[Graphic of Planet]
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1999
AUSTIN GLOBAL
EQUITY FUND
FORUM
FUNDS
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
Two Portland Square Shareholder Inquiries
Portland, ME 04101 Forum Shareholder
Services, LLC P.O. Box 446
800-943-6786 Portland, ME 04112
207-879-0001
800-94FORUM
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
It is a pleasure to report that Austin Global Equity Fund (the "Fund") has
sustained a 5 star Morningstar Rating(TM) among 1,025 and 565 international
equity funds for the 3- and 5-year periods ended September 30, 1999,
respectively.* We can be justly proud of the record to date and can only strive
to continue it in the future. For your review, we present a comparison to
various indices on a compounded annualized rate of return basis:
<TABLE>
<S> <C> <C> <C>
Since Inception
One Year Five Year December 8, 1993
Austin Global Equity Fund* 28.16% 18.01% 15.70%
Morgan Stanley Capital International
World Index (MSCI)* 29.47% 15.91% 15.54%
Standard and Poor's 500 Index (S&P 500)* 27.79% 25.01% 21.61%
</TABLE>
As of September 30, 1999, the Fund's common stock regional concentration was:
Europe, 36.0%; US, 32.7%; Asia Pacific, 20.4%; Latin America, 4.2%. Regarding
specific industries, the Fund remains focused on the broad telecommunications
area, inclusive of landline service providers, wireless operator and software
and hardware manufacturers. Another area of concentration is the financial
services industry, which includes banks and insurers.
We present on the next page an aging of the holdings in the Fund. We believe the
chart reveals a lot about the Fund's ability to adhere to its long-term
investment concept. This is not to say that there are not disappointments
necessitating sales for better opportunities. Other reasons for sales include
additional appreciation believed too remote or at greater risk than deemed
reasonable to take; and the need to take losses to off-set realized capital
gains - managing the Fund's investment tax consequences efficiently.
FORUM FUNDS[Registered Trademark]
1
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SHAREHOLDER LETTER (concluded)
SEPTEMBER 30, 1999
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Longevity Chart
(Assets held one year or longer)
<TABLE>
<S> <C> <C>
Year of Value at % of Total Assets
Purchase September 30, 1999 at September 30, 1999
--------- ------------------ ---------------------
1994 $1,326,600 5.2%
1995 $2,883,898 11.3%
1996 $1,762,520 6.9%
1997 $4,295,256 16.9%
1998 $4,578,435 18.0%
</TABLE>
The dollar value indicated for each year is not high relative to today's mutual
funds. However, it must be remembered the history of your Fund is one of a
modest beginning only six years ago, in December 1993.
Worldwide securities markets remain volatile. This factor emphasizes the need to
take a long-term view to investing - a buy/ hold strategy. To believe otherwise
would entail convincing oneself that a market timing scheme could predict market
and common stock swings with a high degree of accuracy. We do not believe such a
system exists to handle the present day volatility.
/s/ Peter A. Vlachos
Peter A. Vlachos
President
Austin Investment Management, Inc.
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk-adjusted performance as of September 30, 1999,
and are subject to change monthly. Morningstar returns are calculated from the
funds' 3-, 5- and 10-year average annual returns (if applicable) in excess of
90-day Treasury bill returns with appropriate fee adjustments, and a risk factor
that reflects fund performance below 90-day Treasury bill returns. The Fund
received 5 stars for the 3- and 5-year periods ended September 30, 1999. The top
10% of funds in a broad asset class receive five stars.
Investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than original cost. Returns are annualized
and include the reinvestment of dividends and capital gain distributions. For
the periods reported, some of the Fund's fees were waived or expenses
reimbursed, otherwise total return would have been lower.
The Morgan Stanley Capital International World Index 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 Standard and Poor's 500 Index
represents the average performance of 500 widely held securities. These indices
are unmanaged and it is not possible to invest directly in any index.
FORUM FUNDS[Registered Trademark]
2
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited)
SEPTEMBER 30, 1999
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COMMON STOCK (95.8%)
<TABLE>
<C> <S> <C> <C>
SHARES SECURITY DESCRIPTION COST VALUE
- ----------------- --------------------------------------------------------- ------------------ ------------------
ARGENTINA (0.0%)
40 Buenos Aires Embotelladora SA ss. $ - $ -
------------------ ------------------
AUSTRALIA (1.0%)
10,000 Telstra Corp. Ltd., ADR 145,158 263,750
------------------ ------------------
BRAZIL (1.2%)
4,000 Telecomunicacoes Brasileiras SA - Telebras, ADR * 504 125
4,000 Telecomunicacoes Brasileiras SA - Telebras, ADR -
Preferred Block 454,096 299,750
------------------ ------------------
------------------ ------------------
454,600 299,875
------------------ ------------------
FINLAND (2.1%)
6,000 Nokia Corp., ADR 196,117 538,875
------------------ ------------------
FRANCE (5.0%)
1,125 Air Liquide * 178,957 178,519
1,000 Air Liquide, ADR 33,812 31,736
100 Immobiliere Marseillaise * 180,868 211,880
2,000 L'OREAL, ADR 216,811 255,383
1,500 Simco SA * 125,430 127,799
5,000 Societe du Louvre * 317,170 330,147
167 Taittinger SA * 138,418 116,405
------------------ ------------------
------------------ ------------------
1,191,466 1,251,869
------------------ ------------------
GERMANY (3.2%)
3,000 Mannesmann AG* 453,382 479,245
8,000 RWE AG, ADR 278,674 337,387
------------------ ------------------
------------------ ------------------
732,056 816,632
------------------ ------------------
GREECE (2.3%)
5,980 EFG Eurobank * 308,199 285,227
1,175 Ergo Bank SA 161,425 111,592
590 Interamerican SA 13,094 51,530
5,000 Panafon Hellenic Telecom SA, GDR * 162,985 136,138
------------------ ------------------
------------------ ------------------
645,703 584,487
------------------ ------------------
HONG KONG (0.4%)
87,120 Hong Kong and China Gas Co. Ltd., ADR 85,000 106,548
------------------ ------------------
IRELAND (2.3%)
10,000 eircom plc, ADR * 196,850 171,875
10,000 Esat Telecom Group plc, ADR * 143,750 397,500
------------------ ------------------
------------------ ------------------
340,600 569,375
------------------ ------------------
ISRAEL ( 1.3%)
4,000 Check Point Software Technologies Ltd. * 218,750 337,750
------------------ ------------------
ITALY (4.1%)
150,000 Telecom Italia Mobile SpA * 185,989 932,925
7 Telecom Italia SpA * 20 61
1,277 Telecom Italia SpA, ADR 36,100 110,061
------------------ ------------------
222,109 1,043,047
------------------ ------------------
JAPAN (16.3%)
50,000 Bank of Tokyo-Mitsubishi Ltd., ADR 603,987 765,625
3,000 NEC Corp., ADR 177,930 301,500
5,000 Nippon Telegraph & Telephone Corp., ADR 279,050 308,438
20,000 Nisshinbo Industries, Inc. 194,872 98,622
</TABLE>
See Notes to Financial Statement FORUM FUNDS[Registered Trademark]
3
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited) (continued)
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C>
SHARES SECURITY DESCRIPTION COST VALUE
- ----------------- --------------------------------------------------------- ------------------ ------------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
6,000 NTT Mobile Communication Network, Inc., ADR $ 264,560 $ 591,734
4,500 Sony Corp., ADR 395,224 675,281
11,000 Tokio Marine & Fire Insurance Co. Ltd., ADR 582,285 632,500
12,000 Toyota Motor Corp., ADR 670,970 748,500
------------------ ------------------
------------------ ------------------
3,168,878 4,122,200
------------------ ------------------
LUXEMBOURG (1.8%)
3,500 Societe Europeenne des Satellites, FDR * 592,671 462,205
------------------ ------------------
MALAYSIA (0.3%)
10,000 Nestle (Malaysia) Berhad * 66,728 35,001
15,000 Telekom Malaysia Berhad * 68,750 38,883
------------------ ------------------
------------------ ------------------
135,478 73,884
------------------ ------------------
NETHERLANDS (5.2%)
5,065 Aegon NV, ADR 113,966 438,123
3,000 Equant NV * 227,993 244,125
69 Koninklijke KPN NV, ADR 2,186 3,071
8,000 Royal Dutch Petroleum Co. 365,753 472,500
2,000 STMicroelectronics NV 154,975 148,000
------------------ ------------------
------------------ ------------------
864,873 1,305,819
------------------ ------------------
POLAND (0.5%)
25,000 Telekomunikacja Polska SA, GDR 120,200 122,637
------------------ ------------------
SINGAPORE (0.4%)
10,000 Singapore Airlines Ltd. * 95,566 97,620
------------------ ------------------
SOUTH KOREA (1.2%)
10,000 Korea Electric Power Corp., ADR 174,250 160,625
5,000 Korea Telecom Corp., ADR * 137,800 185,000
------------------ ------------------
312,050 345,625
------------------ ------------------
SPAIN (1.3%)
5,000 Endesa SA, ADR 135,612 95,625
4,681 Telefonica De Espana SA, ADR * 234,090 224,698
------------------ ------------------
------------------ ------------------
369,702 320,323
------------------ ------------------
SWITZERLAND (2.9%)
35 Bank Fuer Internationalen Zahlungsausgleich * 253,900 214,584
3,000 Roche Holdings Ltd., ADR 195,000 347,166
5,000 Swisscom AG, ADR 141,800 157,187
------------------ ------------------
------------------ ------------------
590,700 718,937
------------------ ------------------
TAIWAN ( 1.2%)
10,150 Taiwan Semiconductor Manufacturing Co. Ltd., ADR * 313,617 299,425
------------------ ------------------
UNITED KINGDOM (9.1%)
12,322 Allied Zurich plc, ADR 321,042 286,133
5,000 BOC Group plc, ADR 149,050 208,125
67,187 British Energy plc 222,223 455,881
75,000 British Energy plc, A Shares 24,105 71,640
6,000 HSBC Holdings plc, ADR 303,000 343,737
6,000 News Corp. Ltd., ADR 181,110 170,625
5,000 Rio Tinto plc, ADR 210,112 355,000
4,000 SmithKline Beecham plc, ADR 256,240 230,500
4,464 Unilever plc, ADR 205,425 171,585
------------------ ------------------
------------------ ------------------
1,872,307 2,293,226
------------------ ------------------
</TABLE>
See notes to Financial Statements FORUM FUNDS[Registered Trademark]
4
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited) (concluded)
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C>
SHARES SECURITY DESCRIPTION COST VALUE
- ----------------- --------------------------------------------------------- ------------------ ------------------
COMMON STOCK (CONTINUED)
UNITED STATES (32.7%)
4,000 Alcoa, Inc. $ 154,350 $ 248,250
30,000 Bank of New York Co., Inc. 272,812 1,003,125
18,000 Cisco Systems, Inc. * 176,750 1,234,125
6,000 Comcast Corp.* 170,055 239,250
5,000 E. piphany, Inc. * 80,000 243,753
3,000 Home Depot, Inc. 117,180 205,875
8,000 Intel Corp. 271,500 594,500
24,000 InterWorld Corp. * 369,375 867,000
2,000 JDS Uniphase Corp. * 181,300 227,625
3,000 Johnson & Johnson 220,930 275,625
40,000 Kos Pharmaceuticals, Inc. * 492,813 193,752
14,950 Lucent Technologies, Inc. 332,735 969,881
10,000 MCI WorldCom, Inc. * 502,110 718,750
4,000 Microsoft Corp. * 130,330 362,250
9,000 Qwest Communications International, Inc. * 263,972 266,062
10,000 Schlumberger Ltd. 397,005 623,125
------------------ ------------------
4,133,217 8,272,948
------------------ ------------------
Total Common Stock 16,800,818 24,247,057
------------------ ------------------
</TABLE>
FIXED RATE CONVERTIBLE BONDS (2.8%)
<TABLE>
<C> <S> <C> <C>
PRINCIPAL
- -----------------
NETHERLANDS (0.9%)
$400,000 Koninklijke Ahold NV, 3.00%, 9/30/03 216,532 227,746
------------------ ------------------
UNITED KINGDOM (0.6%)
100,000 Telewest plc, 5.25%, 2/19/07 175,370 153,162
------------------ ------------------
UNITED STATES (1.3%)
300,000 Bell Atlantic Financial, 4.25%, 9/15/05 297,869 315,750
------------------ ------------------
Total Fixed Rate Convertible Bonds 689,771 696,658
------------------ ------------------
</TABLE>
SHORT-TERM HOLDINGS (1.4%)
<TABLE>
<C> <S> <C> <C>
SHARES
- -----------------
357,485 BT Pyramid Money Market Fund 357,485 357,485
------------------ ------------------
Total Investments (100.0%) $ 17,848,074 $25,301,200
================== ==================
</TABLE>
* Non-income producing security
ss. Received shares as part of a class action settlement
ADR - American Depositary Receipt
FDR - Foreign Depositary Receipt
GDR - Global Depositary Receipt
Notes to Financial FORUM FUNDS[Registered Trademark]
5
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments (Note 2):
Investments, at cost $ 17,848,074
Net unrealized appreciation 7,453,126
------------------
Total investments, at value 25,301,200
Cash 91,896
Receivable for Fund shares issued 11,108
Interest, dividends and other receivables 55,856
Prepaid expenses 8,347
------------------
Total Assets 25,468,407
------------------
LIABILITIES
Payable to adviser (Note 3) 31,415
Payable to administrator (Note 3) 5,236
Accrued expenses and other liabilities 49,727
------------------
Total Liabilities 86,378
------------------
NET ASSETS $25,382,029
==================
COMPONENTS OF NET ASSETS
Paid-in capital $ 17,969,526
Undistributed net investment loss (54,327)
Unrealized appreciation of investments 7,453,126
Accumulated net realized gain 13,704
------------------
NET ASSETS $25,382,029
==================
SHARES OF BENEFICIAL INTEREST 1,428,027
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 17.77
</TABLE>
See Notes to Financial Staements FORUM FUNDS[Registered Trademark]
6
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS (unaudited)
PERIOD ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income $ 207,909
Interest income 32,436
------------------
Total Investment Income 240,345
------------------
EXPENSES
Investment advisory (Note 3) 184,317
Administration (Note 3) 30,720
Transfer agent (Note 3) 8,556
Custody 7,990
Accounting (Note 3) 18,000
Audit 10,842
Legal 2,585
Trustees 1,164
Miscellaneous 30,498
------------------
Total Expenses 294,672
------------------
NET INVESTMENT LOSS (54,327)
------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments sold 157,262
Net realized loss on foreign currency transactions (1,635)
Net change in unrealized appreciation of investments 1,528,605
------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS 1,684,232
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,629,905
==================
</TABLE>
See Notes to Financial Statements FORUM FUNDS[Registered Trademark]
7
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
April 1, 1999 - April 1, 1998 -
September 30, 1999 March 31, 1999
----------------------- ---------------------
NET ASSETS, Beginning of Period $ 22,014,143 $ 15,378,962
----------------------- ---------------------
OPERATIONS
Net investment income (loss) (54,327) 167,976
Net realized gain on investments sold
and foreign currency transactions 155,627 526,217
Net change in unrealized appreciation of
investments and foreign currency transactions 1,528,605 914,315
----------------------- ---------------------
Net increase in net assets resulting
from operations 1,629,905 1,608,508
----------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income - (167,976)
Net realized gain on investments - (989,542)
Return of capital - (137,811)
----------------------- ---------------------
Total distributions to shareholders - (1,295,329)
----------------------- ---------------------
CAPITAL SHARE TRANSACTIONS
Sale of shares 2,551,502 5,240,038
Reinvestment of distributions - 1,295,329
Redemption of shares (813,521) (213,365)
----------------------- ---------------------
Net increase from capital share transactions 1,737,981 6,322,002
----------------------- ---------------------
Net increase in net assets 3,367,886 6,635,181
----------------------- ---------------------
NET ASSETS, End of Period (a) $ 25,382,029 $ 22,014,143
======================= =====================
SHARE TRANSACTIONS
Sale of shares 148,225 313,176
Reinvestment of distributions - 82,420
Redemption of shares (48,153) (12,909)
----------------------- ---------------------
Net increase in shares 100,072 382,687
======================= =====================
(a) Undistributed net investment income (loss) $ (54,327) -
======================= =====================
</TABLE>
See Notes to Financial Staements FORUM FUNDS[Registered Trademark]
8
<PAGE>
AUSTIN GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS (unaudited)
- -------------------------------------------------------------------------------
Selected per share data and ratios for a share outstanding throughout each
period.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nine
Six Months Year Year Months Year Year Period
Ended Ended Ended Ended Ended Ended Ended
September 30, March 31, March 31, March 31, June 30, June 30, June 30,
1999 1999 1998 1997 1996 1995 1994 (c)
------------ -------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD $16.58 $16.27 $12.84 $13.19 $11.60 $9.80 $10.00
------------ -------- -------- -------- -------- -------- --------
INVESTMENT OPERATIONS
Net investment income (loss) (0.04) 0.15 (0.07) (0.11) (0.12) 0.04 (b) (0.03)
Net realized and unrealized gain (loss)
on investments 1.23 1.32 4.95 0.86 1.98 1.76 (0.17)
------------ -------- -------- -------- -------- -------- --------
Total from Investment Operations 1.19 1.47 4.88 0.75 1.86 1.80 (0.20)
------------ -------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income - (0.14) - - - - -
Net realized gain on investments
and foreign currency transactions - (0.90) (1.45) (1.10) (0.27) - -
Return of capital - (0.12) - - - - -
------------ -------- -------- -------- -------- -------- --------
Total Distributions to Shareholders - (1.16) (1.45) (1.10) (0.27) - -
------------ -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $17.77 $16.58 $16.27 $12.84 $13.19 $11.60 $9.80
============ ======== ======== ======== ======== ======== ========
TOTAL RETURN 7.18% 9.51% 39.88% 5.38% 16.22% 18.37% 3.57% (a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at End of Period (000's omitted) $25,382 $22,014 $15,379 $10,289 $10,326 $8,474 $7,646
Ratios To Average Net Assets:
Expenses,including reimbursement/
waiver of fees 2.39% (a) 2.42% 2.50% 2.50% (a) 2.50% 2.50% 2.36% (a)
Expenses, excluding reimbursement/
waiver of fees 2.39% (a) 2.42% 2.69% 3.38% (a) 3.25% 3.19% 4.18% (a)
Net investment income (loss), including
reimbursement/waiver of fees (0.44)(a) 0.92% (0.50%) (1.09%)(a) (0.98%) (0.41%) (0.83%)(a)
PORTFOLIO TURNOVER RATE 14% 51% 57% 45% 94% 35% 2%
- -------------------------------------------
</TABLE>
(a) Annualized.
(b) Calculated using the weighted average shares outstanding.
(c) For the period December 8, 1993 (commencement of operations) through June
30, 1994.
See Notes to Financial Statements FORUM FUNDS[Registered Trademark]
9
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Forum Funds(Registered Trademark) (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"). The Trust currently has
nineteen active investment portfolios. Included in this report is Austin Global
Equity Fund (the "Fund"), a diversified series of the Trust. The Fund commenced
operations on December 8, 1993. Under its Trust Instrument, the Trust is
authorized to issue an unlimited number of the Fund's 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 amounts could differ from these
estimates. The following summarizes the significant accounting policies of the
Fund:
SECURITY VALUATION - On each Fund business day, 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. Securities, other than short-term securities, held
by the Fund, and for which market quotations are readily available, are valued
using the last reported sales price provided by independent pricing services. If
no sales price is 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 Trust's Board of Trustees. Securities that
mature in sixty days or less are valued at amortized cost, which approximates
market value.
SECURITY TRANSACTIONS AND INVESTMENT INCOME - Investment transactions are
accounted for on trade date. Generally, dividend income is recorded on the
ex-dividend date. Ccertain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the Fund is informed
of the ex-dividend date. Dividend income is recorded net of unrecoverable
withholding tax. Interest income is recorded as earned. Identified cost of
investments sold is used to determine gain and loss for both financial statement
and federal income tax purposes. Foreign dividend and interest income amounts
and realized capital gain or loss are converted to U.S. dollar equivalents using
foreign exchange rates in effect at the date of the transactions.
Foreign currency amounts are translated into U.S. dollars at the mean of the bid
and asked 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 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 transactions to purchase or sell foreign currencies to
protect the U.S. dollar value of its underlying portfolio securities against the
effect of possible adverse movements in foreign exchange rates. Principal risks
associated with such transactions 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 forward currency transactions are
recorded daily as unrealized gain or loss; realized gain or loss includes net
gain or loss on transactions that have terminated by settlement or by the Fund
entering into offsetting commitments.
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. In the event of
default, the Fund may have difficulties disposing of such securities.
FORUM FUNDS[Registered Trademark]
10
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (concluded)
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 its funds. Expenses that are directly attributable
to more than one fund are allocated among the respective funds in proportion to
each fund's average daily net assets.
NOTE 3. ADVISORY FEES, SERVICE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The investment adviser to the Fund is Austin Investment
Management, Inc. (the "Adviser"). Pursuant to an Investment Advisory Agreement,
the Adviser receives an advisory fee from the Fund at an annual rate of 1.50% 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 Fund Services, LLC ("FFS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc., is the Fund's
distributor. FFS receives no compensation for its distribution services. Prior
to March 1, 1999, Forum Financial Services, Inc. provided distribution services
to the Fund for which it received no compensation.
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 made by the Fund.
NOTE 4. SECURITY TRANSACTIONS
The cost of purchases and proceeds from sales of securities, other than
short-term investments, totaled $4,780,370 and $3,283,094, respectively, for the
six months ended September 30, 1999.
For federal income tax purposes, the tax basis of investment securities owned as
of September 30, 1999, was the same as for financial reporting purposes. The
aggregate gross unrealized appreciation and the aggregate gross unrealized
depreciation for all securities were $8,651,740 and $1,198,614, respectively.
FORUM FUNDS[Registered Trademark]
11
<PAGE>
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FORUM FUNDS[Registered Trademark]
12
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FOR MORE INFORMATION FORUM
FUNDS
INVESTMENT ADVISOR AUSTIN GLOBAL EQUITY FUND
Austin Investment Management, Inc. [Graphic of Moon]
375 Park Avenue, Suite 2102
New York, NY 10152-2198
TRANSFER AGENCY
Forum Shareholder Services, LLC
Two Portland Square
Portland, ME 04101
DISTRIBUTOR
Forum Fund Services, LLC
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 Fund's prospectus.
[Logo]
Forum Funds
P.O. Box 446
Portland, ME 04112
800-94FORUM
800-943-6786
207-879-0001
www.forumfunds.com
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