BIA SMALL-CAP GROWTH FUND
BIA GROWTH EQUITY FUND
ANNUAL REPORT
MAY 31, 2000
<PAGE>
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BIA SMALL-CAP GROWTH FUND
ANNUAL REPORT
MAY 31, 2000
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Dear Fellow Shareholder:
We are pleased to report results for the BIA Small-Cap Growth Fund for the
fiscal year period ended May 31, 2000. Since inception (June 28, 1999), the
Fund's net asset value rose 38.2% as compared to 17.1% for the Russell 2000(R)
Growth Index and 7.9% for the S&P 500 Index. During the six months ended May 31,
2000, the Fund's net asset value rose 12.4% as compared to increases of 5.4% and
2.9% for the Russell 2000(R) Growth and S&P 500, respectively. These results
reflect the high underlying growth rate of the portfolio companies and the
historical success of the long-term strategy that we have followed since 1994.1
Our investment philosophy is based on the simple premise that the value of a
portfolio of rapidly growing companies, over the long-term, will reflect the
earnings growth of those companies. Furthermore, despite the volatile nature of
the small-cap sector, we believe that the rapid growth of these companies
(currently greater than 35% per year) should overwhelm the market volatility as
the earnings compound at high rates.
Portfolio companies must meet the criteria dictated by our philosophy. First,
each company must address a market opportunity that is very large relative to
the company's current size. This is necessary because it allows a company to
grow for many years without being constrained by its market. Second, we require
that the company offer a product, service or technology that is unique enough to
withstand significant competitive challenges. In addition, we seek a management
team that is talented and imaginative and whose interests are aligned with those
of their shareholders. Management must also have a business plan to address this
market opportunity which we are able to understand and monitor as a means of
measuring their progress and their ability to manage rapid growth. Lastly,
companies must have the ability to grow earnings at an annual rate of 20% or
more for many years. In fact, portfolio companies earnings have grown at 35% per
year over the last five years and are projected to continue to do so. Following
these criteria, we attempt to construct a portfolio of companies that can be
held for the long-term, thereby minimizing portfolio turnover and seeking to
benefit from the compounding of this high earnings growth rate.
The period since the Fund's inception has vividly demonstrated the volatility of
the small-cap sector. In the years leading up to the market's recent peak in
March 2000, many small companies in favored sectors such as Internet and
biotechnology saw their shares advance several hundred percent, only to have
them cut by 50% or more in a matter of weeks. Many companies went public in very
successful initial offerings, even though they lacked clear plans or a means to
achieve profitability and appeared to be dominated by short-term trading
strategies.
In this challenging environment, we continue to look for profitable companies
with strong fundamentals that exhibit the ability to produce high sustainable
growth. For example, the recent decline in the overall market, and especially in
technology issues, created opportunities to buy, at very attractive valuations,
several fundamentally strong companies with excellent growth prospects.
-----------------------
1 PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. DUE TO CURRENT MARKET
VOLATILITY, THE PERFORMANCE OF THE FUND MAY BE LESS THAN THE FIGURES SHOWN HERE.
1 FORUM FUNDS[R]
<PAGE>
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BIA SMALL-CAP GROWTH FUND
ANNUAL REPORT (continued)
MAY 31, 2000
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In conclusion, while the volatility of our sector does from time-to-time lead to
excessive valuations, volatility also creates significant opportunities for
long-term investors. We hope you are pleased with the near-term results and we
look forward to reporting to you in the years ahead.
Frederick L. Meserve, Jr.
Portfolio Manager
-----------------------
The Russell 2000(R) Growth Index measures the performance of those Russell 2000
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000(R) Index is an unmanaged, market value weighted index which is
widely regarded to be representative of small-company stocks in general. The S&P
500 Index is an unmanaged index representing the average performance of 500
widely held, publicly traded large capitalization stocks. You cannot invest
directly in any index.
The views in this report were those of the Fund's manager as of May 31, 2000,
and may not reflect the views of the manager on the date this report is first
published or any time thereafter. These views are intended to assist
shareholders of the Fund in understanding their investment in the Fund and do
not constitute investment advice.
2 FORUM FUNDS[R]
<PAGE>
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BIA GROWTH EQUITY FUND
ANNUAL REPORT
MAY 31, 2000
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Dear Fellow Shareholder:
The US economy has been on a roll in recent years, buoyed by strong global
demand growth, low inflation, rising corporate profits and low interest rates.
The equity markets have clearly been one of the primary beneficiaries of this
environment, as stocks of all sizes have registered above-trend returns. Over
the past five years, US large cap stocks have returned in excess of 28%
annually, nearly three times the long-term average of just over 10%. Technology
stocks have led the charge, as spending for information processing equipment and
software has surged. However, as the bull market moved into record territory,
investors began to believe that our technology-based "new economy" would be able
to flourish indefinitely without the normal inflationary pressures. Until
recently, they appeared to be more right than wrong. As 1999 progressed, more
and more signs hinted at an overheating economy, with the pressure on wages and
prices mounting. Many sectors of the market reacted rationally but valuations
for technology shares continued to defy gravity. It looked as if traditional
valuation metrics were not appropriate for the high-flying stocks associated
with the Internet revolution. It was clearly different this time...or was it?
All of this serves not only as a reminder of the recent past, but as a lead in
to the performance of the Growth Equity Fund. For much of its early life, the
Fund has enjoyed the wind at its back - global economic strength, significant
productivity gains, strong corporate earnings growth and rising stock prices.
Most sectors have benefited from the markets' general feeling of good health and
our strategy of broad sector diversification has worked to our advantage. The
Fund's performance has been good, posting an advance of 8.6% versus a 7.9% gain
for the S&P 500 Index. 1
Our investment focus has always been to simply buy shares of companies that are
positioned to exploit large and growing market opportunities. Over the past few
years, this has led to a significant allocation to technology, broadly defined
to include communications equipment, hardware, software, semiconductors and
information technology services.
Two major factors are driving the impressive performance of the tech sector. One
is the strong underlying demand for products that improve the flow of data
between individuals and businesses. In this environment, capital always flows to
the bottleneck in an attempt to solve it. Currently, capital spending continues
to be driven by the rapid adoption of e-commerce business models and by pent-up
demand following Y2K spending moratoriums. The other explanation for the flight
to tech is the public's renewed interest in the stock market and the allure of
the fast growing technology stocks.
However, the performance gap between "old" economy and "new" economy stocks has
resulted in extreme divergences between the valuation levels of these groups.
Many technology stocks now trade at record valuations, despite the recent
correction in the sector. As portfolio managers, we have been forced to
reconcile our attraction to the impressive fundamentals of the tech sector with
these premium valuations. The result has been that in recent months we have
trimmed some of our favorite long-term holdings as the position sizes grew to be
quite large (Cisco Systems, Intel). We have repositioned the money into areas
were we saw relative value, adding to positions in financial services (Chase
Manhattan, AIG), healthcare (Medtronic) and select growth cyclicals (Tyco). We
also took this opportunity to initiate a limited number of new positions in
quality growth companies (Anheuser Busch, The Gap, Amgen).
Our investment style strikes a balance between seeking great growth companies
and buying at reasonable valuations. This balanced approach to investing has
been an effective style in the current volatile market conditions.
-----------------------
1 PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. DUE TO CURRENT MARKET
VOLATILITY, THE PERFORMANCE OF THE FUND MAY BE LESS THAN THE FIGURES SHOWN HERE.
3 FORUM FUNDS[R]
<PAGE>
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BIA GROWTH EQUITY FUND
ANNUAL REPORT
MAY 31, 2000
--------------------------------------------------------------------------------
Going forward, we must pay particular attention to the challenges facing today's
market - an economy showing signs of weakening, rising interest rates and input
prices and valuations that leave no room for poor management execution. Although
the near term may continue to be volatile, our longer-term outlook for stocks is
quite constructive. We believe that global economic health will continue and
productivity enhancements will lead to strong corporate earnings growth. We have
positioned the Fund to take advantage of these trends across a broad range of
economic sectors.
Geoffrey R. B. Carey, CFA Jane W. Korhonen, CFA
Portfolio Manager Portfolio Manager
-----------------------
The S&P 500 Index is an unmanaged index representing the average performance of
500 widely held, publicly traded, large capitalization stocks. You cannot invest
directly in any index.
The views in this report were those of the Fund's managers as of May 31, 2000,
and may not reflect the views of the managers on the date this report is first
published or any time thereafter. These views are intended to assist
shareholders of the Fund in understanding their investment in the Fund and do
not constitute investment advice
4 FORUM FUNDS[R]
<PAGE>
PERFORMANCE CHARTS & ANALYSIS
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
These charts reflect the change in value of a $10,000 investment, including
reinvested dividends and distributions, in BIA Growth Equity Fund and BIA
Small-Cap Growth Fund, compared with a broad-based securities market index,
since each Fund's inception (June 28, 1999). The Standard and Poor's 500
Composite Index ("S&P 500 Index") is a market-value weighted index representing
the performance of 500 widely held, publicly traded large capitalization stocks.
The Russell 2000[R] Growth Index measures the performance of those Russell
2000[R] Index companies with higher price-to-book ratios and higher forecasted
growth values. The total return of each Fund includes operating expenses that
reduce returns, while the total return of each Index does not include expenses.
Each Fund is professionally managed while each Index is unmanaged and is not
available for investment. Investment return and principal value of an investment
in each Fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Returns for less than one year are
not annualized. Due to current market volatility, the performance of the Funds
may be less than the figures shown below.
Performance information presented here represents only past performance and does
not necessarily indicate future results.
<TABLE>
<S> <C>
BIA SMALL-CAP GROWTH FUND VS BIA GROWTH EQUITY FUND VS.
RUSSELL 200[R] GROWTH INDEX S&P 500 INDEX
Cumulative Total Return on 5/31/00 Cumulative Total Return on 5/31/00
Since Inception on 6/28/99: 38.20% Since Inception on 6/28/99: 8.59%
Investment Value on 5/31/00 Investment Value on 5/31/00
BIA Small Cap Growth Fund: $13,820 BIA Growth Equity Fund: $10,859
Russell 2000[R] Growth Index: $11,713 S&P 500 Index: $10,801
BIA SMALL-CAP RUSSELL 2000[R] BIA GROWTH S&P 500
GROWTH FUND EQUITY INDEX EQUITY FUND INDEX
06/28/99 10,000 10,000 06/28/99 10,000 10,000
06/28/99 10,000 10,000 06/28/99 10,000 10,000
07/31/99 9,820 9,983 07/31/99 9,990 9,999
08/31/99 9,720 9,610 08/31/99 9,900 9,949
09/30/99 10,320 9,795 09/30/99 9,536 9,677
10/31/99 11,040 10,046 10/31/99 10,096 10,289
11/30/99 12,300 11,108 11/30/99 10,347 10,497
12/31/99 15,320 13,066 12/31/99 10,878 11,115
01/31/00 13,940 12,944 01/31/00 10,558 10,556
02/29/00 19,850 15,956 02/29/00 10,418 10,356
03/31/00 16,450 14,279 03/31/00 11,329 11,368
04/30/00 14,800 12,837 04/30/00 10,959 11,027
05/31/00 13,820 11,713 05/31/00 10,859 10,801
</TABLE>
5 FORUM FUNDS[R]
<PAGE>
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BIA SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
COMMON STOCK (90.1%)
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Security Description Value Shares Security Description Value
BUSINESS SERVICES (42.8%) FOOD STORES (2.0%)
121,600 Aspect Development, Inc. + $ 7,113,600 51,600 Starbucks Corp. + $ 1,754,400
123,300 Broadvision, Inc. + 4,415,681 --------------
16,300 Digital Insight Corp. + 625,512 HEALTH SERVICES (2.9%)
41,550 Documentum, Inc. + 2,287,847 139,950 Sunrise Assisted Living, Inc. + 2,545,341
27,100 eBenX, Inc. + 438,682 -------------
106,602 Eclipsys Corp. + 746,214 MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
61,900 GETTY IMAGES, INC. + 2,038,831 PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (5.9%)
4,800 Keynote Systems, Inc. + 167,100 61,160 ArthroCare Corp. + 5,213,890
79,252 MemberWorks, Inc. + 2,555,877 -------------
39,300 Net Perceptions, Inc. + 584,587 MOTOR FREIGHT TRANSPORTATION & WAREHOUSING (3.3%)
27,325 Novadigm, Inc. + 353,517 87,975 Forward Air Corp. + 2,804,203
110,786 QRS Corp. + 3,046,615 29,375 Landair Corp. 119,336
-------------
85,100 RSA Security, Inc. + 4,898,569 2,923,539
38,650 SITEL Corp. + 224,654 -------------
76,257 Synopsys, Inc. + 3,607,909 RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (0.9%)
27,900 Transaction Systems Architects, 338,288 17,150 Trex Co., Inc. + 763,175
Inc. -------------
123,116 Wind River Systems + 4,462,955
------------
37,906,438 SOCIAL SERVICES (0.6%)
------------
31,975 Bright Horizons Family Solutions, Inc. + 541,577
-------------
CHEMICALS & ALLIED PRODUCTS (0.8%)
23,250 Collagenex Pharmaceuticals, Inc. + 232,500 TRANSPORTATION BY AIR (1.6%)
18,700 EPIX Medical, Inc. + 257,125 47,500 Atlantic Coast Airlines Holdings + 1,445,781
14,800 Guilford Pharmaceuticals, Inc. + 207,200 -------------
------------
696,825 TRANSPORTATION SERVICES (0.9%)
------------
88,100 RailWorks Corp. + 792,900
-------------
EATING & DRINKING PLACES (5.1%)
2,300 Krispy Kreme Doughnuts + 134,838 WHOLESALE TRADE-DURABLE GOODS (0.9%)
126,875 O'Charleys, Inc. + 1,768,320 65,500 Lattitude Communications, Inc. + 765,532
104,375 Papa John's International, Inc. + 2,615,898
------------
------------
4,519,056 Total Common Stock (Cost $57,218,915) 79,741,667
------------ -------------
EDUCATIONAL SERVICES (4.4%)
123,600 Apollo Group, Inc. + 3,592,125 SHORT-TERM INVESTMENTS (9.9%)
26,440 Sylvan Learning Systems, Inc. + 297,450
------------
------------
3,889,575
------------
CASH MANAGEMENT ACCOUNTS (9.9%)
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT $ 3,095,596 Bt Institutional Cash Management Fund $ 3,095,596
& COMPONENTS, EXCEPT COMPUTER EQUIPMENT (13.6%) 5,693,732 BT Investment Money Market Fund 5,693,732
84,850 Advanced Lighting Technologies, Inc.885,622 -------------
52,750 AstroPower, Inc. + 722,015 Total Short-Term Investments (Cost $8,789,328) 8,789,328
99,450 ATMI, Inc. + 3,816,394 -------------
136,700 SIPEX Corp. + 2,992,445 TOTAL INVESTMENTS (100.0%) (COST $66,008,243) $88,530,995
110,075 Tekelec + 3,632,475 =============
------------
------------
12,048,951
------------
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT &
RELATED SERVICES (4.4%)
64,659 AHL Services, Inc. + 493,025
20,050 Incyte Pharmaceuticals, Inc. + 1,057,637
501,900 US Oncology, Inc. + 2,384,025
------------
3,934,687
------------
</TABLE>
---------------------------------------------
+ Non-income producing security.
See Notes to Financial Statements. 6 FORUM FUNDS[R]
<PAGE>
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BIA GROWTH EQUITY FUND
SCHEDULE OF INVESTMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
COMMON STOCK (96.5%)
Shares Security Description Value Shares Security Description Value
AMUSEMENT & RECREATION SERVICES (2.0%) HEAVY CONSTRUCTION OTHER THAN BUILDING
14,700 Walt Disney Co. $ 620,156 CONSTRUCTION-CONTRACTORS (2.5%)
-----------
15,100 Halliburton Co. $ 770,100
APPAREL & ACCESSORY STORES (4.6%) -------------
14,920 CVS Corp. 649,020 INDUSTRIAL & COMMERCIAL MACHINERY &
22,200 GAP, Inc. 778,388 COMPUTER EQUIPMENT (12.4%)
1,427,408 19,200 Cisco Systems, Inc. + 1,094,400
----------- 12,950 Deere & Co. 538,234
BUILDING MATERIALS (2.6%) 17,690 Dell Computer Corp. + 762,881
17,700 Lowe's Cos., Inc. 824,156 3,885 Hewlett-Packard Co. 466,686
----------- 12,800 Ingersoll-Rand Co. 583,200
BUSINESS SERVICES (9.4%) 13,550 Solectron Corp. + 447,997
-------------
17,050 Computer Associates International, Inc. 878,075 3,893,398
11,400 Microsoft Corp. + 713,213 -------------
14,100 Oracle Corp. + 1,013,437 INSURANCE (2.6%)
33,475 Parametric Technology Co. + 355,672 7,306 American International Group, Inc. 822,382
----------- -------------
2,960,397
-----------
CHEMICALS & ALLIED PRODUCTS (10.7%) MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
7,150 Abbott Laboratories 290,915 PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (3.4%)
6,000 Amgen, Inc. 381,750 9,000 Guidant Corp. + 455,625
11,525 Bristol-Myers Squibb Co. 634,595 11,700 Medtronic, Inc. 604,013
-------------
12,950 Colgate-Palmolive Co. 681,494 1,059,638
12,600 E.I. du Pont de Nemours & Co. 617,400 -------------
6,190 Warner-Lambert Co. 755,954 MISCELLANEOUS MANUFACTURING INDUSTRIES (2.8%)
-----------
3,362,108 18,975 Tyco International Ltd. 893,011
----------- -------------
COMMUNICATIONS (7.6%) NONDEPOSITORY CREDIT INSTITUTIONS (3.8%)
8,500 GTE Corp. 537,625 13,500 Federal Home Loan Mortgage Corp. 600,750
16,000 Qwest Communications International, Inc. 677,000 21,125 MBNA Corp. 588,859
-------------
13,100 Sprint Corp. (FON Group) 792,550 1,189,609
9,900 WorldCom, Inc. + 372,487 -------------
-----------
2,379,662 PETROLEUM REFINING & RELATED INDUSTRIES (3.0%)
----------- 11,191 Exxon Corp. 932,351
DEPOSITORY INSTITUTIONS (7.1%) -------------
11,450 Chase Manhattan Corp. 855,172 TRANSPORTATION EQUIPMENT (2.1%)
13,540 Citigroup, Inc. 842,019 12,360 Honeywell, Inc. 675,938
11,875 Wells Fargo Co. 537,343 -------------
-----------
2,234,534 WATER TRANSPORTATION (1.9%)
----------- 22,450 Carnival Corp. 608,956
-------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT (11.4%) WHOLESALE TRADE-NONDURABLE GOODS (2.0%)
7,025 Intel Corp. 875,491 9,550 Cardinal Health, Inc. 619,556
15,700 Linear Technology Corp. 927,281 -------------
15,600 Lucent Technologies, Inc. 895,050 Total Common Stock (Cost $24,819,004) 30,306,818
12,190 Texas Instruments, Inc. 880,727 -------------
-----------
3,578,549 SHORT-TERM INVESTMENTS (3.5%)
-----------
Principal Security Description Value
FOOD & KINDRED PRODUCTS (2.4%) $1,093,585 BT Institutional Cash Management Fund
10,000 Anheuser-Busch Cos., Inc. 775,000 (Cost $1,093,585) $ 1,093,585
----------- -------------
GENERAL MERCHANDISE STORES (2.2%) Total Investments (100.0%) (Cost $25,912,589) $31,400,403
10,846 Target Corp. 679,909 =============
-----------
-------------------------------------------------
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements. 7 FORUM FUNDS[R]
<PAGE>
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STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BIA BIA
SMALL-CAP GROWTH
GROWTH EQUITY
FUND FUND
-------------------- --------------------
ASSETS
Investments (Note 2)
Investments, at cost $ 66,008,243 $ 25,912,589
Net unrealized appreciation 22,522,752 5,487,814
-------------------- --------------------
Total investments, at value 88,530,995 31,400,403
Receivable for securities sold 5,625 362,175
Interest, dividends and other receivables 37,952 37,578
Receivable for Fund shares sold 12,238 91,783
Prepaid expenses 1,285 423
-------------------- --------------------
Total Assets 88,588,095 31,892,362
-------------------- --------------------
LIABILITIES
Payable for securities purchased 484,818 297,705
Payable to adviser (Note 3) 68,158 11,408
Payable to administrator (Note 3) 7,515 3,333
Accrued expenses and other liabilities 68,953 43,149
-------------------- --------------------
Total Liabilities 629,444 355,595
-------------------- --------------------
NET ASSETS $ 87,958,651 $ 31,536,767
==================== ====================
COMPONENTS OF NET ASSETS
Paid-in capital $ 63,279,495 $ 26,334,920
Undistributed net investment income - 13,289
Accumulated Net realized gain (loss) from investments 2,156,404 (299,256)
Unrealized appreciation of investments 22,522,752 5,487,814
-------------------- --------------------
NET ASSETS $ 87,958,651 $ 31,536,767
==================== ====================
SHARES OF BENEFICIAL INTEREST 6,363,038 2,907,745
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE $ 13.82 $ 10.85
</TABLE>
See Notes to Financial Statements. 8 FORUM FUNDS[R]
<PAGE>
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STATEMENTS OF OPERATIONS
PERIOD ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BIA BIA
SMALL-CAP GROWTH
GROWTH EQUITY
FUND FUND
-------------------- --------------------
INVESTMENT INCOME
Interest income $ 293,038 $ 51,883
Dividend income 4,113 186,816
-------------------- --------------------
Total Investment Income 297,151 238,699
-------------------- --------------------
EXPENSES
Investment advisory (Note 3) 667,550 157,189
Adminstration (Note 3) 66,483 36,889
Transfer Agency (Note 3) 17,667 17,127
Custody (Note 3) 20,592 16,274
Legal 12,085 3,776
Trustees 3,439 1,126
Reporting 12,459 3,815
Accounting (Note 3) 37,400 37,400
Auditing 19,900 19,900
Compliance 32,394 24,170
Pricing 1,354 1,476
Miscellaneous 11,669 5,303
-------------------- --------------------
Total Expenses 902,992 324,445
Fees waived (Note 4) (67,914) (114,368)
-------------------- --------------------
Net Expenses 835,078 210,077
-------------------- --------------------
NET INVESTMENT INCOME (LOSS) (537,927) 28,622
-------------------- --------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 2,156,404 (299,256)
Net change in unrealized appreciation of investments 16,441,994 2,103,490
-------------------- --------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 18,598,398 1,804,234
-------------------- --------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 18,060,471 $ 1,832,856
==================== ====================
</TABLE>
See Notes to Financial Statements. 9 FORUM FUNDS[R]
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BIA BIA
SMALL-CAP GROWTH
GROWTH EQUITY
FUND FUND
----------------------------- ------------------------------
Amount Shares Amount Shares
NET ASSETS - June 28, 1999 (Note 1) $ - $ -
-------------- ---------------
OPERATIONS
Net investment income (loss) (537,927) 28,622
Net realized gain (loss) on investments sold 2,156,404 (299,256)
Net change in unrealized appreciation of investments 16,441,994 2,103,490
-------------- ---------------
Net Increase in Net Assets Resulting from Operations 18,060,471 1,832,856
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income on investments - (15,333)
-------------- ---------------
CAPITAL SHARE TRANSACTIONS
Sale of shares 36,912,135 2,917,541 20,315,286 1,960,222
Transactions due to acquisition 39,482,102 3,948,210 11,053,062 1,105,306
Reinvestment of distributions - - 41 4
Redemption of shares (6,496,057) (502,713) (1,649,145) (157,787)
-------------- ------------ --------------- -------------
Net Increase from Capital Transactions 69,898,180 6,363,038 29,719,244 2,907,745
-------------- ============ --------------- =============
Net Increase in Net Assets 87,958,651 31,536,767
-------------- ---------------
NET ASSETS - May 31, 2000 (A) $87,958,651 $31,536,767
============== ===============
(A) Undistributed net investment
income $ - $ 13,289
============== ===============
</TABLE>
See Notes to Financial Statements. 10 FORUM FUNDS[R]
<PAGE>
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FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
These financial highlights reflect selected data and ratios for a share
outstanding throughout the period:
<TABLE>
<S> <C> <C>
BIA BIA
SMALL-CAP GROWTH
GROWTH EQUITY
FUND FUND
------------------------- -------------------------
June 28, 1999 (b) June 28, 1999 (b)
to to
May 31, 2000 May 31, 2000
------------------------- -------------------------
NET ASSET VALUE, Beginning of Period $10.00 $10.00
------------------------- -------------------------
OPERATIONS
Net investment income (loss) (0.10) 0.01
Net realized and unrealized gain on investments 3.92 0.85
------------------------- -------------------------
------------------------- -------------------------
Total from Investment Operations 3.82 0.86
------------------------- -------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income - (0.01)
------------------------- -------------------------
NET ASSET VALUE, End of Period $13.82 $10.85
========================= =========================
TOTAL RETURN 38.20% 8.59%
RATIO/SUPPLEMENTARY DATA
Net assets at end of period (000's omitted) $87,959 $31,537
Ratios to Average Net Assets
Expenses, including waiver of fees (a) 1.25% 1.00%
Expenses, excluding waiver of fees (a) 1.35% 1.55%
Net investment income (loss), including waiver of fees (a) (0.80%) 0.14%
PORTFOLIO TURNOVER RATE 30% 42%
</TABLE>
----------------------------------------------------------------------
(a) Annualized.
(b) See Note 1 in Notes to Financial Statements for commencement of operations.
See Notes to Financial Statements. 11 FORUM FUNDS[R]
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
This report relates to BIA Small-Cap Growth Fund and BIA Growth Equity Fund
(individually a "Fund", and collectively, "the Funds"), each a diversified
series of Forum Funds (the "Trust"). 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 BIA Small-Cap Growth Fund and BIA Growth
Equity Fund commenced operations on June 28, 1999 after acquiring the net assets
of BIA Small-Cap Growth Fund Limited Partnership and BIA Growth Equity Fund
Limited Partnership (each a "Partnership," collectively the "Partnerships"),
respectively. Each Fund issued shares in exchange for the net assets of its
corresponding Partnership. Under its Trust Instrument, the Trust is authorized
to issue an unlimited number of each 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 each
Fund:
SECURITY VALUATION - On each Fund business day, the Trust determines the net
asset value per share of each Fund as of the close of the regular trading day on
the New York Stock Exchange. Securities, other than short-term securities, held
by each 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 pursuant to the
Trust's valuation procedures. 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. Dividend income is recorded on the ex-dividend
date. 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.
REPURCHASE AGREEMENTS - Each Fund may invest in repurchase agreements. Each
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.
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 a Fund,
timing differences and differing characterizations of distributions made by the
Fund.
FEDERAL TAXES - Each 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, each Fund will not be subject to a federal excise
tax. Therefore, no federal income is required.
EXPENSE ALLOCATION - The Trust is comprised of nineteen active fund series and
it accounts separately for the assets, liabilities and operations of each 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.
12 FORUM FUNDS[R]
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NOTES TO FINANCIAL STATEMENTS (continued)
MAY 31, 2000
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NOTE 3. ADVISORY FEES AND OTHER TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISER - The investment adviser to each Fund is Brown Investment
Advisory & Trust Company a wholly owned subsidiary of Brown Capital Holdings
Incorporated. Pursuant to an Investment Advisory Agreement, the Adviser receives
an advisory fee from BIA Small-Cap Growth Fund and BIA Growth Equity Fund at an
annual rate of 1.00% and 0.75%, respectively, of each Fund's average daily net
assets.
ADMINISTRATOR - The administrator of each 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 $100 million, and 0.075% of the remaining average
daily net assets of each Fund, subject to a minimum fee of $40,000 per year.
CUSTODY - Forum Trust, LLC serves as the Trust's custodian and may employ
subcustodians to provide custody of a Fund's domestic and foreign assets. For
its services, the Custodian receives an annualized percentage of the average
daily net assets of a Fund. Each Fund also pays an annual domestic custody fee
as well as certain other transaction fees.
TRANSFER AGENT - The transfer agent and dividend disbursing agent for each Fund
is Forum Shareholder Services, LLC ("FSS"). FSS receives from each Fund an
annual fee of $18,000, 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 each Fund's
distributor. FFS receives no compensation for its distribution services.
OTHER SERVICE PROVIDER - Forum Accounting Services, LLC ("FAcS") provides fund
accounting services to each Fund. For its services, FAcS receives from each Fund
an annual fee of $36,000, plus certain amounts based upon the asset levels of
the Funds as well as the number and type of portfolio transactions made by the
Fund. Forum Trust, LLC, ("Forum Trust"), provides custodial services to each
Fund. For its services, Forum Trust receives a fee that is primarily based on
the average net assets of each Fund. Each Fund also pays an annual domestic
custody fee as well as certain other transaction fees.
NOTE 4. WAIVER OF FEES
The Adviser voluntarily waived fees for the period June 28, 1999 to May 31, 2000
as follows: BIA Small-Cap Growth Fund, $67,914 and BIA Growth Equity Fund,
$114,368.
NOTE 5. SECURITY TRANSACTIONS
The cost of purchases and proceeds from sales of securities, other than
short-term investments, for the period June 28, 1999 to May 31, 2000, were as
follows:
BIA BIA
SMALL-CAP GROWTH FUND GROWTH EQUITY FUND
Cost of Purchases $75,086,252 $34,114,106
Proceeds from Sales 20,119,279 8,995,846
For federal income tax purposes, the tax basis of investment securities, net
unrealized appreciation of investments, aggregate gross unrealized appreciation,
aggregate gross unrealized depreciation for all securities, and the capital loss
carryovers (which expire in May 2008) available to offset future capital gains,
for the period June 28, 1999 to May 31, 2000, were as follows:
13 FORUM FUNDS[R]
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (continued)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BIA BIA
SMALL-CAP GROWTH FUND GROWTH EQUITY FUND
Tax Basis $66,182,608 $26,023,385
Net Unrealized Appreciation 22,348,387 5,377,018
Aggregate Gross Unrealized Depreciation (10,055,241) (1,433,139)
Aggregate Gross Unrealized Appreciation 32,403,628 6,810,157
Capital Loss Carryovers - 111,389
</TABLE>
NOTE 6. ACQUISITION OF FUNDS
As of June 28, 1999, BIA Small-Cap Growth Fund and BIA Growth Equity Fund
acquired all of the net assets of BIA Small-Cap Growth Fund Limited Partnership
and BIA Growth Equity Fund Limited Partnership, respectively. Each Partnership's
net assets and unrealized gain immediately prior to acquisition were as follows:
NET ASSETS UNREALIZED GAINS
BIA Small-Cap Growth Fund Limited Partnership $39,482,102 $6,080,758
BIA Growth Equity Fund Limited Partnership 11,053,062 3,384,324
The net assets of BIA Small-Cap Growth Fund and BIA Growth Equity Fund
immediately after the acquisition were $39,482,102 and $11,053,062,
respectively. The shares issued as a result of the acquisition amounted to
3,948,210 and 1,105,306, respectively.
NOTE 7. FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
UNAUDITED)
Income Dividends - All income dividends paid by the BIA Growth Equity Fund were
ordinary income for federal income tax purposes. The percentage of qualifying
dividends eligible for the corporate dividends received deduction was 100.00%.
14 FORUM FUNDS[R]
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INDEPENDENT AUDITORS' REPORT
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THE BOARD OF TRUSTEES AND SHAREHOLDERS,
BIA SMALL CAP GROWTH FUND AND BIA GROWTH EQUITY FUND:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the BIA Small Cap Growth Fund and BIA Growth
Equity Fund, (the "Funds") as of May 31, 2000, the related statements of
operations and changes in net assets, and the financial highlights for the
period from June 28, 1999 (commencement of operations) to May 31, 2000. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
the securities owned as of May 31, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. 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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Funds as of May
31, 2000, and the results of their operations, the changes in net assets and its
financial highlights for the period from June 28, 1999 (commencement of
operations) to May 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
July 7, 2000
15
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<PAGE>
INVESTMENT ADVISER
Brown Investment Advisory & Trust Company
Furness House
19 South Street
Balitmore, MD 21202
DISTRIBUTOR
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
TRANSFER AGENT
Forum Shareholder Services
Two Portland Square
Portland, Maine 04101
This report is authroized for distribution only to
shareholders and To others who have received a copy
of the Funds' prospectuses.
