<PAGE>
[LOGO]
POLARIS GLOBAL VALUE FUND
SEMI-ANNUAL REPORT
November 30, 1999
POLARIS
CAPITAL MANAGEMENT, INC.
http://www.polariscapital.com
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
A Message to Our Shareholders............................... 1
Schedule of Investments..................................... 3
Statement of Assets and Liabilities......................... 4
Statement of Operations..................................... 5
Statements of Changes in Net Assets......................... 6
Financial Highlights........................................ 7
Notes to Financial Statements............................... 8
</TABLE>
<PAGE>
POLARIS GLOBAL VALUE FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
The Polaris Global Value Fund's total return for the six months ended November
30, 1999 was 5.81%. The Fund's benchmark, the MSCI World Index, returned 11.46%
for the same time period.* While the Fund's performance exceeded its benchmark
from May through September, a November surge in technology-related companies,
primarily in the United States, pushed the benchmark higher by the period's
end.(1)
The reason the Fund did not keep pace with its benchmark is because I began
taking profits in technology holdings in early 1998; lowering the proportion of
the Fund invested in this very hot sector. Despite this, the Fund's performance
in the last six months consisted of some notable successes. Approximately 24% of
the portfolio rose about 50%, illustrating two points. First, when catalysts
trigger strong returns in a deeply depressed value stock, the excess returns are
worth waiting for, even for three- to five-years. Second, the success in these
specific investments illustrated that Polaris' research process and stock
selection discipline worked.
Since early 1998, the Polaris Capital investment process resulted in a three- to
five-year view that the best values worldwide exist in Europe, Scandinavia, and
medium sized U.S. companies. Our significant investments in technology-related
companies that contributed to excellent results through 1997 were reduced in
1998 and 1999 because valuations rose to levels considered too high by us, even
if the very high expected growth in the sector continues. I do, however, remain
enthusiastic about the secular growth of the Internet and technology, as we have
not exited the information age. But I am very skeptical that the valuations of
many of these companies can be justified by any reasonable estimate of future
growth opportunities.
This leads to a very important point: Value does not equal "anti-growth." Many
observers think that value investors do not invest in companies that grow. This
is a misperception. The Polaris research process always seeks out companies that
we believe are the fastest growing and best-managed companies in the best
sectors in the world. The discipline of the investment strategy is to buy such
companies when the market is pessimistic about their future prospects. During
such times of pessimism the value of the company is priced to assume little or
no growth. This is when Polaris will find these companies attractive for
purchase. According to a "value" investment strategy, when optimism returns to
the market, and investors begin to pay (or overpay) for optimistic growth
prospects, the company's value should increase to provide excess returns. While
investors can lose patience waiting for undervalued investments to pay off,
investors can lose substantial cash buying overvalued assets.
(1)INVESTORS SHOULD KEEP IN MIND THE SIMPLE MATHEMATICS OF INDICES. THE MORE
TECHNOLOGY STOCKS OUTPERFORM OTHER COMPANIES IN THE INDEX, THE MORE THE WEIGHT
OF TECHNOLOGY STOCKS IN THE INDEX GROWS. THIS LEADS INDEX FUNDS AND MOST
PORTFOLIO MANAGERS TO INVEST MORE NEW MONEY IN TECHNOLOGY STOCKS. AS INVESTMENT
FUNDS BUY MORE OF THE STOCKS THAT RECENTLY PERFORMED BEST, THIS PUSHES THEIR
STOCK PRICES EVEN HIGHER, THAT IN TURN LEADS TO HIGHER RETURNS, AN EVEN LARGER
WEIGHTING, AND SO ON. EVENTUALLY THIS CYCLE REACHES A MATHEMATICAL LIMIT AND
REVERSES. ACTIVE INVESTMENT STRATEGIES THAT ATTEMPT TO BEAT THE INDICES
ULTIMATELY DEVIATE FROM INVESTING THEIR PORTFOLIOS IN STRICT PROPORTION TO THE
INDEX WEIGHTINGS. THIS CAUSES ACTIVE INVESTMENT STRATEGIES TO BE OUT OF PHASE
WITH INDEX RETURNS - MORE ABOUT THIS IN THE UPCOMING QUARTERLY REPORT.
1
<PAGE>
POLARIS GLOBAL VALUE FUND
SEMI-ANNUAL REPORT
NOVEMBER 30, 1999 (continued)
- --------------------------------------------------------------------------------
I believe the flow of funds during 1999 to technology has created even broader
pockets of value around the world. The difference between the opportunities now
and in 1998 is that many large companies are appearing in our research rather
than a preponderance of small- and medium-sized companies. Current strategy is
to take profits in medium and small company stocks that are not likely to move
higher and reinvest in larger companies. We will, as always, also continue to
look for companies with strong growth prospects at outstanding value. Events
such as the first week of January 2000 in which many overvalued stocks declined
rapidly reinforce my optimism that the outstanding values in the portfolio
should benefit investors in the coming years.
For more detailed information about the Fund and our holdings, please visit our
web site at HTTP://WWW.POLARISFUND.COM. Thank you for your continued support.
Sincerely,
/s/ Bernard R. Horn, Jr.
Bernard R. Horn, Jr.
Portfolio Manager
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DURING THE PERIOD CERTAIN
FEES AND EXPENSES WERE WAIVED. WITHOUT THESE WAIVERS, TOTAL RETURNS WOULD HAVE
BEEN LOWER.
THE MSCI WORLD INDEX IS A GROUP OF UNMANAGED SECURITIES WIDELY REGARDED BY
INVESTORS TO BE REPRESENTATIVE OF THE WORLD MARKET IN GENERAL. ONE CAN NOT
INVEST DIRECTLY IN AN INDEX.
THE VIEWS IN THIS REPORT WERE THOSE OF THE FUND MANAGER AS OF NOVEMBER 30, 1999
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
<PAGE>
POLARIS GLOBAL VALUE FUND
SCHEDULE OF INVESTMENTS (unaudited)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
COMMON STOCK (98.7%)
<TABLE>
<CAPTION>
Shares Security Description Value
- --------------------- --------------------------------------- ------------
<C> <S> <C>
BUILDING AND CONSTRUCTION (8.4%)
57,000 Barratt Developments PLC $ 273,260
70,000 Beazer Group PLC 162,217
41,000 Bellway PLC 224,145
179,000 Countryside Properties PLC 382,025
118,000 Crest Nicholson PLC 293,185
23,854 Koninklijke Boskalis Westminster NV 389,097
------------
1,723,929
------------
BUSINESS SERVICES (0.9%)
10,543 Cendant Corp. (a) 174,618
------------
CHEMICALS AND ALLIED PRODUCTS (0.6%)
52,000 Methanex Corp. (a) 125,353
------------
CONSUMER GOODS (4.6%)
3,150 Christian Dior SA 566,150
33,000 Kesko Oyj 352,875
1,300 SmarterKids.com, Inc. (a) 19,906
------------
938,931
------------
ELECTRONICS AND ELECTRICAL EQUIPMENT (15.1%)
27,000 Arisawa Manufacturing Co. Ltd. 713,412
12,684 Draka Holding NV 490,422
21,400 Helix Technology Corp. 866,365
4,790 Intel Corp. 367,333
138,000 VTech Holdings Ltd. 465,542
68,850 WPI Group, Inc. (a) 185,034
------------
3,088,108
------------
FINANCIAL INSTITUTIONS (30.5%)
22,900 Abington Bancorp, Inc. 293,406
16,400 ABN AMRO Holding NV 399,120
16,100 American Bank of Connecticut 388,413
56,000 Banca Popolare di Milano 318,580
24,200 Banco Bilbao Vizcaya SA 337,480
4,600 Banque Nationale de Paris 421,484
20,100 BostonFed Bancorp, Inc. 329,138
90,400 Charter Pacific Bank (a) 271,200
20,500 Hawthorne Financial Corp. (a) 281,875
34,000 Horizon Bank & Trust Co. (a) 208,250
31,000 Ipswich Bancshares, Inc. 344,875
18,000 Jyske Bank 360,593
13,000 MECH Financial, Inc. 448,500
15,616 North Valley Bancorp 177,632
20,812 Peoples Heritage Financial Group, Inc. 352,503
357,000 Sanlam Ltd. (a) 417,995
10,157 UST Corp. 320,580
26,900 Warren Bancorp, Inc. 218,563
12,791 Webster Financial Corp. 340,560
------------
6,230,747
------------
FOOD AND BEVERAGES (3.6%)
289,750 Crean (James) PLC (a) 116,699
25,888 Sara Lee Corp. 627,784
------------
744,483
------------
INDUSTRIALS (4.2%)
23,740 A. Friedrich Flender AG (a) 191,229
72,369 Fedders Corp., "A" 339,230
18,900 Walter AG 333,029
------------
863,488
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Security Description Value
- --------------------- --------------------------------------- ------------
<C> <S> <C>
MANUFACTURING (3.4%)
8,100 Kone Corp. $ 334,389
13,700 Radex-Heraklith AG 365,000
------------
699,389
------------
METALS AND MINING (5.9%)
77,650 Palabora Mining Co. 506,140
6,700 Phelps Dodge Corp. 348,400
52,100 RTI International Metals (a) 345,163
------------
1,199,703
------------
OIL AND RELATED INDUSTRIES (2.0%)
19,050 Repsol SA, ADR 414,338
------------
OTHER (0.0%)
37,500 Utopia, Inc. (b) -
------------
PRINTING AND PACKAGING (3.8%)
289,750 Oakhill Group PLC (a) 110,864
74,700 Sappi Ltd. 670,185
------------
781,049
------------
STEEL (1.7%)
57,100 Rautaruukki Oyj 339,212
------------
TIRES (1.6%)
16,400 Continental AG 326,958
------------
TELECOMMUNICATIONS (1.7%)
122,000 Total Access Communications SA (a) 348,920
------------
TEXTILES (1.7%)
8,800 Gamma Holdings NV 352,211
------------
TRANSPORTATION (3.9%)
5,600 AMR Corp. (a) 340,900
24 East Japan Railway Co. 140,921
155,600 Neptun Maritime Oyj (a) 313,345
------------
795,166
------------
TRANSPORTATION EQUIPMENT (1.6%)
6,600 Ford Motor Co. 333,300
------------
UTILITIES - ELECTRIC, GAS AND SANITARY SERVICES (3.5%)
9,600 Texas Utilities Co. 343,800
21,600 Union Electrica Fenosa SA 364,076
------------
707,876
------------
Total Common Stock
(Cost $18,633,821) $ 20,187,779
------------
SHORT-TERM INVESTMENTS (1.3%)
<CAPTION>
Principal
Amount
- --------------------- --------------------------------------- ------------
<C> <S> <C>
265,940 BT Investment Money Market Fund $ 265,940
1,084 Middlesex Savings Bank 1,084
1,116 Stoneham Savings Bank 1,116
------------
Total Short-Term Investments, at Cost 268,140
------------
TOTAL INVESTMENTS (100.0%)
(COST $18,901,961) $ 20,455,919
============
</TABLE>
- ------------------------------------------------
(a) Non-income producing security.
(b) Security valued at fair market value as determined by the Board of
Trustees.
ADR - American Depositary Receipt.
See Notes to Financial Statements. 3
<PAGE>
POLARIS GLOBAL VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments (Note 2):
Investments, at cost.................................... $ 18,901,961
Net unrealized appreciation............................. 1,553,958
---------------
Total investments, at value............................... 20,455,919
Receivable for Fund shares issued......................... 350
Interest, dividends and other receivables................. 58,086
Organization costs, net of amortization (Note 2).......... 29,333
---------------
Total Assets................................................ 20,543,688
---------------
LIABILITIES
Payable for securities purchased.......................... 326,788
Payable to adviser (Note 3)............................... 13,548
Payable to other related parties (Note 3)................. 3,333
Accrued expenses and other liabilities.................... 30,851
---------------
Total Liabilities........................................... 374,520
---------------
NET ASSETS $ 20,169,168
===============
COMPONENTS OF NET ASSETS
Paid-in capital........................................... $ 17,354,529
Undistributed net investment income....................... 12,522
Net realized gain on investments
and foreign currency transactions....................... 1,249,996
Unrealized appreciation of investments
and foreign currency transactions....................... 1,552,121
---------------
NET ASSETS.................................................. $ 20,169,168
===============
SHARES OF BENEFICIAL INTEREST 2,213,491
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE $ 9.11
</TABLE>
See Notes to Financial Statements. 4
<PAGE>
POLARIS GLOBAL VALUE FUND
STATEMENT OF OPERATIONS (unaudited)
PERIOD ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income (net of foreign withholding taxes of
$16,987)................................................ $ 147,035
Interest income........................................... 17,441
--------------
Total Investment Income..................................... 164,476
--------------
EXPENSES
Investment advisory (Note 3).............................. 102,972
Administration (Note 3)................................... 20,000
Transfer agent (Note 3)................................... 14,235
Custody................................................... 9,219
Accounting (Note 3)....................................... 19,000
Audit..................................................... 15,049
Legal..................................................... 3,263
Trustees.................................................. 624
Registration.............................................. 3,903
Reporting................................................. 6,069
Amortization of organization costs (Note 2)............... 4,000
Miscellaneous............................................. 4,745
--------------
Total Expenses.............................................. 203,079
--------------
Fees waived (Note 5).................................... (22,500)
--------------
Net Expenses................................................ 180,579
--------------
NET INVESTMENT LOSS......................................... (16,103)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments.......................... 854,027
Net realized loss on foreign currency transactions........ (484)
--------------
Net Realized Gain on Investments and Foreign Currency
Transactions.............................................. 853,543
--------------
Net change in unrealized appreciation on investments...... 285,915
Net change in unrealized depreciation on foreign currency
transactions............................................ (71)
--------------
Net Unrealized Gain on Investments and Foreign Currency
Transactions.............................................. 285,844
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS......................... 1,139,387
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 1,123,284
==============
</TABLE>
See Notes to Financial Statements. 5
<PAGE>
POLARIS GLOBAL VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
FOR THE YEAR ENDED MAY 31, 1999, AND THE
PERIOD ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 1, 1999 June 1, 1998
to to
November 30, 1999 May 31, 1999 (Note 1)
----------------- ---------------------
<S> <C> <C>
NET ASSETS, Beginning of Period................... $19,387,580 $ -
----------- -----------
OPERATIONS
Net investment income (loss).................... (16,103) 127,999
Net realized gain on investments sold
and foreign currency transactions............. 853,543 725,289
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions......................... 285,844 (3,707,306)
----------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations.................................. 1,123,284 (2,854,018)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... - (90,111)
Net realized gain on investments................ - (338,099)
----------- -----------
Total Distributions to Shareholders............... - (428,210)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Sale of shares.................................. 730,476 3,797,127
Transactions due to acquisition (Note 6)........ - 21,861,590
Reinvestment of distributions................... - 427,279
Redemption of shares............................ (1,072,172) (3,416,188)
----------- -----------
Net Increase (Decrease) from Capital
Transactions.................................... (341,696) 22,669,808
----------- -----------
Net Increase in Net Assets........................ 781,588 19,387,580
----------- -----------
NET ASSETS, End of Period (A)..................... $20,169,168 $19,387,580
=========== ===========
SHARE TRANSACTIONS
Sale of shares.................................. 78,324 429,321
Transactions due to acquisition (Note 6)........ - 2,186,159
Reinvestment of distributions................... - 53,323
Redemption of shares............................ (116,635) (417,001)
----------- -----------
Net Increase in Shares............................ (38,311) 2,251,802
=========== ===========
(A) Undistributed net investment income........... $ 12,522 $ 28,625
=========== ===========
</TABLE>
See Notes to Financial Statements. 6
<PAGE>
POLARIS GLOBAL VALUE FUND
FINANCIAL HIGHLIGHTS (unaudited)
- --------------------------------------------------------------------------------
These financial highlights reflect selected per share data and ratios for a
share outstanding throughout each period:
<TABLE>
<CAPTION>
June 1, 1999 June 1, 1998
to to
November 30, 1999 May 31, 1999 (Note 1)
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 8.61 $ 10.00
----------- -----------
INVESTMENT OPERATIONS
Net investment income (loss).................... (0.01) 0.06
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions.................................. 0.51 (1.27)
----------- -----------
Total from Investment Operations.................. 0.50 (1.21)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... - (0.04)
Net realized gain on investments and foreign
currency transactions......................... - (0.14)
----------- -----------
Total Distributions to Shareholders............... - (0.18)
----------- -----------
NET ASSET VALUE, END OF PERIOD.................... $ 9.11 $ 8.61
=========== ===========
TOTAL RETURN...................................... 5.81% (11.95)%
RATIO/SUPPLEMENTARY DATA
Net assets at end of period (000's omitted)..... $ 20,169 $ 19,388
Ratios to Average Net Assets
Expenses, including waiver of fees............ 1.75%(a) 1.75%
Expenses, excluding waiver of fees............ 1.97%(a) 2.06%
Net investment income (loss), including waiver
of fees..................................... (0.16)%(a) 0.63%
PORTFOLIO TURNOVER RATE........................... 32% 51%
</TABLE>
- ---------------------------------------------------------------
(a) Annualized.
See Notes to Financial Statements. 7
<PAGE>
POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
This report relates to Polaris Global Value Fund (the "Fund"), 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 "Act"). The Fund commenced operations on
June 1, 1998 after it acquired the net assets of Global Limited Partnership (the
"Partnership") in exchange for Fund shares. The Partnership commenced operations
on July 31, 1989 and ceased operations on May 31, 1998. 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 results could differ from those
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 and pursuant to the
Trust's valuation procedures. Securities that mature in sixty days or less are
valued at amortized cost, which approximates market value. Foreign short-term
investments are valued at the current market price, then marked-to-market to
recognize any gain or loss on the transaction.
SECURITY TRANSACTIONS AND INVESTMENT INCOME - Investment transactions are
accounted for on trade date. Generally, dividend income is recorded on the
ex-dividend date. Certain 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.
8
<PAGE>
POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
The Fund may enter into transactions to purchase or sell foreign currencies to
protect the U.S. dollar value of its underlying portfolio of 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.
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.
ORGANIZATION COSTS - Costs incurred by the Fund in connection with its
organization are amortized using the straight-line method over a five-year
period.
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 is comprised of 19 active fund series, and it
accounts separately for the assets and 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.
NOTE 3. ADVISORY FEES, SERVICING FEES AND FEES FOR OTHER SERVICE PROVIDERS
INVESTMENT ADVISER - The investment adviser to the Fund is Polaris Capital
Management, Inc. (the "Adviser"). Pursuant to an Investment Advisory Agreement,
the Adviser receives an advisory fee from the Fund at an annual rate of 1.00% of
the average daily net assets of the Fund.
ADMINISTRATOR - The administrator of the Fund is Forum Administrative Services,
LLC ("FAdS"). For its services, FAdS receives an administrative fee at an annual
rate of 0.10% of the first $150 million of the Fund's average daily net assets
and 0.05% of the Fund's average daily net assets in excess of $150 million.
TRANSFER AGENT - The transfer agent and dividend disbursing agent for the Fund
is Forum Shareholder Services, LLC ("FSS"). FSS receives an annual fee of
$24,000, plus certain shareholder account fees.
9
<PAGE>
POLARIS GLOBAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (concluded)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT - The Trust has adopted a shareholder servicing plan
(the "Plan") with respect to the Fund under which FAdS is authorized to enter
into shareholder service agreements with financial institutions and other
persons who provide services for and maintain shareholder accounts as set forth
in the Plan. Under the Plan, the Trust, through FAdS, pays the shareholder
servicing agent a fee of up to 0.25% of the average daily net assets of the
shares owned by investors for which the shareholder servicing agent maintained a
servicing relationship.
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 October 1, 1999, Forum Financial Services, Inc. provided distribution
services to the Fund for which it received no fee.
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 the proceeds from sales of securities, other than
short-term investments, totalled $7,917,041 and $6,384,448, respectively, for
the period June 1, 1999 through November 30, 1999.
For federal income tax purposes, the tax basis of investment securities owned as
of November 30, 1999, was $18,901,961, and the net unrealized appreciation of
investment securities was $1,553,958. The aggregate gross unrealized
appreciation for all securities in which there was an excess of market value
over tax cost was $4,868,327, and the aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market value
was $3,314,369.
NOTE 5. WAIVER OF FEES
The Adviser voluntarily waived fees of $22,500 for the period June 1, 1999
through November 30, 1999.
NOTE 6. ACQUISITION OF FUNDS
As of June 1, 1998, Polaris Global Value Fund acquired all the net assets of the
Partnership. The Partnership's net assets and unrealized gain immediately prior
to acquisition were $21,861,590 and $4,973,583, respectively. The shares issued
as a result of the acquisition amounted to 2,186,159.
The net assets of Polaris Global Value Fund immediately after the acquisition
were $21,861,590.
10
<PAGE>
[LOGO]
POLARIS GLOBAL VALUE FUND
INVESTMENT ADVISER
Polaris Capital Management, Inc. SEMI-ANNUAL
125 Summer Street REPORT
Boston, MA 02110 November 30, 1999
DISTRIBUTOR
Forum Funds Services, LLC
Two Portland Square
Portland, Maine 04101
TRANSFER AGENT
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101
This report is for the information of the shareholders
of the Polaris Global Value Fund.
Its use in connection with any offering of the
Fund's shares is authorized only when preceded or
accompanied by the Fund's current prospectus.
POLARIS
CAPITAL MANAGEMENT, INC.
http://www.polarisfund.com
