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FORUM
FUNDS
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ANNUAL REPORT
MARCH 31, 1998
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Investors High Grade
Bond Fund
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal
Bond Fund
New Hampshire
Bond Fund
Investors Growth Fund
Payson Balanced Fund
Payson Value Fund
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TABLE OF CONTENTS
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Page
A Message to Our Shareholders.... 1
FINANCIAL STATEMENTS OF THE FORUM
FUNDS
Schedules of Investments:
Investors High Grade Bond
Fund.......................... 8
Investors Bond Fund............ 9
TaxSaver Bond Fund............. 12
Maine Municipal Bond Fund...... 17
New Hampshire Bond Fund........ 22
Investors Growth Fund.......... 25
Payson Balanced Fund........... 27
Payson Value Fund.............. 29
Notes to Schedule of
Investments.................... 31
Statements of Assets and
Liabilities.................... 32
Statements of Operations......... 34
Statements of Changes in Net
Assets......................... 36
Financial Highlights............. 39
Notes to Financial Statements.... 42
Report of Independent Auditors... 47
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FORUM FUNDS-REGISTERED TRADEMARK-
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INVESTORS HIGH GRADE BOND FUND SHAREHOLDER INQUIRIES
INVESTORS BOND FUND Forum Financial Corp.
TAXSAVER BOND FUND P.O. Box 446
MAINE MUNICIPAL BOND FUND Portland, Maine 04112
NEW HAMPSHIRE BOND FUND 207-879-0001
INVESTORS GROWTH FUND
PAYSON BALANCED FUND
PAYSON VALUE FUND
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March 31, 1998 ANNUAL REPORT
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Dear Investor:
Forum Funds is pleased to present the annual report for the 1997 fiscal year
and to review with you fund performance for the year. This annual report
includes two new funds; Investors Growth Fund and Investors High Grade Bond
Fund, both of which began operations in the last three and one half months.
Total net assets in the eight Forum Funds reviewed herein now exceed $278
million, an increase of over $125 million since our last annual report. We would
like to take this opportunity to describe the financial highlights of the period
and to share our perspective on the economy with all our investors.
The stock and bond markets have continued to respond well to the ongoing
strength in the U.S. economy, and the Forum Funds have shown solid performance.
Since our last annual report the S&P 500 Index, a broad index of large
companies, has had a total return in excess of 45%. Bond market indices indicate
total returns of over 10%. Investors have continued to be the beneficiaries of
returns that are far above the norm from a historical perspective. While the
markets remain strong on the foundation of a growing economy, low inflation, and
vast flows of money into mutual funds, it is important to remember that these
market returns are far in excess of normal. A cautious and conservative approach
to managing the portfolios of our funds is more important under these
circumstances than when the market is performing at an average rate.
Investors have benefited from strong performance from all the Forum Funds.
In particular, it is worth noting, that the Payson Value Fund and Payson
Balanced Fund performed exceptionally well versus their benchmarks during the
period. Investors received a total return of 45.28% and 31.27% respectively, not
including the impact of sales charges. By contrast, their benchmarks, the
Morningstar Growth and Income Fund Average and Balanced Fund Average, had total
returns of 41.04% and 27.92% respectively, during the same period.
As always we encourage our investors to be aware of the long term nature of
the investing Forum Funds undertakes. While encouraged by the strong markets, we
remain focused on longer term investment objectives rather than short term
market shifts. We will continue to use our expertise to seek those opportunities
that will reward our shareholders over time.
Thank you for your continuing confidence in Forum Funds. We will keep
working to provide shareholders with superior investment service. If you have
questions, please discuss them with your local investment professional or call
us at 207-879-0001.
Sincerely,
[SIGNATURE]
John Y. Keffer
President
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FORUM FUNDS ADVISOR--FORUM INVESTMENT ADVISORS, LLC
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Since the end of the last fiscal year, Forum Investment Advisors, LLC was
selected to serve as advisor to two new Forum Funds; Investors High Grade Bond
Fund and Investors Growth Fund. Be assured that we will serve shareholders of
these funds with the same diligence with which we serve shareholders of the
other Forum Funds we manage. We are also pleased to tell you that assets in the
fixed income and equity funds we advise now exceed $230 million. We will strive
to keep the confidence that we have already earned from so many Forum
shareholders.
FUNDS REVIEW
The inception date of Investors High Grade Bond fund was just weeks prior to
the end of the fiscal year. The portfolio is fully invested in high quality
corporate and government bonds with a relatively short average maturity, as
prescribed in the prospectus. Investors Growth Fund, which began operations in
mid-December, is composed primarily of large capitalization stocks. From its
inception to the end of the fiscal year the fund provided shareholders with a
total return of 13.05%. While this is an impressive absolute return over a short
time period, it does trail the 15.88% total return turned in by the S&P 500.
Although many stocks in the portfolio performed well, the portfolio also held
commercial paper and other short term securities that had a dampening effect on
returns.
The other funds we have advised for years also produced good absolute
returns this fiscal year, although underperforming their benchmarks. We do not
expect the state specific Maine and New Hampshire bond funds to perform as well
as general municipal bond funds for two related reasons: the portfolio manager
has to deal with the idiosyncracies of the municipal markets in the two states;
and taxpayers/shareholders must deal with the intricacies of the two states' tax
codes. The first consideration creates a difficult market in which to manage a
portfolio, the second means the investor must focus on the beneficial after-tax
income the fund generates.
Though Investors Bond Fund and TaxSaver Bond Fund struggled in volatile
fixed income markets, they gave shareholders total returns of 10.98% and 7.75%
respectively. Details of the funds performance for the most recent fiscal year
and since their inception are printed before the financial statements in this
report.
ECONOMIC & FINANCIAL MARKETS REVIEW
The automobile advertising slogan tells you, "YOU ASKED FOR IT. YOU GOT IT.
WHO COULD ASK FOR ANYTHING MORE?" The words might also be used to describe the
current United States economy and its financial markets; low inflation, low
interest rates, low unemployment, and strength in consumer confidence,
productivity, and corporate profits.
Investors continued to be well rewarded for the sustained economic strength
during the funds' fiscal year with a bull market in stocks surpassing
expectations and a fixed income market that also responded quite favorably.
As our last annual report went to press the Federal Reserve Board had just
raised the Fed Funds Rate one quarter point in an attempt to slow a rapidly
expanding economy. We anticipated a follow-on increase at a later date, but we
were wrong. In the Fall, the Fed became concerned about the impact the abrupt
weakness in
2 FORUM FUNDS-Registered Trademark-
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FORUM FUNDS ADVISOR--FORUM INVESTMENT ADVISORS, LLC (CONTINUED)
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Asian economies might have on the U.S. economy. So, it took a wait and see
attitude. That stance continues today, as opinions remain mixed over the actual
impact of the "Asian Flu" and unknowns remain. Although we see little evidence
of a deep or prolonged effect on our economy, we are concerned and watchful.
The economic landscape has been well maintained. Inflation lies almost
dormant with the Consumer Price Index up only 1.4% in the last twelve months,
and the Producer Price Index actually down 1.6%. As a result many companies have
not been able to raise prices to increase profits. They have, however, found
profit growth possible by taking advantage of new dynamics in inventory control,
technology, and a mobile labor force. The flexibility afforded by such
techniques has helped sustain an economic expansion now into its eighth year.
The fixed income markets' response to this thriving economy has been to bid
up bond prices so that yields come down. The thirty year U.S. Treasury Bond
yield dropped from 7.10% to 5.93% from the beginning to the end of the fiscal
year. At the same time, yield spreads between Treasury and corporate bonds have
narrowed considerably. This means that the market requires far less of a risk
premium for investing in the corporate bond market. At times such as these we
believe it pays to be cautious about overreaching for more income--market
history tell us that economic slowdowns do occur and yield spreads widen. Our
long term objectives of providing solid income and total returns for the funds
without undue risk are the reasons we are currently investing in quality fixed
income instruments.
The heady returns generated in the equity markets have become cocktail party
conversation. The strong economy and corporate profit growth has been coupled
with a flow of money that has propelled equity markets to record highs. Some of
this momentum is demographically driven as the country's large work force pours
money into retirement plans. Stock market valuations, however, are extremely
high, which gives us pause as we consider our holdings and dedicate funds to new
investments. Over time, returns in the stock market are a function of dividends,
the internal growth of companies, and revaluations in the market. Revaluations
have been on the climb; the price/earnings multiple on the S&P 500 has expanded
from about 19X to a current multiple of over 25X estimated earnings, in the last
twelve months. Continued upward revaluations will be harder and harder to come
by.
OUTLOOK
We believe our cautious approach is warranted by circumstances. The economy
remains resolute, but valuations in the stock market are high and the bond
market is looking for signs of trouble. Given the pressures of an extended
expansion, we might expect to see lower total returns in the markets over the
coming twelve months. When times are this good, some people find it upsetting
when professional investment managers try to dampen expectations, but we think
it is part of our job to maintain a sense of realism. That realistic approach
leads to our belief that the economy and corporate operations cannot be
sustained in a manner that continues to result in valuations being driven
significantly higher.
Forum Investment Advisors, LLC
3 FORUM FUNDS-Registered Trademark-
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FORUM FUNDS ADVISOR--H.M. PAYSON & CO.
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At this juncture a year ago, we spoke of a strong economy, low inflation,
and a two-tiered stock market, in which large-company stocks outperformed the
broader market. A year later, the picture looks much the same at first glance.
Yet, we note some significant changes in the climate, and conclude that a
discipline towards valuations is increasingly important.
Full-employment, low inflation, strong corporate profits and a torrent of
liquidity continued to fuel the domestic stock market in 1997. In the summer and
through the autumn, however, the turmoil in the Asian economies, precipitated by
the sudden devaluation of several currencies, cast serious doubt on the
prospects for continued high corporate earnings growth. Given the lofty
expectations built into many large-company stocks, this was a troubling
development, and a period of volatility ensued. By early 1998, however,
investors seemed to shake off concerns about Asia, and the market resumed its
climb with a vengeance.
We are less sanguine, however. With dividends at an all-time low and
interest rates unlikely to go much lower, incremental investment returns are
dependent on the continuation of above-average earnings growth. While not in the
business of forecasting, we wonder whether this is a realistic prospect.
Regardless of the economic forecast, it is clear that many, but not all, stocks
exhibit excessive valuations.
In this environment, the Payson Funds have enjoyed robust total returns
while maintaining attractive valuation characteristics. For the one year period
ending March 31, 1998, the Payson Value Fund and the Payson Balanced Fund
produced total returns, without deduction of the 4% maximum sales charge, of
45.28% and 31.27%, respectively. Since inception, the Payson Value Fund has had
an annualized total return of 19.63%; the Balanced Fund 14.42%.(1) Adjusted for
the deduction of the 4% maximum sales charge, the total returns for the one-year
and since inception periods would have been 39.48% and 18.78%, respectively, for
the Value Fund, and 26.02% and 13.68% for the Balanced Fund.
Given our cautious outlook, we will continue to strive to maintain
portfolios of securities that exhibit attractive investment characteristics
regardless of the headlines. This ongoing adherence to our discipline should
continue to produce superior risk-adjusted relative returns going forward. As
always, we thank you for your confidence and loyalty.
H.M. Payson & Co.
Investment Advisor
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(1) Through 3/31/98. Value Fund inception 7/31/92; Balanced Fund inception
11/25/91. Performance data quoted represents past performance and is no
guarantee of future results. You should realize that investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than their original cost. Forum Financial Services, Inc.,
Distributor.
4 FORUM FUNDS-Registered Trademark-
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FORUM FUNDS PERFORMANCE
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The following table and charts provide performance figures for the Forum
Funds. The table covers the past fiscal year, while the charts show the funds'
progress since the inception of their operations.
SUMMARY PERFORMANCE INDICATORS
12 MONTH TOTAL RETURN--PERIOD ENDING MARCH 31, 1998
<TABLE>
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FORUM VS.
FORUM INDEX INDEX
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<S> <C> <C> <C>
Investors Bond Fund................................................................ 10.98% 10.78%(1) 0.20%
TaxSaver Bond Fund................................................................. 7.75% 9.39%(2) -1.64%
Maine Municipal Bond Fund.......................................................... 7.94% 9.39%(2) -1.45%
New Hampshire Bond Fund............................................................ 8.84% 9.39%(2) -0.55%
Payson Balanced Fund............................................................... 31.27% 27.92%(3) 3.35%
Payson Value Fund.................................................................. 45.28% 41.04%(4) 4.24%
(1) MORNINGSTAR Corporate-General Average:
470 Funds Rated
(2) MORNINGSTAR Municipal-National Average:
524 Funds Rated
(3) MORNINGSTAR Balanced Average:
387 Funds Rated
(4) MORNINGSTAR Growth & Income Average:
638 Funds Rated
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FORUM AND MORNINGSTAR RETURN
FIGURES DO NOT INCLUDE THE DEDUCTION OF SALES CHARGES. HAD SALES CHARGES BEEN
DEDUCTED, PERFORMANCE WOULD HAVE BEEN LOWER. DURING THE PERIOD CERTAIN FEES AND
EXPENSES WERE WAIVED BY THE SERVICE PROVIDERS. WITHOUT THESE WAIVERS TOTAL
RETURNS WOULD HAVE BEEN LOWER.
5 FORUM FUNDS-Registered Trademark-
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FORUM FUNDS PERFORMANCE (CONTINUED)
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These charts reflect a comparison in the change in value of a $10,000
investment, including applicable sales charges, in Investors Bond Fund, TaxSaver
Bond Fund, Maine Municipal Bond Fund and New Hampshire Bond Fund, to each Fund's
related securities index, since the Funds' inception. The Lehman Intermediate
Corporate/Government Index is a market index of fixed-rate government and
investment grade securities with maturities of up to 10 years. The Lehman 10
Year Municipal Index is a market index of investment grade municipal fixed-rate
debt securities with an average maturity of 10 years. Returns of the funds
reflect the reinvestment of all dividends and distributions. Investment return
and principal value of an investment in the Funds will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. PAST PERFORMANCE IS NOT PREDICTIVE NOR A GUARANTEE OF FUTURE RESULTS.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT INCLUDING SALES CHARGE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
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INVESTORS BOND FUND VS. LEHMAN INTERMEDIATE
CORPORATE/GOVERNMENT INDEX
<S> <C> <C>
Lehman Intermediate
Government/Corporate Index Investors Bond Fund
10/89 $10,212 $9,775
3/90 $10,322 $9,896
3/91 $11,568 $11,060
3/92 $12,815 $12,488
3/93 $14,411 $14,177
3/94 $14,774 $14,843
3/95 $15,438 $15,518
3/96 $16,911 $17,045
3/97 $17,724 $18,268
3/98 $19,436 $20,273
Average Annual Total Return on 3/31/98
1 Year: 10.98%
5 Year: 7.42%
Since Inception on 10/2/89: 9.16%
Value on 3/31/98
Investors Bond Fund: $20,273
Lehman Index: $19,436
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TAXSAVER BOND FUND VS. LEHMAN 10 YEAR
MUNICIPAL INDEX
<S> <C> <C>
Lehman 10-Year
Municipal Index Taxsaver Bond Fund
10/89 $10,114 $9,656
3/90 $10,413 $9,913
3/91 $11,575 $10,735
3/92 $12,652 $11,696
3/93 $14,326 $13,016
3/94 $14,724 $13,698
3/95 $15,831 $14,544
3/96 $17,245 $15,615
3/97 $18,380 $16,418
3/98 $20,289 $17,691
Average Annual Total Return on 3/31/98
1 Year: 7.75%
5 Year: 6.33%
Since Inception on 10/2/89: 7.42%
Value on 3/31/98
TaxSaver Bond Fund: $17,691
Lehman Index: $20,289
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MAINE MUNICIPAL BOND FUND VS. LEHMAN 10 YEAR
MUNICIPAL INDEX
<S> <C> <C>
Lehman 10-Year Maine Municipal
Municipal Index Bond Fund
12/91 $10,213 $9,630
3/92 $10,204 $9,785
3/93 $11,553 $10,939
3/94 $11,874 $11,314
3/95 $12,767 $12,027
3/96 $13,907 $12,910
3/97 $14,823 $13,552
3/98 $16,362 $14,818
Average Annual Total Return on 3/31/98
1 Year: 7.94%
5 Year: 5.98%
Since Inception on 12/5/91: 6.84%
Value on 3/31/98
Maine Municipal Bond Fund: $14,818
Lehman Index: $16,362
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NEW HAMPSHIRE BOND FUND VS. LEHMAN 10 YEAR
MUNICIPAL INDEX
<S> <C> <C>
Lehman 10-Year
Municipal Index New Hampshire Bond Fund
1/93 $10,168 $9,621
3/93 $10,386 $9,754
3/94 $10,675 $10,218
3/95 $11,477 $10,864
3/96 $12,503 $11,663
3/97 $13,326 $12,195
3/98 $14,710 $13,446
Average Annual Total Return on 3/31/98
1 Year: 8.84%
5 Year: 6.35%
Since Inception on 12/31/92: 6.31%
Value on 3/31/98
New Hampshire Bond Fund: $13,446
Lehman Index: $14,710
</TABLE>
6 FORUM FUNDS-Registered Trademark-
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FORUM FUNDS PERFORMANCE (CONTINUED)
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These charts reflect a comparison in the change in value of a $10,000 investment
in Payson Balanced Fund and Payson Value Fund, including reinvestment of
dividends and distributions, to the performance of the Standard and Poor's 500
Composite Index ("S&P 500"), since the Funds' inception. The S&P 500 is a market
weighted index composed of 500 large capitalization companies and reflects the
reinvestment of dividends. Investment return and principal value of an
investment in the Funds will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. PAST PERFORMANCE
IS NOT PREDICTIVE NOR A GUARANTEE OF FUTURE RESULTS.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PAYSON BALANCED FUND VS. S&P 500 INDEX
S&P 500 Index Payson Balanced Fund
<S> <C> <C>
11/91 $11,142 $9,600
3/92 $10,861 $9,897
3/93 $12,513 $11,393
3/94 $12,693 $12,190
3/95 $14,666 $12,921
3/96 $19,370 $15,725
3/97 $23,209 $17,206
3/98 $34,341 $22,587
Average Annual Total Return on 3/31/98
1 Year: 31.27%
5 Year: 14.66%
Since Inception on 11/25/91: 14.42%
Value on 3/31/98
Payson Balanced Fund: $22,587
S&P 500 Index: $34,341
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PAYSON VALUE FUND VS. S&P 500 INDEX
S&P 500 Index Payson Value Fund
<S> <C> <C>
8/92 $9,796 $9,389
3/93 $10,863 $10,661
3/94 $11,020 $11,874
3/95 $12,732 $12,648
3/96 $16,816 $16,161
3/97 $20,148 $18,263
3/98 $29,813 $26,533
Average Annual Total Return on 3/31/98
1 Year: 45.28%
5 Year: 19.99%
Since Inception on 7/31/92: 19.63%
Value on 3/31/98
Payson Value Fund: $26,533
S&P 500 Index: $29,813
</TABLE>
7 FORUM FUNDS-Registered Trademark-
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INVESTORS HIGH GRADE BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
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<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
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<C> <S> <C>
GOVERNMENT AGENCY NOTES (9.3%)
FFCB (1.2%)
$ 400,000 5.42%, 8/4/98........................... $ 399,327
-----------
FHLB (4.1%)
1,350,000 6.555%, 4/15/99......................... 1,364,620
-----------
FHLMC (0.9%)
300,000 6.60%, 11/12/99......................... 303,990
-----------
FNMA (3.1%)
750,000 7.50%, 2/11/02.......................... 793,725
250,000 7.85%, 9/10/98.......................... 252,538
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Total FNMA 1,046,263
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Total Government Agency Notes
(cost $3,075,986) 3,114,200
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CORPORATE BONDS & NOTES (14.7%)
500,000 Bankamerica Corp., 8.125%, 2/1/02....... 531,760
500,000 Dean Witter Discover, 6.25%, 3/15/00.... 503,065
500,000 Duke Power Corp., 6.625%, 2/1/03........ 512,035
500,000 Dupont E.I. De Nemours & Co., 6.75%,
10/15/02.............................. 513,280
250,000 Johnson & Johnson, 7.375%, 6/29/02...... 261,998
300,000 Norfolk Southern Railway Co., 6.50%,
8/1/02................................ 303,336
250,000 Public Service Co. of Oklahoma, 7.375%,
3/1/02................................ 252,078
500,000 Sara Lee Corp., 5.70%, 7/14/00.......... 497,955
500,000 Shell Oil Co., 6.70%, 8/15/02........... 512,065
500,000 Shell Oil Co., 6.95%, 12/15/98.......... 502,975
300,000 Smithkline Beecham Corp., 7.50%,
5/1/02................................ 300,369
250,000 Warner Lambert Co., 8.00%, 9/1/98....... 251,890
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Total Corporate Bonds & Notes
(cost $4,847,625) 4,942,806
-----------
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
FOREIGN GOVERNMENT OBLIGATIONS (1.5%)
$ 500,000 Province of Ontario Global Bond, 6.125%,
6/28/00 (cost $497,562)............... $ 502,165
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TREASURY NOTES (71.4%)
3,500,000 5.625%, 2/15/06......................... 3,472,315
1,000,000 5.75%, 10/31/00......................... 1,002,790
1,000,000 5.75%, 12/31/98......................... 1,002,220
1,000,000 5.875%, 2/15/04......................... 1,010,530
500,000 5.875%, 3/31/99......................... 501,800
1,000,000 6.00%, 8/15/99.......................... 1,005,390
3,500,000 6.25%, 2/15/03.......................... 3,585,050
500,000 6.25%, 2/15/07.......................... 517,140
500,000 6.25%, 4/30/01.......................... 508,340
500,000 6.375%, 3/31/01......................... 509,735
1,000,000 6.375%, 8/15/02......................... 1,026,490
1,500,000 6.375%, 9/30/01......................... 1,533,120
3,000,000 6.50%, 8/15/05.......................... 3,135,210
1,000,000 7.00%, 4/15/99.......................... 1,014,710
500,000 7.125%, 10/15/98........................ 504,450
2,000,000 7.25%, 5/15/04.......................... 2,159,200
500,000 7.50%, 11/15/01......................... 529,535
500,000 7.875%, 4/15/98......................... 500,550
500,000 8.50%, 2/15/00.......................... 525,380
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Total Treasury Notes
(cost $23,686,366) 24,043,955
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<CAPTION>
SHARES
- --------------------
<C> <S> <C>
SHORT TERM HOLDINGS (3.1%)
1,026,705 Boston 1784 Institutional US Treasury
Money Market Fund (cost $1,026,705)... 1,026,705
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Total Investments (100.0%)
(cost $33,134,244) $33,629,831
-----------
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</TABLE>
See Notes to Schedule of Investments. 8 FORUM FUNDS-Registered Trademark-
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INVESTORS BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
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<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (3.7%)
FHLMC (0.6%)
$ 477,843 Series 90 135-A, 8.75%, 5/15/00......... $ 489,230
7,664 Series 93 1581-A, 4.50%, 9/15/98........ 7,652
-----------
Total FHLMC 496,882
-----------
FNMA (1.6%)
1,397,366 Series 92 214-F, 6.54% V/R, 10/25/22
(a)................................... 1,397,604
-----------
OTHER (1.5%)
219,166 Merrill Lynch Mortgage Investors, Inc.,
Series 89 E, 9.40%, 9/15/09........... 233,277
996,723 RTC, Series 92 C8 D, 8.84%, 12/25/23
(b)................................... 989,248
-----------
Total Other 1,222,525
-----------
Total Collateralized Mortgage Obligations
(cost $3,053,839) 3,117,011
-----------
CORPORATE BONDS & NOTES (58.7%)
500,000 AT&T Corp., 4.375%, 5/1/99.............. 491,820
500,000 Alabama Power Co., 6.375%, 8/1/99....... 502,620
250,000 American Express Credit Co., 6.125%,
6/15/00............................... 250,963
750,000 Associates Corp. of North America,
6.625%, 6/15/05....................... 765,143
330,000 Associates Corp. of North America,
6.375%, 11/15/05...................... 332,043
500,000 Atlanta Gas Light Co., 5.90%, 10/6/03... 491,260
500,000 Banc One Cleveland, N.A., 6.625%,
4/15/03............................... 508,190
600,000 Banc One Corp., 7.60%, 5/1/07........... 647,664
1,000,000 BankAmerica Corp., 7.125%, 5/1/06....... 1,045,100
500,000 Bear Stearns Cos., Inc., 6.75%,
4/15/03............................... 507,840
500,000 Bell Atlantic Corp., 5.05%,
10/1/98............................... 497,880
250,000 Boeing Co., 6.75%, 9/15/02.............. 255,750
250,000 Boeing Co., 6.35%, 6/15/03.............. 253,275
500,000 Boeing Co., 8.10%, 11/15/06............. 564,765
3,000,000 CBS, Inc., ACA insured, 7.625%,
1/1/02................................ 3,125,268
250,000 CNA Financial Corp., 6.25%, 11/15/03.... 248,463
500,000 Chase Manhattan Bank, N.A., 9.75%,
11/1/01............................... 556,885
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS & NOTES, CONTINUED
$ 4,298,000 Citfed Bancorp, Inc., 8.25%, 9/1/03..... $ 4,303,175
1,000,000 Commercial Credit Co., 7.875%,
7/15/04............................... 1,080,000
1,000,000 Commercial Credit Co., 7.375%,
4/15/05............................... 1,060,290
500,000 Commercial Credit Co., 6.625%,
11/15/06.............................. 508,970
500,000 Commonwealth Edison Co., 6.75%,
7/1/98................................ 500,125
750,000 Continental Bank, N.A. (a BankAmerica
subsidiary), 11.25%, 7/1/01........... 759,773
1,000,000 Dow Chemical Co., 8.625%, 4/1/06........ 1,138,890
250,000 Duke Power Corp., 5.875%, 6/1/01........ 249,300
500,000 Dupont Corp., 8.125%, 3/15/04........... 550,385
500,000 Eastman Kodak Co., 7.25%, 7/1/99........ 507,620
500,000 Eli Lilly & Co., 8.125%, 12/1/01........ 535,070
500,000 First Chicago NBD Corp., 8.10%,
3/1/02................................ 530,725
500,000 First Chicage NBD Corp., 6.125%,
2/15/06............................... 491,555
600,000 Ford Motor Co., 7.25%, 10/1/08.......... 639,012
250,000 Ford Motor Credit Co., 7.25%, 5/15/99... 253,355
500,000 Ford Motor Credit Co., 6.375%,
4/15/00............................... 503,995
1,000,000 Ford Motor Credit Co., 7.50%, 6/15/04... 1,064,350
545,000 Ford Motor Credit Co., 6.25%, 12/8/05... 540,362
1,500,000 Ford Motor Credit Co., 6.125%, 1/9/06... 1,475,775
500,000 GTE North, Inc., 6.90%, 11/1/08......... 520,130
200,000 ITT Hartford Group, Inc., 8.20%,
10/15/98.............................. 202,482
400,000 International Lease Finance Corp.,
8.375%, 12/15/04...................... 443,356
500,000 J.P. Morgan & Co., Inc., 7.625%,
9/15/04............................... 534,375
1,000,000 J.P. Morgan & Co., Inc., 6.25%,
12/15/05.............................. 991,470
450,000 Lehman Brothers Holdings, Inc., 5.74%
V/R, 1/12/99 (a)...................... 449,340
</TABLE>
See Notes to Schedule of Investments. 9 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
CORPORATE BONDS & NOTES, CONTINUED
<C> <S> <C>
$ 1,000,000 Lehman Brothers Holdings, Inc., 7.20%,
8/15/09............................... $ 1,033,157
1,000,000 Leucadia Capital Trust I, 8.65%,
1/15/27............................... 1,065,462
500,000 Lucent Technologies, Inc., 7.25%,
7/15/06............................... 532,875
750,000 Merchants National Corp. (a National
City Corp. subsidiary), 9.875%,
10/1/99............................... 788,773
500,000 Merrill Lynch & Co., Inc., 7.00%,
3/15/06............................... 520,965
500,000 Merrill Lynch & Co., Inc., 7.00%,
1/15/07............................... 522,580
250,000 Morgan Stanley Group, Inc., 7.50%,
9/1/99................................ 254,813
500,000 Morgan Stanley Group, Inc., 6.75%,
3/4/03................................ 511,686
1,000,000 NTC Capital, 6.11% V/R, 1/15/27......... 960,715
1,000,000 Nacolah Holding Corp. (a Sammons
Enterprises, Inc. subsidiary), 9.50%,
12/1/03............................... 1,060,617
500,000 NationsBank Corp., 5.125%, 9/15/98...... 498,355
500,000 Northern Telecom, Ltd., 6.00%, 9/1/03... 495,880
550,000 Norwest Corp., 6.20%, 12/1/05........... 543,686
500,000 Norwest Financial Inc., 5.50%,
4/15/98............................... 499,970
500,000 Norwest Financial, Inc., 6.20%,
9/15/99............................... 500,865
250,000 Norwest Financial, Inc., 6.125%,
8/1/03................................ 249,690
500,000 Paine Webber, Inc., 9.25%, 12/15/01..... 545,690
500,000 PepsiCo, Inc., 7.625%, 11/1/98.......... 504,140
750,000 Philip Morris Cos., Inc., 7.375%,
2/15/99............................... 758,064
700,000 Republic New York Corp., 8.375%,
2/15/07............................... 793,875
1,000,000 Salomon, Inc., 7.75%, 9/22/05........... 1,015,710
500,000 Seagram Co., Ltd., 8.35%, 11/15/06...... 561,640
1,000,000 Sears Roebuck Acceptance Corp., 6.70%,
11/15/06.............................. 1,020,200
500,000 Security Pacific Corp., 6.00%, 5/1/00... 500,740
500,000 Southern Indiana Gas & Electric Co.,
6.375%, 8/1/98........................ 500,015
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS & NOTES, CONTINUED
$ 500,000 Southern New England Telephone, 7.125%,
8/1/07................................ $ 530,145
500,000 Union Pacific Corp., 6.00%, 9/1/03...... 487,600
700,000 WMX Technologies, Inc., 8.25%,
11/15/99.............................. 719,075
1,000,000 Wachovia Corp., 7.00%, 12/15/99......... 1,015,810
-----------
Total Corporate Bonds & Notes
(cost $48,826,876) 49,871,602
-----------
GOVERNMENT MORTGAGE BACKED SECURITIES (2.5%)
FHLMC (0.2%)
137,056 Pool 502128, 9.00%, 10/1/04............. 142,915
-----------
GNMA (2.3%)
94,618 Pool 406467, 6.50%, 3/15/26............. 93,827
161,293 Pool 452743, 6.50%, 12/15/27............ 159,888
1,674,431 Pool 462480, 6.50%, 1/15/28............. 1,659,311
84,401 Pool 780509, 6.50%, 2/15/27............. 83,666
-----------
Total GNMA 1,996,692
-----------
Total Government Mortgage Backed Securities
(cost $2,153,032) 2,139,607
-----------
MUNICIPAL BONDS (3.4%)
1,250,000 Coffee County, GA, Hospital Authority
RV, Taxable Anticipation Certificates,
Series B, ACA Insured, 9.00%, 12/1/12
(b)................................... 1,394,500
1,350,000 Coffee County, GA, Hospital Authority
RV, Taxable Anticipation Certificates,
Series B, 9.00%, 12/1/12 (b).......... 1,463,446
-----------
Total Municipal Bonds
(cost $2,748,375) 2,857,946
-----------
<CAPTION>
<C> <S> <C>
SHARES
-----------
PREFERRED STOCK (4.8%)
40,000 Irwin Financial Corp., Capital Trust
I..................................... 1,105,001
68,500 NCBE Capital Trust...................... 1,849,500
80,000 Simmons First National Corp............. 1,120,000
-----------
Total Preferred Stock
(cost $3,738,300) 4,074,501
-----------
</TABLE>
See Notes to Schedule of Investments. 10 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
U.S. TREASURY BONDS (6.0%)
<C> <S> <C>
$ 5,000,000 6.125%, 11/15/27 (cost $5,196,093)...... $ 5,128,130
-----------
SHORT-TERM HOLDINGS (20.9%)
1,723,122 Boston 1784 Institutional US Treasury
Money Market Fund..................... 1,723,122
45,925 Dreyfus Treasury Prime Cash Management
Fund Class-A Shares................... 45,925
4,500,000 Cargill Corp. CP, 5.55%, 4/2/98......... 4,499,306
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
SHORT-TERM HOLDINGS, CONTINUED
$ 2,500,000 GMAC CP, 5.56%, 4/3/98.................. $ 2,499,228
4,000,000 KZH Funding CP, 5.73%, 4/6/98........... 3,996,817
5,000,000 Trident Capital Finance CP, 5.58%,
4/3/98................................ 4,998,450
-----------
Total Short-Term Holdings
(cost $17,762,848) 17,762,848
-----------
Total Investments (100.0%)
(cost $83,479,363) $84,951,645
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 11 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
TAXSAVER BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPALS (98.9%)
COLORADO (8.4%)
$ 1,000,000 Douglas County, CO, SD #1, GO Bonds,
Series A, 8.00%, 12/15/09............. $ 1,304,460
2,000,000 Jefferson County, CO, SD #R-001, GO
Bonds, Series A, FGIC insured, 5.00%,
12/15/17.............................. 1,965,420
-----------
3,269,880
-----------
ILLINOIS (2.2%)
400,000 Aurora, IL, MFHR Bonds, Fox Valley
Village, Unit 18D Project, Banque
Paribas LOC, 7.75%, 9/1/98............ 404,344
465,000 Illinois Development Finance Authority
RV, Community Rehabilitation Providers
Facilities Acquisition Program, Series
92, 8.25%, 8/1/12..................... 465,525
-----------
869,869
-----------
INDIANA (14.5%)
100,000 Allen County, IN, Jail Building Corp.
RV, First Mortgage, 5.15%, 4/1/98..... 100,000
100,000 Avilla, IN, School Building Corp. EFA
RV, First Mortgage, 5.00%, 1/15/00.... 101,799
100,000 Carmel, IN, High School Building Corp.
RV, First Mortgage, 5.40%, 2/15/01.... 103,744
100,000 Columbus, IN, Multi-School Building
Corp. RV, First Mortgage, AMBAC
insured, 6.00%, 1/1/00................ 103,495
100,000 Columbus, IN, North High School Building
Corp. RV, First Mortgage, 6.20%,
7/1/98................................ 100,603
100,000 Elkhart, IN, Community Schools COP
Bonds, 5.25%, 8/15/99................. 101,880
100,000 Flat Rock, IN, Hawcreek Elementary
School Building Corp. RV, First
Mortgage, 6.50%, 7/1/01............... 107,383
100,000 Franklin TWP Marion County, IN,
Multi-School Building Corp. RV, First
Mortgage, 4.80%, 1/1/99............... 100,830
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
INDIANA, CONTINUED
$ 100,000 Hamilton Southeastern IN Conservative
School Building Corp. RV, First
Mortgage, 6.25%, 7/1/99............... $ 103,006
100,000 Hamilton Southeastern, IN, North
Delegate School Building Corp. RV,
First Mortgage, 5.60%, 7/1/01......... 104,220
100,000 Hammond, IN, Multi-School Building Corp.
RV, First Mortgage, 6.50%, 1/15/01.... 106,460
100,000 Hendricks, IN, Economic Development
Income Tax RV, Series A, 5.95%,
7/1/99................................ 102,563
100,000 Howard County, IN, Jail & Juvenile
Detention Center Building Corp. RV,
First Mortgage, 6.20%, 1/1/01......... 105,388
100,000 Indiana Bond Bank RV, Special Program,
Series A1, Sumitomo Bank, Ltd., LOC,
6.20%, 1/1/99......................... 101,840
100,000 Indiana Bond Bank RV, Special Program,
Series A2, Sumitomo Bank, Ltd., LOC,
6.30%, 1/1/00......................... 103,916
100,000 Indiana Bond Bank RV, Special Program,
Series B, 6.00%, 8/1/01............... 105,544
100,000 Indiana Health Facilities Financing
Authority Hospital RV, Community
Hospital of Indiana, Series A & B,
MBIA insured, 6.35%, 7/1/03........... 109,612
100,000 Indiana Health Facilities Financing
Authority Hospital RV, Deaconess
Hospital, Inc., MBIA insured, 5.10%,
3/1/02................................ 103,278
100,000 Indiana Health Facilities Financing
Authority Hospital RV, Deaconess
Hospital, Inc., MBIA insured, 5.20%,
3/1/03................................ 104,037
100,000 Indiana Health Facilities Financing
Authority Hospital RV, Marion General
Hospital, Series A & B, AMBAC insured,
6.25%, 7/1/98......................... 100,610
100,000 Indiana Health Facilities Financing
Authority Hospital RV, Methodist
Hospital of Indiana, Series A, 5.40%,
9/1/00................................ 103,359
</TABLE>
See Notes to Schedule of Investments. 12 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
TAXSAVER BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
INDIANA, CONTINUED
$ 100,000 Indiana Muni Power Agency, Electric &
Refunding RV, Series A, MBIA insured,
5.55%, 1/1/02......................... $ 104,986
100,000 Indiana Muni Power Agency, Power Supply
System RV, Series B, MBIA insured,
5.00%, 1/1/00......................... 101,939
100,000 Indiana Secondary Market Educational
Loans, Inc., Educational Loan RV,
5.30%, 9/1/99......................... 101,411
100,000 Indiana Transportation Finance Authority
Highway RV, Series A, AMBAC insured,
4.50%, 6/1/98......................... 100,132
100,000 Indiana Transportation Financial
Authority Airport Facilities Lease RV,
Series A, 6.00%, 11/1/01.............. 105,865
200,000 Indiana Transportation Financial
Authority Airport Facilities Lease RV,
Series A, 4.80%, 11/1/05.............. 205,624
100,000 Indiana University RV, Package Systems,
MBIA insured, 6.10%, 6/1/99........... 102,773
100,000 Indiana University RV, Student Fee,
Series H, 6.20%, 8/1/98............... 100,813
100,000 Indianapolis, IN, Local Public Important
Bond Bank Transportation RV, Series D,
6.00%, 2/1/01......................... 104,964
100,000 Logansport, IN, Multi-Purpose School
Building Corp. RV, First Mortgage,
5.40%, 7/1/00......................... 102,977
100,000 Marion County, IN, Convention &
Recreational Facilities Authority
Excise Tax RV, Lease Rental, Series A,
AMBAC insured, 5.00%, 6/1/02.......... 103,228
100,000 Michigan City, IN, Area Schools COP,
AMBAC insured, 5.70%, 6/15/02......... 105,729
100,000 Monroe County, IN, School Building Corp.
RV, First Mortgage, 5.80%, 1/15/00.... 103,219
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
INDIANA, CONTINUED
$ 100,000 Noblesville, IN, West School Building
Corp., First Mortgage RV, 6.35%,
7/1/99................................ $ 103,072
100,000 North Harrison, IN, High School Building
Corp., First Mortgage RV, 4.90%,
7/1/99................................ 101,300
100,000 North Harrison, IN, High School Building
Corp., First Mortgage RV, 5.25%,
7/1/01................................ 103,275
100,000 Northridge High School Additions
Building Corp., Independent First
Mortgage RV, 5.60%, 12/30/01.......... 104,821
200,000 Perry, IN, Multi-School Building Corp.
RV, First Mortgage, 4.50%, 7/15/99.... 201,742
100,000 Pike Township, IN, School Building
Corp., Educational Facilities RV,
First Mortgage, Series A, 5.50%,
2/1/00................................ 102,683
100,000 Porter County, IN, Hospital Association
RV, FGIC insured, 5.80%, 12/1/00...... 104,504
100,000 Purdue University, IN, Educational
Facilities RV, Student Fees, Series G,
5.05%, 7/1/98......................... 100,328
100,000 Shelby County, IN, Jail Building Corp.,
Jail Facilities RV, First Mortgage,
MBIA insured, ETM USG, 6.05%,
7/15/02............................... 107,489
100,000 South Bend, IN, Sewer Works RV, FGIC
insured, 4.50%, 12/1/98............... 100,544
100,000 South Vermillion, IN, Middle School
Building Corp., Educational Facilities
RV, First Mortgage, 5.00%, 1/15/00.... 101,816
100,000 Southwest Allen, IN, Multi-School
Building Corp., Educational Facilities
RV, First Mortgage, ETM USG, 6.35%,
1/15/02............................... 107,578
100,000 Southwest Allen, IN, Multi-School
Building Corp., Educational Facilities
RV, First Mortgage, MBIA insured,
6.00%, 7/15/01........................ 105,963
100,000 Tippecanoe County-Lafayette, IN,
Building Corp. Leasing RV, First
Mortgage, 4.75%, 7/1/00............... 101,657
</TABLE>
See Notes to Schedule of Investments. 13 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
TAXSAVER BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
INDIANA, CONTINUED
$ 300,000 Vigo County, IN, Middle School Building
Corp., Educational Facilities RV,
First Mortgage, 5.40%, 7/1/05......... $ 316,617
100,000 Whitko, IN, Middle School Building
Corp., Educational Facilities RV,
6.50%, 7/15/01........................ 107,291
-----------
5,587,907
-----------
KENTUCKY (3.0%)
1,000,000 Kenton County, KY, Water District RV,
6.00%, 2/1/17......................... 1,074,890
100,000 Kentucky Housing Corp. Housing RV,
Series B, 5.05%, 7/1/06............... 103,155
-----------
1,178,045
-----------
LOUISIANA (3.7%)
1,000,000 Louisana Public Facilities Authority RV,
Extended Care Facilities Authority -
Comm-Care Corp., 11.00%, 2/1/14....... 1,427,770
-----------
MARYLAND (1.6%)
625,000 Maryland State EDA Health Care
Facilities RV, Crescent Cities
Project, Series A, 5.30%, 12/20/18.... 630,131
-----------
MICHIGAN (8.3%)
250,000 Comstock Park, MI, Public Schools GO
Bonds, 6.00%, 5/1/06.................. 276,415
1,000,000 Grand Rapids, MI, Water Supply RV, FGIC
insured, 6.50%, 1/1/15................ 1,072,030
250,000 Kent County, MI, Building Authority GO
Bonds, 5.10%, 12/1/07................. 261,565
200,000 Michigan Muni Bond Authority Revenue,
Series G, AMBAC insured, 6.20%,
11/1/04............................... 221,942
1,000,000 Michigan State Strategic Fund Ltd.,
Detroit Edison Co. Project-BB, 6.50%,
2/15/02............................... 1,084,140
150,000 Oakland County, MI, Sewer Disposal GO
Bonds, Orchard Lake Village, 5.40%,
11/1/02............................... 157,940
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
MICHIGAN, CONTINUED
$ 150,000 Oakland County, MI, Sewer Disposal GO
Bonds, Orchard Lake Village, Series B,
5.40%, 11/1/02........................ $ 157,940
-----------
3,231,972
-----------
MISSOURI (1.5%)
500,000 Sikeston Missouri Electric RV, 6.00%,
6/1/16................................ 561,750
-----------
NEBRASKA (2.8%)
1,000,000 Douglas County, NE, SD #017, GO Bonds,
Millard, MBIA insured, 6.25%,
10/1/17............................... 1,089,080
-----------
NEW YORK (1.0%)
350,000 New York State Thruway Authority,
Service Contract RV, Local Highway and
Bridge Project, 5.75%, 4/1/06......... 374,750
-----------
NORTH CAROLINA (4.1%)
750,000 Mecklenburg County, NC, Industrial
Facilities & PCR Financing Authority
RV, Fluor Corp. Project, 5.25%,
12/1/09............................... 768,015
505,000 North Carolina Eastern Muni Power RV,
Series A, USG COLL, 6.00%, 1/1/26..... 577,690
255,000 North Carolina Muni Power Agency #1,
Catawba Electric RV, 5.00%, 1/1/20.... 254,095
-----------
1,599,800
-----------
OHIO (26.4%)
1,000,000 Butler County, OH, Transportation RV,
Improvement District, Series A, FSA
insured, 6.00%, 4/1/11................ 1,104,340
500,000 Columbus, OH, UTGO Bonds, Series B,
5.25%, 5/15/08........................ 532,290
2,000,000 Hamilton, OH, Electrical System Mortgage
RV, Series A, FGIC insured, 6.00%,
10/15/23.............................. 2,155,420
700,000 Lakota, OH, UTGO Bonds, SD, AMBAC
insured, 6.25%, 12/1/14............... 772,429
750,000 Montgomery County, OH, LTGO Bonds,
5.30%, 12/1/10........................ 788,265
</TABLE>
See Notes to Schedule of Investments. 14 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
TAXSAVER BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
OHIO, CONTINUED
$ 1,000,000 North Olmstead, OH, LTGO Bonds, AMBAC
insured, 6.20%, 12/1/11............... $ 1,127,780
795,000 Northwest, OH, SD LOC, GO Bonds, FGIC
insured, 5.50%, 12/1/12............... 855,666
500,000 Ohio State Air Quality Development
Authority, PCR, Cleveland Electric Co.
Project, FGIC insured, 8.00%,
12/1/13............................... 576,570
500,000 Ohio State Public Facilities Community
RV, Higher Education Capital
Facilities, Series II-A, 5.00%,
5/1/05................................ 519,305
655,000 Shelby County, OH, Hospital Facilities
RV, Wilson Memorial Hospital, ETM USG,
6.40%, 12/1/03........................ 699,173
500,000 University Cincinnati, OH, General
Receipts, Educational Facilities RV,
Series G, 7.00%, 6/1/11............... 546,865
500,000 Washington County, OH, Hospital
Refunding RV, Shelby General Hospital,
6.875%, 7/1/03........................ 538,805
-----------
10,216,908
-----------
OKLAHOMA (0.7%)
250,000 Claremore, OK, Public Works Authority
Capital Improvement RV, MBIA insured,
5.00%, 6/1/05......................... 259,743
-----------
PENNSYLVANIA (11.5%)
665,000 Allegheny County, PA, Hospital
Development Authority, Health Care RV,
Allegheny Valley School Project,
7.25%, 2/1/03......................... 699,580
1,000,000 Allegheny County, PA, Hospital
Development Authority, Health Center
RV, West Penn Hospital Foundation,
Series 90, 8.00%, 1/1/05.............. 1,063,700
500,000 Bucks County, PA, IDA RV, Personal Care,
ETM USG, Series A, 10.00%, 5/15/19.... 816,815
515,000 Erie-Western Pennsylvania Port
Authority, Pennsylvania Refunding RV,
8.25%, 6/15/00........................ 560,537
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
PENNSYLVANIA, CONTINUED
$ 1,000,000 Hampden, PA, IDA RV, Ralston Purina Co.
Project, 8.125%, 1/1/07............... $ 1,056,140
110,000 Pennsylvania HEFA RV, Medical College of
Pennsylvania, Series 91 B, 7.25%,
3/1/05, P/R USG 3/1/01 @ 102.......... 121,464
125,000 Washington County, PA, IDA Refunding RV,
Presbyterian Medical Center, FHA
insured, 6.50%, 1/15/02............... 135,274
-----------
4,453,510
-----------
PUERTO RICO (4.6%)
150,000 Commonwealth of Puerto Rico, GO Bonds,
MBIA insured, 6.50%, 7/1/04........... 168,518
500,000 Puerto Rico, Industrial, Medical &
Environmental PCR Facilities Authority
Financing Bonds, Pepsico, Inc.,
Project, 6.25%, 11/15/13.............. 546,565
335,000 Puerto Rico Infrastructure Financing
Authority, Special Tax RV, Series 88
A, 7.60%, 7/1/00...................... 344,548
100,000 Puerto Rico Infrastructure Financing
Authority, Special Tax RV, Series 88
A, 7.75%, 7/1/08...................... 103,040
550,000 University of Puerto Rico RV, Series N,
MBIA insured, 6.25%, 6/1/04........... 609,713
-----------
1,772,384
-----------
TEXAS (2.1%)
750,000 Red River Authority, TX, PCR, Remarketed
8/1/90, Hoechst Celanese Corp. LOC,
7.50%, 8/1/12......................... 820,755
-----------
VIRGIN ISLANDS (1.2%)
410,000 Virgin Islands PFA RV, Government
Development Program, Series A, 7.00%,
10/1/04............................... 446,264
-----------
</TABLE>
See Notes to Schedule of Investments. 15 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
TAXSAVER BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
VIRGINIA (1.3%)
$ 500,000 Fairfax County, VA, EDA RV
(C-Span Project), Series B, 7.50%,
6/1/01................................ $ 516,395
-----------
Total Municipal Bonds (cost $37,106,164) 38,306,913
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
SHORT-TERM HOLDINGS (1.1%)
$ 433,556 Boston 1784 Tax Free Money Market Fund
(cost $433,556)....................... $ 433,556
-----------
Total Investments (100.0%) (cost $37,539,720) $38,740,469
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 16 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
MAINE MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS (96.1%)
GENERAL OBLIGATION--BOND BANK (6.8%)
$ 50,000 Maine Muni Bond Bank, Series 88 A,
6.70%, 11/1/98........................ $ 50,876
50,000 Maine Muni Bond Bank, Series 88 A,
7.50%, 11/1/05, P/R USG 11/1/98 @
102................................... 52,095
40,000 Maine Muni Bond Bank, Series 88 B,
7.65%, 11/1/06, P/R USG 11/1/98 @
102................................... 41,808
50,000 Maine Muni Bond Bank, Series 88 B,
7.85%, 11/1/18, P/R USG 11/1/98 @
103................................... 52,684
60,000 Maine Muni Bond Bank, Series 88 C,
7.10%, 11/1/02, P/R USG 11/1/98 @
101.25................................ 61,935
300,000 Maine Muni Bond Bank, Series 89 B,
7.30%, 11/1/00........................ 321,128
50,000 Maine Muni Bond Bank, Series 89 B,
7.40%, 11/1/14, P/R USG 11/1/99 @
102................................... 53,735
210,000 Maine Muni Bond Bank, Series 90 B,
7.20%, 11/1/07, P/R USG 11/1/00 @
102................................... 230,272
50,000 Maine Muni Bond Bank, Series 90 B,
7.20%, 11/1/11, P/R USG 11/1/00 @
102................................... 54,827
150,000 Maine Muni Bond Bank, Series 90 B,
7.20%, 11/1/15, P/R USG 11/1/00 @
102................................... 164,480
25,000 Maine Muni Bond Bank, Series 90 D,
7.375%, 11/1/10, P/R USG 11/1/00 @
102................................... 27,520
10,000 Maine Muni Bond Bank, Series 91 C,
6.45%, 11/1/01........................ 10,784
25,000 Maine Muni Bond Bank, Series 91 D,
5.90%, 11/1/00........................ 26,229
100,000 Maine Muni Bond Bank, Series 92 B,
6.65%, 11/1/07........................ 112,280
85,000 Maine Muni Bond Bank, Series 92 B,
6.75%, 11/1/12........................ 95,790
100,000 Maine Muni Bond Bank, Series 92 C,
5.80%, 11/1/99........................ 103,104
150,000 Maine Muni Bond Bank, Series 92 E,
5.80%, 11/1/04........................ 161,928
205,000 Maine Muni Bond Bank, Series 93 C,
5.55%, 11/1/08........................ 217,532
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
GENERAL OBLIGATION--BOND BANK, CONTINUED
$ 80,000 Maine Muni Bond Bank, Sewer & Water
Bonds, SRF Program, Series 91 A,
7.20%, 11/1/13, P/R USG 11/1/01 @
102................................... $ 89,353
-----------
1,928,360
-----------
GENERAL OBLIGATION--LOCAL (20.1%)
100,000 Bangor, ME, LTGO Bonds, Bangor
International Airport Project, 5.75%,
10/1/01............................... 105,013
25,000 Bangor, ME, LTGO Bonds, Bangor
International Airport Project, 5.85%,
10/1/02............................... 26,595
150,000 Bangor, ME, LTGO Bonds, Bangor
International Airport Project, 6.00%,
10/1/03............................... 161,877
100,000 Bangor, ME, LTGO Bonds, Bangor
International Airport Project, 6.10%,
10/1/04............................... 108,324
250,000 Bangor, ME, LTGO Bonds, Bangor
International Airport Project, 6.35%,
10/1/07............................... 269,135
100,000 Bangor, ME, UTGO Bonds, 5.20%,
11/1/00............................... 103,286
60,000 Bangor, ME, UTGO Bonds, 5.50%, 9/1/24... 64,241
175,000 Bar Harbor, ME, UTGO Bonds, 6.20%,
6/1/05................................ 193,491
75,000 Bar Harbor, ME, UTGO Bonds, 6.45%,
6/1/09................................ 85,945
25,000 Bath, ME, GO Bonds, 5.625%, 3/1/09...... 27,054
30,000 Bath, ME, UTGO Bonds, 7.45%, 12/1/07.... 36,825
20,000 Bath, ME, UTGO Bonds, 7.50%, 12/1/08.... 24,892
50,000 Brewer, ME, UTGO Bonds, Series A, 6.10%,
1/1/03................................ 54,004
50,000 Brewer, ME, UTGO Bonds, Series A, 6.10%,
1/1/04................................ 54,565
50,000 Brewer, ME, UTGO Bonds, Series A, 6.10%,
1/1/05................................ 54,462
50,000 Brewer, ME, UTGO Bonds, Series A, 6.20%,
1/1/06................................ 54,539
50,000 Brunswick, ME, Tax Increment GO Bonds,
BTI Project, 5.50%, 11/1/08........... 53,937
</TABLE>
See Notes to Schedule of Investments. 17 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
MAINE MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
GENERAL OBLIGATION--LOCAL, CONTINUED
$ 100,000 Cape Elizabeth, ME, GO Bonds, 5.90%,
10/15/12.............................. $ 108,162
25,000 Cape Elizabeth, ME, GO Bonds, 5.90%,
10/15/14.............................. 26,865
250,000 Cape Elizabeth, ME, UTGO Bonds, 5.75%,
10/15/09.............................. 270,673
100,000 Cumberland County, ME, UTGO Bonds,
6.50%, 2/1/03, P/R USG 2/1/01 @ 102... 108,346
250,000 Cumberland County, ME, UTGO Bonds,
5.25%, 2/1/07......................... 263,647
25,000 Ellsworth, ME, UTGO Bonds, 7.20%,
7/1/08................................ 30,049
250,000 Freeport, ME, UTGO Bonds, 7.25%,
9/1/04................................ 290,810
20,000 Freeport, ME, UTGO Bonds, 7.25%,
9/1/10................................ 24,809
40,000 Old Orchard Beach, ME, UTGO Bonds, MBIA
insured, 6.40%, 9/1/04................ 44,339
215,000 Old Orchard Beach, ME, UTGO Bonds, MBIA
insured, 6.60%, 9/1/06................ 240,499
50,000 Old Orchard Beach, ME, UTGO Bonds, MBIA
insured, 6.65%, 9/1/07................ 56,030
70,000 Old Orchard Beach, ME, UTGO Bonds, MBIA
insured, 6.65%, 9/1/08................ 78,441
35,000 Old Orchard Beach, ME, UTGO Bonds, MBIA
insured, 6.65%, 9/1/10................ 38,949
50,000 Portland, ME, GO Bonds, 12.10%,
7/1/99................................ 55,013
50,000 Portland, ME, GO Bonds, 10.50%,
11/1/99............................... 55,108
500,000 Portland, ME, GO Bonds, 6.20%, 4/1/05... 557,660
50,000 Portland, ME, GO Bonds, 12.60%,
11/1/05............................... 75,732
100,000 Portland, ME, GO Bonds, 7.25%,
12/1/05............................... 118,619
790,000 Portland, ME, GO Bonds, 5.30%,
6/13/13............................... 812,002
25,000 Portland, ME, GO Bonds, 6.50%, 4/1/14... 28,390
150,000 South Portland, ME, GO Bonds, 5.80%,
9/1/08................................ 167,192
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
GENERAL OBLIGATION--LOCAL, CONTINUED
$ 40,000 South Portland, ME, GO Bonds, 5.80%,
9/1/11................................ $ 44,530
25,000 Westbrook, ME, UTGO Bonds, 6.75%,
11/15/04.............................. 28,573
75,000 Windham, ME, UTGO Bonds, 0.05%,
6/15/08............................... 47,785
130,000 Winslow, ME, GO Bonds, Crowe Rope
Industries Project, Series A, 5.50%,
3/1/07................................ 138,229
50,000 Winslow, ME, SD, UTGO Bonds, AMBAC
insured, 7.00%, 10/1/10............... 55,085
20,000 Winslow, ME, UTGO Bonds, AMBAC insured,
6.90%, 10/1/08........................ 22,059
25,000 Winthrop, ME, UTGO Bonds, 5.10%,
8/1/04................................ 26,111
25,000 Winthrop, ME, UTGO Bonds, 5.20%,
8/1/05................................ 26,273
25,000 Winthrop, ME, UTGO Bonds, 5.30%,
8/1/06................................ 26,483
25,000 Winthrop, ME, UTGO Bonds, 5.40%,
8/1/07................................ 26,698
250,000 Yarmouth, ME, GO Bonds, AMBAC insured,
5.25%, 11/15/09....................... 264,375
35,000 York, ME, SD, UTGO Bonds, AMBAC insured,
6.40%, 3/1/03......................... 37,719
-----------
5,673,440
-----------
GENERAL OBLIGATION--STATE (2.5%)
60,000 Maine, UTGO Bonds, 10.00%, 5/15/98...... 60,457
10,000 Maine, UTGO Bonds, 9.25%, 3/15/99....... 10,524
100,000 Maine, UTGO Bonds, 8.50%, 3/1/00........ 108,497
100,000 Maine, UTGO Bonds, 7.50%, 12/15/00...... 109,204
50,000 Maine, UTGO Bonds, 8.00%, 5/1/01........ 55,673
90,000 Maine, UTGO Bonds, 6.40%, 7/1/02........ 98,028
25,000 Maine, UTGO Bonds, 7.50%, 12/15/02...... 28,568
100,000 Maine, UTGO Bonds, 6.50%, 7/1/03........ 110,877
100,000 Maine, UTGO Bonds, Highway Improvements,
8.00%, 5/1/02......................... 114,388
-----------
696,216
-----------
</TABLE>
See Notes to Schedule of Investments. 18 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
MAINE MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
GENERAL OBLIGATION--TERRITORIAL (7.1%)
$ 300,000 Guam Government LTGO Bonds, Series 89 A,
Fuji Bank LOC, 7.00%, 11/15/04........ $ 320,667
1,000,000 Puerto Rico, GO Bonds, MBIA insured,
6.50%, 7/1/04......................... 1,123,450
525,000 Puerto Rico, GO Bonds, Series 93,
MBIA-IBC insured, 5.50%, 7/1/08....... 569,488
-----------
2,013,605
-----------
REVENUE--HEALTH & EDUCATION (20.5%)
30,000 Maine Educational Loan Authority,
Educational Loan RV, Supplemental
Education Loan Program, Series 92 A-1,
6.80%, 12/1/07........................ 32,410
65,000 Maine Educational Loan Authority,
Educational Loan RV, Supplemental
Education Loan Program, Series 92 A-1,
7.00%, 12/1/16........................ 70,359
20,000 Maine Educational Loan Authority,
Educational Loan RV, Supplemental
Education Loan Program, Series 92 A-2,
7.15%, 12/1/16........................ 21,728
45,000 Maine Educational Loan Marketing Corp.,
Student Loan Refunding RV, 6.90%,
11/1/03............................... 47,439
25,000 Maine Educational Loan Marketing Corp.,
Student Loan Refunding RV, Series A,
6.35%, 5/1/05......................... 26,417
140,000 Maine HEHFA RV, Cedar Nursing Home, FHA
insured, 7.90%, 8/1/32, P/R USG 2/1/00
@ 102................................. 152,312
50,000 Maine HEHFA RV, Central Maine Medical
Center, FGIC insured, 8.00%, 7/1/18,
P/R USG 7/1/98 @ 102.................. 51,528
100,000 Maine HEHFA RV, Colby College Issue,
FGIC insured, 6.20%, 7/1/99........... 102,982
250,000 Maine HEHFA RV, Coves Edge Nursing Home,
10.00%, 8/1/20, P/R USG 8/1/00 @
103................................... 289,930
100,000 Maine HEHFA RV, FSA insured, 6.10%,
7/1/01................................ 105,989
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
REVENUE--HEALTH & EDUCATION, CONTINUED
$ 10,000 Maine HEHFA RV, Kennebec Valley Medical
Center, FGIC insured, 7.00%, 7/1/05... $ 10,836
55,000 Maine HEHFA RV, Kennebec Valley Medical
Center, FGIC insured, 7.00%, 7/1/15... 59,600
185,000 Maine HEHFA RV, Maine Medical Center,
ETM USG, 6.00%, 10/1/13............... 204,844
150,000 Maine HEHFA RV, Portland Alliance for
the Mentally Ill, Maine Coast Regional
Health Center and Thomas College, FSA
insured, 6.10%, 7/1/03................ 162,483
435,000 Maine HEHFA RV, Saint Mary's General
Hospital, 8.50%, 7/1/09, P/R USG
7/1/99 @ 102.......................... 464,528
25,000 Maine HEHFA RV, Series A, 5.25%,
7/1/11................................ 26,012
550,000 Maine HEHFA RV, Series A, FSA insured,
5.25%, 7/1/10......................... 570,614
335,000 Maine HEHFA RV, Series B, MBIA insured,
5.00%, 7/1/10......................... 338,957
100,000 Maine HEHFA RV, Series 92 B, FSA
insured, 5.875%, 7/1/06............... 106,993
500,000 Maine HEHFA RV, Series 93 A, FSA
insured, 5.60%, 7/1/07................ 533,340
450,000 Maine HEHFA RV, Series 93 B, FSA
insured, 5.55%, 7/1/08................ 477,207
155,000 Maine HEHFA RV, Series 93 D, FSA
insured, 5.20%, 7/1/06................ 162,615
500,000 Maine HEHFA RV, Series 93 D, FSA
insured, 5.30%, 7/1/07................ 526,220
25,000 Maine HEHFA RV, Southern Maine Medical
Center, AMBAC insured, 7.20%,
5/1/06................................ 27,009
15,000 Maine HEHFA RV, Southern Maine Medical
Center, AMBAC insured, 7.30%,
5/1/14................................ 16,152
950,000 Maine Veterans' Homes RV, 6.80%,
10/1/05............................... 1,024,156
60,000 University of Maine System RV, 7.20%,
9/1/09, P/R USG 9/1/99 @ 102.......... 63,992
</TABLE>
See Notes to Schedule of Investments. 19 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
MAINE MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
REVENUE--HEALTH & EDUCATION, CONTINUED
$ 105,000 University of Maine System RV, 7.25%,
9/1/19, P/R USG 9/1/99 @ 102.......... $ 112,059
-----------
5,788,711
-----------
REVENUE--HOUSING (5.0%)
5,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 88 B, FHA/VA/ Private Mortgage
Pools, 8.00%, 11/15/15................ 5,124
100,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 88 C, 8.20%, 11/15/08.......... 102,957
40,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 88 D-5, 7.45%, 11/15/11........ 42,279
200,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 88 D-6, 7.25%, 11/15/19........ 211,510
20,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 89 A-1, 7.625%, 11/15/24....... 20,726
30,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 89 A-2, 7.30%, 11/15/16........ 31,223
110,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 90 A-5, Remarketed 5/13/93,
6.20%, 11/15/16....................... 114,874
185,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 92 C, 6.55%, 11/15/12.......... 194,281
300,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 94 A-2, 5.20%, 11/15/08........ 306,774
250,000 Maine HSG AUTH RV, Mortgage Purchase,
Series 94 C-1, 6.20%, 11/15/07........ 262,630
30,000 Maine HSG AUTH RV, Series 91 A, FSA
insured, 7.40%, 11/15/22.............. 31,932
50,000 Maine HSG AUTH RV, SFM Refunding RV,
Series 91-1, 6.90%, 11/1/07........... 53,052
40,000 Maine HSG AUTH RV, SFM Refunding RV,
Series 91-1, 7.15%, 11/1/21........... 42,427
-----------
1,419,789
-----------
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
REVENUE--INDUSTRIAL (8.5%)
$ 15,000 Bath, ME, Sewer Improvements RV, 7.40%,
12/1/06............................... $ 18,145
25,000 Bucksport, ME, Solid Waste Disposal RV,
Champion International Corp. Project,
6.25%, 5/1/10, Remarketed 5/1/93...... 26,585
530,000 East Millinocket, ME, PCR, Great
Northern Nekoosa Corp. Project, ETM
USG, 6.70%, 6/1/04.................... 579,350
15,000 Kennebunk, ME, Sewer District RV Bonds,
7.10%, 1/1/06......................... 17,412
165,000 Kennebec, ME, Water District RV, 7.00%,
12/1/14, P/R USG 12/1/01 @ 101.50..... 183,586
40,000 Kennebec, ME, Water District RV, 7.00%,
12/1/20, P/R USG 12/1/01 @ 101.50..... 44,505
500,000 Maine Finance Authority RV, Boise
Cascade Corp. Project, 7.90%,
6/1/15................................ 538,714
500,000 Regional Waste Systems, Inc., ME, RV,
Series A-C, 7.30%, 7/1/98............. 504,335
415,000 Regional Waste Systems, Inc., ME, RV,
Series A-C, 7.95%, 7/1/10............. 438,684
25,000 Regional Waste Systems, Inc., ME, RV,
Series D-F, 7.60%, 7/1/00............. 26,200
25,000 Wells Sanitation District, ME, Sewer RV,
6.75%, 3/1/00......................... 26,270
-----------
2,403,786
-----------
REVENUE--OTHER (0.0%)
10,000 Maine Court Facilities Authority Lease
Rental RV, 7.15%, 8/1/07, P/R USG,
8/1/00 at 102......................... 10,901
-----------
REVENUE--GUAM (3.5%)
25,000 Guam Government LO Highway RV, Series 92
A, FSA insured, 5.60%, 5/1/00......... 25,892
800,000 Guam Government LO Highway, RV, Series
A, FSA insured, 6.25%, 5/1/07......... 872,840
75,000 Guam Government Water System RV, CGIC
insured, 6.85%, 7/1/99................ 77,850
-----------
976,582
-----------
</TABLE>
See Notes to Schedule of Investments. 20 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
MAINE MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
REVENUE--PUERTO RICO (11.5%)
$ 35,000 Puerto Rico Highway & Transportation
Authority RV, Series U, 5.875%,
7/1/99................................ $ 35,939
335,000 Puerto Rico Highway & Transportation
Authority RV, Series X, 5.00%,
7/1/02................................ 345,640
100,000 Puerto Rico, Industrial, Medical &
Environmental RV, Abbott Chemicals,
Inc. Project, 6.50%, 7/1/09........... 100,824
225,000 Puerto Rico, Industrial, Medical &
Environmental RV, Motorola, Inc.
Project, Series A, 6.75%, 1/1/14
(b)................................... 248,560
500,000 Puerto Rico, PBA, Guaranteed Public
Education and Health Facilities RV,
Series M, FSA insured, 5.70%,
7/1/09................................ 550,850
1,000,000 Puerto Rico, PBA, Guaranteed RV, Series
B, 5.00%, 7/1/14...................... 1,000,780
870,000 University of Puerto Rico RV, Series N,
MBIA insured, 6.25%, 6/1/04........... 964,456
-----------
3,247,049
-----------
REVENUE--VIRGIN ISLANDS (7.4%)
350,000 Virgin Islands PFA RV, Government
Development Program, Series A, 7.00%,
10/1/04............................... 380,955
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
REVENUE--VIRGIN ISLANDS, CONTINUED
$ 550,000 Virgin Islands PFA RV, Matching Fund
Loan Notes, Series A, 6.90%,
10/1/01............................... $ 594,375
875,000 Virgin Islands PFA RV, Series 89 A,
7.30%, 10/1/18, P/R USG 10/1/00 @
101................................... 1,117,865
-----------
2,093,195
-----------
REVENUE--TRANSPORTATION (3.2%)
130,000 Maine State Turnpike Authority RV, MBIA
insured, 6.00%, 7/1/11................ 141,585
700,000 Maine State Turnpike Authority RV, MBIA
insured, 6.00%, 7/1/14................ 760,395
-----------
901,980
-----------
Total Municipal Bonds
(cost $25,989,715) 27,153,614
-----------
<CAPTION>
SHARES
- --------------------
<C> <S> <C>
SHORT-TERM HOLDINGS (3.9%)
1,106,128 Boston 1784 Tax-Free Money Market Fund
(cost $1,106,128)..................... 1,106,128
-----------
Total Investments (100.0%)
(cost $27,095,843) $28,259,742
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 21 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NEW HAMPSHIRE BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
MUNICIPALS (98.4%)
GENERAL OBLIGATION--BOND BANK (3.7%)
$ 25,000 New Hampshire Muni Bond Bank, Series 89
B, 6.70%, 7/15/04, P/R USG 7/15/99 @
102................................... $ 26,415
25,000 New Hampshire Muni Bond Bank, Series 90
A, 6.90%, 1/15/05..................... 26,761
20,000 New Hampshire Muni Bond Bank, Series 90
D, 6.90%, 7/15/03..................... 21,574
25,000 New Hampshire Muni Bond Bank, Series 91
E, 6.90%, 8/15/06..................... 27,604
50,000 New Hampshire Muni Bond Bank, Series 92
H, 6.35%, 7/15/06..................... 54,661
175,000 New Hampshire Muni Bond Bank, Series 92
H, 6.50%, 7/15/08..................... 191,605
85,000 New Hampshire Muni Bond Bank, Series 94
C, State Guaranteed, 5.80%, 8/15/08... 92,239
25,000 New Hampshire Muni Bond Bank, Series K,
6.75%, 1/15/08, P/R USG 1/15/01 @
102................................... 27,205
------------
468,064
------------
GENERAL OBLIGATION--LOCAL (22.6%)
155,000 Bedford, NH, UTGO Bonds, 6.70%,
8/1/12................................ 169,042
225,000 Belknap County, NH, GO Bonds, MBIA
insured, 5.20%, 6/15/13............... 229,932
50,000 Concord, NH, GO Bonds, FGIC insured,
6.05%, 10/15/08....................... 55,275
100,000 Concord, NH, SD, GO Bonds, 4.70%,
10/15/07.............................. 102,943
100,000 Concord, NH, SD, GO Bonds, 5.00%,
10/15/10.............................. 103,215
100,000 Concord, NH, UTGO Bonds, MBIA insured,
5.00%, 1/15/09........................ 102,587
25,000 Concord, NH, UTGO Bonds, Series 88,
7.00%, 5/15/04, P/R USG 5/15/98 @
102................................... 25,599
25,000 Exeter, NH, UTGO Bonds, 5.30%,
6/15/08............................... 26,800
50,000 Exeter, NH, UTGO Bonds, Series 93,
5.10%, 6/15/05........................ 52,548
140,000 Exeter, NH, UTGO Bonds, Sewer
Improvements, 6.25%, 1/15/07.......... 151,567
90,000 Farmington, NH, SD, GO Bonds, AMBAC
insured, 5.55%, 2/15/02............... 94,838
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
GENERAL OBLIGATION--LOCAL, CONTINUED
$ 50,000 Franklin, NH, GO Bonds, MBIA insured,
5.20%, 10/1/07........................ $ 52,695
100,000 Goffstown, NH, SD, GO Bonds, AMBAC
insured, 5.25%, 8/15/11............... 102,948
45,000 Keene, NH, UTGO Bonds, 5.15%,
10/15/11.............................. 46,767
25,000 Lisbon, NH, Regional SD, UTGO Bonds,
5.60%, 2/1/10......................... 26,145
50,000 Londonderry, NH, UTGO Bonds, 5.40%,
1/15/14............................... 51,553
250,000 Manchester, NH, UTGO Bonds, Public
Improvement Bonds, 5.50%, 11/1/12..... 262,003
15,000 Manchester, NH, UTGO Bonds, Series 93 A,
5.00%, 7/1/04......................... 15,628
250,000 Manchester, NH, UTGO Bonds, Series 93 A,
5.30%, 7/1/07......................... 263,345
20,000 Nashua, NH, UTGO Bonds, 5.70%,
7/15/07............................... 21,296
15,000 Nashua, NH, UTGO Bonds, 6.80%, 7/1/09... 16,507
100,000 Nashua, NH, UTGO Bonds, AMBAC insured,
5.35%, 7/15/06........................ 106,460
35,000 Nashua, NH, UTGO Bonds, FGIC insured,
5.25%, 11/2/09........................ 36,782
100,000 Nashua, NH, UTGO Bonds, Public
Improvement Bonds, 6.80%, 7/1/07...... 110,046
10,000 Nashua, NH, UTGO Bonds, Public
Improvement Bonds, 6.70%, 11/1/07..... 10,655
50,000 Oyster River, NH, Cooperative SD State
Guaranteed, GO Bonds, Lot A, 5.75%,
6/15/07............................... 54,305
100,000 Oyster River, NH, Cooperative SD State
Guaranteed, GO Bonds, Lot A, 5.85%,
6/15/08............................... 108,862
30,000 Salem, NH, GO Bonds, MBIA insured,
6.45%, 3/1/04......................... 32,391
400,000 Stratham, NH, SD, GO Bonds, AMBAC
insured, 5.10%, 1/15/08............... 420,588
------------
2,853,322
------------
</TABLE>
See Notes to Schedule of Investments. 22 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NEW HAMPSHIRE BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
GENERAL OBLIGATION--STATE (3.1%)
$ 350,000 New Hampshire, Capital Improvement GO
Bonds, 5.50%, 12/1/06................. $ 378,102
10,000 New Hampshire, GO Bonds, 6.00%,
9/1/05................................ 11,002
------------
389,104
------------
GENERAL OBLIGATION--TERRITORIAL (1.7%)
200,000 Guam Government LTGO Bonds, Series 89 A,
Fuji Bank LOC, 7.00%, 11/15/04........ 213,778
------------
REVENUE--HEALTH & EDUCATION (22.4%)
25,000 Hudson, NH, SD, Educational Facilities
RV, Lot B, 7.30%, 12/15/06............ 30,090
20,000 Hudson, NH, SD, Educational Facilities
RV, Lot B, 7.30%, 12/15/08............ 24,571
15,000 Mascenic, NH, Regional SD #1, Lot C,
AMBAC insured, 7.20%, 12/15/07........ 18,242
50,000 New Hampshire, HEFA, (Concord Hospital
Issue) RV, AMBAC insured, 5.40%,
10/1/06............................... 53,368
500,000 New Hampshire, HEFA, (Dartmouth College)
RV, Series A, 5.13%, 6/1/28........... 492,040
90,000 New Hampshire, HEHFA, RV, 6.00%,
10/1/13............................... 91,918
160,000 New Hampshire, HEHFA, RV, 6.00%,
10/1/13............................... 175,970
35,000 New Hampshire, HEHFA, (Elliot Hospital
of Manchester) RV, 6.50%, 10/1/11..... 37,748
100,000 New Hampshire, HEHFA, (Exeter Hospital)
RV, 5.25%, 10/1/00.................... 102,384
50,000 New Hampshire, HEHFA, (Exeter
Hospital/Healthcare Issue) RV, 5.50%,
10/1/13............................... 53,023
90,000 New Hampshire, HEHFA, (Franklin Pierce
College) RV, Series 94, 5.50%,
10/1/04............................... 92,295
165,000 New Hampshire, HEHFA, (Franklin Pierce
College) RV, Series 94, 5.50%,
10/1/04............................... 175,692
1,000,000 New Hampshire, HEFA, (Kendal at Hanover
Issue) RV, 5.80%, 10/1/12............. 1,025,910
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
REVENUE--HEALTH & EDUCATION, CONTINUED
$ 45,000 New Hampshire, HEHFA, (Lakes Region
Hospital Association) RV, 5.75%,
1/1/11................................ $ 47,569
15,000 New Hampshire, HEHFA, (Mary Hitchcock
Memorial Hospital) RV, FGIC insured,
4.90%, 8/15/01........................ 15,362
50,000 New Hampshire, HEHFA, (Nashua Memorial
Hospital) RV, 5.50%, 10/1/02.......... 51,924
125,000 New Hampshire, HEHFA, (Rivier College)
RV, 6.90%, 1/1/13..................... 134,255
175,000 New Hampshire, HEHFA,
(Wentworth-Douglass Hospital) RV,
5.40%, 1/1/07......................... 184,729
30,000 New Hampshire, HEHFA, (University System
of New Hampshire) RV, MBIA insured,
Series 92, 6.00%, 7/1/07.............. 32,460
------------
2,839,550
------------
REVENUE--HOUSING (9.1%)
500,000 New Hampshire, HSG AUTH RV, MFHR,
FHA/VA/RECD MTGS LOC, 5.60%, due
7/1/03................................ 522,310
15,000 New Hampshire, HSG AUTH RV, SFM RV,
6.75%, 7/1/04......................... 15,721
100,000 New Hampshire, HSG AUTH RV, SFM RV,
Series 92 A, 5.25%, 1/1/07............ 101,941
95,000 New Hampshire, HSG AUTH RV, SFM RV,
Series 96 B, 5.90%, 1/1/07............ 98,382
95,000 New Hampshire, HSG AUTH RV, SFM RV,
Series 96 B, 6.00%, 1/1/08............ 97,637
95,000 New Hampshire, HSG AUTH RV, SFM RV,
Series 96 B, 6.00%, 7/1/08............ 97,737
125,000 New Hampshire, HSG AUTH RV, Series SB,
4.85%, 1/1/05......................... 126,852
90,000 New Hampshire, HSG AUTH RV, Series SB,
4.95%, 1/1/06......................... 91,312
------------
1,151,892
------------
</TABLE>
See Notes to Schedule of Investments. 23 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NEW HAMPSHIRE BOND FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
REVENUE--GUAM (1.7%)
$ 200,000 Guam Government LO Highway, RV, Series
92 A, FSA insured, 6.25%, 5/1/07...... $ 218,210
------------
REVENUE--PUERTO RICO (14.7%)
775,000 Puerto Rico, PBA, Guaranteed Public
Education and Health Facilities RV,
Series 93 M, FSA insured, 5.70%,
7/1/09................................ 853,818
30,000 Puerto Rico Highway & Transportation
Authority RV, Series 92 U, 5.875%,
7/1/99................................ 30,805
165,000 Puerto Rico Highway & Transportation
Authority RV, Series 93 X, 5.00%,
7/1/02................................ 170,240
575,000 Puerto Rico, Industrial, Medical &
Environmental RV, Motorola, Inc.
Project, Series 83 A, 6.75%, 1/1/14
(b)................................... 635,207
145,000 University of Puerto Rico RV, Series N,
MBIA insured, 6.25%, 6/1/04........... 160,742
------------
1,850,812
------------
REVENUE--VIRGIN ISLANDS (12.9%)
180,000 Virgin Islands, HFA, SFM RV, GNMA
Mortgage-Backed, 6.00%, 3/1/07........ 185,308
580,000 Virgin Islands, PFA RV, Government
Development Program, Series A, 7.00%,
10/1/04............................... 631,300
450,000 Virgin Islands, PFA RV, Matching Fund
Loan Notes, Series A, 6.90%,
10/1/01............................... 486,310
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ ------------
<C> <S> <C>
REVENUE--VIRGIN ISLANDS, CONTINUED
$ 235,000 Virgin Islands, PFA RV, Series 89 A,
7.30%, 10/1/18, P/R USG 10/1/00 @
101................................... $ 300,226
30,000 Virgin Islands, PFA RV, Series B, COLL
by USG, 7.25%, 10/1/07, P/R USG
10/1/00 @ 101......................... 32,615
------------
1,635,759
------------
REVENUE--TRANSPORTATION (6.5%)
550,000 New Hampshire State Turnpike System RV,
Series 91 A, FGIC insured, 7.00%,
11/1/06............................... 649,990
150,000 New Hampshire State Turnpike System RV,
Series A, FGIC insured, 6.75%,
11/1/11............................... 173,750
------------
823,740
------------
Total Municipals
(cost $12,055,283) 12,444,231
------------
<CAPTION>
<C> <S> <C>
SHARES
-----------
SHORT-TERM HOLDINGS (1.6%)
200,000 New Hampshire, HEHFA, Revenue Muni
Demand Notes, FGIC insured, 3.80% V/R,
7/1/21 (cost $200,000)................ 200,000
------------
Total Investments (100.0%)
(cost $12,255,283) $12,644,231
------------
------------
</TABLE>
See Notes to Schedule of Investments. 24 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCK (88.2%)
AMUSEMENT & RECREATION SERVICES (1.5%)
5,000 Walt Disney Co.......................... $ 533,750
-----------
BUSINESS SERVICES (6.4%)
4,000 Automatic Data Processing, Inc.......... 272,250
7,500 Computer Associates International,
Inc................................... 433,125
6,000 Computer Sciences Corp.(c).............. 330,000
10,000 Fiserv, Inc.(c)......................... 633,750
20,000 Ogden Corp.............................. 575,000
-----------
2,244,125
-----------
CHEMICALS & ALLIED PRODUCTS (13.2%)
8,000 Abbott Laboratories..................... 602,500
8,000 Air Products & Chemicals, Inc........... 663,000
7,000 E.I. du Pont de Nemours & Co............ 476,000
10,000 Elan Corp. plc ADR(c)................... 646,250
8,000 Johnson & Johnson....................... 586,500
15,000 M.A. Hanna Co........................... 366,562
6,900 Merck & Co., Inc........................ 885,787
25,000 RPM, Inc................................ 445,312
-----------
4,671,911
-----------
COMMUNICATIONS (5.2%)
6,000 AT&T Corp............................... 393,750
8,000 Airtouch Communications, Inc.(c)........ 391,500
10,000 GTE Corp................................ 598,750
10,200 SBC Communications, Inc................. 444,975
-----------
1,828,975
-----------
DEPOSITORY INSTITUTIONS (7.0%)
11,000 Banc One Corp........................... 695,750
6,000 Citfed Bancorp, Inc..................... 337,500
9,137 NationsBank Corp........................ 666,357
18,000 Norwest Corp............................ 748,125
-----------
2,447,732
-----------
EATING & DRINKING PLACES (1.9%)
22,500 Tricon Global Restaurants, Inc.(c)...... 676,407
-----------
ELECTRIC, GAS & SANITARY SERVICES (1.4%)
15,000 SIGCORP, Inc............................ 479,062
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT (8.9%)
20,000 Andrew Corp.(c)......................... 396,250
10,200 Emerson Electric Co..................... 664,915
24,000 General Electric Co..................... 2,068,500
-----------
3,129,665
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY &
TRANSPORTATION EQUIPMENT (2.0%)
6,000 Gillette Co............................. $ 712,125
-----------
FOOD & KINDRED PRODUCTS (1.3%)
11,000 PepsiCo, Inc............................ 469,562
-----------
FORESTRY (0.2%)
2,500 Georgia-Pacific Group (Timber Group).... 64,220
-----------
GENERAL MERCHANDISE STORES (1.6%)
10,000 Sears, Roebuck & Co..................... 574,375
-----------
INDUSTRIAL & COMMERCIAL MACHINERY &
COMPUTER EQUIPMENT (2.8%)
6,000 Hewlett-Packard Co...................... 380,250
6,000 IBM Corp................................ 623,250
-----------
1,003,500
-----------
INSURANCE CARRIERS (5.9%)
6,750 American International Group, Inc....... 850,078
1,500 General Re Corp......................... 330,937
14,000 ReliaStar Financial Corp................ 644,875
11,000 USF&G Corp.............................. 274,312
-----------
2,100,202
-----------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (3.3%)
16,407 Thermo Instrument Systems, Inc.(c)...... 543,481
6,000 Xerox Corp.............................. 638,625
-----------
1,182,106
-----------
MISCELLANEOUS RETAIL (3.5%)
16,000 Barnes & Noble, Inc.(c)................. 624,000
20,000 Toys "R" Us, Inc.(c).................... 601,250
-----------
1,225,250
-----------
NONDEPOSITORY CREDIT INSTITUTIONS (1.8%)
10,000 FNMA.................................... 632,500
-----------
OIL & GAS EXTRACTION (1.3%)
6,000 Schlumberger, Ltd....................... 454,500
-----------
PAPER & ALLIED PRODUCTS (1.2%)
2,500 Georgia-Pacific Group................... 161,875
3,000 Minnesota Mining & Manufacturing Co..... 273,562
-----------
435,437
-----------
PETROLEUM REFINING & RELATED INDUSTRIES (5.0%)
2,000 Amoco Corp.............................. 172,751
</TABLE>
See Notes to Schedule of Investments. 25 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS GROWTH FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
PETROLEUM REFINING & RELATED INDUSTRIES, CONTINUED
10,000 Exxon Corp.............................. $ 676,250
6,000 Mobil Corp.............................. 459,750
8,000 Royal Dutch Petroleum Co................ 454,500
-----------
1,763,251
-----------
PHARMACEUTICAL PREPARATIONS (1.9%)
7,000 American Home Products Corp............. 667,625
-----------
PRIMARY METAL INDUSTRIES (1.4%)
10,000 Hubbell, Inc. Class B................... 503,750
-----------
RUBBER & MISCELLANEOUS PLASTIC PRODUCTS (1.7%)
14,000 Nike, Inc. Class B...................... 619,500
-----------
TOBACCO (1.2%)
10,000 Philip Morris Cos., Inc................. 416,875
-----------
TRANSPORTATION EQUIPMENT (5.3%)
13,000 Boeing Co............................... 677,625
15,000 Chrysler Corp........................... 623,438
6,000 United Technologies Corp................ 553,875
-----------
1,854,938
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
WHOLESALE TRADE--NONDURABLE GOODS (1.3%)
12,000 Sigma Aldrich........................... $ 447,000
-----------
Total Common Stock
(cost $13,831,155) 31,138,343
-----------
SHORT TERM HOLDINGS (11.8%)
$ 1,165,831 Boston 1784 Institutional US Treasury
Money Market Fund..................... 1,165,831
500,001 Dreyfus Government Cash Management
Fund.................................. 500,001
2,500,000 Merrill Lynch, 5.58%, 4/3/98............ 2,499,225
-----------
Total Short Term Holdings
(cost $4,165,057) 4,165,057
-----------
Total Investments (100.0%)
(cost $17,996,212) $35,303,400
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 26 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
PAYSON BALANCED FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCK (68.6%)
CHEMICALS & ALLIED PRODUCTS (2.3%)
5,600 Dow Chemical Co......................... $ 544,600
-----------
COMMUNICATIONS (4.2%)
6,600 AT&T Corp............................... 433,125
10,230 Telefonos de Mexico SA ADR.............. 576,717
-----------
1,009,842
-----------
DEPOSITORY INSTITUTIONS (6.8%)
8,800 Banc One Corp........................... 556,600
4,625 Chase Manhattan Corp.................... 623,796
8,000 First Union Corp........................ 454,000
-----------
1,634,396
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (1.6%)
7,390 Harris Corp............................. 385,205
-----------
HEALTH SERVICES (4.2%)
35,040 Beverly Enterprises, Inc.(c)............ 466,471
15,000 Tenet Healthcare Corp................... 544,687
-----------
1,011,158
-----------
INDUSTRIAL & COMMERCIAL MACHINERY &
COMPUTER EQUIPMENT (7.6%)
3,025 IBM Corp................................ 314,221
18,000 Quantum Corp.(c)........................ 383,625
20,300 Timken Co............................... 686,396
23,000 Western Digital Corp.(c)................ 403,938
-----------
1,788,180
-----------
INSURANCE CARRIERS (5.4%)
11,600 Conseco, Inc............................ 656,850
10,599 Travelers Group, Inc.................... 635,940
-----------
1,292,790
-----------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS (5.1%)
11,200 Litton Industries, Inc.(c).............. 646,100
12,750 Tektronix, Inc.......................... 568,969
-----------
1,215,069
-----------
METAL MINING (2.3%)
8,450 Phelps Dodge Corp....................... 545,553
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES (2.6%)
16,030 ITT Industries, Inc..................... 610,142
-----------
MISCELLANEOUS RETAIL (2.3%)
22,400 Woolworth Corp.(c)...................... 560,000
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
OIL & GAS EXTRACTION (5.8%)
4,800 Atlantic Richfield Co................... $ 377,400
20,225 ENSCO International, Inc................ 561,243
12,100 USX-Marathon Group, Inc................. 455,263
-----------
1,393,906
-----------
PETROLEUM REFINING & RELATED INDUSTRIES (4.6%)
8,400 Cooper Cameron Corp.(c)................. 507,150
11,650 Phillips Petroleum Co................... 581,772
-----------
1,088,922
-----------
TOBACCO PRODUCTS (2.2%)
12,500 Philip Morris Cos., Inc................. 521,094
-----------
TRANSPORTATION (9.5%)
9,800 Canadian National Railway Co............ 627,200
9,500 Ford Motor Co........................... 615,718
9,000 Tidewater, Inc.......................... 394,313
11,800 Trinity Industries, Inc................. 647,526
-----------
2,284,757
-----------
WHOLESALE TRADE--NONDURABLE GOODS (2.1%)
11,000 Supervalu, Inc.......................... 512,877
-----------
Total Common Stock
(cost $13,267,733) 16,398,491
-----------
<CAPTION>
FACE AMOUNT
----------
<C> <S> <C>
CORPORATE BONDS & NOTES (9.2%)
$ 50,000 Allstate Corp., 5.875%, 6/15/98......... 49,996
45,000 Avco Financial Services, 5.50%,
5/1/98................................ 44,982
150,000 Bear Stearns Cos., Inc., 6.625%,
1/15/04............................... 151,607
200,000 Chase Manhattan Corp., 6.25%, 1/15/06... 198,306
100,000 Crown, Cork, & Seal, 6.75%, 12/15/03.... 102,691
190,000 GMAC, 5.90%, 1/17/00.................... 189,436
100,000 Household Finance Corp., 7.625%,
6/15/99............................... 101,635
200,000 Household Finance Corp., 8.00%,
8/15/04............................... 204,974
20,000 IBM Credit Corp., 5.55%, 11/5/98........ 19,979
400,000 Korea Development Bank Global Bond,
7.25%, 5/15/06........................ 363,220
200,000 Lockheed Martin Corp., 6.85%, 5/15/01... 204,104
65,000 PepsiCo, Inc., 6.25%, 9/1/99............ 65,379
</TABLE>
See Notes to Schedule of Investments. 27 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
PAYSON BALANCED FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS & NOTES, CONTINUED
$ 200,000 Sears Roebuck Acceptance Corp., 6.75%,
9/15/05............................... $ 203,877
100,000 Wachovia Corp., 7.00%, 12/15/99......... 101,745
100,000 WMX Technologies, Inc., 8.25%,
11/15/99.............................. 103,114
100,000 WMX Technologies, Inc., 6.70%, 5/1/01... 100,680
-----------
Total Corporate Bonds & Notes
(cost $2,209,481) 2,205,725
-----------
GOVERNMENT AGENCY NOTES (5.9%)
FHLB (1.3%)
300,000 6.41%, 12/29/03......................... 297,908
-----------
FHLMC (2.5%)
400,000 6.89%, 10/3/05.......................... 407,930
200,000 6.65%, 2/9/06........................... 199,306
-----------
Total FHLMC 607,236
-----------
FNMA (2.1%)
500,000 6.54%, 9/8/00........................... 501,096
-----------
Total Government Agency Notes
(cost $1,365,244) 1,406,240
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS (3.4%)
FHLMC (1.7%)
200,000 Series 1491 GB, 6.90%, 11/15/21......... 201,948
200,000 Series 1678 C, 6.00%, 8/15/08........... 198,894
-----------
Total FHLMC 400,842
-----------
<CAPTION>
SECURITY
FACE AMOUNT DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
FNMA (1.7%)
$ 400,000 Series 1992-184 C, 7.00%, 10/25/21...... $ 395,000
-----------
Total Collateralized Mortgage Obligations
(cost $798,125) 795,842
-----------
MORTGAGE BACKED SECURITIES (0.6%)
GNMA (0.6%)
144,840 Pool 394795, 7.50%, 10/15/10
(cost $148,823)....................... 150,199
-----------
U.S. TREASURY NOTES (8.2%)
500,000 6.375%, 1/15/99......................... 503,281
125,000 9.125%, 5/15/99......................... 129,727
275,000 6.75%, 6/30/99.......................... 278,954
400,000 6.125%, 7/31/00......................... 404,375
350,000 6.25%, 8/31/02.......................... 357,657
275,000 7.25%, 5/15/04.......................... 296,828
-----------
Total U.S. Treasury Notes
(cost $1,939,804) 1,970,822
-----------
<CAPTION>
SHARES
----------
<C> <S> <C>
SHORT-TERM HOLDINGS (4.1%)
991,194 Boston 1784 Institutional US Treasury
Money Market Fund (cost $991,194)..... 991,194
-----------
Total Investments (100.0%)
(cost $20,720,404) $23,918,513
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 28 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
PAYSON VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCK (95.1%)
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE BUILDERS (2.1%)
6,000 Southdown, Inc.......................... $ 418,125
-----------
CHEMICALS & ALLIED PRODUCTS (9.5%)
6,000 Bristol-Myers Squibb Co................. 625,875
3,000 Dow Chemical Co......................... 291,750
5,000 Eastman Chemical Co..................... 337,188
8,000 Schering-Plough Corp.................... 653,500
-----------
1,908,313
-----------
COMMUNICATIONS (9.9%)
9,000 AT&T Corp............................... 590,625
8,000 GTE Corp................................ 479,000
6,000 Telefonos de Mexico SA ADR.............. 338,250
17,000 US West Media Group(c).................. 590,750
-----------
1,998,625
-----------
DEPOSITORY INSTITUTIONS (6.3%)
5,000 BankBoston Corp......................... 551,250
5,000 JSB Financial, Inc...................... 279,687
1,333 Wells Fargo & Co........................ 441,555
-----------
1,272,492
-----------
ELECTRIC, GAS & SANITARY SERVICES (1.3%)
5,000 New Century Energies, Inc............... 251,875
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT (6.0%)
9,000 Harris Corp............................. 469,125
7,000 Teleflex, Inc........................... 294,000
8,000 Texas Instruments, Inc.................. 433,000
-----------
1,196,125
-----------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES (1.5%)
6,000 Fluor Corp.............................. 298,500
-----------
FOOD STORES (4.4%)
20,000 American Stores Co...................... 520,000
20,000 Ruddick Corp............................ 371,250
-----------
891,250
-----------
HEALTH SERVICES (3.3%)
20,000 Beverly Enterprises, Inc.(c)............ 266,250
11,000 Tenet Healthcare Corp................... 399,437
-----------
665,687
-----------
INDUSTRIAL & COMMERCIAL MACHINERY &
COMPUTER EQUIPMENT (6.9%)
3,000 Cooper Cameron Corp.(c)................. 181,125
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL MACHINERY &
COMPUTER EQUIPMENT, CONTINUED
2,000 IBM Corp................................ $ 207,750
15,000 Timken Co............................... 507,187
6,200 Varian Associates, Inc.................. 343,325
8,000 Western Digital Corp.(c)................ 140,500
-----------
1,379,887
-----------
INSURANCE CARRIERS (6.5%)
10,000 American Bankers Insurance.............. 645,000
10,999 Travelers Group, Inc.................... 659,940
-----------
1,304,940
-----------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS (3.3%)
6,000 Litton Industries, Inc.(c).............. 346,125
7,000 Tektronix, Inc.......................... 312,375
-----------
658,500
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES (2.4%)
13,000 ITT Industries, Inc..................... 494,812
-----------
MISCELLANEOUS RETAIL (3.1%)
6,000 TJX Cos., Inc........................... 271,500
12,000 Toys "R" Us, Inc.(c).................... 360,750
-----------
632,250
-----------
OIL & GAS EXTRACTION (1.6%)
4,000 Atlantic Richfield Co................... 314,500
-----------
PAPER & ALLIED PRODUCTS (2.8%)
15,000 Willamette Industries, Inc.............. 563,437
-----------
PETROLEUM REFINING & RELATED INDUSTRIES (4.4%)
5,000 Mobil Corp.............................. 383,126
10,000 Phillips Petroleum Co................... 499,378
-----------
882,504
-----------
PRINTING & PUBLISHING (1.5%)
10,000 Banta Corp.............................. 309,375
-----------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (2.2%)
10,000 Nike, Inc. Class B...................... 442,500
-----------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES (2.0%)
9,000 Edwards (A.G.), Inc..................... 393,750
-----------
TOBACCO PRODUCTS (1.2%)
6,000 Philip Morris Cos., Inc................. 250,125
-----------
TRANSPORTATION (9.0%)
10,000 Fleetwood Enterprises, Inc.............. 465,625
6,000 Ford Motor Co........................... 388,875
</TABLE>
See Notes to Schedule of Investments. 29 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
PAYSON VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
TRANSPORTATION, CONTINUED
8,000 Tidewater, Inc.......................... $ 350,500
11,000 Trinity Industries, Inc................. 603,625
-----------
1,808,625
-----------
WHOLESALE TRADE--NONDURABLE GOODS (3.9%)
6,000 Supervalu, Inc.......................... 279,750
20,000 Sysco Corp.............................. 512,500
-----------
792,250
-----------
Total Common Stock
(cost $12,339,562) 19,128,447
-----------
WARRANTS (0.0%)
526 Security Capital Group Class B (cost
$0)................................... 1,742
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------------------------------------------------------ -----------
<C> <S> <C>
SHORT-TERM HOLDINGS (4.9%)
$951,642 Boston 1784 Institutional U.S. Treasury
Money Market Fund..................... $ 951,642
30,640 Dreyfus Government Cash Management
Fund.................................. 30,640
-----------
Total Short-Term Holdings
(cost $982,282) 982,282
-----------
Total Investments (100.0%)
(cost $13,321,844) $20,112,471
-----------
-----------
</TABLE>
See Notes to Schedule of Investments. 30 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Certain rate securities are deemed to have a maturity remaining until the
next readjustment of the interest rate or the longer of the demand period or
readjustment. The interest rates shown reflect the rate in effect on March
31, 1998.
(b) Securities that may be resold to "qualified institutional buyers" under rule
144A or securities offered pursuant to 4(2) of the Securities Act of 1933,
as amended.
(c) Non-income producing securities.
<TABLE>
<S> <C>
ACA American Capital Assets
ADR American Depositary Receipts
AMBAC American Municipal Bond Assurance Corporation
CGIC Capital Guaranty Insurance Company
COLL Collateralized
COP Certificates of Participation
CP Commercial Paper
EDA Economic Development Authority
EFA Education Finance Authority
ETM Escrowed to Maturity
FFCB Federal Farm Credit Bureau
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Authority
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HEFA Higher Education Facilities Authority
HEHFA Higher Education & Health Facilities Authority
HFA Housing Finance Authority
HSG AUTH State Housing Authority
IBC Insured Bond Certification
IDA Industrial Development Authority
LO Limited Obligation
LOC Letter of Credit
LTGO Limited Tax General Obligation
MBIA Municipal Bond Insurance Association
MFHR Multi-Family Housing Revenue
MTGS Mortgages
Muni Municipal
NBD National Bank Detroit
PBA Public Building Authority
P/R Prerefunded
PCR Pollution Control Revenue
PFA Public Finance Authority
RECD Royal Economic & Community Development
RV Revenue Bonds
RTC Resolution Trust Company
SD School District
SFM Single Family Mortgage
VA Veterans Administration
V/R Variable Rate
USG U.S. Governments
UTGO Unlimited Tax General Obligation
</TABLE>
See Notes to Financial Statements. 31 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINE
INVESTORS INVESTORS TAXSAVER MUNICIPAL
HIGH GRADE BOND BOND BOND
BOND FUND FUND FUND FUND
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Notes 1 and 2):
Investments at cost.......... $ 33,134,244 $83,479,363 $37,539,720 $27,095,843
Net unrealized appreciation
(depreciation).............. 495,587 1,472,282 1,200,749 1,163,899
------------- ----------- ----------- -----------
Total investments at
value..................... 33,629,831 84,951,645 38,740,469 28,259,742
Cash........................... -- -- -- --
Interest, dividends and other
receivables................... 436,537 1,132,142 628,979 524,723
Receivable for securities
sold.......................... -- -- -- --
Receivable for fund shares
sold.......................... 64,000 28,053 -- 44,863
Organization costs, net of
amortization (Note 2)......... 5,118 -- -- --
------------- ----------- ----------- -----------
Total Assets....................... 34,135,486 86,111,840 39,369,448 28,829,328
------------- ----------- ----------- -----------
LIABILITIES:
Dividends payable.............. 83,022 449,306 125,873 49,482
Payable for securities
purchased..................... -- -- -- 570,009
Payable to advisor (Note 3).... 5,970 29,001 13,269 9,493
Payable for fund shares
redeemed...................... -- 950 21,000 --
Accrued expenses and other
liabilities................... 9,597 34,552 5,999 4,291
------------- ----------- ----------- -----------
Total Liabilities.................. 98,589 513,809 166,141 633,275
------------- ----------- ----------- -----------
NET ASSETS......................... $ 34,036,897 $85,598,031 $39,203,307 $28,196,053
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
COMPONENTS OF NET ASSETS:
Paid in capital................ $ 33,541,310 $83,858,624 $37,578,093 $27,002,433
Undistributed (distribution in
excess of) net investment
income........................ -- (4,904) 8,267 --
Unrealized appreciation
(depreciation) on
investments................... 495,587 1,472,282 1,200,749 1,163,899
Accumulated net realized gain
(loss)........................ -- 272,029 416,198 29,721
------------- ----------- ----------- -----------
NET ASSETS......................... $ 34,036,897 $85,598,031 $39,203,307 $28,196,053
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
SHARES OF BENEFICIAL INTEREST...... 3,415,730 8,097,617 3,645,233 2,552,646
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
NET ASSET VALUE, AND REDEMPTION
PRICE PER SHARE................... $ 9.96 $ 10.57 $ 10.75 $ 11.05
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
OFFERING PRICE PER SHARE (NAV
DIVIDED BY (1-MAXIMUM SALES
LOAD)............................. $ 10.35 $ 10.98 $ 11.17 $ 11.33
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
MAXIMUM SALES LOAD................. 3.75% 3.75% 3.75% 2.50%
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
</TABLE>
See Notes to Financial Statements. 32 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW HAMPSHIRE INVESTORS PAYSON PAYSON
BOND GROWTH BALANCED VALUE
FUND FUND FUND FUND
-------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Notes 1 and 2):
Investments at cost.......... $ 12,255,283 $17,996,212 $20,720,404 $13,321,844
Net unrealized appreciation
(depreciation).............. 388,948 17,307,188 3,198,109 6,790,627
-------------- ----------- ----------- -----------
Total investments at
value..................... 12,644,231 35,303,400 23,918,513 20,112,471
Cash........................... 15,940 -- -- --
Interest, dividends and other
receivables................... 236,976 45,658 121,633 28,881
Receivable for securities
sold.......................... -- -- 496,883 --
Receivable for fund shares
sold.......................... 29,229 -- -- 11,024
Organization costs, net of
amortization (Note 2)......... -- 14,333 -- --
-------------- ----------- ----------- -----------
Total Assets....................... 12,926,376 35,363,391 24,537,029 20,152,376
-------------- ----------- ----------- -----------
LIABILITIES:
Dividends payable.............. 12,157 -- 47,424 6,529
Payable for securities
purchased..................... -- 1,407,043 -- 184,050
Payable to advisor (Note 3).... 4,333 18,258 12,303 13,287
Payable to administrator (Note
3)............................ -- -- 5,560 4,192
Payable for fund shares
redeemed...................... -- -- 4,073 --
Accrued expenses and other
liabilities................... 1,959 39,152 27,834 25,961
-------------- ----------- ----------- -----------
Total Liabilities.................. 18,449 1,464,453 97,194 234,019
-------------- ----------- ----------- -----------
NET ASSETS......................... $ 12,907,927 $33,898,938 $24,439,835 $19,918,357
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
COMPONENTS OF NET ASSETS:
Paid in capital................ $ 12,506,403 $16,503,288 $19,858,219 $12,199,033
Undistributed (distribution in
excess of) net investment
income........................ 489 88,462 (3,069) (15,760)
Unrealized appreciation
(depreciation) on
investments................... 388,948 17,307,188 3,198,109 6,790,627
Accumulated net realized gain
(loss)........................ 12,087 -- 1,386,576 944,457
-------------- ----------- ----------- -----------
NET ASSETS......................... $ 12,907,927 $33,898,938 $24,439,835 $19,918,357
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
SHARES OF BENEFICIAL INTEREST...... 1,202,463 2,987,037 1,652,819 919,046
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
NET ASSET VALUE, AND REDEMPTION
PRICE PER SHARE................... $ 10.73 $ 11.35 $ 14.79 $ 21.67
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
OFFERING PRICE PER SHARE (NAV
DIVIDED BY (1-MAXIMUM SALES
LOAD)............................. $ 11.01 $ 11.82 $ 15.41 $ 22.58
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
MAXIMUM SALES LOAD................. 2.50% 4.00% 4.00% 4.00%
-------------- ----------- ----------- -----------
-------------- ----------- ----------- -----------
</TABLE>
See Notes to Financial Statements. 33 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD AND YEAR ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS HIGH MAINE
GRADE BOND INVESTORS TAXSAVER MUNICIPAL
FUND (a) BOND FUND BOND FUND BOND FUND
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income...... $ 93,471 $2,940,733 $1,415,850 $1,410,516
Dividend income...... -- 159,141 -- --
-------------- ---------- ---------- ----------
Total investment
income.................. 93,471 3,099,874 1,415,850 1,410,516
-------------- ---------- ---------- ----------
EXPENSES:
Investment advisory
(Note 3)............ 5,970 171,777 102,003 107,471
Management (Note
3).................. 2,985 108,198 66,898 73,724
Transfer agency (Note
3).................. 4,248 120,533 76,553 86,179
Custody.............. 567 15,413 8,549 7,062
Accounting (Note
3).................. 3,548 41,000 41,000 48,000
Audit................ 15,750 15,750 15,750 16,250
Legal................ 2,078 15,124 9,171 15,795
Trustees............. 600 3,246 2,477 2,814
Reporting............ 3,887 21,523 11,469 12,533
Compliance........... 5,025 4,434 3,593 6,880
Amortization of
organization costs
(Note 2)............ 36 -- -- --
Miscellaneous........ 7 8,153 9,048 21,888
-------------- ---------- ---------- ----------
Total expenses........... 44,701 525,151 346,511 398,596
Expenses reimbursed and
fees waived (Note 4).... (34,252) (224,577 ) (193,516 ) (237,403 )
-------------- ---------- ---------- ----------
Net expenses............. 10,449 300,574 152,995 161,193
-------------- ---------- ---------- ----------
NET INVESTMENT INCOME
(LOSS).................. 83,022 2,799,300 1,262,855 1,249,323
-------------- ---------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on
investments sold.... -- 407,860 431,531 85,991
Net change in
unrealized
appreciation
(depreciation) on
investments......... (120,183) 619,147 12,927 692,888
-------------- ---------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS.......... (120,183) 1,027,007 444,458 778,879
-------------- ---------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS......... $ (37,161) $3,826,307 $1,707,313 $2,028,202
-------------- ---------- ---------- ----------
-------------- ---------- ---------- ----------
</TABLE>
(a) See Note 1 to financial statements for commencement of operations.
See Notes to Financial Statements. 34 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIOD AND YEAR ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS PAYSON
NEW HAMPSHIRE GROWTH FUND BALANCED PAYSON VALUE
BOND FUND (a) FUND FUND
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........... $ 552,456 $ 69,128 $ 464,294 $ 31,251
Dividend income........... -- 118,840 353,967 309,230
------------- ------------- ------------ ------------
Total investment income....... 552,456 187,968 818,261 340,481
------------- ------------- ------------ ------------
EXPENSES:
Investment advisory (Note
3)....................... 43,782 59,250 131,512 131,769
Management (Note 3)....... 29,727 18,231 43,837 32,942
Transfer agency (Note
3)....................... 40,793 26,445 73,628 58,869
Custody................... 2,082 3,283 6,738 5,456
Accounting (Note 3)....... 36,000 10,935 37,000 36,000
Audit..................... 15,250 13,850 13,850 13,850
Legal..................... 6,168 1,790 8,989 6,710
Trustees.................. 1,656 871 2,462 2,051
Reporting................. 5,668 5,317 9,078 6,902
Compliance................ 5,368 428 7,922 7,312
Amortization of
organization costs (Note
2)....................... -- 843 -- --
Miscellaneous............. 11,094 1,130 8,570 5,503
------------- ------------- ------------ ------------
Total expenses................ 197,588 142,373 343,586 307,364
Expenses reimbursed and fees
waived (Note 4)............. (131,923) (42,237) (91,437) (68,646)
------------- ------------- ------------ ------------
Net expenses.................. 65,665 100,136 252,149 238,718
------------- ------------- ------------ ------------
NET INVESTMENT INCOME
(LOSS)...................... 486,791 87,832 566,112 101,763
------------- ------------- ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments sold...... 28,990 -- 3,327,732 1,827,572
Net change in unrealized
appreciation
(depreciation) on
investments.............. 381,519 3,816,203 1,901,486 4,127,867
------------- ------------- ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS................. 410,509 3,816,203 5,229,218 5,955,439
------------- ------------- ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 897,300 $ 3,904,035 $5,795,330 $ 6,057,202
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
</TABLE>
(a) See Note 1 to financial statements for commencement of operations.
See Notes to Financial Statements. 35 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS HIGH GRADE BOND
INVESTORS BOND FUND TAXSAVER BOND FUND
FUND (i)
------------------------- ------------------------- -------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS--MARCH 31,
1996................... $ -- $ 25,675,978 $ 17,914,805
- ------------------------- ------------- ------------- -------------
OPERATIONS:
Net investment income
(loss)................ -- 1,738,605 932,979
Net realized gain
(loss) on investments
sold.................. -- (141,125 ) (1,358 )
Net change in
unrealized
appreciation
(depreciation) on
investments........... -- 159,124 (57,061 )
------------- ------------- -------------
Net increase in net
assets resulting
from operations..... -- 1,756,604 874,560
------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ -- (1,748,440 ) (932,979 )
Net realized gain on
investments........... -- (42,129 ) (89,232 )
------------- ------------- -------------
Total distribution to
shareholders........ -- (1,790,569 ) (1,022,211 )
------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares......... -- -- 4,548,773 445,780 1,975,008 186,690
Reinvestment of
distributions......... -- -- 372,783 36,554 381,020 36,054
Redemption of shares... -- -- (8,373,325 ) (819,354) (2,366,175 ) (224,222)
------------- ---------- ------------- ---------- ------------- ----------
Net increase
(decrease) in
capital
transactions........ -- -- (3,451,769 ) (337,020) (10,147 ) (1,478)
------------- ---------- ------------- ---------- ------------- ----------
---------- ---------- ----------
Net increase (decrease)
in net assets......... -- (3,485,734 ) (157,798 )
------------- ------------- -------------
NET ASSETS--MARCH 31,
1997
- -------------------------
(Including line (A))... -- 22,190,244 17,757,007
------------- ------------- -------------
OPERATIONS:
Net investment income
(loss)................ 83,022 2,799,300 1,262,855
Net realized gain
(loss) on investments
sold.................. -- 407,860 431,531
Net change in
unrealized
appreciation
(depreciation) on
investments (Note
7).................... (120,183 ) 619,147 12,927
------------- ------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... (37,161 ) 3,826,307 1,707,313
------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (83,022 ) (2,799,300 ) (1,254,588 )
Net realized gain on
investments........... -- -- (10,731 )
------------- ------------- -------------
Total distribution to
shareholders........ (83,022 ) (2,799,300 ) (1,265,319 )
------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares......... 142,651 14,291 25,408,790 2,422,519 5,953,473 558,559
Transactions due to
acquisition (Note
7).................... 34,168,816 3,416,882 45,203,440 4,284,687 19,211,589 1,780,499
Reinvestment of
distributions......... -- -- 243,656 23,408 351,873 32,851
Redemption of shares... (154,387 ) (15,443) (8,475,106 ) (811,636) (4,512,629 ) (419,873)
------------- ---------- ------------- ---------- ------------- ----------
Net increase
(decrease) in
capital
transactions........ 34,157,080 3,415,730 62,380,780 5,918,978 21,004,306 1,952,036
------------- ---------- ------------- ---------- ------------- ----------
---------- ---------- ----------
Net increase (decrease)
in net assets......... 34,036,897 63,407,787 21,446,300
------------- ------------- -------------
NET ASSETS--MARCH 31,
1998
- -------------------------
(Including line (B))... $ 34,036,897 $ 85,598,031 $ 39,203,307
------------- ------------- -------------
------------- ------------- -------------
(A) Accumulated
undistributed
(distribution in
excess of) net
investment income
March 31, 1997....... $ -- $ (2,108 ) $ --
------------- ------------- -------------
------------- ------------- -------------
(B) Accumulated
undistributed
(distribution in
excess of) net
investment income,
March 31, 1998....... $ -- $ (4,904 ) $ 8,267
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(i) See Note 1 to financial statements for commencement of operations.
See Notes to Financial Statements. 36 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED MARCH 31, 1997 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINE MUNICIPAL BOND NEW HAMPSHIRE BOND FUND INVESTORS GROWTH FUND
FUND (i)
----------------------- ----------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- -------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS--MARCH 31, 1996 $ 26,043,867 $ 6,903,448 $ --
- -------------------------- ------------- ------------- -------------
OPERATIONS:
Net investment income
(loss)................. 1,211,407 369,767 --
Net realized gain (loss)
on investments sold.... 27,570 7,800 --
Net change in unrealized
appreciation
(depreciation) on
investments............ (14,199 ) (31,627 ) --
------------- ------------- -------------
Net increase in net
assets resulting from
operations........... 1,224,778 345,940 --
------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income... (1,211,407 ) (369,767 ) --
Net realized gain on
investments............ -- -- --
------------- ------------- -------------
Total distribution to
shareholders......... (1,211,407 ) (369,767 ) --
------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares.......... 4,353,571 386,296 3,290,772 317,277 -- --
Reinvestment of
distributions.......... 679,876 84,023 260,377 31,104 -- --
Redemption of shares.... (5,263,190 ) (492,962) (1,740,090 ) (173,693) -- --
------------- -------- ------------- -------- ------------- ---------
Net increase
(decrease) in capital
transactions......... (229,743 ) (22,643) 1,811,059 174,688 -- --
------------- -------- ------------- -------- ------------- ---------
-------- -------- ---------
Net increase (decrease)
in net assets.......... (216,372 ) 1,787,232 --
------------- ------------- -------------
NET ASSETS--MARCH 31, 1997
- --------------------------
(Including line (A)).... 25,827,495 8,690,680 --
------------- ------------- -------------
OPERATIONS:
Net investment income
(loss)................. 1,249,323 486,791 87,832
Net realized gain (loss)
on investments sold.... 85,991 28,990 --
Net change in unrealized
appreciation
(depreciation) on
investments (Note 7)... 692,888 381,519 3,816,203
------------- ------------- -------------
Net increase
(decrease) in net
assets resulting from
operations........... 2,028,202 897,300 3,904,035
------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income... (1,249,323 ) (486,791 ) --
Net realized gain on
investments............ (15,537 ) (3,158 ) --
------------- ------------- -------------
Total distribution to
shareholders......... (1,264,860 ) (489,949 ) --
------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares.......... 4,686,863 427,434 4,626,698 440,871 4,277,148 410,190
Transactions due to
acquisition (Note 7)... -- -- -- -- 26,936,473 2,693,647
Reinvestment of
distributions.......... 926,235 84,744 450,170 42,708 -- --
Redemption of shares.... (4,007,882 ) (366,259) (1,266,972 ) (124,158) (1,218,718 ) (116,800)
------------- -------- ------------- -------- ------------- ---------
Net increase
(decrease) in capital
transactions......... 1,605,216 145,919 3,809,896 359,421 29,994,903 2,987,037
------------- -------- ------------- -------- ------------- ---------
-------- -------- ---------
Net increase (decrease)
in net assets.......... 2,368,558 4,217,247 33,898,938
------------- ------------- -------------
NET ASSETS--MARCH 31, 1998
- --------------------------
(Including line (B)).... $ 28,196,053 $ 12,907,927 $ 33,898,938
------------- ------------- -------------
------------- ------------- -------------
(A) Accumulated
undistributed
(distribution in
excess of) net
investment income
March 31, 1997........ $ -- $ 489 $ --
------------- ------------- -------------
------------- ------------- -------------
(B) Accumulated
undistributed
(distribution in
excess of) net
investment income,
March 31, 1998........ $ -- $ 489 $ 88,462
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(i) See Note 1 to financial statements for commencement of operations.
See Notes to Financial Statements. 37 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED MARCH 31, 1997 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAYSON BALANCED FUND PAYSON VALUE FUND
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
NET ASSETS--MARCH 31,
1996................... $ 17,455,477 $ 10,319,479
- ------------------------- ------------- -------------
OPERATIONS:
Net investment income
(loss)................ 549,597 150,333
Net realized gain
(loss) on investments
sold.................. 1,527,258 564,564
Net change in
unrealized
appreciation
(depreciation) on
investments........... (456,564 ) 695,895
------------- -------------
Net increase in net
assets resulting
from operations..... 1,620,291 1,410,792
------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (543,918 ) (147,191)
Net realized gain on
investments........... (1,714,763 ) (1,171,228)
------------- -------------
Total distribution to
shareholders........ (2,258,681 ) (1,318,419)
------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares......... 1,843,928 148,919 2,557,138 158,335
Reinvestment of
distributions......... 1,361,863 102,532 829,392 52,847
Redemption of shares... (1,859,735 ) (149,706) (689,414) (42,359)
------------- --------- ------------- ---------
Net increase
(decrease) in
capital
transactions....... 1,346,056 101,745 2,697,116 168,823
------------- --------- ------------- ---------
--------- ---------
Net increase
(decrease) in net
assets............. 707,666 2,789,489
------------- -------------
NET ASSETS--MARCH 31,
1997...................
- -------------------------
(Including line (A))... 18,163,143 13,108,968
------------- -------------
OPERATIONS:
Net investment income
(loss)................ 566,112 101,763
Net realized gain
(loss) on investments
sold.................. 3,327,732 1,827,572
Net change in
unrealized
appreciation
(depreciation) on
investments........... 1,901,486 4,127,867
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 5,795,330 6,057,202
------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (566,112 ) (101,763)
Net realized gain on
investments........... (2,798,475 ) (1,140,141)
------------- -------------
Total distribution to
shareholders........ (3,364,587 ) (1,241,904)
------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Sale of shares......... 3,548,584 245,496 3,200,541 167,428
Reinvestment of
distributions......... 2,130,618 155,750 737,950 39,454
Redemption of shares... (1,833,253 ) (124,233) (1,944,400) (101,877)
------------- --------- ------------- ---------
Net increase
(decrease) in
capital
transactions........ 3,845,949 277,013 1,994,091 105,005
------------- --------- ------------- ---------
--------- ---------
Net increase (decrease)
in net assets......... 6,276,692 6,809,389
------------- -------------
NET ASSETS--MARCH 31,
1998
- -------------------------
(Including line (B))... $ 24,439,835 $ 19,918,357
------------- -------------
------------- -------------
(A) Accumulated
undistributed
(distribution in
excess of) net
investment income
March 31, 1997....... $ (1,366 ) $ (24,390)
------------- -------------
------------- -------------
(B) Accumulated
undistributed
(distribution in
excess of) net
investment income,
March 31, 1998....... $ (3,069 ) $ (15,760)
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements. 38 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS
HIGH GRADE
BOND FUND INVESTORS TAXSAVER
---------- BOND BOND
FUND FUND
SELECTED PER SHARE PERIOD ------------------------------------------- -------------------------------------------
DATA AND RATIOS FOR A ENDED
SHARE OUTSTANDING MARCH 31, YEAR ENDED MARCH 31, YEAR ENDED MARCH 31,
THROUGHOUT EACH ---------- ------------------------------------------- -------------------------------------------
PERIOD 1998(a) 1998 1997 1996 1995 1994 1998 1997 1996 1995
---------- ------- ------- ------- ------- ------- ------- ------- ------- -------
1994
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.............. $ 10.00 $ 10.19 $ 10.21 $ 10.00 $ 10.38 $ 10.71 $ 10.49 $ 10.57 $ 10.39 $ 10.35 $ 10.63
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Investment Operations
Net Investment
Income (Loss)...... 0.02 0.71 0.71 0.74 0.82 0.81 0.53 0.56 0.57 0.57 0.57
Net Realized and
Unrealized Gain
(Loss) on
Investments........ (0.04) 0.38 -- 0.21 (0.38) (0.30) 0.27 (0.03) 0.18 0.04 (0.01)
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations.......... (0.02) 1.09 0.71 0.95 0.44 0.51 0.80 0.53 0.75 0.61 0.56
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions From
Net Investment
Income.............. (0.02) (0.71) (0.71) (0.74) (0.82) (0.81) (0.53) (0.56) (0.57) (0.57) (0.57)
Net Realized Gain on
Investments........ -- -- (0.02) -- -- (0.03) (0.01) (0.05) -- -- (0.27)
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions... (0.02) (0.71) (0.73) (0.74) (0.82) (0.84) (0.54) (0.61) (0.57) (0.57) (0.84)
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End
of Period........... $ 9.96 $ 10.57 $ 10.19 $ 10.21 $ 10.00 $ 10.38 $ 10.75 $ 10.49 $ 10.57 $ 10.39 $ 10.35
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return (b)...... (0.16%)(c) 10.98% 7.18% 9.84% 4.55% 4.70% 7.75% 5.15% 7.36% 6.18% 5.24%(d)
Ratio/Supplementary
Data
Net Assets at End of
Period (000's
omitted)............ $34,037 $85,598 $22,190 $25,676 $25,890 $26,083 $39,203 $17,757 $17,915 $16,018 $16,518
Ratios to Average Net
Assets:
Expenses including
reimbursement/waiver.. 0.70%(d) 0.70% 0.70% 0.43% 0.75% 0.75% 0.60% 0.60% 0.60% 0.60% 0.60%(d)
Expenses excluding
reimbursement/waiver.. 3.00%(d) 1.22% 1.45% 1.36% 1.33% 1.31% 1.36% 1.53% 1.48% 1.45% 1.50%(d)
Net investment
income (loss)
including
reimbursement/waiver.. 5.56%(d) 6.52% 6.94% 7.29% 8.19% 7.49% 4.95% 5.28% 5.35% 5.62% 5.27%(d)
Portfolio Turnover
Rate................ 0.00% 116.65% 79.42% 42.89% 48.17% 41.41% 92.87% 34.19% 61.61% 63.85% 141.80%
</TABLE>
- ------------------------------
(a) See Note 1 to financial statements for commencement of operations.
(b) Total return calculations do not include sales charge.
(c) Not annualized.
(d) Annualized.
39 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINE MUNICIPAL NEW HAMPSHIRE
BOND BOND
FUND FUND
SELECTED PER SHARE ------------------------------------------- -------------------------------------------
DATA AND RATIOS FOR A
SHARE OUTSTANDING YEAR ENDED MARCH 31, YEAR ENDED MARCH 31,
THROUGHOUT EACH ------------------------------------------- -------------------------------------------
PERIOD 1998 1997 1996 1995 1994 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 10.73 $ 10.72 $ 10.47 $ 10.37 $ 10.55 $ 10.31 $ 10.33 $ 10.08 $ 9.96 $ 10.01
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Investment Operations
Net Investment Income
(Loss)..................... 0.51 0.51 0.51 0.52 0.52 0.47 0.48 0.48 0.49 0.51
Net Realized and Unrealized
Gain (Loss) on
Investments................ 0.33 0.01 0.25 0.11 (0.16) 0.43 (0.02) 0.25 0.12 (0.03)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations.................. 0.84 0.52 0.76 0.63 0.36 0.90 0.46 0.73 0.61 0.48
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions From
Net Investment Income....... (0.51) (0.51) (0.51) (0.52) (0.52) (0.48) (0.48) (0.48) (0.49) (0.51)
Net Realized Gain on
Investments................ (0.01) -- -- (0.01) (0.02) -- -- -- -- (0.02)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions........... (0.52) (0.51) (0.51) (0.53) (0.54) (0.48) (0.48) (0.48) (0.49) (0.53)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period...................... $ 11.05 $ 10.73 $ 10.72 $ 10.47 $ 10.37 $ 10.73 $ 10.31 $ 10.33 $ 10.08 $ 9.96
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return (a).............. 7.94% 4.98% 7.34% 6.31% 3.42% 8.84% 4.56% 7.36% 6.32% 4.75%
Ratio/Supplementary Data
Net Assets at End of Period
(000's omitted)............ $28,196 $25,827 $26,044 $25,525 $26,310 $12,908 $ 8,691 $ 6,903 $ 5,276 $ 3,555
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver....... 0.60% 0.60% 0.60% 0.50% 0.50% 0.60% 0.60% 0.60% 0.46% 0.34%
Expenses excluding
reimbursement/waiver....... 1.48% 1.56% 1.48% 1.40% 1.44% 1.81% 2.22% 2.26% 2.19% 4.33%
Net investment income (loss)
including
reimbursement/waiver....... 4.65% 4.77% 4.73% 5.08% 4.81% 4.45% 4.65% 4.65% 4.95% 4.68%
Portfolio Turnover Rate....... 16.34% 21.18% 34.07% 31.55% 13.47% 22.99% 53.46% 34.31% 37.59% 9.60%
</TABLE>
- ------------------------------
(a) Total return calculations do not include sales charge.
40 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS
GROWTH
FUND
-------- PAYSON PAYSON
BALANCED VALUE
PERIOD FUND FUND
SELECTED PER SHARE ENDED ------------------------------------------- -------------------------------------------
DATA AND RATIOS FOR A MARCH
SHARE OUTSTANDING 31, YEAR ENDED MARCH 31, YEAR ENDED MARCH 31,
THROUGHOUT EACH -------- ------------------------------------------- -------------------------------------------
PERIOD 1998(a) 1998 1997 1996 1995 1994 1998 1997 1996 1995
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
1994
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.00 $ 13.20 $ 13.70 $ 11.90 $ 11.71 $ 11.40 $ 16.10 $ 15.99 $ 12.71 $ 12.11 $ 11.01
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Investment Operations
Net Investment Income
(Loss)................ 0.03 0.37 0.42 0.43 0.44 0.34 0.12 0.21 0.21 0.18 0.13
Net Realized and
Unrealized Gain (Loss)
on Investments........ 1.32 3.52 0.84 2.12 0.24 0.46 6.93 1.80 3.29 0.60 1.12
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations............. 1.35 3.89 1.26 2.55 0.68 0.80 7.05 2.01 3.50 0.78 1.25
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions From
Net Investment
Income................ -- (0.37) (0.42) (0.43) (0.44) (0.35) (0.12) (0.20) (0.21) (0.18) (0.15)
Net Realized Gain on
Investments -- (1.93) (1.34) (0.32) (0.05) (0.14) (1.36) (1.70) (0.01) -- --
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions...... 0.00 (2.30) (1.76) (0.75) (0.49) (0.49) (1.48) (1.90) (0.22) (0.18) (0.15)
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $11.35 $ 14.79 $ 13.20 $ 13.70 $ 11.90 $ 11.71 $ 21.67 $ 16.10 $ 15.99 $ 12.71 $ 12.11
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return (b)......... 13.50%(c) 31.27% 9.42% 21.70% 6.00% 6.99% 45.28% 13.01% 27.77% 6.52% 11.38%
Ratio/Supplementary Data
Net Assets at End of
Period (000's
omitted)............... $33,899 $24,440 $18,163 $17,455 $13,872 $11,355 $19,918 $13,109 $10,319 $ 7,960 $ 5,060
Ratios to Average Net
Assets:
Expenses including
reimbursement/waiver... 1.10%(d) 1.15% 1.15% 1.15% 1.15% 1.15% 1.45% 1.45% 1.45% 1.46% 1.45%
Expenses excluding
reimbursement/waiver... 1.56%(d) 1.57% 1.67% 1.70% 1.72% 1.95% 1.87% 2.07% 2.16% 2.25% 3.04%
Net investment income
(loss) including
reimbursement/waiver... 0.96%(d) 2.58% 3.07% 3.25% 3.91% 4.37% 0.62% 1.30% 1.47% 1.59% 1.38%
Average Commission
rate (e)............... $0.0760 $0.0647 $0.0806 $0.0973 -- -- $0.0807 $0.0979 $0.0993 -- --
Portfolio Turnover
Rate................... 0.00% 66.13% 52.93% 61.77% 50.06% 80.13% 38.85% 24.13% 53.06% 27.20% 32.15%
</TABLE>
- ------------------------------
(a) See Note 1 to financial statements for commencement of operations.
(b) Total return calculations do not include sales charge.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share paid to brokers on the
purchase or sale of equity securities.
41 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
- --------------------------------------------------------------------------------
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 twenty-two active investment portfolios (each a "Fund" and collectively the
"Funds"). The Trust Instrument of the Trust authorizes each Fund to issue an
unlimited number of shares of beneficial interest without par value. Investors
High Grade Bond Fund, Payson Balanced Fund, Payson Value Fund and Investors
Growth Fund are diversified portfolios. All other Funds are non-diversified.
Included in this report are the eight Funds listed below. Commencement of
operations for each Fund was as follows:
<TABLE>
<S> <C>
Investors High Grade Bond Fund March 16, 1998
Investors Bond Fund October 2, 1989
TaxSaver Bond Fund October 2, 1989
Maine Municipal Bond Fund December 5, 1991
New Hampshire Bond Fund December 31, 1992
Investors Growth Fund December 12, 1997
Payson Balanced Fund November 25, 1991
Payson Value Fund July 31, 1992
</TABLE>
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 Funds:
SECURITY VALUATION-Securities, other than short-term, held by the Funds 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 Trustees. Securities with a maturity of 60 days or less held by
the Funds are valued at amortized cost.
REPURCHASE AGREEMENTS-Each Fund may invest in repurchase agreements. The Funds,
through their custodian, receive delivery of the underlying securities, whose
market value must always equal or exceed the repurchase price. The investment
adviser is responsible for determining the value of the underlying securities at
all times. In the event of default, a Fund may have difficulties with the
disposition of such securities.
INTEREST AND DIVIDEND INCOME-Interest income is accrued as earned. Dividends on
securities held by the Funds are recorded on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS-Distributions of net investment income to
shareholders are declared daily and paid monthly by all Funds except Payson
Balanced Fund and Payson Value Fund, for which dividends are declared and paid
quarterly and Investors Growth Fund, for which dividends are declared and paid
annually. Net capital gains, if any, are distributed to shareholders at least
annually. Distributions are based on amounts calculated in accordance with
applicable income tax regulations.
42 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
ORGANIZATION COSTS-The costs incurred by Investors High Grade Bond Fund and
Investors Growth Fund in connection with their 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 Funds'
operations.
FEDERAL TAXES-Each Fund intends to qualify and continue to qualify each year as
a regulated investment company and distribute substantially 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, each
Fund will not be subject to a federal excise tax. Therefore, no federal income
or excise tax provision is required.
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 recorded on trade date.
Realized gain and loss on investments sold are recorded on the basis of
identified cost.
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISERS-Effective January 2, 1998, the investment adviser for
Investors Bond Fund, Investors High Grade Bond Fund, TaxSaver Bond Fund, Maine
Municipal Bond Fund, New Hampshire Bond Fund and Investors Growth Fund is Forum
Investment Advisors, LLC ("Forum Advisors"). Forum Advisors receives an advisory
fee of 0.40% of the average daily net assets from Investors Bond Fund, Investors
High Grade Bond Fund, TaxSaver Bond Fund, Maine Municipal Bond Fund and New
Hampshire Bond Fund and 0.65% of the average daily net assets from Investors
Growth Fund. Prior to January 2, 1998, the investment advisor for Investors Bond
Fund, TaxSaver Bond Fund, Maine Municipal Bond Fund and New Hampshire Bond Fund
was Forum Advisors, Inc.-Registered Trademark- pursuant to the same terms and
compensation as Forum Advisors. The investment adviser for Payson Balanced Fund
and Payson Value Fund is H.M. Payson & Co. ("Payson"). Payson receives an
advisory fee of 0.60% and 0.80% of the average daily net assets of Payson
Balanced Fund and Payson Value Fund, respectively.
MANAGEMENT AND OTHER SERVICES-Forum Financial Corp.-Registered Trademark-
("FFC"), an affiliate of Forum Advisors, serves as the Funds transfer agent and
dividend disbursing agent, and for those services receives an annual fee of
$12,000 plus 0.25% of the average daily net assets of each Fund.
Effective June 19, 1997, Forum Accounting Services, LLC ("FAcS") serves as the
Trust's fund accountant. FAcS is compensated for such services at an amount of
$36,000 per year per Fund, plus certain amounts based upon the number and types
of portfolio transactions within each Fund. Prior to June 19, 1997, FFC also
served as the fund accountant of the Trust pursuant to the same terms and
compensation as FAcS.
Effective June 19, 1997, the manager of the Trust, Forum Administrative
Services, LLC ("FAdS"), receives a management fee for its services to the Trust
at an annual rate of 0.20% of the average daily net assets of each Fund. In
addition, FAdS charged certain legal expenses to the Funds aggregating $878.
Forum Financial Services, Inc.-Registered Trademark- ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as the distributor of the Funds' shares. Prior to June 19, 1997, FFSI
also served as the manager of the Trust pursuant to the same terms and
compensation as FAdS.
43 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
FFSI also received sales commissions during the year ended March 31, 1998 from
TaxSaver Bond Fund, Maine Municipal Bond Fund, Payson Balanced Fund and Payson
Value Fund. After deducting amounts allowed to authorized dealers and agents,
commissions amounted to $162, $376, $186 and $462, respectively. Maine Municipal
Bond Fund, New Hampshire Bond Fund and Payson Value Fund deducted amounts
allowed dealers and agents of $16,514, $4,041 and $3,253, respectively. FAdS,
Forum Advisors, FFC and FFSI are affiliated companies.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FFC and FAdS have voluntarily undertaken to waive a portion of their fees and
assume certain expenses of the Funds so that total expenses of the Funds would
not exceed a certain limitation. FFC and FAdS, at their discretion, may revise
or discontinue the voluntary waivers. For the year ended March 31, 1998,
expenses reimbursed and fees waived were as follows:
<TABLE>
<CAPTION>
EXPENSES
REIMBURSED FEES WAIVED TOTAL
--------- -------------------- EXPENSES REIMBURSED
FADS FFC FADS AND FEES WAIVED
--------- --------- --------- -------------------
<S> <C> <C> <C> <C>
Investors High Grade Bond Fund.......... $ 27,536 $ 3,731 $ 2,985 $ 34,252
Investors Bond Fund..................... 14,081 102,298 108,198 224,577
TaxSaver Bond Fund...................... 67,520 59,098 66,898 193,516
Maine Municipal Bond Fund............... 119,926 43,753 73,724 237,403
New Hampshire Bond Fund................. 90,578 11,618 29,727 131,923
Investors Growth Fund................... 1,262 22,744 18,231 42,237
Payson Balanced Fund.................... -- 53,159 38,278 91,437
Payson Value Fund....................... -- 39,896 28,750 68,646
</TABLE>
NOTE 5. SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities (including maturities)
of portfolio securities (excluding short-term investments) during the year ended
March 31, 1998 were as follows:
<TABLE>
<CAPTION>
PROCEEDS
FROM SALES COST OF PROCEEDS OF
COST OF AND GOV'T GOV'T
PURCHASES MATURITIES PURCHASES PURCHASES
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Investors High Grade Bond Fund.......... $ -- $ -- $ -- $ --
Investors Bond Fund..................... 33,075,866 10,727,691 34,710,735 30,605,121
TaxSaver Bond Fund...................... 25,513,183 22,584,155 -- --
Maine Municipal Bond Fund............... 6,942,401 4,201,003 -- --
New Hampshire Bond Fund................. 6,263,292 2,473,060 -- --
Investors Growth Fund................... 4,914,562 -- -- --
Payson Balanced Fund.................... 12,937,220 13,570,583 1,165,573 655,875
Payson Value Fund....................... 6,752,250 6,156,028 -- --
</TABLE>
44 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
For federal income tax purposes, the tax basis of investment securities owned as
of March 31, 1998 were the same as for financial reporting purposes. The
aggregate gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost and the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ---------- -----------
<S> <C> <C> <C>
Investors High Grade Bond
Fund....................... $ 532,325 $ 36,738 $ 495,587
Investors Bond Fund......... 1,664,732 192,450 1,472,282
TaxSaver Bond Fund.......... 1,247,080 46,331 1,200,749
Maine Municipal Bond Fund... 1,165,155 1,256 1,163,899
New Hampshire Bond Fund..... 391,105 2,157 388,948
Investors Growth Fund....... 17,476,437 169,249 17,307,188
Payson Balanced Fund........ 3,720,401 522,292 3,198,109
Payson Value Fund........... 6,981,210 190,583 6,790,627
</TABLE>
NOTE 6. CONCENTRATION OF RISK
The Maine Municipal Bond Fund and New Hampshire Bond Fund invest substantially
all of their assets in debt obligations of issuers located in the states of
Maine and New Hampshire, respectively. The issuers' abilities to meet their
obligations may be affected by Maine and Hew Hampshire economic or political
developments.
NOTE 7. ACQUISITION OF FUNDS
As of December 11, 1997, Investors Bond Fund acquired all the net assets of NCBE
Income Fixed Trust Fund for Qualified Pension and Profit Sharing Retirement
Plans and Trusts and NCBE Fixed Income Common Trust Fund. TaxSaver Bond Fund
acquired all the net assets of NCBE Municipal Bond Common Trust Fund. Investors
Growth Fund acquired all the net assets of NCBE Discretionary Common Trust Fund
and NCBE Equity Common Trust Fund for Self-Employed Individuals' Retirement
Plans and Trusts. In addition, as of March 16, 1998, Investors High Grade Bond
Fund acquired all the net assets of the CTF Income Fund and the net assets of
the CTF Balanced Fund's fixed income segment. The net assets, unrealized gain
(loss) and shares associated with each acquired fund immediately prior to
acquisition were as follows:
45 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
ACQUIRED FUNDS NET ASSETS GAIN/(LOSS) SHARES ACQUIRED
- --------------------------------------------------------------------- -------------- ------------- ----------------
<S> <C> <C> <C>
NCBE Fixed Income Trust Fund for Qualified Pension and Profit Sharing
Retirement Plans and Trusts......................................... $ 19,803,770 $ -- 1,877,135
NCBE Fixed Income Common Trust Fund.................................. 25,399,670 582,690 2,407,552
NCBE Municipal Bond Common Trust Fund................................ 19,211,589 711,932 1,780,499
NCBE Discretionary Common Trust Fund................................. 22,784,623 13,490,984 2,278,462
NCBE Equity Common Trust Fund for Self-Employed Individuals'
Retirement Plans and Trusts......................................... 4,151,850 -- 415,185
CTF Income Fund...................................................... 15,238,632 299,777 1,523,863
CTF Balanced Fund (fixed income segment)............................. 18,930,184 315,993 1,893,018
</TABLE>
The net assets of Investors Bond Fund, TaxSaver Bond Fund, Investors Growth
Fund, and Investors High Grade Bond Fund immediately after the acquisition were:
$75,178,000; $39,858,760; $26,936,473 and $34,168,816, respectively.
NOTE 8. FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
(UNAUDITED)
<TABLE>
<CAPTION>
MID TERM LONG TERM
SHORT TERM CAPITAL CAPITAL QUALIFYING ORDINARY EXEMPT
CAPITAL GAIN GAIN GAIN DIVIDENDS INCOME INTEREST
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investors High Grade Bond
Fund....................... -- -- -- -- 100.00 % --
Investors Bond Fund......... -- -- -- 4.88 % 95.12 % --
TaxSaver Bond Fund.......... .004014 -- .001592 -- -- 100.00 %
Maine Municipal Bond Fund... -- -- .006242 -- 0.04 % 99.96 %
New Hampshire Bond Fund..... -- -- .002802 -- -- 100.00 %
Investors Growth Fund....... -- -- -- 100.00 % -- --
Payson Balanced Fund........ .692967 .750487 .483358 17.36 % 82.64 % --
Payson Value Fund........... .107955 .515261 .735648 -- 100.00 % --
</TABLE>
For federal income tax purposes, dividends from short term capital gains are
classified as ordinary income.
46 FORUM FUNDS-Registered Trademark-
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders,
Forum Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Investors High Grade Bond Fund, Investors
Bond, TaxSaver Bond, Maine Municipal Bond, New Hampshire Bond, Investors Growth
Fund, Payson Balanced and Payson Value Funds (certain of the series constituting
Forum Funds), (the "Funds") as of March 31, 1998 the related statements of
operations for the year then ended, the statements of changes in net assets for
the years ended March 31, 1998 and 1997 and the financial highlights for each of
the years in the five-year period ended March 31, 1998. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits 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, 1998 by correspondence with the custodian and 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 audits provide 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 aforementioned
Funds at March 31, 1998, the results of their operations, the changes in their
net assets and their financial highlights for its respective stated periods, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
May 1, 1998
47
<PAGE>
[Logo]
Manager
Forum Administration Services, LLC
Transfer Agent
Forum Financial Corp.
Forum Funds
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION TO SHAREHOLDERS AND OTHERS
WHO HAVE RECEIVED A COPY OF THE FORUM FUNDS' PROSPECTUS.
