POLARIS GLOBAL
VALUE FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 1998
Polaris
Capital Management, Inc.
http://www.polariscapital.com
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POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1998 (unaudited)
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SHARES SECURITY DESCRIPTION VALUE
COMMON STOCK (99.1%)
BUILDING & CONSTRUCTION (4.0%)
57,000 Barratt Developments $ 213,585
70,000 Beazer Group plc 199,323
41,000 Bellway plc 192,209
118,000 Crest Nicholson plc 192,836
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797,953
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BUSINESS SERVICES (4.0%)
21,543 Cendant Corp. (a) 409,317
5,700 Takefuji Corp. 389,522
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798,839
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CHEMICALS & ALLIED PRODUCTS (4.7%)
39,000 Arisawa Manufacturing Co. 431,500
50,600 Methanex Corp. (a) 282,857
1,400 Methanex Corp. (a) 7,788
19,000 Wellman, Inc. 230,375
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952,520
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COMMUNICATIONS (4.6%)
410,000 Total Access Communications (a) 918,400
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DOMESTIC DEPOSITORY INSTITUTIONS (17.8%)
15,100 Abington Bancorp, Inc. 241,600
16,100 American Bank of
Connecticut, Waterbury 358,225
58,400 Charter Pacific Bank (a) 219,000
34,000 Horizon Bank & Trust Co. (a) 301,750
31,000 Ipswich Savings Bank 348,750
14,500 MECH Financial, Inc. 402,375
15,616 North Valley Bancorp 202,032
See Notes to Financial Statements.
1
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POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
NOVEMBER 30, 1998 (unaudited)
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SHARES SECURITY DESCRIPTION VALUE
DOMESTIC DEPOSITORY INSTITUTIONS (CONTINUED)
9,250 SIS Bancorp, Inc. $ 430,125
15,157 UST Corp. 375,136
26,900 Warren Bancorp, Inc. 248,825
16,291 Webster Financial Corp. 452,075
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3,579,893
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ELECTRIC, GAS & SANITARY SERVICES (6.7%)
10,800 Draka Holding NV 311,549
3,295 Intel Corp. 354,624
21,600 Union Electrica Fenosa SA 320,517
83,000 VTECH Holdings Ltd. 359,099
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1,345,789
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FOOD & KINDRED PRODUCTS (1.6%)
18,900 Orkla ASA, Cl A 316,498
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FOREIGN DEPOSITORY INSTITUTIONS (3.6%)
24,200 Banco Bilbao Vizcaya,S.A. 383,487
3,600 Jyske Bank A/S 341,630
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725,117
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INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT (3.7%)
32,700 Helix Technology Corp. 400,575
11,000 WALTER AG 341,554
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742,129
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MEASURING, ANALYZING & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (3.7%)
9,850 Teradyne, Inc. (a) 315,816
58,900 WPI Group, Inc. (a) 419,663
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735,479
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See Notes to Financial Statements.
2
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POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
NOVEMBER 30, 1998 (unaudited)
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SHARES SECURITY DESCRIPTION VALUE
METAL MINING (3.6%)
80,950 Palabora Mining Co. $ 399,771
5,800 Phelps Dodge Corp. 328,787
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728,558
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MISCELLANEOUS MANUFACTURING INDUSTRIES (11.8%)
68,769 Fedders Corp., Cl A 348,143
2,700 Kone Corp. 309,814
10,700 Radex-Heraklith AG 284,230
57,100 Rautaruukki OYJ 366,467
15,920 Schuttersveld NV 352,368
30,000 Valmet Oyj 408,417
5,500 Veba AG German Ord. 305,772
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2,375,211
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MISCELLANEOUS RETAIL (3.9%)
3,650 Christian Dior SA 398,390
28,000 Kesko Oyj 375,744
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774,134
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PAPER & ALLIED PRODUCTS (2.7%)
116,700 Sappi Ltd. (a) 535,302
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PETROLEUM REFINING & RELATED INDUSTRIES (1.8%)
6,350 Repsol SA ADR 356,394
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PRIMARY METAL INDUSTRIES (1.4%)
18,100 RTI International Metals (a) 272,631
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PRINTING, PUBLISHING & ALLIED INDUSTRIES (1.6%)
8,000 Roto Smeets de Boer NV 323,088
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See Notes to Financial Statements.
3
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POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
NOVEMBER 30, 1998 (unaudited)
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SHARES SECURITY DESCRIPTION VALUE
REAL ESTATE (1.1%)
179,000 Countryside Properties plc $ 221,608
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RUBBER & MISCELLANEOUS PLASTIC PRODUCTS (3.3%)
16,400 Continental AG 403,501
209,751 Crean (James) plc 268,082
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671,583
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TEXTILE MILL PRODUCTS (1.8%)
8,400 Gamma Holding N.V. 364,355
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TRANSPORTATION BY AIR (3.5%)
5,600 AMR Corp. (a) 369,250
11,498 KLM Royal Dutch Airlines N.V. 315,402
321 KLM Royal Dutch Airlines
N.V., N.Y. registered shares 9,068
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693,720
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TRANSPORTATION EQUIPMENT (2.1%)
6,425 Toyota Motor Corp. 325,266
4,000 Toyota Motor Corp. 101,529
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426,795
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TRANSPORTATION SERVICES (1.6%)
2,374 A. Friedrich Flender AG (a) 329,956
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WATER TRANSPORTATION (2.7%)
208,600 Neptun Maritime Oyj (a) 547,688
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WHOLESALE TRADE-NONDURABLE GOODS (1.8%)
55,000 Chock Full o' Nuts Corp. (a) 364,375
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See Notes to Financial Statements.
4
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POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS (concluded)
NOVEMBER 30, 1998 (unaudited)
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SHARES SECURITY DESCRIPTION VALUE
TOTAL COMMON STOCK (COST
$18,927,949) $19,898,015
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SHORT-TERM INVESTMENTS (0.9%)
187,356 Boston 1784 Institutional US Treasury
Fund (cost $187,356) 187,356
CERTIFICATES OF DEPOSIT (0.0%)
1,048 Middlesex Savings Bank 1,048
1,080 Stoneham Savings Bank 1,080
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TOTAL CERTIFICATES OF DEPOSIT
(COST $2,128) 2,128
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TOTAL INVESTMENTS (100.0%)(COST
$19,117,433) $ 20,087,499
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(a) Non-income producing security.
ADR - American Depositary Receipts
See Notes to Financial Statements.
5
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POLARIS GLOBAL VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
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ASSETS
Investments (Note 2):
Investments at cost $ 19,117,433
Net unrealized appreciation (depreciation) 970,066
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Total investments at value 20,087,499
Receivable for Fund shares issued 3,100
Receivable for investments sold 335,740
Interest, dividends and other receivables 24,960
Organization costs, net of amortization (Note 2) 37,333
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Total Assets 20,488,632
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LIABILITIES
Payable to adviser (Note 3) 7,861
Payable to other related parties (Note 3) 3,333
Accrued expenses and other liabilities 21,886
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Total Liabilities 33,080
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NET ASSETS $ 20,455,552
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COMPONENTS OF NET ASSETS
Paid in capital $ 18,928,024
Undistributed (distribution in excess of) net investment income 3,344
Accumulated net realized gain (loss) on investments sold 553,360
Unrealized appreciation (depreciation) on investments 970,824
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NET ASSETS $ 20,455,552
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Shares of Beneficial Interest 2,397,382
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 8.53
</TABLE>
See Notes to Financial Statements.
6
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POLARIS GLOBAL VALUE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (unaudited)
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INVESTMENT INCOME
Dividend income $ 163,616
Interest income 19,044
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Total investment Income 182,660
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EXPENSES:
Investment advisory (Note 3) 102,368
Administration (Note 3) 20,000
Transfer agent (Note 3) 14,065
Custody 10,585
Accounting (Note 3) 21,000
Audit 15,668
Legal 2,830
Trustees 1,054
Reporting 1,069
Compliance 12,351
Amortization of organization costs (Note 2) 2,667
Miscellaneous 2,582
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Total Expenses 206,239
Fee waived (Note 3) (26,923)
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Net Expenses 179,316
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NET INVESTMENT INCOME (LOSS) 3,344
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investments sold 560,012
Net realized gain (loss) on foreign currency transactions (6,652)
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Net realized gain (loss) on investments and foreign currency transactions 553,360
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Net change in unrealized appreciation (depreciation) on investments 970,066
Net change in unrealized appreciation (depreciation) on
foreign currency transactions 758
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Net change in unrealized appreciation (depreciation) on investments
and foreign currency transactions 970,824
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS 1,524,184
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,527,528
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</TABLE>
See Notes to Financial Statements.
7
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POLARIS GLOBAL VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998 (unaudited)
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NET ASSETS - JUNE 1, 1998 $ 16,887,905
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OPERATIONS
Net investment income (loss) 3,344
Net realized gain (loss) on investments sold 553,360
Net change in unrealized appreciation (depreciation)
on investments 970,824
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Net increase (decrease) in net assets resulting
from operations 1,527,528
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CAPITAL SHARE TRANSACTIONS (a)
Sale of shares 2,745,626
Redemption of shares (705,507)
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Net increase (decrease) from capital transactions 2,040,119
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Net increase (decrease) in net assets 3,567,647
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NET ASSETS - NOVEMBER 30, 1998 $ 20,455,552
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(a) Shares Issued (Redeemed)
Sale of shares 298,430
Redemption of shares (87,207)
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Net increase (decrease) in shares 211,223
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</TABLE>
See Notes to Financial Statements.
8
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POLARIS GLOBAL VALUE FUND
FINANCIAL HIGHLIGHTS (unaudited)
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Selected per share data for a
share of the Fund outstanding
throughout the following period:
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Six Months
Ended
November 30,
1998(a)
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Net Asset Value, Beginning of Period $7.72
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Investment Operations
Net Investment Income (Loss) -
Net Realized and Unrealized Gain (Loss)
on Investments 0.81
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Total from Investment Operations 0.81
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Net Asset Value, End of Period $8.53
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Total Return (14.70)%
Ratio/Supplementary Data:
Net Assets at End of Period (000's omitted) $20,456
Ratios to Average Net Assets:
Expenses 1.75% (b)
Expenses excluding reimbursement/waiver 2.01% (b)
Net investment income (loss) 0.03% (b)
Portfolio Turnover Rate 35.69%
</TABLE>
(a) See Note 1 to Financial Statements.
(b) Annualized.
See Notes to Financial Statements.
9
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POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (unaudited)
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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 (the
"Act"). The Trust currently has twenty-two active investment portfolios. These
financial statements relate to Polaris Global Value Fund (the "Fund"), that
commenced operations on July 31, 1989 as a limited partnership. Effective June
1, 1998, the Fund was reorganized as a diversified portfolio, as a series of the
Trust. As a result of this reorganization, the Fund's fiscal year end changed
from June 30 to May 31. Under its Trust Instrument, the Trust is authorized 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, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates. The
following represent significant accounting policies of the Fund:
SECURITY VALUATION - The Trust determines the net asset value per share of the
Fund as of the close of the regular trading day on the New York Stock Exchange,
on each Fund business day. 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 as determined by the Board of
Trustees. Securities that mature in sixty days or less are valued at amortized
cost.
REPURCHASE AGREEMENTS - The Fund may invest in repurchase agreements. The Fund,
through its custodian, receives delivery of the underlying securities, whose
market value must always equal or exceed the repurchase price. The investment
adviser is responsible for determining the market value of the underlying
securities at all times. In the event of default, the Fund may have difficulties
disposing of such securities.
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 at least annually.
Distributions are based on amounts calculated in accordance with applicable
income tax regulations.
10
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POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (continued)
NOVEMBER 30, 1998 (unaudited)
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ORGANIZATION COSTS - The costs incurred by the Fund in connection with its
organization and registration of shares have been capitalized and are amortized
using the straight line method over a five - year period, beginning with the
commencement of the Fund's operations.
FEDERAL TAXES - The Fund intends to qualify, and continue to qualify, each year
as a regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gain and certain other amounts, if any, the Fund will
not be subject to a federal excise tax. Therefore, no federal income tax
provision is required.
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 determined on the basis of
identified cost.
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser to the Fund is Polaris Capital
Management, Inc. (the "Adviser"). Pursuant to an Investment Advisory Agreement,
the Adviser receives an advisory fee from the Fund at an annual rate of 1.00% of
the average daily net assets of the Fund. The Adviser has voluntarily waived a
portion of its fees and may assumed certain expenses of the Fund, so that total
expenses of the Fund would not exceed 1.75% of average net assets. For the six
months ended November 30, 1998, fees waived were $26,923.
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 0.10% of the first $150 million of the Fund's average daily net assets
and 0.05% of the Fund's average daily net assets in excess of $150 million, with
a $40,000 minimum fee per year. For the six months ended November 30, 1998,
there were no legal expenses charged to the Fund by FAdS.
TRANSFER AGENT - The transfer agent and dividend disbursing agent for the Fund
is Forum Shareholder Services, LLC ("FSS"). FSS receives an annual fee of
$24,000 plus certain shareholder account fees.
SHAREHOLDER SERVICE AGENT - The Trust has adopted a shareholder servicing plan
with respect to the Fund under which the Trust must pay FAdS a shareholder
servicing fee at an annual rate of up to 0.25% of the average daily net assets
of the shares owned by investors for which the shareholder servicing agent
maintained a servicing relationship. FAdS may pay any or all amounts of these
payments to various institutions that provide shareholder servicing to their
clients.
DISTRIBUTOR - Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association Services Dealers, Inc.,
acts as the Fund's distributor. FFSI receives no compensation for its
distribution services.
11
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POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (concluded)
NOVEMBER 30, 1998 (unaudited)
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OTHER SERVICE PROVIDERS - 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
Purchases and sales of investment securities, other than short-term investments,
totaled $8,619,461 and $7,031,118 respectively, for the six months ended
November 30, 1998.
For federal income tax purposes, the tax basis of investment securities owned as
of November 30, 1998 was $19,117,433 and the net unrealized appreciation of
investment securities was $970,066. The aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost
was $3,544,946 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value was
$2,574,880.
12
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TABLE OF CONTENTS
NOVEMBER 30, 1998
Page
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Schedule of Investments.............................. 1
Statement of Assets and Liabilities.................. 6
Statement of Operations.............................. 7
Statement of Changes in Net Assets................... 8
Financial Highlights................................. 9
Notes to Financial Statements........................ 10
Distributor
Forum Financial Services, Inc.
Investment Adviser
Polaris Capital Management, Inc.
125 Summer Street
Boston, MA 02110
_____________________________________________________
This report is submitted for the general information
of the shareholders of the Fund. It is not
authorized for distribution to prospective investors
in the Fund unless preceded or accompanied
by an effective prospectus, which includes information
regarding the Fund's objectives and
policies, experience of its management, marketability
of shares, and other information.
_____________________________________________________
POLARIS GLOBAL
VALUE FUND
Semi-Annual Report
November 30, 1998
Polaris
Capital Management, Inc.
