<PAGE>
SPORTSFUND-SM-
ANNUAL REPORT
MARCH 31, 1997
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SPORTSFUND-SM-
Account Information and
Shareholder Servicing:
Forum Financial Corporation-Registered Trademark-
P.O. Box 446
Portland, Maine 04112
Toll free (888) 82-SPORT
Dear Shareholder,
We present to you this annual report for Sportsfund-SM-. The Fund commenced
operations on August 1, 1996, and immediately began investing in equity
securities of companies engaged in sports related businesses. For the first
four months of its operations, the Fund performed well relative to the universe
of sports companies and the general equity market.
Unfortunately, Sportsfund-SM- never achieved an economically viable asset base.
Accordingly, in December of last year, the Board of Trustees of Forum Funds
determined that it was not practicable to continue the Fund's operations.
As a result of the Board's decision, the equity holdings of the fund were sold
and cash equivalents purchased order to meet shareholder redemptions.
Redemptions were made and met in an orderly fashion and the shares of the last
shareholder were redeemed on May 2, 1997. We regret that the sale of shares was
not strong enough to make it possible to continue offering this investment.
Sincerely,
John Y. Keffer
Chairman
The Forum Funds
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SPORTSFUND-SM-
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
MARCH 31, 1997
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The following chart compares a change in value of a $10,000 investment in the
Fund,including reinvested dividends and distributions and the performance of
the Standard & Poor's 500 Composite Index("S & P 500"). The S&P 500 is a
market weighted index composed 500 large capitalization companies and
reflects the reinvestment of dividends. The Index excludes the effect of
any fees or sales charges. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. PAST
PERFORMANCE CANNOT PREDICT NOR GUARANTEE FUTURE RESULTS.
SPORTSFUND-SM- VS S & P 500 INDEX
<TABLE>
<CAPTION>
1-Aug-96 31-Aug-96 30-Sep-96 31-Oct-96 30-Nov-96 31-Dec-96 31-Jan-97 28-Feb-97 31-Mar-97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sportsfund $9,600 $9,782 $10,118 $9,994 $10,022 $9,836 $9,855 $9,865 $9,894
S & P 500 Index $10,000 $10,211 $10,785 $11,083 $11,920 $11,684 $12,413 $12,511 $11,998
</TABLE>
INVESTMENT VALUE ON 3/31/97
- -----------------------------
Sportsfund-SM- $ 9,982
S & P 500 Index $ 11,998
INCEPTION INCEPTION
TO DATE* TO DATE*
TOTAL RETURN CUMULATIVE ANNUALIZED
- ------------- ----------- -----------
Sportsfund-SM- 3.1% 4.7%
*Inception date for Sportsfund-SM- was August 1, 1996.
2 FORUM FUNDS-Registered Trademark-
<PAGE>
SPORTSFUND-SM-
STATEMENT OF NET ASSETS
MARCH 31, 1997
Shares
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ASSETS:
Short-Term Holdings (72.0%)
1784 Institutional U.S. Treasury Money Market Fund 13,769 $ 13,769
Dreyfus Government Cash Management Fund 4,496 4,496
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Total Short-Term Holdings, at cost and value 18,265
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Other Assets (309.3%)
Cash 9,533
Organization Costs, net of amortization (Note 2) 68,750
Interest, dividends and other receivables 149
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Total Other Assets 78,432
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Total assets 96,697
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LIABILITIES (281.3%):
Payable for Fund shares redeemed 1,031
Accrued fees and other expenses 70,308
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Total liabilities 71,339
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NET ASSETS $ 25,358
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COMPONENTS OF NET ASSETS:
Paid in capital $ 25,358
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SHARES OF BENEFICIAL INTEREST, NO PAR VALUE 2,508
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NET ASSET VALUE, AND REDEMPTION PRICE PER SHARE $ 10.11
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OFFERING PRICE PER SHARE (NAV DIVIDED BY (1-4.00%)) $ 10.53
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See Notes to Financial Statements. 3 FORUM FUNDS-Registered Trademark-
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SPORTSFUND-SM-
STATEMENT OF OPERATIONS
FOR THE PERIOD AUGUST 1, 1996 TO MARCH 31, 1997
INVESTMENT INCOME:
Interest income $ 1,065
Dividend income 1,405
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Total investment income 2,470
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EXPENSES:
Investment Advisory (Note 3) 2,329
Administration (Note 3) 26,559
Transfer agency (Note 3) 16,502
Custody 4,531
Accounting (Note 3) 23,903
Audit 9,500
Legal 7,474
Registration 14,917
Reporting 5,320
Amortization of organization costs (Note 2) 6,250
Miscellaneous 12,686
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Total expenses 129,971
Expenses reimbursed and fees waived (Note 3) (126,477)
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Net expenses 3,494
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NET INVESTMENT INCOME (LOSS) (1,024)
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NET REALIZED GAIN (LOSS) ON INVESTMENTS 4,984
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NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,960
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See Notes to Financial Statements. 4 FORUM FUNDS-Registered Trademark-
<PAGE>
SPORTS FUND-SM-
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD AUGUST 1, 1996 TO MARCH 31, 1997
Amount Shares
------ ------
NET ASSETS - AUGUST 1, 1996 (a) $ -
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OPERATIONS:
Net investment income (loss) (1,024)
Net realized gain (loss) on investments sold 4,984
Net increase (decrease) in net assets ------------
resulting from operations 3,960
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DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (4,771)
Net realized gain on investments (4,464)
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Total distributions (9,235)
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CAPITAL SHARE TRANSACTIONS:
Sale of shares 496,731 48,739
Reinvestment of distributions 9,109 901
Redemption of shares (475,207) (47,132)
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Net increase (decrease)
in capital transactions 30,633 2,508
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------------ ------------
Net increase (decrease) 25,358
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NET ASSETS - MARCH 31, 1997 (b) $ 25,358
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(a) Commencement of investment operations.
See Notes to Financial Statements. 5 FORUM FUNDS-Registered Trademark-
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SPORTSFUND-SM-
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding
throughout the period and ratio.
<TABLE>
<CAPTION>
Period Ended
March 31,
1997(a)
------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
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Investment Operations (b)
Net Investment Income (Loss) (0.13)
Net Realized and Unrealized Investment Gain (Loss) on Investments 0.44
-------
Total from Investment Operations 0.31
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Distributions from
Net Investment Income (0.10)
Net Realized Gain on Investments (0.10)
-------
Total Distributions (0.20)
-------
Net Asset Value, End of Period $10.11
-------
-------
Total Return 3.07 % (c)
Ratio/Supplementary Data:
Net Assets at End of Period (000's omitted) $25
Ratios to Average Net Assets:
Expenses including reimbursement/waiver 1.87 % (d)
Expenses excluding reimbursement/waiver 69.47 % (d)
Net investment income (loss) including reimbursement/waiver (0.54) % (d)
Average Commission Rate (e) $0.0678
Portfolio Turnover Rate 233.83 %
</TABLE>
(a) See Note 1 for date of inception.
(b) Calculated using the weighted average shares outstanding method.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share paid to brokers
on the purchase and sale of portfolio securities.
6 FORUM FUNDS-Registered Trademark-
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SPORTSFUND-SM-
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
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NOTE 1. ORGANIZATION
Forum Funds-Registered Trademark- (the "Trust") is an open-end management
investment company organized as a Delaware business trust. The Trust currently
has eleven 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-SM- (the
"Fund"), a diversified portfolio of the Trust that commenced operations on
August 1, 1996.
On Tuesday, December 24, 1996, the Board of Trustees (the "Board") of Forum
Funds received letters of resignation from Forum Advisors, Inc.-Registered
Trademark- ("Forum Advisors"), the subadviser to Sportsfund-SM- (the "Fund"),
Forum Administrative Services, LLC-Registered Trademark- ("FAS"), the manager of
the Fund, Forum Financial Services, Inc.-Registered Trademark- ("Forum"), the
distributor of the Fund, and Forum Financial Corp.-Registered Trademark-
("FFC"), the Fund's transfer agent. These resignations are effective as of
March 24, 1997, in the case of Forum Advisers, and as of February 22, 1997, in
the case of Forum, FAS, and FFC.
The Board has suspended sales of the Fund's shares, effective December 26, 1996,
and is taking steps to terminate the Fund.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates.
The following represent significant accounting policies of the Fund:
SECURITY VALUATION - Securities 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 sales are reported, the mean of the last
bid and asked price is used. In the absence of readily available market
quotations, securities are valued at fair value as determined by the Board of
Directors. Securities with a maturity of 60 days or less are valued at
amortized cost.
INTEREST AND DIVIDEND INCOME - Interest income is accrued as earned. Dividends
on securities held by the Fund are recorded on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment income and net
capital gains, if any, are declared and paid at least annually. Distributions
are based on amounts calculated in accordance with applicable Federal income tax
regulations.
ORGANIZATION COSTS - The costs incurred by the Fund in connection with its
organization and registration of shares have been capitalized and are being
amortized using the straight-line method over a five year period beginning with
the commencement of the Fund's operations. Certain of these costs were paid by
Forum Financial Services, Inc. and have been reimbursed by the Fund.
FEDERAL TAXES - The Fund intends to qualify and continue to qualify each year
as a regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, the Fund
will not be subject to a Federal excise tax. Therefore, no Federal income tax
provision is required.
7 FORUM FUNDS-Registered Trademark-
<PAGE>
SPORTSFUND-SM-
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 1997
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EXPENSE ALLOCATION - The Trust accounts separately for the assets and
liabilities and operations of each Fund. Expenses that are directly
attributable to more than one Fund are allocated among the respective Funds.
REALIZED GAIN AND LOSS - Security transactions are accounted for on a trade date
basis and realized gain and loss on investments sold are determined on the basis
of identified cost.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISERS - The investment adviser for Fund is Westwood Ventures, Ltd.
("Westwood"). Westwood receives an advisor fee from Sportsfund-SM- 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 received a fee from Westwood for its
sub-advisory services; however, that compensation did not increase the amount
paid by the Fund.
MANAGEMENT AND OTHER SERVICES - Forum Financial Corp.-Registered Trademark-
("FFC") served as the Fund's transfer agent and dividend disbursing agent, and
fund accountant. For its services in these capacities, FFC received $24,000
plus certain shareholder account fees and $36,000 plus certain adjustments based
on the type and volume of portfolio transactions, respectively.
The manager of the Fund was Forum Administrative Services, LLC (the "Manager").
For it's services, the Manager received a fee equal to the greater of 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, or $40,000 per year. In addition, the Manager charged
certain legal expenses to the Fund aggregating $226.
The Manager also received sales commissions during the year ended March 31, 1997
amounting to $1,138 after deducting $3,257 allowed to authorized dealers and
agents. The Manager, Forum Advisors and FFC are affiliated companies.
The Advisor and Manager have voluntarily waived a portion of their fees and
assumed certain expenses of the Fund so that total expenses of the Fund would
not exceed a certain limitation. For the year ended March 31, 1997, fees waived
and expenses reimbursed were $68,811, and $57,666 respectively.
NOTE 4. SECURITY TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments,
totaled $474,602 and $479,574 respectively, for the year ended March 31, 1997.
For Federal income tax purposes, the tax basis of investment securities owned at
March 31, 1997 was $18,265. The aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost was $0 and
the aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over market value was $0.
NOTE 5. FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
(UNAUDITED)
Sportsfund-SM- dividends declared consisted of 56.87% qualifying dividends, and
43.13% ordinary dividends.
8 FORUM FUNDS-Registered Trademark-
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SPORTSFUND-SM-
REPORT OF INDEPENDENT AUDITORS
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The Board of Trustees and Shareholders,
Forum Funds:
We have audited the accompanying statement of net assets of Sportsfund-SM- (a
portfolio of Forum Funds) as of March 31, 1997, the related statements of
operations and changes in net assets and the financial highlighs for the eight
months then ended. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of March 31, 1997 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Sportsfund-SM-
as of March 31, 1997, the results of its operations, the changes in its net
assets, and its financial highlights for the eight months then ended in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, MA
May 9, 1997
9
