ANNUAL REPORT
[Picture of Earth from Moon]
MARCH 31, 2000
AUSTIN GLOBAL
EQUITY FUND
FORUM
FUNDS
<PAGE>
AUSTIN GLOBAL EQUITY FUND
ANNUAL REPORT
MARCH 31, 2000
--------------------------------------------------------------------------------
Two Portland Square Shareholder Inquiries
Portland, ME 04101 Forum Shareholder Services, LLC
800-943-6786 P.O. Box 446
Portland, ME 04112
207-879-0001
800-94FORUM
--------------------------------------------------------------------------------
Dear Fellow Shareholder:
We are pleased to report that the Austin Global Equity Fund registered a gain of
68.64% for the year ended March 31, 2000.* This compares with 21.87% gain for
our primary benchmark the MSCI World Index and 17.94% for the Standard & Poors
500. The Austin Global Equity Fund's outperformance of the MSCI World Index was
primarily attributable to an overweighting in Japan relative to the index, and
to overweightings in the technology and telecommunications sectors in all
regions.
Presently Austin Global Equity Fund is invested regionally as follows:
USA 38.73%
Europe 29.85%
Asia/Pacific 24.99%
Latin America 6.28%
The current geographic allocations of the Austin Global Equity Fund reflect our
belief that Europe and the Pacific Rim, including Japan, is on the path to
sustainable economic recovery and growth. Further we think Europe is about to
experience an accelerated pace of economic expansion. Both trends will not only
provide strength to their respective securities markets but support continued
economic growth in the United States.
Among the areas in Europe that are of particular interest include insurance,
banking, technology and telecom. As we have discussed previously, we expect
cross border mergers and acquisitions to continue in Europe. Such consolidations
have enhanced performance of the Austin Global Equity Fund in the past. We have
recently initiated purchases of select European banks that we believe will be
beneficiaries of this trend.
We are optimistic that the Austin Global Equity Fund will continue to progress
notwithstanding the increased volatility in global securities markets. Our
reaction to such volatility is to maintain a long-term focus on securities that
are strongly financed in growing industries.
While we remain gratified with the performance of the Austin Global Equity Fund
in the year ended March 31, 2000, we want to indicate that in April and to date
in May, global securities markets in which the Austin Global Equity Fund is
invested have been volatile and declined from their March highs. The Austin
Global Equity Fund's performance during the same period suffered as a result.
However, we have adjusted the portfolio to take advantage of the opportunities
presented by the decline.
Below we highlight some of the purchases and sales of securities completed
within the period covered by this report.
In Japan, we purchased Murata Manufacturing, a manufacturer of electronic
components, used for power, communication and audiovisual equipment. Murata is
benefiting from the global economic upswing and the demand for electronic
equipment. In the United States, we have added Corning, Inc. a leader in
fiber-optic glass and photonic components.
1 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SHAREHOLDER LETTER (concluded)
MARCH 31, 2000
--------------------------------------------------------------------------------
Corning continues to enhance its portfolio of optical products and is in the
sweet spot of the explosion in bandwidth demand. We have also purchased ADR
shares of Taiwan Semiconductor (TSMC), a world class manufacturer of
semiconductor wafers used in a variety of applications from mobile telephones to
personal computers. TSMC is benefiting from a trend in outsourcing a crucial
part of semiconductor manufacturing and rapid growth of end demand applications.
Recent sales include British Energy, an UK power company whose share price had
reached a valuation adequately discounting its market opportunity for the
foreseeable future. Other sales include British Oxygen and Air Liquide of France
whose merger realized our investment objective.
Austin Global Equity Fund continues to seek attractive investment opportunities
around the world.
For more information call 212-888-9292.
/S/ Peter A. Vlachos
Peter A. Vlachos
President
Austin Investment Management, Inc.
* PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Due to current market
volatility, the Fund's performance may be less than the figures presented.
Investment return and principal value will fluctuate so that, when redeemed, an
investor's shares may be worth more or less than their original cost. The Fund's
return assumes reinvestment of all dividends and capital gain distributions.
Investing overseas involves special risks, including the volatility of currency
exchange rates, and in some cases, political and economic instability and
relatively illiquid markets.
2 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
MARCH 31, 2000
--------------------------------------------------------------------------------
The following chart compares changes in the value of a $10,000 investment in
Austin Global Equity Fund (the "Fund"), including reinvested dividends and
distributions, to the performance of the Morgan Stanley Capital International
World Index ("MSCI"). The MSCI 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 MSCI is unmanaged and its performance reflects the
reinvestment of dividends. It is important to keep in mind that the MSCI
excludes the effect of any expenses which have been deducted from Austin Global
Equity Fund's return. It is not possible to invest directly in any index. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate so that shares may be worth more or less at
redemption than at original purchase.
AUSTIN GLOBAL EQUITY FUND VS. MSCI
[EDGAR Representation of Bar Chart]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nov-93* Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00
$ 10,000 $ 9,890 $ 10,230 $ 13,092 $ 14,206 $ 19,872 $ 21,762 $ 36,698
$ 10,000 $ 10,551 $ 11,534 $ 13,844 $ 15,139 $ 19,978 $ 22,504 $ 27,424
</TABLE>
INVESTMENT VALUE ON 3/31/00*
Austin Global Equity Fund $ 36,698
MSCI $ 27,424
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN AS OF 3/31/00 ONE YEAR FIVE YEAR INCEPTION TO DATE
Austin Global Equity Fund** 68.64% 29.11% 22.88%
MSCI 21.87% 18.91% 17.27%
</TABLE>
* Inception date for Austin Global Equity Fund was December 8, 1993. Performance
figures for the MSCI Index are for the period from 11/30/93 to 3/31/00.
**Due to current market volatility, the Fund's performance may be less than the
figures presented.
3 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
--------------------------------------------------------------------------------
COMMON STOCK ( 97.4%)
<TABLE>
<S> <C> <C> <C>
SHARES SECURITY DESCRIPTION COST VALUE
----------------- -------------------------------------------------- --------------- ---------------
ARGENTINA (0.3%)
6,936 Banco de Galicia SA $ 138,610 $ 140,454
40 Buenos Aires Embotelladora SA* - 2
--------------- ---------------
138,610 140,456
--------------- ---------------
AUSTRALIA (1.3%)
6,000 News Corp. Ltd., ADR 181,110 337,500
10,000 Telstra Corp. Ltd., ADR 145,158 235,000
--------------- ---------------
326,268 572,500
--------------- ---------------
BRAZIL (1.4%)
4,000 Telecomunicacoes Brasileiras SA - Telebras, ADR -
Preferred Block 454,096 598,750
--------------- ---------------
FINLAND (5.1%)
6,500 F-Secure Oyj * 130,669 465,979
7,000 Nokia Corp., ADR 296,053 1,520,750
3,000 Sonera Oyj 184,265 204,675
--------------- ---------------
610,987 2,191,404
--------------- ---------------
FRANCE (1.7%)
100 Immobiliere Marseillaise 180,868 214,340
2,000 L'OREAL, ADR 216,813 258,356
1,500 Simco SA 125,430 113,390
940 Societe du Louvre * 68,082 40,827
167 Taittinger SA 138,418 95,879
--------------- ---------------
729,611 722,792
--------------- ---------------
GERMANY (0.7%)
4,000 RWE AG, ADR 139,337 143,148
1,000 Siemens AG 161,736 144,009
--------------- ---------------
301,073 287,157
--------------- ---------------
GREECE (0.3%)
10,000 Panafon Hellenic Telecom SA, GDR 163,110 147,366
--------------- ---------------
HONG KONG (0.6%)
87,120 Hong Kong & China Gas Co. Ltd., ADR 85,000 109,092
1,000 Qualcomm, Inc. * 129,123 149,313
--------------- ---------------
214,123 258,405
--------------- ---------------
IRELAND (0.6%)
5,000 Elan Corp. plc, ADR * 147,700 237,500
--------------- ---------------
ITALY (4.3%)
150,000 Telecom Italia Mobile SpA 185,989 1,840,065
7 Telecom Italia SpA 20 104
--------------- ---------------
186,009 1,840,169
--------------- ---------------
See Notes to Financial Statements. 4 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 2000
-----------------------------------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION COST VALUE
----------------- -------------------------------------------------- --------------- ---------------
COMMON STOCK (CONTINUED)
JAPAN (19.3%)
50,000 Bank of Tokyo-Mitsubishi Ltd., ADR $ 603,988 $ 709,375
4,000 Fujitsu Ltd. 144,965 122,848
30,000 Marubeni Corp. 107,207 113,196
2,000 Murata Manufacturing 351,809 486,521
3,500 NEC Corp., ADR 233,400 519,531
6,000 Nippon Telegraph & Telephone Corp., ADR 348,485 472,875
20,000 Nisshinbo Industries, Inc. 194,872 98,084
6,000 NTT Mobile Communication Network, Inc., ADR * 264,560 1,231,414
5,000 Sony Corp., ADR 484,560 1,400,625
5,000 Takara Shuzo Co. Ltd. 135,829 112,124
5,000 Takeda Chemical Industries 291,298 355,872
11,000 Tokio Marine & Fire Insurance Co. Ltd., ADR 582,285 576,813
20,000 Tokyo Broadcasting System, Inc. 579,502 789,742
12,000 Toyota Motor Corp., ADR 670,970 1,248,000
--------------- ---------------
4,993,730 8,237,020
--------------- ---------------
LUXEMBOURG (1.4%)
3,500 Societe Europeenne des Satellites, FDR 592,671 611,204
--------------- ---------------
PERU (0.4%)
10,000 Telefonica del Peru, ADR 142,602 170,000
--------------- ---------------
MALAYSIA (0.3%)
10,000 Nestle (Malaysia) Berhad 66,728 47,631
15,000 Telekom Malaysia Berhad 68,750 61,578
--------------- ---------------
135,478 109,209
--------------- ---------------
MEXICO (3.9%)
8,000 Grupo Televisa SA, GDR * 361,898 544,000
15,000 Nuevo Grupo Iusacell, ADR * 215,145 303,750
12,000 Telefonos De Mexico, ADR 596,511 804,000
--------------- ---------------
1,173,554 1,651,750
--------------- ---------------
NETHERLANDS (4.4%)
5,065 Aegon NV, ADR 113,966 408,050
4,000 Equant NV * 336,262 340,250
10,000 Royal Dutch Petroleum Co. 508,627 575,625
3,000 STMicroelectronics NV 243,338 561,563
--------------- ---------------
1,202,193 1,885,488
--------------- ---------------
POLAND (0.5%)
25,000 Telekomunikacja Polska SA, GDR 120,200 228,840
--------------- ---------------
PORTUGAL (0.3%)
10,000 Portugal Telecom SA, ADR 143,825 124,375
--------------- ---------------
See Notes to Financial Statements. 5 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
MARCH 31, 2000
-----------------------------------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION COST VALUE
----------------- -------------------------------------------------- --------------- ---------------
COMMON STOCK (CONTINUED)
SINGAPORE (0.2%)
10,000 Singapore Airlines Ltd. $ 95,566 $ 93,539
--------------- ---------------
SOUTH KOREA (1.2%)
5,000 Korea Telecom Corp., ADR 137,800 218,750
7,000 SK Telecom Co. Ltd., ADR 195,305 273,000
--------------- ---------------
333,105 491,750
--------------- ---------------
SWEDEN (0.3%)
6,000 Intentia International AB * 148,634 136,805
--------------- ---------------
SWITZERLAND (1.8%)
1,000 Arkivator AB 43,561 44,907
35 Bank Fuer Internationalen Zahlungsausgleich 253,900 176,821
3,000 Roche Holdings Ltd., ADR 195,000 325,856
2,500 Telelogic AB * 212,450 225,694
--------------- ---------------
704,911 773,278
--------------- ---------------
TAIWAN (1.6%)
12,150 Taiwan Semiconductor Manufacturing Co. Ltd., ADR * 411,632 692,550
--------------- ---------------
TURKEY (0.5%)
10,800,000 Haci Omer Sabanci Holding 101,814 197,640
--------------- ---------------
UNITED KINGDOM (6.9%)
7,000 HSBC Holdings plc - ADR 371,883 426,563
23,000 Marconi plc 321,073 274,822
50,000 Nycomed Amersham plc 540,000 408,395
5,000 Rio Tinto plc, ADR 210,113 356,250
66,500 TeleWest Communications plc * 375,434 510,813
176,894 Vodafone Airtouch plc 905,155 983,459
--------------- ---------------
2,723,658 2,960,302
--------------- ---------------
UNITED STATES (37.8%)
2,000 Alcoa, Inc. 77,175 140,500
30,000 Bank of New York Co., Inc. 272,812 1,246,875
2,000 BCE, Inc. 199,140 250,875
3,000 Biogen, Inc. * 241,680 209,625
3,000 BMC Software, Inc. * 164,250 148,125
6,500 Check Point Software Technologies Ltd.* 179,562 1,111,906
1,000 CIENA Corp. * 112,063 126,125
32,000 Cisco Systems, Inc.* 157,111 2,474,000
3,000 Comcast Corp. 85,027 130,125
6,000 Commerzbank AG 227,453 226,779
2,000 Conexant Systems, Inc. * 191,776 142,000
5,150 Corning, Inc. 624,908 999,100
3,000 E.piphany, Inc. * 48,000 400,688
4,500 Home Depot, Inc. 117,180 290,250
See Notes to Financial Statements. 6 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (concluded)
MARCH 31, 2000
-----------------------------------------------------------------------------------------------------------
SHARES SECURITY DESCRIPTION COST VALUE
----------------- -------------------------------------------------- --------------- ---------------
COMMON STOCK (CONTINUED)
UNITED STATES (CONTINUED)
10,000 Intel Corp. $ 455,250 $ 1,319,375
14,000 InterWorld Corp.* 219,375 791,000
11,300 Intersil Holding Corp. 282,500 584,068
10,000 JDS Uniphase Corp.* 246,079 1,205,625
40,000 Kos Pharmaceuticals, Inc.* 234,288 570,000
12,950 Lucent Technologies, Inc. 300,893 786,712
500 Medlmmune, Inc. * 104,300 87,062
4,000 Microsoft Corp. * 130,330 425,000
2,000 Nextel Communications, Inc. * 167,625 296,500
3,000 Next Level Communications, Inc. * 60,000 326,250
40,000 Pacific Century CyberWorks, Ltd. * 115,200 103,750
9,000 Qwest Communications International, Inc. * 263,973 436,500
5,000 Retek, Inc. * 75,000 205,937
10,000 Schlumberger Ltd. 355,756 765,000
2,500 Telaxis Communications Corp. * 42,500 150,273
2,000 United Parcel Service Class B 100,000 126,000
--------------- ---------------
5,851,206 16,076,025
--------------- ---------------
VENEZUELA (0.3%)
4,000 Compania Anonima Nacional Telefonos de Venezuela, ADR 138,936 116,000
--------------- ---------------
Total Common Stock 22,285,302 41,552,274
--------------- ---------------
FIXED RATE CONVERTIBLE BONDS (2.4%)
PRINCIPAL
-----------------
FRANCE (0.3%)
$ 100,000 France Telecom, 4.13%, 11/29/04 102,340 113,390
--------------- ---------------
NETHERLANDS (0.4%)
400,000 Koninklijke Ahold NV, 3.00%, 9/30/03 216,532 185,200
--------------- ---------------
UNITED KINGDOM (0.7%)
100,000 Telewest plc, 5.25%, 2/19/07 175,370 279,776
--------------- ---------------
UNITED STATES (1.0%)
300,000 Bell Atlantic Financial, 4.25%, 9/15/05 + 299,756 431,604
--------------- ---------------
Total Fixed Rate Convertible Bonds 793,998 1,009,970
--------------- ---------------
SHORT-TERM HOLDINGS (0.2%)
SHARES
-----------------
62,857 Bankers Trust Investment Money Market Fund 62,857 62,857
--------------- ---------------
Total Investments (100.0%) $ 23,142,157 $ 42,625,101
=============== ===============
</TABLE>
* Non-income producing security.
+ Securities that may be resold to "qualified institutional buyers" under the
rule 144A or securities offered pursuant to 4(2) of the Securities Act of
1933, as amended. These securities had been determined to be liquid
pursuant to procedures adopted by the Board of Trustees.
ADR - American Depository Receipt
FDR - Foreign Depository Receipt
GDR - Global Depository Receipt
See Notes to Financial Statements. 7 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments (Note 2):
Investments, at cost $ 23,142,157
Net unrealized appreciation 19,482,944
------------------
Total investments, at value 42,625,101
Receivable for Fund shares issued 59,916
Receivable for investments sold 332,432
Interest, dividends and other receivables 76,076
Prepaid expenses 7,657
------------------
Total Assets 43,101,182
------------------
LIABILITIES
Payable for investments purchased 411,719
Payable to adviser (Note 3) 56,033
Payable to administrator (Note 3) 9,339
Payable for foreign exchange contracts 62,157
Accrued expenses and other liabilities 41,275
------------------
Total Liabilities 580,523
------------------
NET ASSETS $ 42,520,659
==================
COMPONENTS OF NET ASSETS
Paid-in capital $ 20,088,326
Unrealized appreciation of investments and foreign currency transactions 19,482,748
Accumulated net realized gain 2,949,585
------------------
NET ASSETS $ 42,520,659
==================
SHARES OF BENEFICIAL INTEREST 1,520,607
==================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 27.96
==================
</TABLE>
See Notes to Financial Statements. 8 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend income $ 296,415
Interest income 58,974
------------------
Total Investment Income 355,389
------------------
EXPENSES
Investment advisory (Note 3) 452,484
Administration (Note 3) 75,414
Transfer agent (Note 3) 18,274
Custody 20,385
Accounting (Note 3) 43,200
Audit 18,900
Legal 4,621
Trustees 2,038
Compliance 15,475
Miscellaneous 24,610
------------------
Total Expenses 675,401
------------------
NET INVESTMENT LOSS (320,012)
------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments sold 3,413,734
Net realized loss on foreign currency transactions (2,214)
Net change in unrealized appreciation of investments and foreign currency transaction 13,558,227
------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS 16,969,747
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 16,649,735
==================
</TABLE>
See Notes to Financial Statements. 9 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Year Year
Ended Ended
March 31, 2000 March 31, 1999
---------------------- ---------------------
NET ASSETS, Beginning of Period $ 22,014,143 $ 15,378,962
---------------------- ---------------------
OPERATIONS
Net investment income (loss) (320,012) 167,976
Net realized gain on investments sold
and foreign currency transactions 3,411,520 526,217
Net change in unrealized appreciation of
investments and foreign currency transactions 13,558,227 914,315
---------------------- ---------------------
Net increase in net assets resulting
from operations 16,649,735 1,608,508
---------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income - (167,976)
Net realized gain on investments sold - (989,542)
Return of capital - (137,811)
---------------------- ---------------------
Total distributions to shareholders - (1,295,329)
---------------------- ---------------------
CAPITAL SHARE TRANSACTIONS
Sale of shares 7,959,840 5,240,038
Reinvestment of distributions - 1,295,329
Redemption of shares (4,103,059) (213,365)
---------------------- ---------------------
Net increase from capital share transactions 3,856,781 6,322,002
---------------------- ---------------------
Net increase in net assets 20,506,516 6,635,181
---------------------- ---------------------
NET ASSETS, End of Period $ 42,520,659 $ 22,014,143
====================== =====================
SHARE TRANSACTIONS
Sale of shares 359,722 313,176
Reinvestment of distributions - 82,420
Redemption of shares (167,070) (12,909)
---------------------- ---------------------
Net increase in shares 192,652 382,687
====================== =====================
</TABLE>
See Notes to Financial Statements. 10 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected per share data and ratios for a share outstanding throughout each
period.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Nine
Year Year Year Months Year Year
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, June 30, June 30,
2000 1999 1998 1997 1996 1995
---------- ---------- ----------- ----------- ---------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD $16.58 $16.27 $12.84 $13.19 $11.60 $9.80
---------- ---------- ----------- ----------- ---------- ---------
INVESTMENT OPERATIONS
Net investment income (loss) (0.21) 0.15 (0.07) (0.11) (0.12) 0.04
Net realized and unrealized gain
on investments 11.59 1.32 4.95 0.86 1.98 1.76
---------- ---------- ----------- ----------- ---------- ---------
Total from Investment Operations 11.38 1.47 4.88 0.75 1.86 1.80
---------- ---------- ----------- ----------- ---------- ---------
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 $27.96 $16.58 $16.27 $12.84 $13.19 $11.60
========== ========== =========== =========== ========== =========
TOTAL RETURN 68.64% 9.51% 39.88% 5.38% 16.22% 18.37%
RATIOS/SUPPLEMENTARY DATA
Net Assets at End of Period (000's omitted) $42,521 $22,014 $15,379 $10,289 $10,326 $8,474
Ratios To Average Net Assets:
Expenses, including reimbursement/
waiver of fees 2.24% 2.42% 2.50% 2.50% (a) 2.50% 2.50%
Expenses, excluding reimbursement/
waiver of fees 2.24% 2.42% 2.69% 3.38% (a) 3.25% 3.19%
Net investment income (loss), including
reimbursement/waiver of fees (1.06%) 0.92% (0.50%) (1.09%)(a) (0.98%) (0.41%)
PORTFOLIO TURNOVER RATE 49% 51% 57% 45% 94% 35%
</TABLE>
-------------------------------------------
(a) Annualized.
See Notes to Financial Statements. 11 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Forum Funds(R) (the "Trust") is a Delaware business trust that is registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Act"). 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 accounting principles
generally accepted in the United States of America, 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. Dividend income is recorded on 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.
12 FORUM FUNDS[R]
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (concluded)
March 31, 2000
--------------------------------------------------------------------------------
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.
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 $18,247,812 and $14,420,308, respectively, for
the year ended March 31, 2000.
For federal income tax purposes, the tax basis of investment securities owned as
of March 31, 2000, was $23,142,157. The aggregate gross unrealized appreciation
and the aggregate gross unrealized depreciation for all securities were
$20,313,241 and $830,297, respectively.
13 FORUM FUNDS[R]
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AUSTIN GLOBAL EQUITY FUND
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders,
Austin Global Equity Fund:
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Austin Global Equity Fund (one of the portfolios
constituting Forum Funds) as of March 31, 2000, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with 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
securities owned as of March 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 audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Austin Global Equity
Fund as of March 31, 2000, and the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Boston, MA
May 12, 2000
14 FORUM FUNDS[R]
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FOR MORE INFORMATION FORUM
FUNDS
AUSTIN GLOBAL EQUITY FUND
Investment Adviser
Austin Investment Management, Inc.
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 Funds's Prospectus.
[FORUM 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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