AUSTIN GLOBAL EQUITY FUND
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Two Portland Square Shareholder Inquiries
Portland, ME 04101 Forum Shareholder Services, LLC
800-943-6786 P.O. Box 446
Portland, ME 04112
207-879-0001
ANNUAL REPORT MARCH 31, 1999
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Dear Fellow Shareholder:
In the year ended March 31, 1999, your Fund achieved milestone ratings in its
Morningstar Mutual Fund category. Austin Global Equity Fund (AGE) has been
awarded five stars (*****) for its overall risk-adjusted performance by
Morningstar. It was rated among 918 and 454 international equity funds for the
3- and 5- year periods ended March 31, 1999, respectively. It should be noted
that the Fund is but five and a quarter years old as of March 31, 1999. As of
March 31, the Fund's average annual total return for the 1-year, 3-year, 5-year
and since inception (December 8, 1993) periods were 9.51%, 18.46%, 17.08%, and
15.77%, respectively.*
In the same three and five year periods, the Standard & Poors ("S&P") 500 Index
exceeded the Fund's annualized compounded gains by 9.65% and 9.18%,
respectively. Simultaneously, your Fund bettered the Morgan Stanley Capital
International World Index ("MSCI") by 0.83% and 0.69% compounded annually for
the three and five year periods, respectively. The S&P 500 Index has, as you
undoubtedly are aware, out-performed substantially all other indices. We include
the S&P 500 Index for reference although it is not our comparative benchmark.
The data related to the MSCI is very pertinent, as it is the measure Morningstar
applies to our global category.
In the twelve months ended March 31, 1999, your Fund advanced 9.51% which was
below the S&P 500 Index average rise of 18.47% and the MSCI advance of 12.64%.
The Fund has continued to invest in the privatization of formerly state owned
enterprises on a selected basis. Those purchased since our September 30, 1998,
report to shareholders are: Swisscom, Telecom Poland and YPF Sociedad. Initial
public offerings of former state owned enterprises ebbed during the year due to
a decline in anticipated offering prices. This forced issuing states to seek
more strategic partnering and equity sales on a private basis. With recovery of
security markets evident throughout the developed economies, we believe an
acceleration of privatization via initial public offerings is a reasonable
prospect near term.
Activity in the past year has broadened to include purchase of cyclical stocks.
These include Alcoa, Inc., Toyota Motor, the mining company Rio Tinto and
chemical processors, BOC and Air Liquide. This broadening is based on the belief
that developed economies outside North America are demonstrating recovery in one
stage or another. As we indicated in our previous reports, central banks,
including our own Federal Reserve have pursued policies ranging from a neutral
interest position to a bias toward lowering interest rates. This has taken place
within a world economy presently substantially free
<PAGE>
AUSTIN GLOBAL EQUITY FUND
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of inflation. This has comforted securities markets around the globe and has
encouraged further stimulation in fiscal and monetary policy in countries and
regions in need of economic recovery such as the Pacific Rim, Germany and United
Kingdom.
We believe that the foregoing makes for a good investment environment, and we
are optimistic about the Fund's ability to profit from it.
/s/ Peter A. Vlachos
Peter A. Vlachos
President
Austin Investment Management, Inc.
- --------------------------
* Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that, when redeemed, an investor's shares may
be worth more or less than their original cost. The Fund's average total return
assumes reinvestment of all dividends and capital gain distributions.
Morningstar proprietary ratings reflect historical risk-adjusted performance as
of 3/31/99 and are subject to change monthly. Furthermore, these ratings are
calculated based on risk and return ratios for 3-, 5-, and 10-year average
annual returns (if applicable) in excess of 90-day T-bill returns with
appropriate fee adjustments, and a risk factor that reflects fund performance
below 90-day T-bill returns and considers all sales charges and fees (if
applicable). The top 10% of funds in its broad asset class receive five stars.
The Fund's 3- and 5- year ratings are both 5 stars.
2
<PAGE>
AUSTIN GLOBAL EQUITY FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
MARCH 31, 1999
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The following chart compares changes in the value of a $10,000 investment in
Austin Global Equity Fund (the "Fund"), including reinvested dividends and
distributions, to the performance of the Morgan Stanley Capital International
World Index ("MSCI"). The MSCI measures the performance of a diverse range of
global stock markets in the United States, Canada, Europe, Australia, New
Zealand and the Far East. The MSCI is unmanaged and its performance reflects the
reinvestment of dividends. It is important to keep in mind that the MSCI
excludes the effect of any expenses which have been deducted from Austin Global
Equity Fund's return. It is not possible to invest directly in any index. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. SHARES MAY BE WORTH MORE OR
LESS AT REDEMPTION THAN AT ORIGINAL PURCHASE.
AUSTIN GLOBAL EQUITY FUND VS. MSCI
[EDGAR REPRESENTATION OF LINE CHART]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nov 93 Mar 94 Mar 95 Mar 96 Mar 97 Mar 98 Mar 99
------ ------ ------ ------ ------ ------ ------
Austin Global Equity Fund $10,000 $ 9,890 $10,230 $13,092 $14,206 $19,872 $21,762
MSCI $10,000 $10,551 $11,534 $13,844 $15,139 $19,978 $22,504
</TABLE>
INVESTMENT VALUE ON 3/31/99
- ---------------------------
Austin Global Equity Fund $ 21,762
MSCI $ 22,504
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN AS OF 3/31/99 ONE YEAR FIVE YEAR INCEPTION TO DATE
- ---------------------------------------- -------- --------- -----------------
Austin Global Equity Fund 9.51% 17.08% 15.77%
MSCI 12.64% 16.35% 16.42%
</TABLE>
*Inception date for Austin Global Equity Fund was December 8, 1993.
3 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31,1999
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<TABLE>
<S> <C> <C> <C>
SHARES/FACE COST VALUE
--------------- ------------------ ----------------
COMMON STOCK (96.2%)
ARGENTINA (1.4%)
Buenos Aires Embotelladora S.A. (b) 40 $ - $ -
YPF Sociedad Anonima, ADR 10,000 293,725 315,625
------------------ ----------------
------------------ ----------------
293,725 315,625
------------------ ----------------
AUSTRALIA (1.9%)
News Corp. Ltd., ADR 5,000 147,112 147,500
Telstra Corp. Ltd., ADR 2,500 145,158 263,750
------------------ ----------------
------------------ ----------------
292,270 411,250
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BRAZIL (1.5%)
Telecomunicacoes Brasileiras SA - Telebras, ADR 4,000 454,600 322,500
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CANADA 0.3%)
Gulf Canada Resources Ltd. (a) 25,000 131,063 67,187
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FINLAND (2.1%)
Nokia Corp., ADR 3,000 196,117 467,250
------------------ ----------------
FRANCE (6.1%)
Air Liquide 1,125 178,957 167,605
Air Liquide, ADR 1,000 33,813 29,797
Immobiliere Marseillaise 100 180,868 180,290
L'OREAL, ADR 2,000 216,812 253,055
Rhone-Poulenc SA, ADR 3,000 151,680 132,000
Simco SA 1,500 125,430 131,169
Societe du Louvre 5,000 317,170 350,325
Taittinger SA 167 138,418 104,568
------------------ ----------------
------------------ ----------------
1,343,148 1,348,809
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GERMANY (1.6%)
RWE AG, ADR 8,000 278,674 354,105
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GREECE (0.6%)
Panafon Hellenic Telecom SA, GDR (a) 5,000 162,985 129,760
------------------ ----------------
HONG KONG (0.5%)
Hong Kong and China Gas Co. Ltd., ADR 79,200 85,000 111,910
------------------ ----------------
IRELAND (2.4%)
Allied Irish Banks plc, ADR 1,000 103,570 103,500
Esat Telecom Group plc, ADR (a) 10,000 143,750 418,750
------------------ ----------------
------------------ ----------------
247,320 522,250
------------------ ----------------
ITALY (5.2%)
Telecom Italia Mobile SpA 150,000 185,989 1,008,870
Telecom Italia SpA 7 20 74
Telecom Italia SpA, ADR 1,277 36,100 133,287
------------------ ----------------
222,109 1,142,231
------------------ ----------------
</TABLE>
See Notes to Financial Statements. 4 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31,1999
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<TABLE>
<S> <C> <C> <C>
SHARES/FACE COST VALUE
--------------- ------------------ ----------------
JAPAN (12.2%)
Bank of Tokyo-Mitsubishi Ltd., ADR 45,000 $ 526,237 $ 632,813
Fuji Photo Film, ADR 9,000 366,060 336,375
Nisshinbo Industries, Inc. 20,000 194,872 76,500
NTT Mobile Communication Network, Inc., ADR 6,000 264,560 296,378
Sony Corp., ADR 3,000 244,493 273,938
Tokio Marine & Fire Insurance Co. Ltd., ADR 11,000 582,285 617,375
Toyota Motor Corp., ADR 8,000 434,500 458,000
------------------ ----------------
------------------ ----------------
2,613,007 2,691,379
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LUXEMBOURG (2.2%)
Societe Europeenne des Satellites, FDR (a) 3,500 592,671 476,096
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MALAYSIA (0.2%)
Nestle (Malaysia) Berhad 10,000 66,727 28,000
Telekom Malaysia Berhad 15,000 68,750 24,157
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------------------ ----------------
135,477 52,157
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NETHERLANDS (5.0%)
Aegon NV, ADR 5,000 108,112 449,375
Equant NV (a) 3,000 227,993 225,750
Koninklijke KPN NV, ADR 69 2,186 2,738
Royal Dutch Petroleum Co. 8,000 365,753 416,000
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------------------ ----------------
704,044 1,093,863
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POLAND (0.6%)
Telekomunikacja Polska SA, GDR (a) 25,000 120,200 131,842
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SOUTH KOREA (0.6%)
Korea Electric Power Corp., ADR 10,000 174,250 126,875
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SPAIN (1.4%)
Endesa SA, ADR 5,000 135,612 124,375
Telefonica De Espana SA, ADR 1,530 234,120 195,457
------------------ ----------------
------------------ ----------------
369,732 319,832
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SWITZERLAND (3.4%)
Bank Fuer Internationalen Zahlungsausgleich - BIZ 35 253,900 196,856
Roche Holdings Ltd., ADR 3,000 195,000 365,841
Swisscom AG, ADR (a) 5,000 141,800 194,688
------------------ ----------------
------------------ ----------------
590,700 757,385
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UNITED KINGDOM (11.9%)
Allied Zurich plc, ADR (a) 12,322 321,041 332,387
BOC Group plc, ADR 5,000 149,050 136,875
British American Tobacco plc, ADR 12,323 465,497 220,273
British Energy plc 90,000 295,593 861,552
HSBC Holdings plc, ADR 1,000 303,000 313,567
Rio Tinto plc, ADR 5,000 210,112 275,000
SmithKline Beecham plc, ADR 4,000 256,240 286,000
Unilever plc, ADR 5,000 205,438 185,000
------------------ ----------------
------------------ ----------------
2,205,971 2,610,654
------------------ ----------------
</TABLE>
See Notes to Financial Statements. 5 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31,1999
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<TABLE>
<S> <C> <C> <C>
SHARES/FACE COST VALUE
--------------- ------------------ ----------------
UNITED STATES (35.1%)
Alcoa, Inc. 4,000 $ 154,350 $ 164,750
Ascend Communications, Inc. (a) 3,000 140,055 251,063
Bank of New York Co., Inc. 30,000 272,812 1,078,125
Chris-Craft Industries, Inc. (a) 6,493 257,766 296,249
Cisco Systems, Inc. (a) 9,000 176,750 986,063
Comcast Corp. 3,000 170,055 188,813
Entercom Communications Corp. (a) 5,000 112,500 176,875
Home Depot, Inc. 3,000 117,180 186,750
Intel Corp. 4,000 271,500 476,500
iVillage, Inc. (a) 800 19,200 80,400
Johnson & Johnson 3,000 220,930 281,063
Knightsbridge Tankers Ltd. 5,000 107,750 86,250
Kos Pharmaceuticals, Inc. (a) 40,000 492,813 220,000
Lucent Technologies, Inc. 5,000 192,680 538,750
MCI WorldCom, Inc. (a) 10,000 502,110 885,625
Microsoft Corp. (a) 4,000 130,330 358,500
New Era of Networks, Inc. (a) 8,000 127,740 542,000
Paymentech, Inc. (a) 5,000 108,500 118,125
Pepsi-Cola Puerto Rico Bottling Co. (a) 149 - 894
Qwest Communications International, Inc. (a) 4,500 263,973 324,422
Schlumberger Ltd. 8,000 271,030 481,500
------------------ ----------------
------------------ ----------------
4,110,024 7,722,717
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TOTAL COMMON STOCK 15,323,087 21,175,677
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FIXED RATE CONVERTIBLE BONDS (2.7%)
NETHERLANDS (1.2%)
Koninklijke Ahold NV, 3.00%, 9/30/03 400,000 216,532 256,949
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UNITED STATES (1.5%)
Bell Atlantic Financial, 4.25%, 9/15/05 300,000 296,049 327,563
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TOTAL FIXED RATE CONVERTIBLE BONDS 512,581 584,512
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SHORT-TERM HOLDINGS (1.1%)
Dreyfus Government Cash Management Fund 250,432 250,432 250,432
------------------ ----------------
TOTAL INVESTMENTS (100.0%) $ 16,086,100 $ 22,010,621
================== ================
</TABLE>
(a) Non-income producing security.
(b) Received shares as part of a class action settlement.
ADR - American Depository Receipt
FDR - Foreign Depository Receipt
GDR - Global Depository Receipt
See Notes to Financial Statements. 6 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
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<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost $ 16,086,100
Net unrealized appreciation 5,924,521
------------------
Total investments at value 22,010,621
Interest, dividends and other receivables 56,352
Prepaid expenses 9,665
------------------
Total assets 22,076,638
------------------
LIABILITIES:
Payable to adviser (Note 3) 27,706
Payable to transfer agent 1,510
Payable to administrator (Note 3) 4,618
Accrued expenses and other liabilities 28,661
------------------
Total liabilities 62,495
------------------
NET ASSETS $ 22,014,143
==================
COMPONENTS OF NET ASSETS:
Paid in capital $ 16,231,545
Unrealized appreciation on investments 5,924,521
Accumulated net realized loss (141,923)
------------------
NET ASSETS $ 22,014,143
==================
SHARES OF BENEFICIAL INTEREST 1,327,955
==================
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 16.58
==================
</TABLE>
See Notes to Financial Statements. 7 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 558,815
Interest income 53,002
------------------
Total investment income 611,817
------------------
EXPENSES:
Investment advisory (Note 3) 274,672
Administration (Note 3) 45,779
Transfer agent (Note 3) 19,647
Custody 8,468
Accounting (Note 3) 36,000
Audit 21,244
Legal 15,612
Trustees 1,045
Amortization of organization costs (Note 2) 5,484
Miscellaneous 15,890
------------------
Total expenses 443,841
------------------
NET INVESTMENT INCOME 167,976
------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold 526,217
Net change in unrealized appreciation on investments 914,315
------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,440,532
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,608,508
==================
</TABLE>
See Notes to Financial Statements. 9 FORUM FUNDS (R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Year Year
Ended Ended
March 31, 1999 March 31, 1998
--------------------- --------------------
NET ASSETS - Beginning of Period $ 15,378,962 $ 10,289,290
--------------------- --------------------
OPERATIONS:
Net investment income (loss) 167,976 (65,277)
Net realized gain on investments sold 526,217 1,816,799
Net change in unrealized appreciation on
investments 914,315 2,479,548
--------------------- --------------------
Net increase in net assets resulting
from operations 1,608,508 4,231,070
--------------------- --------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (167,976) -
Net realized gain on investments sold (989,542) (1,232,391)
Return of capital (137,811) -
--------------------- --------------------
--------------------- --------------------
Total distributions to shareholders (1,295,329) (1,232,391)
--------------------- --------------------
CAPITAL SHARE TRANSACTIONS (a):
Sale of shares 5,240,038 1,230,491
Reinvestment of distributions 1,295,329 1,232,391
Redemption of shares (213,365) (371,889)
--------------------- --------------------
Net increase from capital transactions 6,322,002 2,090,993
--------------------- --------------------
Net increase in net assets 6,635,181 5,089,672
--------------------- --------------------
NET ASSETS - End of Period $ 22,014,143 $ 15,378,962
===================== ====================
(a) Shares Issued (Redeemed)
Sale of shares 313,176 81,338
Reinvestment of distributions 82,420 88,280
Redemption of shares (12,909) (25,424)
--------------------- --------------------
===================== ====================
Net increase in shares 382,687 144,194
===================== ====================
</TABLE>
See Notes to Financial Statements. 9 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
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Selected per share data and ratios for a share outstanding throughout each
period.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Nine
Year Year Months Year Year Period
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, June 30, June 30, June 30,
1999 1998 1997 1996 1995 1994 (a)
--------- ---------- --------- ---------- --------- ---------
Net Asset Value, Beginning of Period $16.27 $12.84 $13.19 $11.60 $9.80 $10.00
--------- ---------- --------- ---------- --------- ---------
Investment Operations
Net Investment Income (Loss) 0.15 (0.07) (0.11) (0.12) 0.04 (b) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investments 1.32 4.95 0.86 1.98 1.76 (0.17)
--------- ---------- --------- ---------- --------- ---------
Total from Investment Operations 1.47 4.88 0.75 1.86 1.80 (0.20)
Distributions from
Net Investment Income (0.14) - - - - -
Net Realized Gain on Investments (0.90) (1.45) (1.10) (0.27) - -
Return of Capital (0.12) - - - - -
--------- ---------- --------- ---------- --------- ---------
Total Distributions (1.16) (1.45) (1.10) (0.27) - -
--------- ---------- --------- ---------- --------- ---------
Net Asset Value, End of Period $16.58 $16.27 $12.84 $13.19 $11.60 $9.80
========= ========== ========= ========== ========= =========
Total Return 9.51% 39.88% 5.38% 16.22% 18.37% 3.57% (c)
Ratio/Supplementary Data:
Net Assets at End of Period (000's omitted) $22,014 $15,379 $10,289 $10,326 $8,474 $7,646
Ratios to Average Net Assets:
Expenses 2.42% 2.50% 2.50% (c) 2.50% 2.50% 2.36% (c)
Expenses excluding reimbursement/waiver - 2.69% 3.38% (c) 3.25% 3.19% 4.18% (c)
Net investment income (loss) 0.92% (0.5%) (1.09%)(c) (0.98%) (0.41%) (0.83%)(c)
Portfolio Turnover Rate 51.15% 57.37% 44.79% 93.55% 35.31% 2.49%
</TABLE>
- -------------------------------------------------
(a) For the period December 8, 1993 (commencement of operations) through June
30, 1994.
(b) Calculated using the weighted average shares outstanding.
(c) Annualized.
See Notes to Financial Statements. 10 FORUM FUNDS (R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
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NOTE 1. ORGANIZATION
Forum Funds(R) (the "Trust") is a Delaware business trust that is registered as
an open-end management investment company under the Investment Company Act of
1940 (the "Act"). These financial statements relate to Austin Global Equity Fund
(the "Fund"), a diversified portfolio of the Trust that commenced operations on
December 8, 1993. The Trust currently has twenty-two active investment
portfolios (each a "Series"). The Fund is authorized under the Trust's Trust
Instrument to issue an unlimited number of shares of beneficial interest without
par value.
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 as of 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 these
estimates. The following summarizes the significant accounting policies of the
Fund:
SECURITY VALUATION - Securities held by the Fund for which market quotations are
readily available are valued using the last reported sales price provided by
independent pricing services. If no sales are reported, the mean of the last bid
and ask price is used. In the absence of readily available market quotations,
securities are valued at fair value determined in accordance with procedures
adopted by the Board of Trustees. Short-term securities that mature in sixty
days or less are valued at amortized cost.
INTEREST AND DIVIDEND INCOME - Interest income is accrued as earned. Dividends
on securities held by the Fund are recorded on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders of net investment
income and net capital gain, if any, are declared and paid annually.
Distributions are based on amounts calculated in accordance with applicable
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are due primarily to differing
treatments of income and gain on various investment securities held by the Fund,
timing differences and differing characterizations of distributions made by the
Fund.
ORGANIZATION COSTS - The costs incurred by the Fund in connection with its
organization and registration of shares have been capitalized and are being
amortized using the straight-line method over a five-year period beginning on
the commencement of the Fund's operations.
FEDERAL TAXES - The Fund intends to qualify each year as a regulated investment
company and distribute all its taxable income. In addition, by distributing in
each calendar year substantially all its net investment income, capital gain and
certain other amounts, if any, the 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 Series. Expenses that are directly
attributable to more than one Series are allocated among the respective Series.
REALIZED GAIN AND LOSS - Security transactions are recorded on trade date.
Realized gain and loss on investments sold are determined on the basis of
identified cost.
FOREIGN CURRENCY TRANSLATION - The books and records of the Fund are maintained
in United States dollars. Foreign currency amounts are converted into U.S.
dollars at the mean of the bid and ask prices of such currencies against U.S.
dollars as follows: (i) assets and liabilities at the rate of exchange at the
end of the respective period; and (ii) purchases
11 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
MARCH 31, 1999
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
and sales of securities and income and expenses at the rate of exchange
prevailing on the dates of such transactions. The portion of the results of
operations arising from changes in the exchange rates and the portion due to
fluctuations arising from changes in the market prices of securities are not
isolated. Such fluctuations are included with the net realized and unrealized
gain or loss on investments.
The Fund may enter into forward contracts to purchase or sell foreign currencies
to protect the U.S. dollar value of its portfolio from possible adverse
movements in foreign exchange rates and exchange control regulations. Risks
associated with such contracts include the movement in value of the foreign
currency relative to the U.S. dollar and the ability of the counterparty to
perform. Fluctuations in the value of such contracts are recorded daily as
unrealized gain or loss; realized gain or loss include net gain or loss on
contracts which have terminated by settlement or by the Fund entering into
offsetting commitments.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies resulting from
the level of governmental supervision and regulation of foreign securities
markets and the possibility of political and economic instability.
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser to the Fund is Austin Investment
Management, Inc. ("Adviser"). Pursuant to an Investment Advisory Agreement, the
Adviser receives an advisory fee from the Fund at an annual rate of 1.50% of the
average daily net assets of the Fund.
ADMINISTRATOR - The administrator of the Fund is Forum Administrative Services,
LLC ("FAdS"). For its services, FAdS receives an administrative fee at an annual
rate of 0.25% of the average daily net assets of the Fund.
TRANSFER AGENT - The transfer agent and dividend disbursing agent for the Fund
is Forum Shareholder Services, LLC ("FSS"). FSS receives an annual fee of
$12,000, plus certain shareholder account fees.
DISTRIBUTOR - Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as the Fund's distributor. FFSI receives no compensation for its
distribution services
OTHER SERVICE PROVIDER - Forum Accounting Services, LLC ("FAcS") provides fund
accounting services to the Fund. For its services, FAcS receives an annual fee
of $36,000, plus certain amounts based upon the asset level of the Fund as well
as the number and type of portfolio transactions.
NOTE 4. SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities, other than short-term
investments, totaled $14,491,964 and $8,933,635 respectively, for the year ended
March 31, 1999.
For federal income tax purposes, the tax basis of investment securities owned as
of March 31, 1999, was $16,086,313. The aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost
was $7,299,715 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value was
$1,375,407.
12 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders,
Austin Global Equity Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Austin Global Equity Fund (one of the portfolios
constituting Forum Funds) as of March 31, 1999, the related statement of
operations for the year then ended, the statement of changes in net assets for
the years ended March 31, 1998 and March 31, 1999, and the financial highlights
for the years ended March 31, 1998 and March 31, 1999, nine months ended March
31, 1997 and each of the years in the three year period ended June 30, 1996.
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, 1999 by correspondence with the custodian and brokers. 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 Austin Global Equity
Fund, as of March 31, 1999, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, MA
May 7, 1999
13 FORUM FUNDS(R)
<PAGE>
Investment Adviser
Austin Investment Management, Inc.
375 Park Avenue, Suite 2207
New York, NY 10152-2207
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Trustees
John Y. Keffer
Costas Azariadis
James C. Cheng
J. Michael Parish
Administrator
Forum Administrative Services, LLC
Two Portland Square
Portland, ME 04101
[FORUM LOGO]
Distributor
Forum Financial Services, Inc.
Two Portland Square
Portland, ME 04101
This report is authorized for distribution only
to shareholders and to others who have received
a copy of the Austin Global Equity Fund
Prospectus.
