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TABLE OF CONTENTS
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Page
From the Front Office. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Assets and Liabilities . . . . . . . . . . . . . . . . . . . 5
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . 7
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 9
Manager
Forum Administrative Services, LLC
Distributor
Forum Financial Services, Inc.
Transfer Agent
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
Toll free (888) 82-SPORT
[email protected]
SPORTSFUND
SEMI-ANNUAL REPORT
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SEPTEMBER 30, 1996
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SPORTSFUND-SM-
ACCOUNT INFORMATION AND
SHAREHOLDER SERVICING:
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112 [LOGO]
Toll free (888) 82-SPORT
[email protected]
SEMI-ANNUAL REPORT
September 30, 1996
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FROM THE FRONT OFFICE
Our team of investment professionals is excited to announce the results of
the first two months of SPORTSFUND-SM- action. From the fund's inception on
August 1st through the close of business on September 30th, total net assets
invested in the fund grew to over $425,000! While the veteran Dow Jones
Industrial Average was up 5.70% for the period, the rookie SPORTSFUND-SM-
achieved a highly competitive return of 5.40%(1), excluding the effect of the
funds sales charge. With this strong start, the fund is firmly positioned in
the marathon of sports investing.
Physical fitness, active recreation and sporting activities are deeply
ingrained within cultures around the world. Organized athletic events predate
those of the ancient Greeks. Spectator sports have grown in unprecedented
numbers. Crowds still awe the unbridled passion and skill of athletes and
embrace the thrill of the unknown outcome. Athletic competition has
successfully evolved into the twentieth century, and into big business. Whether
it's a bowl of soup endorsed by an athletic super-hero, Olympic medalists
wearing milk mustaches or consumer product trademarks brightly painted on NASCAR
hoods and quarter-panels, sports have secured their dominance in our corporate
culture.
Keenly aware of the significance of sports, companies of all types sponsor
events, teams, participants and even media coverage. Marketing gurus rush to
have logos emblazoned on everything from lapels and feet to equipment and hot
air balloons. Stadiums install more seating and more signage. Design teams
create new and exciting products, while engineers make them stronger and
lighter. Retailers expand into super stores, and end-users just want to have
more fun!
1
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SPORTSFUND-SM-
FROM THE FRONT OFFICE (CONTINUED), SEPTEMBER 30, 1996
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Investing in sports related businesses transcends economic sectors and
traditional industry classifications. Companies participate in the broadly
diversified array of athletic options. Entrepreneurs and conglomerates
accommodate both individual and team activities, providing for the needs at
professional, amateur and recreational levels. From bowling balls to in-line
skates, from super-domes to fishing streams, there are many investment
opportunities in which to participate.
Companies in sports-related businesses intersect various aspects of our
economy. It is an economy experiencing moderately paced inflation at 3%, low
unemployment held to 5.1% and consumer confidence at a six year high. Retailers
are looking forward to the upcoming holiday shopping season after posting
sluggish sales for the year. Athletic apparel and footwear companies are
already leading this comeback. Low borrowing rates have enabled smaller
companies to advance their expansion plans and posture their businesses among
larger companies. Overall, corporations continue to pursue efficiencies and
expand global opportunities while rewarding shareholders with improving values
and record earnings. Moreover, this earnings growth is at a much more
sustainable rate than the rapidly paced rate of the last few years. And as the
evening news reports, the stock markets continue to soar upward.
Our highly motivated team strives to provide you with a potentially
exciting investment opportunity along with superior customer service. We will
continue to manage SPORTSFUND-SM- in the best interests of you, our team of
shareholders. Please discuss your questions with your local investment
professional or contact our team at Forum Funds. You may peruse our website
http://www.sportsfund.com, e-mail us at [email protected] or call us
toll free at 1-888-82-SPORT.
Thank you for choosing SPORTSFUND-SM-.
(1) 5.40% is the since inception (8/1/96) total return for the three-month
period ended 10/31/96. This figure is not annualized. This return includes
changes in principle value, reinvested dividends and capital gains distributions
and excludes the effect of the fund's maximum 4.00% sales charge. Present
expense waivers and/or reimbursements have increased the fund's return. Total
return represents past performance and cannot guarantee future results.
Investment return and principle value will vary and shares may be worth more or
less at redemption than at original purchase.
Total return, including the fund's maximum 4.00% sales charge, was 1.18%
for the same period.
Since the fund focuses its investments on a set of industries related to a
single theme, it may be more volatile than a fund that does not focus its
investments in this manner. Because sports activities are not a necessity,
companies focused on sports may be more affected by economic downturns than
other companies.
2
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SPORTSFUND-SM-
SCHEDULE OF INVESTMENTS, SEPTEMBER 30, 1996
SHARES SECURITY DESCRIPTION VALUE
------ -------------------------------------------------- ----------
COMMON STOCK (90.4%)
AMUSEMENT & RECREATION SERVICES (7.5%)
500 Penn National Gaming, Inc.* . . . . . . . . . . . $ 15,500
500 Penske Motorsports, Inc.* . . . . . . . . . . . . 17,562
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33,062
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APPAREL & FOOTWEAR MANUFACTURING (25.3%)
1,400 K-Swiss, Inc. . . . . . . . . . . . . . . . . . . 14,525
125 Nike, Inc. - Class B. . . . . . . . . . . . . . . 15,188
450 Reebok International Ltd. . . . . . . . . . . . . 15,638
450 Russell Corporation . . . . . . . . . . . . . . . 14,513
2,100 Starter Corporation*. . . . . . . . . . . . . . . 13,125
2,800 Tultex Corporation* . . . . . . . . . . . . . . . 15,050
1,200 Vans, Inc.* . . . . . . . . . . . . . . . . . . . 22,950
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110,989
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MISCELLANEOUS MANUFACTURING (22.3%)
1,500 Action Performance Companies, Inc.* . . . . . . . 19,313
2,700 Aldila, Inc.* . . . . . . . . . . . . . . . . . . 10,631
1,000 First Team Sports, Inc.*. . . . . . . . . . . . . 8,500
500 K2, Inc.. . . . . . . . . . . . . . . . . . . . . 13,062
400 Oakley, Inc.* . . . . . . . . . . . . . . . . . . 17,000
1,400 Rawlings Sporting Goods Company, Inc.*. . . . . . 13,475
1,300 Ride, Inc.* . . . . . . . . . . . . . . . . . . . 15,925
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97,906
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REAL ESTATE INVESTMENT TRUSTS (6.4%)
1,000 National Golf Properties, Inc.. . . . . . . . . . 27,875
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SPECIALTY RETAIL (7.9%)
700 The North Face, Inc.* . . . . . . . . . . . . . . 19,775
1,800 Sports & Recreation, Inc.*. . . . . . . . . . . . 15,075
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34,850
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*Non-income producing security.
See notes to financial statements.
3
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SPORTSFUND-SM-
SCHEDULE OF INVESTMENTS (CONTINUED), SEPTEMBER 30, 1996
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SHARES SECURITY DESCRIPTION VALUE
------ -------------------------------------------------- ----------
TRANSPORTATION EQUIPMENT MANUFACTURING (21.0%)
2,200 Artic Cat, Inc. . . . . . . . . . . . . . . . . . $ 20,625
800 Brunswick Corporation . . . . . . . . . . . . . . 19,200
800 Cannondale Corporation* . . . . . . . . . . . . . 18,600
1,500 Fountain Powerboat Industries, Inc.*. . . . . . . 17,625
1,050 Outboard Marine Corporation . . . . . . . . . . . 16,143
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92,193
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Total Common Stock
(cost $378,012) . . . . . . . . . . . . . . . . . . . . . . 396,875
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SHORT-TERM HOLDINGS (9.6%)
20,987 1784 U.S. Treasury Money Market Fund. . . . . . . 20,987
21,286 Dreyfus Government Cash Management Fund . . . . . 21,286
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42,273
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Total Short-Term Holdings
(cost $42,273). . . . . . . . . . . . . . . . . . . . . . . 42,273
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Total Investments (100.0%)
(cost $420,285) . . . . . . . . . . . . . . . . . . . . . . $439,148
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*Non-income producing security.
See notes to financial statements.
4
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SPORTSFUND-SM-
STATEMENTS OF ASSETS AND LIABILITIES, SEPTEMBER 30, 1996
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ASSETS:
Investments, at value (a) . . . . . . . . . . . . . . . . . $439,148
Interest, dividends and other receivables . . . . . . . . . 350
Receivable for shares issued. . . . . . . . . . . . . . . . 7,384
Organization costs, net . . . . . . . . . . . . . . . . . . 72,500
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Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 519,382
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LIABILITIES:
Accrued fees and other expenses . . . . . . . . . . . . . . 73,119
Payable for securities purchased. . . . . . . . . . . . . . 18,850
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Total liabilities: . . . . . . . . . . . . . . . . . . . . . . 91,969
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NET ASSETS: . . . . . . . . . . . . . . . . . . . . . . . . . $427,413
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Components of Net Assets:
Capital paid in . . . . . . . . . . . . . . . . . . . . . . $410,415
Net investment loss . . . . . . . . . . . . . . . . . . . . (454)
Unrealized appreciation (depreciation). . . . . . . . . . . 18,863
Accumulated net realized losses . . . . . . . . . . . . . . (1,411)
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Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . $427,413
---------
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SHARES OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . 40,549
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NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . $ 10.54
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(a) Cost of investments. . . . . . . . . . . . . . . . . . . . . $420,285
See Notes to financial statements.
5
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SPORTSFUND-SM-
STATEMENTS OF OPERATIONS, SEPTEMBER 30, 1996
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INVESTMENT INCOME:
Interest income . . . . . . . . . . . . . . . . . . . . . . $ 312
Dividend income . . . . . . . . . . . . . . . . . . . . . . 336
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Total investment income. . . . . . . . . . . . . . . . . . . . . 648
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EXPENSES:
Advisory . . . . . . . . . . . . . . . . . . . . . . . . . 690
Administration. . . . . . . . . . . . . . . . . . . . . . . 6,559
Transfer agency . . . . . . . . . . . . . . . . . . . . . . 8,049
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . 1,667
Accounting. . . . . . . . . . . . . . . . . . . . . . . . . 5,903
Professional fees . . . . . . . . . . . . . . . . . . . . . 246
Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 14,885
Amortization of organization costs. . . . . . . . . . . . . 2,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . 108
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Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 40,607
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Expenses reimbursed and fees waived. . . . . . . . . . . . . . . (39,505)
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Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . 1,102
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NET INVESTMENT LOSS. . . . . . . . . . . . . . . . . . . . . . . (454)
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments . . . . . . . . . . . . . . . . (1,411)
Net change in unrealized appreciation. . . . . . . . . . . . . . 18,863
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NET GAIN ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . 17,452
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INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . . . $ 16,998
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See notes to financial statements.
6
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SPORTSFUND-SM-
STATEMENTS OF CHANGES IN NET ASSETS, SEPTEMBER 30, 1996
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AMOUNT SHARES
------ ------
NET ASSETS - August 1, 1996 (a). . . . . . . . . . $ --
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OPERATIONS:
Net investment loss . . . . . . . . . . . . . (454)
Net realized loss on investments. . . . . . . (1,411)
Net change in unrealized appreciation . . . . 18,863
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16,998
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CAPITAL SHARE TRANSACTIONS:
Sale of shares. . . . . . . . . . . . . . . . 410,415 40,549
-------- ------
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NET ASSETS - September 30, 1996. . . . . . . . . . $427,413
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--------
(a) Commencement of Fund's operations.
See notes to financial statements.
7
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SPORTSFUND-SM-
FINANCIAL HIGHLIGHTS, SEPTEMBER 30, 1996
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PERIOD ENDED
SEPTEMBER 30, 1996 (b)
----------------------
Beginning net asset value per share. . . . . . . . . . $ 10.00
--------
Net investment loss. . . . . . . . . . . . . . . . . . (0.01)
Net realized and unrealized gain on securities . . . . 0.55
--------
Ending net asset value per share . . . . . . . . . . . $ 10.54
--------
--------
Ratios to average net assets:
Expenses (a). . . . . . . . . . . . . . . . . . . 2.00 % (c)
Net investment loss . . . . . . . . . . . . . . . (0.27)% (c)
Total Return . . . . . . . . . . . . . . . . . . . . . 5.40 %
Portfolio turnover rate. . . . . . . . . . . . . . . . 3.18%
Average Commission rate (d). . . . . . . . . . . . . . 0.0713%
Net assets at the end of the year. . . . . . . . . . . $427,413
(a) During the period, various fees and expenses were waived and reimbursed,
respectively. Had such waives and reimbursements not occurred, the ratio
of expense to average net assets would have been 45.94%, annualized.
(b) See Note 1 for date of inception.
(c) Annualized.
(d) Amount represents the average commission per share, paid to brokers, on the
purchase and sale of portfolio securities
See notes to financial statements.
8
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SPORTSFUND-SM-
NOTES TO FINANCIAL STATEMENTS, SEPTEMBER 30, 1996
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NOTE 1. ORGANIZATION
Forum Funds (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust currently has eight active
investment portfolios. The Trust Instrument of the Trust authorizes each Fund
to issue an unlimited number of shares of beneficial interest without par value.
Included in this report is Sportsfund (the "Fund"), a diversified portfolio that
commenced operations on August 1, 1996.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements and are based,
in part, on the following accounting policies.
SECURITY VALUATION - Securities, other than short-term, held by the Fund for
which market quotations are readily available are valued using the last reported
sales price provided by independent pricing services. If no sale is reported,
the mean of the last bid and ask price is used. If no mean price is available,
the last bid price is used. In the absence of readily available market
quotations, securities are valued at fair value using procedures approved by the
Fund's Board of Trustees. Short-term securities held by Fund are valued at
amortized cost.
INTEREST AND DIVIDEND INCOME AND DISTRIBUTIONS TO SHAREHOLDERS - Interest income
is accrued as earned. Dividend income is recorded on the ex-dividend date.
Distributions of net investment income and net capital gains to shareholders are
declared and paid annually.
FEDERAL INCOME TAX - The Fund intends to qualify as a regulated investment
company and distributes all of its taxable income. As such, no Federal income
tax provision is required.
OTHER - Investment security transactions are recorded on trade date. Realized
gains and losses on investments sold are recorded on the basis of identified
cost.
NOTE 3. INVESTMENT ADVISORY AND RELATED SERVICES
INVESTMENT ADVISER - The investment adviser for the Fund is Westwood Ventures,
Ltd. ("Westwood"). Westwood receives an advisory fee from Sportsfund at an
annual rate of 1.25% of the average daily net assets of the Fund. Forum
Advisors serves as sub-adviser to the Fund. Forum receives a fee from Westwood
for its sub-advisory services; however, that compensation does not increase the
amount paid by the Fund.
9
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SPORTSFUND-SM-
NOTES TO FINANCIAL STATEMENTS, SEPTEMBER 30, 1996
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MANAGEMENT AND OTHER SERVICES - Forum Financial Corp. ("FFC") serves as the
Fund's transfer agent and dividend disbursing agent, for which it receives a fee
of $24,000 per year. FFC also serves as the Fund's fund accountant and is
compensated for those services at an amount of $36,000 per year.
The manager of the Fund is Forum Administrative Services, LLC (the "Manager").
The manager receives a management fee for its services to Sportsfund at an
annual rate of 0.15% of the first $50 million of the Fund's average daily net
assets, 0.10% of the next $50 million, and 0.05% of the remaining average daily
net assets of the Fund. In addition, the Manager charged certain legal expenses
to the Fund aggregating $208.
The Manager also received sales commissions during the period ended September
30, 1996 amounting to $448 after deducting $3,128 allowed to authorized dealers
and agents. The Manager, Forum Advisors and FFC are affiliated companies.
For the period ended September 30, 1996, expenses reimbursed and fees waived by
Westwood were $38,815 and $690, respectively.
NOTE 4. SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities (including maturities)
of portfolio securities (excluding short-term investments) during the period
ended September 30, 1996 were $387,273 and $7,838, respectively.
The cost of investments for Federal income tax purposes as of September 30,
1996 is the same as for financial reporting purposes. Unrealized appreciation
and depreciation as of September 30, 1996 was $30,994 and $12,131, respectively.
10
