OAK HALL(R) SMALL CAP CONTRARIAN FUND
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Two Portland Square, Portland, Maine 04101
Shareholder Inquiries [LOGO]
Forum Financial Corp.
P.O. Box 446, Portland, Maine 04112
207-879-0001
800-625-4255
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ANNUAL REPORT MARCH 31, 1999
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Dear Shareholder:
As we write this shareholder letter, we are both excited and disappointed - two
emotions that do not usually coincide. On the disappointing side, the Fund in
the fiscal year ending March 31, 1999 was down 22.30% versus the Russell 2000
Index which was down 16.19% over the same period.* This sub-performance can be
partially explained by the superior return that was generated in the January -
March period of 1998 which put us on a high plateau that was vulnerable to the
extreme volatility which ensued for small cap stocks in the succeeding 12
months. More importantly, the divergence between small and large capitalization
stocks became extreme during the year and no area of small cap was spared save
some special pockets of technology and the speculation in Internet stocks.
On the exciting end of the spectrum, we have seen a dramatic change in the
fortunes of small stocks recently. In the month of March alone, the Oak Hall
Small Cap Contrarian Fund is up roughly 6.00%. Is this the long awaited
broadening of the market that has been anticipated for the past 3 years? We
believe this is a distinct possibility and in the following paragraphs, we will
try to define the current market environment and explain the reasons for our
optimism.
In many ways we are in precedent setting times in the equity investment
business. Record high valuations in the large cap growth market are accompanied
by extremely narrow leadership, with most days showing more 12 month lows than
highs for individual stocks. We see feverish speculation in areas such as the
Internet and in various forms of E-Commerce based enterprises. This aggressive
investment stance is drawing funds from more traditional small cap investment
areas, and when combined with the roughly two billion monthly outflows from
small cap mutual funds, puts undue pressure on this asset class.
We are often asked what will happen to change this extremely unsettling
dependence on a small number of highly visible, highly liquid stocks, and when
will traditional small cap investing come back in vogue. After all, it's been
almost four years of underperformance for small cap, especially in the value
end, and investors rightly question whether this asset class will ever recover.
The following are observations we think will contribute to a change in
perception.
At the present time, the relative value of small cap to large cap stocks is at
the greatest spread it's been in more than 20 years. There is historical
precedent for significant small cap recovery following periods of undervaluation
and indeed the periods of 1976-1984, and 1991-1994 (periods of significant small
stock outperformance) came after major periods of underperformance. Therefore,
the environment is conducive to a small stock sustained rally even though the
timing is in question.
Small cap profit growth continues to outpace large cap profit growth (the S&P
this year will be hard pressed to grow more than 5%). Even in this environment,
small cap multiples continue to go down and a reversion to the mean seems
inevitable.
* PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY, AND SHARES MAY BE WORTH MORE OR LESS AT REDEMPTION
THAN AT ORIGINAL PURCHASE. SMALL CAPITALIZATION STOCKS ARE REPRESENTED BY THE
RUSSELL 2000 INDEXTM, WHICH IS A MARKET WEIGHTED INDEX OF 2,000 SMALL CAP U.S.
COMPANIES. THE INDEX IS UNMANAGED AND ITS PERFORMANCE REFLECTS THE REINVESTMENT
OF DIVIDENDS. INDIVIDUALS CANNOT INVEST DIRECTLY IN THE INDEX.
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
ANNUAL REPORT
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The US economy continues to grow at a surprisingly positive rate and long-term
rates appear to be drifting back towards a 5% yield. This is very positive for
our mostly domestic-oriented companies and should enable them to continue to
grow earnings at a double-digit rate.
Lastly, we believe we are on the cusp of a prolonged period of mergers and
acquisitions in the small and mid-cap area. Valuations are so depressed in these
stocks that sophisticated strategic and financial buyers are seeing the virtues
of accretive purchases and could conceivably cause a rise in valuations.
On a more fundamental basis, we continue to find an unusual number of compelling
investment ideas. During the quarter, we established positions in Applied Power,
a diversified industrial company with a strong position in electronic and
electrical enclosures, an especially attractive niche market. Applied Power's
earnings have grown at 20%, yet sells at barely 10x earnings. We also invested
in U.S. Industries, a diversified manufacturer of consumer products oriented
towards the Do-It-Yourself home building market. Like Applied Power, it sells
for less than 10x earnings and has earnings growth prospects of 15 to 20%. We
also established positions in a down trodden technology company - Informix - and
a regional airline - Midwest Express - which has superior future growth
prospects. We sold our positions in Tiffany's and Outback Steakhouse after they
reached our price objectives and divested our stakes in Bombay and Claire's
after some fundamental changes in their strategic outlook took place.
The values we see in the small cap area are compelling and this we believe is
the salvation of this asset class. Assuming interest rates stay low and the US
economy remains robust, small caps should come back into focus. We intend to be
there and appreciate your support.
John W. Morosani Edward M. Cimilluca
Co-Portfolio Manager Co-Portfolio Manager
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FORUM FUNDS(R)
2
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
ANNUAL REPORT
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The following chart compares changes in value of a $10,000 investment in the Oak
Hall Small Cap Contrarian Fund, including reinvested dividends and
distributions, to the performance of the Russell 2000 Index since inception of
the Fund. The Russell 2000 Index is a market weighted index of 2,000 companies
with market capitalizations from $162 million to $1 billion. The Russell 2000
Index is unmanaged and its performance reflects the reinvestment of dividends.
It is important to keep in mind that the Russell 2000 Index excludes the effect
of any expenses which have been deducted from the Fund's return. Investment
return and principal value of an investment in the Fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. PAST PERFORMANCE CANNOT PREDICT NOR GUARANTEE FUTURE RESULTS.
OAK HALL SMALL CAP CONTRARIAN FUND VS. RUSSELL 2000 INDEX
<TABLE>
<S> <C> <C> <C> <C>
Average Annual Total Return
One Five Since Value
Year Year Inception* on 3/31/99
---- ---- ---------- ----------
Oak Hall Small Cap Contrarian Fund (22.30%) 5.16% 10.02% $18,948
Russell 2000 Index (16.19%) 10.88% 12.61% $22,299
</TABLE>
[EDGAR REPRESENTATION OF LINE CHART]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997 1998 1999
June March March March March March March March
---- ----- ----- ----- ----- ----- ----- -----
Oak Hall Small Cap Contrarian Fund $10,000 $11,979 $14,735 $12,865 $15,816 $16,288 $24,384 $18,948
Russell 2000 Index $10,000 $12,140 $13,304 $13,841 $17,794 $18,716 $26,606 $22,299
</TABLE>
* Inception date for Oak Hall Small Cap Contrarian Fund is July 13, 1992.
Figures for the Russell 2000 Index are based on an inception date of June
30, 1992.
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FORUM FUNDS(R)
3
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999
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<TABLE>
<S> <C> <C> <C> <C> <C>
SECURITY SECURITY
SHARES DESCRIPTION VALUE SHARES DESCRIPTION VALUE
- ----------- ------------------------------------- ---------- --------- ---------------------------------------- --------------
COMMON STOCK (98.8%) INDUSTRIAL & COMMERCIAL MACHINERY, CONTINUED:
AIR TRANSPORTATION (2.1%) 9,200 U.S. Industries, Inc................... $ 151,225
--------------
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2,900 Midwest Express Holdings, Inc.(a)...... $85,188 326,950
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APPAREL & ACCESSORY STORES (3.4%) MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
4,300 Footstar, Inc.(a)...................... 137,600 PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (4.0%)
----------
AUTOMOTIVE RETAIL (2.1%) 6,800 Roper Industries, Inc.................. 162,350
--------------
11,200 LoJack Corp.(a)........................ 86,100 MOTION PICTURES (2.1%)
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BUILDING CONSTRUCTION-GENERAL CONTRACTORS & 4,700 Carmike Cinemas, Inc.(a)............... 84,894
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OPERATIVE BUILDERS (5.6%) OIL & GAS EXTRACTION (9.9%)
12,600 Cavalier Homes, Inc.................... 121,275 6,700 Central Pacific Minerals NL(a)........ 66,581
5,500 Champion Enterprises, Inc.(a).......... 106,562 14,366 EEX Corp.(a).......................... 70,034
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227,837 29,300 Meridian Resource Corp.(a)............ 98,888
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BUSINESS SERVICES (5.6%) 11,200 Snyder Oil Corp....................... 165,900
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4,700 ADVO, Inc.(a).......................... 90,769 401,403
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4,900 Harte-Hanks, Inc....................... 134,443 PETROLEUM REFINING & RELATED INDUSTRIES (3.9%)
----------
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225,212 10,600 Input/Output, Inc.(a).................. 66,913
----------
CHEMICAL & ALLIED PRODUCTS (2.9%) 12,400 Newpark Resources, Inc.(a)............. 89,900
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8,200 Dura Pharmaceuticals, Inc.(a).......... 115,825 156,813
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COMMUNICATION SERVICES (5.9%) PRIMARY METAL INDUSTRIES (3.0%)
21,100 Premiere Technologies, Inc.(a)......... 240,013 7,100 Belden, Inc........................... 121,144
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CONSTRUCTION-SPECIAL TRADE CONTRACTORS (5.6%) REAL ESTATE (5.0%)
8,500 Comfort Systems USA, Inc.(a)........... 124,312 16,200 Capital Automotive REIT............... 201,488
--------------
7,000 Watsco, Inc............................ 102,375 RETAIL SALES (5.8%)
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226,687 12,900 Petco Animal Supplies, Inc.(a)....... 129,000
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DEPOSITORY INSTITUTIONS (3.1%) 3,100 Zale Corp.(a)......................... 105,981
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2,500 Astoria Financial Corp................. 125,000 234,981
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EATING & DRINKING PLACES (2.7%) SOFTWARE (5.0%)
8,000 RARE Hospitality International, Inc.(a) 110,000 13,700 Informix Corp.(a)..................... 101,038
----------
ELECTRONIC & COMPUTER RELATED EQUIPMENT (2.4%) 13,700 Inso Corp.(a)......................... 103,606
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6,800 Vishay Intertechnology, Inc.(a)........ 99,025 204,644
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HEALTH SERVICES (5.3%) TEXTILE MILL PRODUCTS (2.8%)
12,500 American Oncology Resources, Inc.(a).. 112,500 6,200 Shaw Industries, Inc.................. 114,700
--------------
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12,300 Physician Reliance Network, Inc.(a).... 104,550 TOTAL COMMON STOCK (Cost $3,846,416) 4,006,467
---------- --------------
----------
217,050
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HOME FURNITURE, FURNISHINGS & SHORT-TERM HOLDINGS (1.2%)
Equipment Stores (2.5%) 49,785 Dreyfus Government Cash
12,500 Pier 1 Imports, Inc.................... 101,563 Management Fund (cost $49,785)... 49,785
----------
==============
INDUSTRIAL & COMMERCIAL MACHINERY (8.1%) TOTAL INVESTMENTS (100.0%) (cost $3,896,201)... $ 4,056,252
==============
3,600 Applied Power, Inc..................... 98,100
2,300 Pentair, Inc........................... 77,625
</TABLE>
(a) Non-income producing security.
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See Notes to Financial Statements. FORUM FUNDS (R)
4
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
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<TABLE>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost........................................... $ 3,896,201
Net unrealized appreciation................................... 160,051
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Total investments at value........................................ 4,056,252
Interest, dividends and other receivables......................... 991
Receivable from adviser (Note 3).................................. 89,518
Prepaid expenses.................................................. 14,962
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Total assets ........................................................... 4,161,723
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LIABILITIES:
Payable to administrator (Note 3)................................. 12,741
Payable to transfer agent (Note 3)................................ 1,281
Accrued fees and other expenses................................... 80,257
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Total liabilities ...................................................... 94,279
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NET ASSETS.............................................................. $ 4,067,444
================
COMPONENTS OF NET ASSETS:
Paid in capital................................................... $ 4,216,646
Unrealized appreciation on investments............................ 160,051
Accumulated net realized loss..................................... (309,253)
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NET ASSETS.............................................................. $ 4,067,444
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SHARES OF BENEFICIAL INTEREST........................................... 254,977
================
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE)...... $ 15.95
================
</TABLE>
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See Notes to Financial Statements. 5 FORUM FUNDS(R)
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income...................................................... $ 36,594
Interest income...................................................... 11,427
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Total investment income ................................................... 48,021
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EXPENSES:
Investment advisory (Note 3)........................................ 38,224
Administration (Note 3)............................................. 12,741
Transfer agent (Note 3)............................................. 17,599
Custody.............................................................. 9,489
Accounting (Note 3)................................................. 39,000
Audit................................................................ 21,270
Directors............................................................ 366
Legal................................................................ 6,468
Registration......................................................... 14,195
Reporting............................................................ 18,062
Miscellaneous........................................................ 8,282
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Total expenses ............................................................ 185,696
Expenses reimbursed and fees waived (Note 3) ........................ (109,202)
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Net expenses .............................................................. 76,494
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NET INVESTMENT LOSS ....................................................... (28,473)
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments sold ............................... (281,589)
Net change in unrealized depreciation on investments ................ (1,116,304)
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............................ (1,397,893)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (1,426,366)
=================
</TABLE>
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See Notes to Financial Statements. 6 FORUM FUNDS(R)
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<S> <C> <C>
Year Year
Ended Ended
March 31, 1999 March 31, 1998
----------------- ------------------
NET ASSETS - Beginning of Period............................................ $ 7,207,925 $ 7,310,193
----------------- ------------------
OPERATIONS:
Net investment loss.................................................... (28,473) (84,363)
Net realized gain (loss) on investments sold........................... (281,589) 1,344,532
Net change in unrealized appreciation (depreciation) on investments.... (1,116,304) 1,304,798
----------------- ------------------
Net increase (decrease) in net assets resulting
from operations..................................................... (1,426,366) 2,564,967
----------------- ------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net realized gain on investments....................................... (27,072) -
----------------- ------------------
CAPITAL SHARE TRANSACTIONS (a):
Sale of shares......................................................... 394,323 2,446,775
Reinvestment of distributions.......................................... 23,893 -
Redemption of shares................................................... (2,105,259) (5,114,010)
----------------- ------------------
Net decrease from capital transactions................................. (1,687,043) (2,667,235)
----------------- ------------------
Net decrease in net assets............................................. (3,140,481) (102,268)
----------------- ------------------
NET ASSETS - End of Period.................................................. $ 4,067,444 $ 7,207,925
================= ==================
(a) Shares Issued (Redeemed)
Sale of shares.................................................... 23,000 138,550
Reinvestment of distributions..................................... 1,558 -
Redemption of shares.............................................. (118,397) (319,320)
----------------- ------------------
Net decrease in shares............................................ (93,839) (180,770)
================= ==================
</TABLE>
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See Notes to Financial Statements. FORUM FUNDS(R)
7
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
FINANCIAL HIGHLIGHTS
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Selected data for a share of the Fund outstanding throughout each period.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Nine Months
Year Ended Year Ended Ended Year Ended Year Ended Year Ended
March 31, March 31, March 31, June 30, June 30, June 30,
1999 1998 1997 1996 1995 1994
--------------- ------------ --------------- ------------- ------------- ------------
Net Asset Value, Beginning of
Period............................ $20.66 $13.80 $13.61 $11.33 $12.55 $14.30
--------------- ------------ --------------- ------------- ------------- ------------
Investment Operations:
Net Investment Loss............... (0.11) (0.24) (0.15) (0.32)(a) (0.03)(a) (0.09)
Net Realized and Unrealized
Investment Gain (Loss) on
Investments................... (4.50) 7.10 0.34 2.60 (0.10) (0.52)
--------------- ------------ --------------- ------------- ------------- ------------
Total from Investment Operations....... (4.61) 6.86 0.19 2.28 (0.13) (0.61)
Distributions from:
Net Realized Gain on Investments.. (0.10) - - - (1.09) (1.14)
--------------- ------------ --------------- ------------- ------------- ------------
Net Asset Value, End of Period......... $15.95 $20.66 $13.80 $13.61 $11.33 $12.55
=============== ============ =============== ============= ============= ============
Total Return........................... (22.3%) 49.71% 1.40% 20.12% (1.07%) (5.14%)
Ratio/Supplementary Data:
Net Assets at End of Period
(000's omitted)................... $4,067 $7,208 $7,310 $12,257 $16,399 $35,470
Ratios to Average Net Assets:
Expenses.......................... 1.50% 1.93% 2.00% (b) 2.00% 2.00% 2.01%
Expenses excluding
reimbursement/waiver........... 3.64% 2.96% 2.93% (b) 2.44% - 2.17%
Net investment loss............... (0.56%) (1.29%) (1.13%)(b) (1.14%) (0.23%) (0.96%)
Portfolio Turnover Rate................ 118.40% 100.61% 95.05% 157.01% 115.33% 168.61%
</TABLE>
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(a) Calculated using the weighted average shares outstanding.
(b) Annualized.
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See Notes to Financial Statements. FORUM FUNDS(R)
8
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OAK HALL(R) SMALL CAP CONTRARIAN 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, as amended (the "Act"). These financial statements relate to Oak Hall(R)
Small Cap Contrarian Fund (the "Fund"), a diversified portfolio of the Trust
that commenced operations on July 13, 1992. 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, the
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 as determined 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 at least 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.
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.
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FORUM FUNDS(R)
9
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser to the Fund is Oak Hall(R) Capital
Advisors, L.P. (the "Adviser"). Pursuant to an Investment Advisory Agreement,
the Adviser receives an advisory fee from the Fund at an annual rate of 0.75% of
the average daily net assets of the Fund. The Adviser has voluntarily waived its
fees, and assumed certain expenses of the Fund, so that total expenses of the
Fund would not exceed 1.50% of average net assets. For the year ended March 31,
1999, fees waived and expenses reimbursed were $38,224 and $70,978,
respectively.
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.
SHAREHOLDER SERVICE AGENT - The Trust has adopted a shareholder servicing plan
with respect to the Fund under which the Trust may pay FAdS a shareholder
servicing fee at an annual rate of 0.25% of the average daily net assets of the
Fund. FAdS may pay any or all amounts of these payments to various institutions
that provide shareholder servicing to the Fund. For the year ended March 31,
1999, no payments were made under the service plan.
DISTRIBUTOR - Forum Fund Services, LLC ("FFS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc., acts as the
Fund's distributor. FFS receives no compensation for its distribution services.
Prior to January 1, 1999, Forum Financial Services, Inc. provided distribution
services to the Fund.
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
Cost of purchases and proceeds from sales of investment securities, other than
short-term investments, totaled $5,768,005 and $7,118,080, 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 $3,968,714, and the net unrealized appreciation of
investment securities was $87,538. The aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost
was $431,336 and the aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value was $343,798.
As of March 31, 1999, the Fund had a capital loss carryover available to offset
future capital gains in the amount of $236,740, expiring March 31, 2007.
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FORUM FUNDS(R)
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OAK HALL(R) SMALL CAP CONTRARIAN FUND
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders,
Forum Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Oak Hall(R) Small Cap Contrarian 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 Oak Hall(R) Small
Cap Contrarian 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
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FORUM FUNDS(R)
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INVESTMENT ADVISER
Oak Hall(R) Capital Advisors, L.P.
122 East 42nd Street--24th Floor
New York, NY 10168
http://www.oakhallfund.com
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
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 Oak Hall(R) Small Cap Contrarian Fund
Prospectus.
================================================================================
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OAK HALL(R)
SMALL CAP
CONTRARIAN FUND
ANNUAL REPORT
March 31, 1999
[LOGO]
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