SEMI-ANNUAL REPORT
SEPTEMBER 30, 2000
[GRAPHIC OF EARTH FROM MOON]
AUSTIN GLOBAL
EQUITY FUND
FORUM
FUNDS
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SEMI-ANNUAL REPORT
SEPTEMBER 30, 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 in the twelve month period ended September 30,
2000, the Austin Global Equity Fund (the "Fund") produced a gain of 32.2%,
compared with 8.2% in the MSCI World Index, the Fund's benchmark.1. During the
same twelve-month period the S&P 500 Index gained 13.3%. In recent months,
however, the Fund's performance has not been as strong relative to its
benchmarks. In the six months ended September 30, 2000, the Fund declined 16.0%
versus 8.4% for the MSCI World Index and 3.6% for the S&P 500.
With equal pleasure we report that the Fund has maintained its Five Star Overall
Morningstar Rating(TM)2, as well as its Morningstar five star rating for the
three and five-year periods ended September 30, 2000. These five star
designations are a source of considerable pride because they were awarded when
compared against 1,175 international equity funds in the three-year category and
730 funds in the five-year category. These rankings take on added meaning given
the volatility in worldwide markets in which the Fund invests.
During the reporting period, equity markets on a global basis have been
particularly volatile, and we have taken that volatility into account in
managing the Fund. As you know, the engine of global economic growth in the
recent past has been the technology sector. The Fund continues to maintain a
long-term constructive stance on that sector, as well as telecom sector, but a
few notable shifts were made during this period. We continue to look for strong
global technology franchises for investment opportunities.
Substantial investments were also made within the U.S. pharmaceutical and
healthcare sector resulting in an overweight position for the Fund versus the
MSCI World Index. We continue to have a positive outlook on the global
healthcare industry and seek investment opportunities there. In addition, the
Fund's position within the insurance industry versus the MSCI World Index has
grown substantially. We have been active in other sectors of the equity markets,
finding value within the metals and mining sector and energy sectors, both of
which have been raised slightly versus the Fund's benchmark. Notable investments
by the Fund include Allianz of Germany and MBIA of the United States, both in
the financial services industry, a sector in which we also maintain a favorable
outlook at the macro and company level.
The recent turbulence in the euro currency has negatively affected the Fund's
performance. The euro began the year at roughly 1.02 versus the US Dollar. At
the end of September, the exchange rate was down to 0.88, a decline of almost
14%. In spite of short term uncertainties regarding European economic growth, we
believe there are significant structural reforms taking place in many European
countries that will potentially lead to strong long term growth in the region.
We view the recent weakness and uncertainty in Europe as an opportunity for
investment. Specifically, we have been actively investing in the German equity
markets, seeking companies that will benefit from such structural reforms. Our
country weighting in Germany has therefore been raised versus the MSCI World
Index during the period.
Subsequent to the period under review, security markets have continued to be
volatile. Most observers attribute the recent market declines to higher interest
rates, slower economic growth, higher oil prices and anticipation of lower
corporate earnings, especially in the telecommunications service and equipment
industries. As explained in previous reports, the Fund has had sizable
investments in these areas. Countering these negative macro economic trends (and
providing the markets with potential upside) are the continued growth in
productivity and the containment of inflation.
1 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SHAREHOLDER LETTER (concluded)
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
An important development in the U.S. market is the mostly favorable reports on
aggregate company earnings. Approximately 80% of companies reported earnings for
the 3rd quarter (ended September 30, 2000) which met or exceeded Wall Street
estimates. Only an approximate 20% missed expectations. For this reason, we do
not believe a recession lurks in the near future. We anticipate U.S. GDP growth
of 2.5% to 3.5% in 2001, which has the potential to provide an attractive
backdrop for the Fund to increase its weightings in U.S. markets. We believe
corporate earnings will provide an impetus to higher selected stock prices in
2001.
Thank you all for your support. We remain committed to meeting your global
investment needs.
/s/ Peter A. Vlachos
Peter A. Vlachos
President
Austin Investment Management, Inc.
1 The Fund's average annual total returns for the 1-year, 5-year and since
inception (12/8/93) periods ending 9/30/00 were 32.19%, 19.69%, and 17.98%,
respectively. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Market
volatility can significantly impact short-term performance. Results of an
investment made today may differ substantially from the historical performance
of the Fund. 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 Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 9/30/00 and are subject to change monthly. Furthermore, these ratings are
calculated from the Fund's 3-, 5- and 10-year (if applicable) average annual
returns in excess of 90-day T-bill returns with appropriate fee adjustments, and
a risk factor that reflects fund performance below 90-day T-bill returns. The
Overall Morningstar rating is based on a weighted average of the Fund's 3-year,
5-year and 10-year (if applicable) risk adjusted performance. The top 10% of
funds in a broad asset class receive five stars, the next 22.5% receive four
stars, the middle 35% receive three stars, the next 22.5% receive 2 stars and
the bottom 10% receive 1 star.
The MSCI World Index is an unmanaged index representing the performance of a
diverse range of global stock markets in the United States, Canada, Europe,
Australia, New Zealand and the Far East. The S&P 500 Index is an unmanaged index
representing the average performance of 500 widely held, publicly traded large
capitalization stocks. Index returns do not reflect expenses that have been
deducted from the Fund's returns. It is not possible to invest directly in an
Index.
The views in this report were those of the Fund manager as of September 30,
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>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited)
SEPTEMBER 30, 2000
<TABLE>
--------------------------------------------------------------------------------------------------------------------
Shares Security Description Cost Value
-------------------- ------------------------------------------------------- --------------- ----------------
<S> <C> <C> <C>
COMMON STOCK (97.1%)
AUSTRALIA (1.3%)
6,000 News Corp. Ltd., ADR $ 181,110 $ 336,375
10,000 Telstra Corp. Ltd., ADR 145,158 162,500
--------------- ----------------
326,268 498,875
--------------- ----------------
BELGIUM (0.9%)
17,250 Option International NV * 250,126 357,938
--------------- ----------------
BRAZIL (1.5%)
7,000 Telecomunicacoes Brasileiras SA - Telebras, ADR -
Preferred Block 614,984 553,875
468 Tele Norte Leste Participacoes SA, ADR 7,700 10,706
800 Tele Sudeste Celular Participacoes SA, ADR 32,007 16,800
280 Telesp Celular Participacoes SA, ADR 10,965 9,223
--------------- ----------------
665,656 590,604
--------------- ----------------
CANADA (2.0%)
13,140 Nortel Networks Corp. 763,762 782,651
--------------- ----------------
FINLAND (3.8%)
20,500 F-Secure Oyj * 111,162 134,587
28,000 Nokia Corp., ADR 296,052 1,114,750
9,000 Sonera Oyj 538,201 228,724
--------------- ----------------
945,415 1,478,061
--------------- ----------------
FRANCE (4.4%)
100 Immobiliere Marseillaise 180,868 237,372
20,000 L'OREAL, ADR 216,812 310,438
1,500 Simco SA 125,430 100,067
14,000 STMicroelectronics NV 559,272 666,750
167 Taittinger SA 138,418 88,419
2,000 Total Fina Elf SA 301,835 292,612
--------------- ----------------
1,522,635 1,695,658
--------------- ----------------
GERMANY (3.1%)
4,500 Bayerische Hypo- und Vereinsbank AG 296,040 246,196
6,000 Commerzbank AG 227,453 177,896
4,000 RWE AG, ADR 139,337 140,482
2,000 Schering AG 107,531 129,893
4,000 Siemens AG 598,037 514,453
--------------- ----------------
1,368,398 1,208,920
--------------- ----------------
GREECE (0.3%)
10,000 Panafon Hellenic Telecom SA, GDR * 163,110 95,717
--------------- ----------------
HONG KONG (0.3%)
95,832 Hong Kong & China Gas Co. Ltd., ADR 85,000 119,837
--------------- ----------------
ISRAEL (6.2%)
13,000 Check Point Software Technologies Ltd. * 179,562 2,047,500
25,000 Compugen Ltd. * 250,000 343,750
--------------- ----------------
429,562 2,391,250
--------------- ----------------
ITALY ( 6.6%)
20,000 Bulgari SpA 228,091 246,196
125,000 Finmeccanica SpA * 161,733 148,025
20,000 Mediaset SpA 319,409 297,906
32,000 Mediolanum SpA 542,884 543,856
3,000 San Paolo-IMI SpA, ADR 109,147 97,687
150,000 Telecom Italia Mobile SpA 185,989 1,212,450
7 Telecom Italia SpA 20 74
--------------- ----------------
1,547,273 2,546,194
--------------- ----------------
3 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited) (continued)
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------------------------------------------
Shares Security Description Cost Value
-------------------- ------------------------------------------------------- --------------- ----------------
COMMON STOCK, CONTINUED
JAPAN (14.7%)
17,000 Furukawa Electric Co., Ltd. $ 288,079 $ 469,600
50,000 Mitsui Marine & Fire Insurance Co., Ltd. 223,125 229,965
3,000 Murata Manufacturing 554,294 413,659
3,500 NEC Corp., ADR 233,400 389,813
6,000 Nippon Telegraph & Telephone Corp., ADR 348,485 294,000
6,000 NTT DoCoMo, Inc., ADR 264,560 860,633
10,000 Sony Corp., ADR 484,560 1,009,375
10,000 Takara Shuzo Co. Ltd. 257,365 204,516
3,000 Takeda Chemical Industries 183,959 198,223
17,000 Tokyo Broadcasting System, Inc. 516,944 684,342
12,000 Toyota Motor Corp., ADR 670,970 942,000
--------------- ----------------
4,025,741 5,696,126
--------------- ----------------
LUXEMBOURG (1.4%)
3,500 Societe Europeenne des Satellites, FDR 592,671 531,219
--------------- ----------------
MALAYSIA (0.2%)
10,000 Nestle (Malaysia) Berhad 66,728 52,632
15,000 Telekom Malaysia Berhad 68,750 39,474
--------------- ----------------
135,478 92,106
--------------- ----------------
MEXICO (3.6%)
10,000 Grupo Televisa SA, GDR * 496,018 576,875
15,000 Nuevo Grupo Iusacell, ADR * 215,145 178,125
12,000 Telefonos De Mexico, ADR 596,511 638,250
--------------- ----------------
1,307,674 1,393,250
--------------- ----------------
NETHERLANDS (3.4%)
10,231 Aegon NV, ADR 119,439 379,826
10,000 ASM Lithography Holding NV * 429,751 323,125
10,000 Royal Dutch Petroleum Co. 508,627 599,375
--------------- ----------------
1,057,817 1,302,326
--------------- ----------------
POLAND (0.3%)
25,000 Telekomunikacja Polska SA, GDR 120,200 134,025
--------------- ----------------
4 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited) (continued)
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------------------------------------------
Shares Security Description Cost Value
-------------------- ------------------------------------------------------- --------------- ----------------
COMMON STOCK, CONTINUED
SINGAPORE (0.2%)
10,000 Singapore Airlines Ltd. $ 95,566 $ 94,812
--------------- ----------------
SOUTH KOREA (1.2%)
5,000 Korea Telecom Corp., ADR 137,800 168,125
12,000 SK Telecom Co. Ltd., ADR 349,456 307,500
--------------- ----------------
487,256 475,625
--------------- ----------------
SPAIN (0.5%)
10,000 Telefonica SA * 223,997 198,104
--------------- ----------------
SWITZERLAND (2.0%)
35 Bank Fuer Internationalen Zahlungsausgleich 253,900 314,879
3,000 Roche Holdings Ltd., ADR 185,737 263,821
25,000 Telelogic AB * 212,451 199,835
--------------- ----------------
652,088 778,535
--------------- ----------------
TAIWAN (1.3%)
25,232 Taiwan Semiconductor Manufacturing Co. Ltd., ADR * 767,981 514,102
--------------- ----------------
TURKEY (0.2%)
10,800,000 Haci Omer Sabanci Holding 101,814 87,480
--------------- ----------------
UNITED KINGDOM (3.0%)
5,000 HSBC Holdings plc, ADR 272,550 357,000
5,000 Granda Media plc * 39,174 33,340
50,000 Nycomed Amersham plc 540,000 490,495
5,000 Rio Tinto plc, ADR 210,113 297,500
--------------- ----------------
1,061,837 1,178,335
--------------- ----------------
UNITED STATES (34.7%)
3,000 Anadarko Petroleum Corp. 176,378 199,380
30,000 Bank of New York Co., Inc. 272,812 1,681,875
2,000 CIENA Corp. * 112,063 245,625
32,000 Cisco Systems, Inc.* 157,111 1,768,000
6,150 Corning, Inc. 774,343 1,826,550
4,000 Corvis Corp. * 144,000 244,188
9,500 Home Depot, Inc. 405,743 504,094
5 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
SCHEDULE OF INVESTMENTS (unaudited) (concluded)
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------------------------------------------
Shares Security Description Cost Value
-------------------- ------------------------------------------------------- --------------- ----------------
COMMON STOCK, CONTINUED
UNITED STATES (continued)
20,000 Intel Corp. $ 455,250 $ 832,500
3,000 International Rectifier Corp. * 155,963 151,688
10,000 Intersil Holding Corp. * 250,000 498,750
10,000 JDS Uniphase Corp. * 246,079 946,875
40,000 Kos Pharmaceuticals, Inc. * 234,288 790,000
8,950 Lucent Technologies, Inc. 237,207 273,534
8,000 MBIA, Inc. 491,980 569,000
3,000 McDATA Corp. Class B * 84,000 368,672
4,000 Microsoft Corp. * 130,330 241,000
2,000 New Focus, Inc. * 40,000 158,125
3,000 Next Level Communications, Inc. * 60,000 198,375
6,000 PE Biosystems Group 419,320 699,000
13,000 Schlumberger Ltd. 601,956 1,070,062
500 StorageNetworks, Inc. * 13,500 51,094
6,000 Thermo Electron Corp. * 150,796 156,000
--------------- ----------------
5,613,119 13,474,387
--------------- ----------------
Total Common Stock 24,310,444 37,716,137
--------------- ----------------
FIXED RATE CONVERTIBLE BONDS (1.8%)
PRINCIPAL
--------------------
FRANCE (0.2%)
$100,000 France Telecom, 4.13%, 11/29/04 102,340 90,448
--------------- ----------------
NETHERLANDS (0.5%)
400,000 Koninklijke Ahold NV, 3.00%, 9/30/03 216,532 193,614
--------------- ----------------
UNITED KINGDOM (0.3%)
100,000 Telewest plc, 5.25%, 2/19/07 175,370 106,452
--------------- ----------------
UNITED STATES (0.8%)
300,000 Bell Atlantic Financial, 4.25%, 9/15/05 + 300,000 324,750
--------------- ----------------
Total Fixed Rate Convertible Bonds 794,242 715,264
--------------- ----------------
SHORT-TERM HOLDINGS (1.1%)
Shares
--------------------
Bankers Trust Investment Money Market Fund 426,435 426,435
--------------- ----------------
TOTAL INVESTMENTS (100.0%) $ 25,531,121 $ 38,857,836
=============== ================
</TABLE>
* Non-income producing security.
+ Securities that may be resold to "qualified institutional buyers" under
Rule 144A of the Securities Act of 1933, as amended (the "1933 Act"), or
securities offered pursuant to Section 4 (2) of the 1933 Act. These
securities have 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 6 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
<TABLE>
ASSETS
<S> <C>
Investments (Note 2):
Investments, at cost $ 25,531,121
Net unrealized appreciation 13,326,715
------------------
Total investments, at value 38,857,836
Receivable for Fund shares issued 1,500,000
Interest, dividends and other receivables 55,680
Prepaid expenses 5,711
------------------
Total Assets 40,419,227
------------------
LIABILITIES
Payable for investments purchased 10,965
Payable to custodian (Note 3) 2,210
Payable to adviser (Note 3) 49,905
Payable to administrator (Note 3) 8,318
Accrued expenses and other liabilities 26,556
------------------
Total Liabilities 97,954
------------------
NET ASSETS $ 40,321,273
==================
COMPONENTS OF NET ASSETS
Paid-in capital $ 24,751,762
Distributions in excess of net investment income (106,186)
Unrealized appreciation of investments and foreign currency transactions 13,323,227
Accumulated net realized gain 2,352,470
------------------
NET ASSETS $ 40,321,273
==================
SHARES OF BENEFICIAL INTEREST 1,716,717
==================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 23.49
==================
</TABLE>
See Notes to Financial Statements 7 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENT OF OPERATIONS (unaudited)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend income $ 306,189
Interest income 23,026
------------------
Total Investment Income 329,215
------------------
EXPENSES
Investment advisory (Note 3) 298,802
Administration (Note 3) 49,800
Transfer agent (Note 3) 9,606
Custody (Note 3) 12,569
Accounting (Note 3) 24,000
Audit 8,250
Legal 2,447
Trustees 809
Compliance 4,164
Pricing 5,432
Miscellaneous 19,522
------------------
Total Expenses 435,401
------------------
NET INVESTMENT LOSS (106,186)
------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investments sold (588,676)
Net realized loss on foreign currency transactions (8,439)
Net change in unrealized depreciation of investments (6,159,521)
------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS (6,756,636)
------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (6,862,822)
==================
See Notes to Financial Statements 8 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Six Months Year
Ended Ended
September 30, 2000 March 31, 2000
---------------------- --------------------
NET ASSETS, Beginning of Period $ 42,520,659 $ 22,014,143
---------------------- --------------------
OPERATIONS
Net investment loss
(106,186) (320,012)
Net realized gain (loss) on investments sold
and foreign currency transactions
(597,115) 3,411,520
Net change in unrealized appreciation (depreciation)
of investments and foreign currency transactions
(6,159,521) 13,558,227
---------------------- --------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations
(6,862,822) 16,649,735
---------------------- --------------------
CAPITAL SHARE TRANSACTIONS
Sale of shares
14,929,485 7,959,840
Redemption of shares
(10,266,049) (4,103,059)
---------------------- --------------------
Net Increase from Capital Share Transactions
4,663,436 3,856,781
---------------------- --------------------
Net Increase (Decrease) in Net Assets
(2,199,386) 20,506,516
---------------------- --------------------
NET ASSETS - End of Period (a) $ 40,321,273 $ 42,520,659
====================== ====================
SHARE TRANSACTIONS
Sale of shares
609,632 359,722
Redemption of shares
(413,522) (167,070)
---------------------- --------------------
Net Increase in Shares
196,110 192,652
====================== ====================
(a) Distributions in excess of net investment income $ (106,186) $ -
====================== ====================
</TABLE>
See Notes to Financial Statements 9 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS (unaudited)
--------------------------------------------------------------------------------
Selected per share data and ratios for a share outstanding throughout each
period.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nine
Six Months Year Year Year Months Year Year
Ended Ended Ended Ended Ended Ended Ended
September 30, March 31, March 31, March 31, March 31, June June
30, 30,
2000 2000 1999 1998 1997 1996 1995
----------- --------- ---------- --------- --------- -------- --------
NET ASSET VALUE, Beginning of Period $27.96 $16.58 $16.27 $12.84 $13.19 $11.60 $9.80
----------- --------- ---------- --------- --------- -------- --------
INVESTMENT OPERATIONS
Net investment income (loss) (0.06) (0.21) 0.15 (0.07) (0.11) (0.12) 0.04
Net realized and unrealized gain (loss)
on investments (4.41) 11.59 1.32 4.95 0.86 1.98 1.76
----------- --------- ---------- --------- --------- -------- --------
Total from Investment Operations (4.47) 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 $23.49 $27.96 $16.58 $16.27 $12.84 $13.19 $11.60
=========== ========= ========== ========= ========= ======== ========
TOTAL RETURN (15.99%) 68.64% 9.51% 39.88% 5.38% 16.22% 18.37%
RATIOS/SUPPLEMENTARY DATA
Net Assets at End of Period (000's $40,321 $42,521 $22,014 $15,379 $10,289 $10,326 $8,474
omitted)
Ratios To Average Net Assets:
Expenses, including reimbursement/
waiver of fees 2.19% (a) 2.24% 2.42% 2.50% 2.50% (a) 2.50% 2.50%
Expenses, excluding reimbursement/
waiver of fees 2.19% (a) 2.24% 2.42% 2.69% 3.38% (a) 3.25% 3.19%
Net investment income (loss), including
reimbursement/waiver of fees (0.53)% (a) (1.06%) 0.92% (0.50%) (1.09%) (a)(0.98%) (0.41%)
PORTFOLIO TURNOVER RATE 20% 49% 51% 57% 45% 94% 35%
--------------------------------------
(a) Annualized.
</TABLE>
See Notes to Financial Statements 10 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
SEPTEMBER 30, 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 twenty-one 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 or, if no sales price is reported, the mean
of the last bid and ask price as provided by independent pricing services. 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.
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.
11 FORUM FUNDS(R)
<PAGE>
AUSTIN GLOBAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (concluded)
SEPTEMBER 30, 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.
CUSTODIAN - The custodian is Forum Trust, LLC. The Fund pays an annual global
custody fee based on average daily net assets of the Fund. The Fund also pays an
annual maintenance fee of $3,600 plus certain other transaction fees. These fees
are paid monthly.
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 $10,547,747 and $7,924,664, respectively, for
the six months ended September 30, 2000.
For federal income tax purposes, the tax basis of investment securities owned as
of September 30, 2000, was $25,531,121. The aggregate gross unrealized
appreciation and the aggregate gross unrealized depreciation for all securities
were $15,338,597 and $2,011,882, respectively.
12 FORUM FUNDS(R)
<PAGE>
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 disribution only to shareholdrs and to others who
have received a copy of the Fund's prospectus.
[LOGO]
FORUM FUNDS
P.0. Box 446
Portland, ME 04112
800-94FORUM
800-943-6786
207-879-0001
www.forumfunds.com
<PAGE>
