
14. The Custodian shall be responsible for the performance of only such
duties as are set forth in this Agreement or the Procedures Manual or contained
in Authorized Instructions given to the Custodian which are not contrary to the
provisions of any relevant law or regulation. The Custodian shall not be liable
to the Client or to any other person for any action taken or omitted to be taken
by it in connection with this Agreement in the absence of negligence or willful
misconduct on the part of the Custodian. Upon the request of the Custodian, the
Client agrees to deliver to the Custodian a duly executed power of attorney, in
form and substance satisfactory to the Custodian, authorizing the Custodian to
take any action or execute any instrument on behalf of the Client as necessary
or advisable to accomplish the purposes of this Agreement.
15. The Client agrees to pay to the Custodian from time to time such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon from time to time and the Custodian's out-of-pocket or incidental
expenses. The Client hereby agrees to hold the Custodian harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed or assessed with respect to
the Accounts or any Property held therein. The Custodian is and any
Subcustodians are authorized to charge the Accounts for such items and the
Custodian shall have a lien, charge and security interest on any and all
Property for any amount owing to the Custodian from time to time under this
Agreement.
16. This Agreement may be terminated by the Client or the Custodian by 60
days written notice to the other, sent by registered mail. If notice of
termination is given, the Client shall, within 30 days following the giving of
such notice, deliver to the Custodian a statement in writing specifying the
successor custodian or other person to whom the Custodian shall transfer the
Property. In either event the Custodian, subject to the satisfaction of any lien
it may have, will transfer the Property to the person so specified. If the
Custodian does not receive such statement the Custodian, at its election, may
transfer the Property to a bank or trust company established under the laws of
<PAGE>
the United States or any state thereof to be held and disposed of pursuant to
the provisions of this Agreement or may continue to hold the Property until such
a statement is delivered to the Custodian. In such event the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian remains in possession of any Property and the provisions of this
Agreement relating to the duties and obligations of the Custodian shall remain
in full force and effect; provided, however, that the Custodian shall no longer
settle any transactions in securities for the Accounts.
17. The Custodian, its agents and employees will maintain the
confidentiality of information concerning the Property held in the Client's
account, including in dealings with affiliates of the Custodian. In the event
the Custodian or any Subcustodian is requested or required to disclose any
confidential information concerning the Property, the Custodian shall to the
extent practicable and legally permissible, promptly notify the Client of such
request or requirement so that the Client may seek a protective order or waive
the Custodian's or such Subcustodian's compliance with this Section 17. In the
absence of such a waiver, if the Custodian or such Subcustodian is compelled, in
the opinion of its counsel, to disclose any confidential information, the
Custodian or such Subcustodian may disclose such information to such persons as,
in the opinion of counsel, is so required.
18. Any notice or other communication from the Client to the Custodian,
unless otherwise provided by this Agreement, shall be sent by certified or
registered mail to Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn,
New York, 11201, Attention: President, and any notice from the Custodian to the
Client is to be mailed postage prepaid, addressed to the Client at the address
appearing below, or as it may hereafter be changed on the Custodian's records in
accordance with notice from the Client.
19. The Custodian may assign all of its rights and obligations hereunder to
any other entity which is qualified to act as custodian under the terms of this
Agreement and majority-owned, directly or indirectly, by Morgan Stanley Group
Inc., and upon the assumption of the rights and obligations hereunder by such
entity, such entity shall succeed to all of the rights and obligations of, and
be substituted for, the Custodian hereunder as if such entity had been
originally named as custodian herein. The Custodian shall give prompt written
notice to the Client upon the effectiveness of any such assignment.
<PAGE>
This Agreement shall bind the successors and assigns of the Client and
the Custodian and shall be governed by the laws of the State of New York
applicable to contracts executed in and to be performed in that state.
[Norwest Bank Minnesota, N.A.]
By \s\ Webster A. Hill
____________________ Name: Webster A. Hill
Title: VP Trust Asset Services
Address for record:
_______________________
733 Marquette Ave.
_______________________
Minneapolis, MN 55479-0047
_______________________
Accepted:
MORGAN STANLEY TRUST COMPANY
By \s\ Daniel Roccato
______________________
Daniel Roccato
Authorized Signature
<PAGE>
AMENDMENT TO CUSTODY AGREEMENT
BETWEEN
MORGAN STANLEY TRUST COMPANY
AND
NORWEST BANK MINNESOTA, N.A.
DATED JUNE 18, 1993
This Amendment, dated as of April 1, 1996, amends the custody agreement
dated June 18, 1993 ("Custody Agreement") between Morgan Stanley Trust Company
("Custodian") and Norwest Bank Minnesota, N.A. ("Client").
Intending to be legally bound, the parties hereby agree as follows, with respect
to Account Nos. 412718 and 412726 (separate accounts established on the
Custodian's books and records for two customers of the Client):
1. The second and third sentences of Article 1 of the Custody Agreement
shall be deleted and replaced in their entirety with the following:
"The Client instructs the Custodian to establish on the books and
records of the Custodian one or more accounts ("the Accounts") in the
name of the Client, one or more of which shall be for the benefit of
Account No. 412718 and one or more of which shall be for the benefit of
Account No. 412726. The Custodian shall record in the Accounts and
shall have general responsibility for the safekeeping of all securities
("Securities"), cash and other property (all such Securities, cash and
other property being collectively, the "Property") of the Client for
the benefit of each customer."
2. The following sentence shall be inserted in Article 1 of the Custody
Agreement immediately after the third sentence:
"The Client shall cause to be delivered to the Accounts only customer
assets and the Custodian shall maintain in the Accounts only these
assets and none of its proprietary assets."
3. The last sentence of Article 1 of the Custody Agreement shall be
deleted and replaced in its entirety with the following:
"The Client acknowledges that, to the extent not inconsistent with the
terms of the Custody Agreement, the Procedures Manual constitutes an
integral part of this Agreement."
4. The last sentence of Article 2 of the Custody Agreement shall be
deleted and replaced in its entirety with the following:
"Except as provided in the previous sentence, the Custodian shall be
liable for losses incurred by the Client in respect of Property held by
a Subcustodian to the extent such loss is caused by the negligence or
willful misconduct of any Subcustodian."
5. The first sentence of Article 3(a) of the Custody Agreement shall be deleted
and replaced in its entirety with the following:
"The Custodian will identify on its books as belonging to the Client
for the benefit of its customers any Property held by a Subcustodian
for the Custodian's account:"
6. The fourth sentence of Article 12shall be deleted and replaced in its
entirety with the following:
"In addition to any other remedies available, the Custodian shall be
entitled to a right of set-off against the Property in the particular
Account that caused the extension of credit to satisfy the repayment of
such credit extensions and the payment of accrued interest thereon."
7. This Amendment may not be modified except by a writing signed by both parties
hereto.
<PAGE>
8. This Amendment may be signed in counterparts which, when taken together as a
whole, shall constitute a single agreement.
9. All other provisions of the Custody Agreement shall remain in full force and
effect.
10. This Amendment shall bind the successors and assigns of the Client and the
Custodian and shall be governed by the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
NORWEST BANK MINNESOTA, N.A.
By:\s\ Jeannette Dubanowski
_______________________________
Name: Jeabbette Dubanowski
Title: Trust Officer
MORGAN STANLEY TRUST COMPANY
By:\s\ Jack Federico
_______________________________
Name: Jack Federico
Title: Principal
<PAGE>
Exhibit (h)(2)
CORE TRUST (DELAWARE)
PORTFOLIO AND UNITHOLDER
ACCOUNTING AGREEMENT
AGREEMENT made as of the 1st day of June, 1997 and amended this 18th
day of March, 1998, by and between Core Trust (Delaware), a business trust
organized under the laws of the State of Delaware, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Accounting Services, Limited Liability Company, a Delaware limited
liability company with its principal office and place of business at Two
Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue units (as defined in the Trust's Trust Instrument) (the "Units")
in separate series; and
WHEREAS, the Trust offers Units in various series as listed in Appendix
A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Portfolio," and collectively as the
"Portfolios"); and
WHEREAS, the Trust desires that Forum perform certain portfolio
accounting and unitholder recordkeeping services for each Portfolio and Forum is
willing to provide those services on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
portfolio accountant and unitholder recordkeeper for the Units of the Portfolios
for the period and on the terms set forth in this Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and, if applicable, Bylaws (collectively, as
amended from time to time, "Organic Documents"), (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant the 1940 Act (the "Registration Statement"), (iii)
the current Part A and Part B of the Trust's Registration Statement
(collectively, as currently in effect and as amended or supplemented, the
"Offering Document") and (iv) all procedures adopted by the Trust with respect
to the Portfolios (i.e., repurchase agreement procedures), and shall promptly
furnish Forum with all amendments of or supplements to the foregoing. The Trust
shall deliver to Forum a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2A. PORTFOLIO ACCOUNTING DUTIES
With respect to each Portfolio, Forum shall perform the following
services:
(i) calculate the net asset value per unit with the frequency
prescribed in each Portfolio's then current Offering Document;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting principles ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Portfolio's general ledger and record all income,
expenses, capital share activity and security transactions of each Portfolio;
<PAGE>
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Portfolio as applicable, and such other measure
of performance as may be agreed upon between the parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Portfolio is calculated or as otherwise directed by the Trust, either
(A) a valuation of the assets of the Portfolio (in accordance with the
Trust's valuation procedures) or (B) a calculation confirming that the
market value of the Portfolio's assets does not deviate from the
amortized cost value of those assets by more than a specified
percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's placement agent in order to prepare, and prepare, the
Trust's Form N-SAR;
(ix) provide appropriate records to the Trust's independent accountants
and, upon approval of the Trust or the Administrator, any regulatory
body in any requested review of the Trust's books and records
maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers;
(xi) file the Portfolios' semi-annual financial statements with the SEC
or ensure that the Portfolios' semi-annual financial statements are
filed with the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or the Administrator with the data requested
by the Administrator that is required to update the Registration
Statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income and
other tax returns;
(xv) prepare or prepare, execute and file all Federal income tax
returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers to
the Trust and the Board and provide information to the Administrator,
investment advisers to the Trust and other appropriate persons with
respect to questions of Portfolio compliance;
(xvii) provide tax attribute information to the appropriate agents of
each investor in the Portfolio that seeks to qualify as a regulated
investment company under the Code;
(xviii) daily reconcile Units outstanding and other data with the
records of the holders of Units ("Unitholders");
(xix) periodically reconcile all appropriate data with each Portfolio's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for
each security; and
<PAGE>
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
SECTION 2B. UNITHOLDER RECORDKEEPING DUTIES
(a) In accordance with procedures established from time to time by
agreement between the Trust and Forum, with respect to each Portfolio, Forum
shall perform the following services:
(i) provide the services of a transfer agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal
program) that are customary for open-end management investment
companies including: (A) maintaining all accounts for Unitholders, (B)
preparing Unitholder meeting lists, (C) mailing proxies to Unitholders,
(D) mailing Unitholder reports and prospectuses to current Unitholders,
(E) withholding taxes on U.S. resident and non-resident alien accounts,
(F) preparing and mailing statements of account to Unitholders for all
purchases and redemptions of Units and other transactions in Unitholder
accounts, (G) preparing and mailing activity statements for
Unitholders, and (H) providing Unitholder account information;
(ii) receive for acceptance orders for the purchase of Units and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Portfolio (the "Custodian");
(iii) pursuant to purchase orders, issue the appropriate number of
Units and hold such Units in the appropriate Unitholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian;
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Units were offered and as
instructed by the redeeming Unitholders;
(vi) effect transfers of Units upon receipt of appropriate instructions
from Unitholders and instructions from the Trust;
(vii) receive from Unitholders or debit Unitholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(xiii) prepare and transmit payments to underwriters, selected dealers
and others for trail commissions, Rule 12b-1 fees, shareholder service
fees and other payments based on the amount of assets in Unitholder
accounts;
(ix) maintain records of account for and provide reports and statements
to the Trust and Unitholders as to the foregoing;
(x) record the issuance of Units of the Trust and maintain pursuant to
Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as amended
("1934 Act") a record of the total number of Units of the Trust and
each Portfolio that are authorized, based upon data provided to it by
the Trust, and are issued and outstanding and provide the Trust on a
regular basis a report of the total number of Units that are authorized
and the total number of Units that are issued and outstanding; and
(xi) provide a system which will enable the Trust to monitor the total
number of Units of each Portfolio sold in each State.
(b) Forum shall provide the following additional services on behalf
of the Trust and such other services agreed to in writing by the Trust
and Forum:
<PAGE>
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States;
(ii) receive and tabulate proxy votes; and
(iii)solicit Unitholders with respect to Unitholder meetings.
(c) The Trust or the Administrator or other agent (i) shall identify to
Forum in writing those transactions and assets to be treated as exempt from
reporting for each state and territory of the United States and for each foreign
jurisdiction (collectively "States") and (ii) shall monitor the sales activity
with respect to Unitholders domiciled or resident in each State. The
responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Units, to monitor the issuance of
such Units or to take cognizance of any laws relating to the issue or sale of
such Units, which functions shall be the sole responsibility of the Trust.
(d) Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for the safekeeping, control, preparation and
use of share certificates (if authorized to be issued by the Trust), check
forms, and facsimile signature imprinting devices. Forum shall establish and
maintain facilities and procedures reasonably acceptable to the Trust for
safekeeping of all records maintained by Forum pursuant to this Agreement.
(e) Forum shall procure, at its cost, the services of an affiliate that
is registered as a transfer agent under the 1934 Act to perform those services
hereunder that must be performed by a registered transfer agent, if any.
SECTION 2C. OTHER DUTIES
(a) Forum shall prepare and maintain on behalf of the Trust the following
books and records of each Portfolio pursuant to Rule 31a-1 under the 1940
Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all purchases
and sales of securities, purchase and redemption of Units by the
Portfolios, all receipts and disbursements of cash and all other debits and
credits, as required by subsection (b)(1) of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by subsection
(b)(2) of the Rule (including the Unitholder ledgers required by subsection
(b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the Trust
for, or in connection with, the purchase or sale of securities, and all
other portfolio purchases or sales, as required by subsections (b)(5) and
(b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct or
indirect interest or which the Trust has granted or guaranteed and a record
of any contractual commitments to purchase, sell, receive or deliver any
property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule;
(vi) The applicable books and records required to be maintained under
Section 17A(d) of the 1934 Act and the rules and regulations thereunder;
and
(vii) Other records required by the Rule or any successor rule or pursuant
to interpretations thereof to be kept by open-end management investment
companies, but limited to those provisions of the Rule applicable to
portfolio transactions and as agreed upon between the parties hereto.
(b) The books and records maintained pursuant to Section 2C(a) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act and the 1934 Act. The books and records
pertaining to the Trust required to be maintained by and that are in possession
of Forum shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
<PAGE>
times during Forum's normal business hours. Upon the reasonable request of the
Trust or the Administrator, copies of any such books and records shall be
provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
(c) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Portfolio that are consistent
with the standard of care set forth in Section 3(a) or based, if applicable, on
good faith reliance upon an item described in Section 3(d)(a "Forum Claim"). The
Trust shall not be required to indemnify any Forum Indemnitee if, prior to
confessing any Forum Claim against the Forum Indemnitee, Forum or the Forum
Indemnitee does not give the Trust written notice of and reasonable opportunity
to defend against the Forum Claim in its own name or in the name of the Forum
Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, directors, officers and managers ("Trust Indemnitees")
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character arising out of or in any way related to
Forum's actions taken or failures to act with respect to a Portfolio that are
not consistent with the standard of care set forth in Section 3(a)("Trust
Claim"). Forum shall not be required to indemnify any Trust Indemnitee if, prior
to confessing any Trust Claim against the Trust Indemnitee, the Trust or the
Trust Indemnitee does not give Forum written notice of and reasonable
opportunity to defend against the Trust Claim in its own name or in the name of
the Trust Indemnitee.
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
<PAGE>
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(e) Except to the extent it has breached the provisions of this
Agreement, Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(f) With respect to Portfolios which do not value their assets in
accordance with Rule 2a-7 under the 1940 Act, notwithstanding anything to the
contrary in this Agreement, Forum shall not be liable to the Trust or any
shareholder of the Trust for (i) any loss to the Trust if an NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.001 (1/10 of 1%) or (ii) any loss to a shareholder of the Trust if the NAV
Difference for which Forum would otherwise be liable under this Agreement is
less than or equal to 0.005 (1/2 of 1%) or if the loss in the shareholder's
account with the Trust is less than or equal to $10. Any loss for which Forum is
determined to be liable hereunder shall be reduced by the amount of gain which
inures to shareholders, whether to be collected by the Trust or not.
(g) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Portfolio's
NAV is calculated, (iii) in calculating any NAV Difference for which Forum would
otherwise be liable under this Agreement for a particular NAV error, Portfolio
losses and gains shall be netted and (iv) in calculating any NAV Difference for
which Forum would otherwise be liable under this Agreement for a particular NAV
error that continues for a period covering more than one NAV determination,
Portfolio losses and gains for the period shall be netted.
(h) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Portfolio to act in contravention of a Portfolio's
Prospectus or any provision of the 1940 Act. Except as otherwise specifically
provided herein, the Trust assumes all responsibility for ensuring that the
Trust complies with all applicable requirements of the Securities Act, the 1940
Act and any laws, rules and regulations of governmental authorities with
jurisdiction over the Trust. All references to any law in this Agreement shall
be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Portfolio, the fees
set forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Portfolio, the Trust shall
pay Forum, with respect to each Portfolio, the fees set forth in clause (ii) of
Appendix B hereto. In consideration of additional services provided by Forum to
perform certain functions, the Trust shall pay Forum, with respect to each
Portfolio the fees set forth in clause (iii) of Appendix B hereto. Nothing in
this Agreement shall require Forum to perform any of the services listed in
clause (iii) of Appendix B hereto, as such services may be performed by the
Portfolio's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Portfolio
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
<PAGE>
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Portfolio, the Trust shall pay to Forum such compensation as shall
be payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Portfolio, agrees to reimburse Forum for
the expenses set forth in Clause (iv) of Appendix B hereto. In addition, the
Trust, on behalf of the applicable Portfolio, shall reimburse Forum for all
expenses and employee time (at 150% of salary) attributable to any review of the
Trust's accounts and records by the Trust's independent accountants or any
regulatory body outside of routine and normal periodic reviews. Should the Trust
exercise its right to terminate this Agreement, the Trust, on behalf of the
applicable Portfolio, shall reimburse Forum for all out-of-pocket expenses and
employee time (at 150% of salary) associated with the copying and movement of
records and material to any successor person and providing assistance to any
successor person in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
(c) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each
Portfolio on June 1, 1997 and shall become effective with respect to Portfolios
created after that date on the later of the date on which the Trust's
Registration Statement relating to the Units of the Portfolio becomes effective
or the date of the commencement of operations of the Portfolio. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Portfolios.
(b) This Agreement shall continue in effect with respect to a Portfolio
until terminated; provided, that continuance is specifically approved at least
annually by the Board.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL PORTFOLIOS
In the event that the Trust establishes one or more series of Units
after the effectiveness of this Agreement, such series of Units shall become a
Portfolio under this Agreement. Forum or the Trust may elect not to make any
such series subject to this Agreement.
SECTION 7. PROPRIETARY INFORMATION; CONFIDENTIALITY
(a) The Trust acknowledges that the databases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals maintained by Forum on databases under the control and ownership of
Forum or a third party constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to Forum or the third party. The Trust agrees to treat all Proprietary
Information as proprietary to Forum and further agrees that it shall not divulge
any Proprietary Information to any person or organization except as may be
provided under this Agreement.
(b) Forum acknowledges that the Unitholder list and all information
related to Unitholders furnished to Forum by the Trust or by a Unitholder in
connection with this Agreement constitute proprietary information (collectively,
"Customer Data") of substantial value to the Trust. In no event shall
Proprietary Information be deemed Customer Data. Forum agrees to treat all
Customer Data as proprietary to the Trust and further agrees that it shall not
<PAGE>
divulge any Customer Data to any person or organization except as may be
provided under this Agreement or as may be directed by the Trust.
(c) Forum agrees to treat all records and other information related to
the Trust as proprietary information of the Trust and, on behalf of itself and
its employees, to keep confidential all such information, except that Forum may:
(i) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(iii) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld and may not be
withheld where Forum may be exposed to civil or criminal contempt
proceedings for failure to release the information, when requested to
divulge such information by duly constituted authorities or when so
requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots, failure of the mails,
transportation, communication or power supply or equipment failures; provided,
that Forum shall, at no additional expense to the Trust, take reasonable steps
to minimize service interruptions.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Portfolio's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Portfolio. Functions
or duties normally scheduled to be performed on any day which is not a business
day of the Trust or of a Portfolio shall be performed on, and as of, the next
business day, unless otherwise required by law.
<PAGE>
SECTION 12. ISSUANCE AND TRANSFER OF UNITS; CERTIFICATES
(a) Forum shall make original issues of Units of each Portfolio in
accordance with the Offering Document only upon receipt of (i) instructions
requesting the issuance, (ii) a certified copy of a resolution of the Board
authorizing the issuance and (iii) necessary funds for the payment of any
original issue tax applicable to such Units.
(b) Transfers of Units of each Portfolio shall be registered on the
Unitholder records maintained by Forum. In registering transfers of Units, Forum
may rely upon the Uniform Commercial Code as in effect in the State of Delaware
or any other statutes that, in the opinion of Forum's counsel, protect Forum and
the Trust from liability arising from (i) not requiring complete documentation,
(ii) registering a transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of such inquiry or (iv) refusing registration whenever
an adverse claim requires such refusal. As Unitholder recordkeeper, Forum will
be responsible for delivery to the transferor and transferee of such
documentation as is required by the Uniform Commercial Code.
(c) Units shall be issued to investors in a Portfolio at the net asset
value per unit next determined after Forum receives a completed purchase order.
A purchase order shall be complete at the time specified in the Prospectus
pursuant to which the Units are offered and when Forum or its agent receives (i)
an instruction directing investment in a Portfolio, (ii) a wire or other
electronic payment in the amount designated in the instruction and (iii) in the
case of an initial purchase, a completed account application.
(d) The Trust shall not issue Unit certificates.
SECTION 13. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and Forum agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Portfolio to which Forum's rights or claims relate in settlement of such rights
or claims, and not to the trustees of the Trust or the shareholders of the
Portfolios.
SECTION 14. REPRESENTATIONS AND WARRANTIES
(a) Forum represents and warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
(ii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
(iii) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
(iv) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(b) The Trust represents and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) All proceedings required by the Organic Documents have been taken
to authorize it to enter into and perform this Agreement;
<PAGE>
(iv) It is an open-end management investment company registered under
the 1940 Act;
(v) All units of the Portfolios, when issued, shall be validly issued,
fully paid and non-assessable; and
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
SECTION 15. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Portfolios in accordance with
Section 6, no provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Portfolio of the Trust are
separate and distinct from the assets and liabilities of each other Portfolio
and that no Portfolio shall be liable or shall be charged for any debt,
obligation or liability of any other Portfolio, whether arising under this
Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or
manager of Forum shall be liable at law or in equity for Forum's obligations
under this Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
CORE TRUST (DELAWARE)
By:____________________________
David I. Goldstein
Vice President
FORUM ACCOUNTING SERVICES, LLC
By:_____________________________
Stacey E. Hong
Director
<PAGE>
CORE TRUST (DELAWARE)
PORTFOLIO AND UNITHOLDER
ACCOUNTING AGREEMENT
APPENDIX A
PORTFOLIOS OF THE TRUST
AS OF DECEMBER 5, 1997
International Portfolio
Index Portfolio
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Total Return Bond Portfolio
Positive Return Bond Portfolio
Stable Income Portfolio
Prime Money Market Portfolio
Money Market Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
Small Cap Index Portfolio
Treasury Cash Portfolio
Government Portfolio
Government Cash Portfolio
Cash Portfolio
Municipal Cash Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PORTFOLIO AND UNITHOLDER
ACCOUNTING AGREEMENT
APPENDIX A
PORTFOLIOS OF THE TRUST
AS OF MARCH 18, 1998
International Portfolio
Index Portfolio
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Stable Income Portfolio
Prime Money Market Portfolio
Money Market Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
Small Cap Index Portfolio
Treasury Cash Portfolio
Government Portfolio
Government Cash Portfolio
Cash Portfolio
Municipal Cash Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PORTFOLIO AND UNITHOLDER
ACCOUNTING AGREEMENT
APPENDIX A
PORTFOLIOS OF THE TRUST
AS OF FEBRUARY 11, 1999
International Equity Portfolio
International Portfolio
Index Portfolio
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Stable Income Portfolio
Prime Money Market Portfolio
Money Market Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Value Bond Portfolio
Small Cap Index Portfolio
Treasury Cash Portfolio
Government Portfolio
Government Cash Portfolio
Cash Portfolio
Municipal Cash Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PORTFOLIO AND UNITHOLDER
ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE
Standard Fee per Portfolio with up to five Unitholders (other than
nominal interests of any initial Unitholders and
Unitholders that are affiliated persons of Forum)..........$4,000/month
Fee for each additional five Unitholders................... $500/month
Plus Additional Surcharges for each of:
(1) Tax-Free Money Market Portfolios..................$1,000/month
(2) Global or International Portfolios................$2,000/month
(3) Portfolios with more than 25% of their total assets
invested in asset backed securities...............$1,000/month
(4) Portfolios with more than 50% of their total assets
invested in asset backed securities...............$1,000/month
(5) Portfolios with more than 100 security positions
For each 100 positions (or portion thereof)
above 100 ...................................... $1,000/month
(6) Portfolios with a monthly portfolio
turnover rate of 10% or greater.................. $1,000/month
(7) Money Market Portfolios with asset levels exceeding:
$500 million................................... $500/month
$1 billion..................................... $500/month
$2 billion..................................... $500/month
(8) Non-Money Market Portfolios with asset levels exceeding:
$100 million................................... $500/month
$250 million................................... $500/month
$500 million................................... $500/month
$1 billion..................................... $500/month
$2 billion..................................... $500/month
(9) Portfolios holding futures or options contracts...$1,000/month
(10) Portfolios (other than those subject to (2) above)
holding forward currency contracts or more than
10 international positions....................... $1,000/month
Portfolios (other than those subject to (2) above)
holding forward currency contracts or more than
30 international positions........................$1,000/month
Note 1: Surcharges are determined based upon the total assets, security
positions or other factors as of the end of the prior month and on the
portfolio turnover rate for the prior month. Portfolio turnover rate
shall have the meaning ascribed thereto in SEC Form N-1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1997. On January 1, 1998, and on each successive January 1, the
rates may be adjusted automatically by Forum without action of the
Trust to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of
Labor Statistics. Forum shall notify the Trust each year of the new
rates, if applicable.
<PAGE>
Note 3. Cash Portfolio, Government Cash Portfolio and Treasury Cash
Portfolio's standard fee with up to five Unitholders is the lesser of
$4,000/month or 0.05% of the Portfolio's average annual daily net
assets.
(II) START-UP FEE
Portfolio Start-Up Fee...........................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
TAX SERVICES. Preparation of Federal income and excise tax returns and
preparation, execution and filing of state income tax returns, including
any extensions or amendments
NON MONEY MARKET PORTFOLIOS ADVISED BY NORWEST INVESTMENT
MANAGEMENT, INC. OR ITS AFFILIATES....... $3,500/fiscal period
MONEY MARKET PORTFOLIOS ADVISED BY NORWEST INVESTMENT
MANAGEMENT, INC. OR ITS AFFILIATES....... $2,750/fiscal period
OTHER MONEY MARKET PORTFOLIOS............ $1,500/fiscal period
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Portfolio, shall reimburse Forum
for all out-of-pocket and ancillary expenses in providing the services described
in this Agreement, including but not limited to the cost of (or appropriate
share of the cost of): (i) pricing, paydown, corporate action, credit and other
reporting services, (ii) taxes, (iii) postage and delivery services, (iv)
telephone services, (v) electronic or facsimile transmission services, (vi)
reproduction, (vii) printing and distributing financial statements, (viii)
microfilm and microfiche and (ix) Trust record storage and retention fees. In
addition, any other expenses incurred by Forum at the request or with the
consent of the Trust, will be reimbursed by the Trust on behalf of the
applicable Portfolio.
<PAGE>
Exhibit (h)(3)
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
AGREEMENT made this 9th day of November, 1994, 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 Forum Financial Services, Inc. ("Forum"), a
corporation organized under the laws of State of Delaware with its principal
place of business at 61 Broadway, New York, New York 10006.
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 Forum perform placement agent services
for each of the portfolios of the Trust as listed in Appendix A hereto (each a
"Portfolio," and collectively the "Portfolios") and Forum 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. SERVICES AS PLACEMENT AGENT
(a) Forum will act as Placement Agent of the Interests covered by the
Trust's registration statement then in effect under the 1940 Act. As Placement
Agent, Forum shall have the right to sell Interests of the Portfolios upon the
terms set forth in the Trust's registration statement, as such registration
statement is amended and in effect from time to time. In acting as Placement
Agent under the Placement Agency Agreement, neither Forum nor its employees nor
any agents thereof shall make any offer or sale of Interests in a manner which
would require the Interests to be registered under the Securities Act of 1933,
as amended (the "1933 Act"). As used in this Agreement the term "registration
statement" shall mean any registration statement filed with the Securities and
Exchange Commission (the "Commission") as modified by any amendments thereto
that at any time shall have been filed with the Commission by or on behalf of
the Trust.
(b) All activities by Forum and its agents and employees as Placement
Agent of Interests shall comply with all applicable laws, rules and regulations,
including without limitation, all rules and regulations adopted pursuant to the
1940 Act by the Commission.
(c) Nothing herein shall be construed to require the Trust to accept
any offer to purchase any Interests, all of which shall be subject to approval
by the Trust's Board of Trustees.
(d) The Trust shall furnish from time to time for use in connection
with the sale of Interests such information with respect to the Trust and
Interests as Forum may reasonably request. The Trust shall also furnish Forum
upon request with: (a) audited annual and unaudited semiannual statements of the
Trust's books and accounts prepared by the Trust, and (b) from time to time such
additional information regarding the Trust's financial or regulatory condition
as Forum may reasonably request.
(e) The Trust represents to Forum that all registration statements
filed by the Trust with the Commission under the 1940 Act with respect to
Interests have been prepared in conformity with the requirements of such statute
and rules and regulations of the Commission thereunder. The Trust represents and
warrants to Forum that any registration statement will contain all statements
required to be stated herein in conformity with both such statute and the rules
and regulations of the Commission; that all statements of fact contained in any
registration statement will be true and correct in all material respects at the
time of filing of such registration statements or amendments thereto; and that
no registration statement will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of Interests. The Trust may
but shall not be obligated to, propose from time to time such amendment to any
registration statement as in the light of future developments may, in the
opinion of the Trust's counsel, be necessary or advisable. If the Trust shall
not propose such amendment and/or supplement within fifteen days after receipt
<PAGE>
by the Trust of a written request from Forum to do so, Forum may, at its option,
terminate this Agreement. The Trust shall not file any amendment to any
registration statement without giving Forum reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Trust's right to file at any time such amendment to any
registration statement as the Trust may deem advisable, such right being in all
respects absolute and unconditional.
(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 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 Forum shall have been prejudiced by such failure, or
<PAGE>
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).
(h) No Interests shall be offered by either Forum or the Trust under
any of the provisions of this Agreement and no orders for the purchase or sale
of Interests hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement or any necessary amendments thereto
shall be suspended under any of the provisions of the 1940 Act; provided,
however, that nothing contained in this Section 1(h) shall in any way restrict
or have an application to or bearing on the Trust's obligation to redeem
Interests from any investor in accordance with the provisions of the Trust's
registration statement or Trust Instrument, as amended from time to time.
(i) The Trust agrees to advise Forum as soon as reasonably practical by
a notice in writing delivered to Forum or its counsel:
(i) of any request by the Commission for amendment to the registration
statement then in effect or for additional information;
(ii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in
effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(iii) of the happening of any event that makes untrue any statement of
a material fact made in the registration statement then in effect or
that requires the making of a change in such registration statement in
order to make the statements therein not misleading; and
(iv) of all action of the Commission with respect to any amendment to
any registration statement that may from time to time be filed with the
Commission.
For purposes of this Section 1(i), informal requests by or acts of the
Staff of the Commission shall not be deemed actions or requests by the
Commission.
(j) Forum agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information not otherwise publicly available relative to the Trust and its
prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where Forum may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
(k) In addition to Forum's duties as Placement Agent, the Trust
understands that Forum may, in its discretion, perform additional functions in
connection with transactions in Interests.
(l) Forum shall receive no fee for its services hereunder.
(m) The processing of Interest transactions may include, but is not
limited to, compilation of all transactions; creation of a transaction tape and
timely delivery of it to the Trust's transfer agent for processing;
reconciliation of all transactions delivered to the Trust's transfer agent; and
the recording and reporting of these transactions executed by the Trust's
transfer agent in customer statements; and rendering of periodic customer
statements.
(n) Forum may also provide other investor services, such as
communicating with Trust investors and other functions in administering customer
accounts for Trust investors.
(o) Nothing herein is intended, nor shall be construed, as requiring
Forum to perform any of the foregoing functions.
<PAGE>
s
SECTION 2. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each
Portfolio on the date hereof and with respect to each future portfolio of the
Trust on the date this Agreement or Appendix A hereto is amended. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Portfolios.
(b) This Agreement shall continue in effect with respect to a Portfolio
for a period of one year from its effectiveness and shall continue in effect for
successive twelve-month periods; provided, however, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting interests of the Portfolio and (ii) by a vote
of a majority of Trustees of the Trust who are not parties to this agreement or
interested persons of any such party (other than as Trustees of the Trust);
provided further, however, that if the continuation of this agreement is not
approved as to a Portfolio, Forum may continue to render to the 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 on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. This
agreement shall terminate upon assignment.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Forum and the Trust each hereby represents and warrants to the other
that it has all requisite authority to enter into, execute, deliver and perform
its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
SECTION 4. ACTIVITIES OF FORUM
Except to the extent necessary to perform Forum's obligations
hereunder, nothing herein shall be deemed to limit or restrict Forum's right, or
the right of any of Forum'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.
SECTION 5. LIMITATION OF INTEREST HOLDER 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 Forum agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Portfolio to which Forum's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Portfolios.
SECTION 6. 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.
(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.
<PAGE>
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
(f) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
(g) 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
FORUM FINANCIAL SERVICES, INC.
------------------------
David R. Keffer
Vice President
<PAGE>
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
APPENDIX A
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Total Return Bond Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
APPENDIX A
AS OF SEPTEMBER 22, 1997
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Small Cap Index Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Total Return Bond Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
APPENDIX A
AS OF MARCH 18, 1998
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Small Cap Index Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
<PAGE>
CORE TRUST (DELAWARE)
PLACEMENT AGENT AGREEMENT
APPENDIX A
AS OF FEBRUARY 11, 1999
Small Company Stock Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Large Company Growth Portfolio
Small Cap Index Portfolio
Disciplined Growth Portfolio
Small Cap Value Portfolio
Strategic Bond Portfolio
International Portfolio
Income Equity Portfolio
Managed Fixed Income Portfolio
Index Portfolio
Positive Return Portfolio
Stable Income Portfolio
Money Market Portfolio
Prime Money Market Portfolio
International Equity Portfolio
