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CRM SMALL CAP VALUE FUND
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FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Financial Corp.
Two Portland Square P.O. Box 446
Portland, Maine 04101 Portland, Maine 04112
800-CRM-2883 800-844-8258
800-276-2883 (207) 879-8910
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SEMI-ANNUAL REPORT APRIL 24, 1996
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Dear Fellow Shareholder:
After completing our first six months, we are pleased to report that the CRM
Small Cap Value Fund is off to a strong start. The Fund had an aggregate total
return of 19.85% since its inception on October 2, 1995, and 11.65% for the
first quarter of 1996. These results compare favorably with the Russell 2000's
return of 7.38% since October 2, 1995, and 5.10% for the first quarter. As of
March 31, 1996, the net assets of the Fund were approximately $23.2 million.
Our approach to finding good investments for the Fund is no different from the
approach we have successfully employed for our private management clients over
the past twenty-three years. We invest in companies undergoing some significant
change--change in their revenue/asset mix, change in their cost of doing
business and even change in their management. This change often creates a period
of undervaluation that can provide an attractive entry point. As value
investors, we are looking to acquire stocks that are trading at discounts to
market multiples of earnings and cash flow as well as at discounts to comparable
companies. We also develop a "private market" value for our investments, i.e.,
what a strategic buyer might pay for the whole company, as an additional
valuation tool.
We have constructed a diversified portfolio for the Fund of approximately fifty
to sixty stocks. As bottom-up investors, we focus on the fundamentals of each
individual company and are less concerned with broad macroeconomic and sector
issues. Our performance to date has a very broad base as most stocks in the
portfolio have made meaningful contributions. Some of the more noteworthy stocks
include Culligan Water Technologies, which was spun off from Astrum last fall,
and Acme-Cleveland Corporation, a manufacturer and supplier of electronic
products and metalworking tools that is reviewing alternatives for increasing
shareholder value after becoming the target of a takeover offer from Danaher.
Tracor, Inc. and Wang Laboratories, Inc. have benefited from some smart
acquisitions and Flores & Rucks, Inc. has been successfully building its oil and
gas reserves through low risk exploratory drilling. Currently, two of our larger
positions are Mascotech, Inc., an automotive supplier that is shrinking its
revenue base to focus on higher margin products, and Elsag Bailey Process
Automation N.V., an automation controls company that recently doubled its size
through the acquisition of a competitor. Both of these companies trade at less
than ten times earnings--quite inexpensive by any measure.
We thank you for your interest in the CRM Small Cap Value Fund and look forward
to its continued success during the remainder of the fiscal year.
Sincerely,
The CRM Funds CRM Advisors, LLC
[SIG] [SIG] [SIG]
Fred M. Filoon Ronald H. McGlynn Jay B. Abramson
President President Executive Vice President
Portfolio Manager
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SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
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<C> <S> <C>
COMMON STOCKS (88.3%)
BUILDING CONSTRUCTION-GENERAL CONTRACTORS AND OPERATIVE BUILDERS (1.8%)
32,000 Walter Industries, Inc.*.................................... $ 440,000
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BUSINESS SERVICES (3.7%)
10,500 CDI Corporation*............................................ 280,875
6,200 Continuum, Inc.*............................................ 258,075
25,000 Iron Mountain, Inc.*........................................ 381,250
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920,200
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CONSUMER PRODUCTS (2.7%)
28,000 Carter-Wallace, Inc. ....................................... 458,500
10,000 Church & Dwight Company, Inc. .............................. 208,750
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667,250
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ELECTRIC, GAS, AND SANITARY SERVICES (2.5%)
30,000 UGI Corporation ............................................ 637,500
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ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT AND COMPONENTS, EXCEPT COMPUTERS (5.8%)
12,500 Augat, Inc. ................................................ 218,750
22,000 GSE Systems, Inc.*.......................................... 316,250
40,000 Rexel, Inc.*................................................ 490,000
26,000 Strattec Security Corporation*.............................. 429,000
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1,454,000
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FABRICATED METAL PRODUCTS, EXCEPT MACHINERY AND TRANSPORTATION EQUIPMENT (5.0%)
20,000 TriMas Corporation ......................................... 440,000
15,000 Watts Industries, Inc. -- Class A .......................... 298,125
22,000 Whittaker Corporation*...................................... 517,000
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1,255,125
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FINANCIAL INSTITUTIONS (4.3%)
10,000 BankUnited Financial Corporation*........................... 82,500
5,000 Center Financial Corporation ............................... 90,625
400 Charter One Financial, Inc. ................................ 13,500
3,000 Commercial Federal Corporation ............................. 116,625
10,000 Fidelity Federal Bank -- Class A ........................... 95,000
7,000 Long Island Bancorp, Inc. .................................. 196,875
14,000 ONBANCorp, Inc. ............................................ 490,000
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1,085,125
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<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
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<C> <S> <C>
FOOD STORES (2.1%)
12,000 Penn Traffic Company*....................................... $ 178,500
27,500 Ruddick Corporation ........................................ 336,875
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515,375
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FURNITURE AND FIXTURES (1.1%)
30,000 Furniture Brands International, Inc.*....................... 277,500
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GENERAL MERCHANDISE STORES (8.5%)
45,000 Big B, Inc. ................................................ 466,875
47,500 Egghead, Inc.*.............................................. 507,655
18,000 Fred Meyer, Inc.*........................................... 504,000
15,000 Neiman-Marcus Group, Inc.*.................................. 333,750
10,440 Proffitt's, Inc.*........................................... 328,860
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2,141,140
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HOLDING AND OTHER INVESTMENT COMPANIES (2.4%)
24,000 Express America Holdings Company*........................... 105,000
22,000 John Hancock Bank and Thrift Opportunity Fund .............. 503,250
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608,250
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INDUSTRIAL AND COMMERCIAL MACHINERY AND COMPUTER EQUIPMENT (9.5%)
20,000 Acme-Cleveland Corporation ................................. 617,500
26,000 Black Box Corporation*...................................... 442,000
6,000 Culligan Water Technologies*................................ 195,000
50,000 Power Control Technologies*................................. 456,250
8,000 Silicon Valley Group, Inc.*................................. 195,000
20,000 Wang Laboratories, Inc.*.................................... 475,000
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2,380,750
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LUMBER AND WOOD PRODUCTS, EXCEPT FURNITURE (2.1%)
22,700 Fibreboard Corporation ..................................... 536,290
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MEASURING, ANALYZING, AND CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL, AND OPTICAL GOODS
(7.0%)
27,500 Elsag Bailey Process Automation N.V.*....................... 629,060
17,000 Tektronix, Inc. ............................................ 552,500
33,500 Tracor, Inc.*............................................... 584,155
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1,765,715
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</TABLE>
* Non-income producing security.
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
2
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SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1996
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
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OIL AND GAS EXTRACTION (6.2%)
<C> <S> <C>
23,000 Barrett Resources Corporation*.............................. $ 575,000
20,000 Flores & Rucks, Inc.*....................................... 370,000
40,000 Forest Oil Corporation*..................................... 495,000
17,000 Hugoton Energy Corporation*................................. 131,750
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1,571,750
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PRIMARY METAL INDUSTRIES (7.1%)
26,000 Commonwealth Aluminum Corporation .......................... 461,500
29,000 Schnitzer Steel Industries, Inc. ........................... 757,625
14,000 Wolverine Tube, Inc.*....................................... 568,750
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1,787,875
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PRINTING, PUBLISHING, AND ALLIED INDUSTRIES (6.1%)
21,000 Big Flower Press Holdings, Inc.*............................ 267,750
11,000 Devon Group, Inc.*.......................................... 313,500
29,000 Duplex Products*............................................ 266,438
10,000 Houghton Mifflin Company ................................... 441,250
25,000 Playboy Enterprises, Inc. -- Class B*....................... 253,127
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1,542,065
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REAL ESTATE (3.2%)
6,000 Hospitality Properties Trust ............................... 160,500
16,000 Insignia Financial Group, Inc. -- Class A*.................. 390,000
15,000 RFS Hotel Investors, Inc. .................................. 260,625
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811,125
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TRANSPORTATION EQUIPMENT (6.2%)
60,400 Mascotech, Inc. ............................................ 807,850
23,000 Safety Components International, Inc.*...................... 322,000
30,000 Terex Corporation*.......................................... 202,500
5,000 Thiokol Corporation ........................................ 219,375
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1,551,725
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<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
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<C> <S> <C>
WHOLESALE TRADE-NONDURABLE GOODS (1.0%)
26,000 Central Garden and Pet Company*............................. $ 247,000
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TOTAL COMMON STOCKS (COST $20,456,481) ......................................... $22,195,760
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CONVERTIBLE PREFERRED STOCK (1.5%)
TRANSPORTATION EQUIPMENT (1.5%)
15,000 Terex Corporation, 13.00%, due 12/31/00(a) ................. 390,000
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TOTAL CONVERTIBLE PREFERRED STOCK (COST $354,375) ..............................
$ 390,000
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WARRANTS (0.9%)
TRANSPORTATION EQUIPMENT (0.9%)
15,000 Terex Corporation(a) ....................................... 225,000
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TOTAL WARRANTS (COST $135,000) ................................................. $ 225,000
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SHORT-TERM HOLDINGS (9.3%)
426,103 1784 U.S. Treasury Money Market Fund ....................... 426,103
1,177,997 Dreyfus Government Cash Management Fund .................... 1,177,997
705,467 Forum Daily Assets Treasury Fund ........................... 705,467
32,026 Monarch Government Institutional Fund ...................... 32,026
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TOTAL SHORT-TERM HOLDINGS (COST $2,341,593) .................................... $ 2,341,593
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TOTAL INVESTMENTS (100.0%) (COST $23,287,449) .................................. $25,152,353
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</TABLE>
(a) Securities that may be resold to "qualified institutional buyers" pursuant
to Rule 144A under, or securities offered pursuant to Section 4(2) of, the
Securities Act of 1933, as amended. These Securities have been determined to
be liquid under guidelines established by the Board of Trustees.
* Non-income producing security.
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
3
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SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
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<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $23,287,449)...... $25,152,353
Interest, dividends and other receivables..... 14,708
Receivable for securities sold................ 243,552
Receivable for shares issued.................. 110,000
Organization costs, net....................... 79,668
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Total assets...................................... 25,600,281
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LIABILITIES:
Accrued advisory fees......................... 12,627
Accrued fees and other expenses............... 16,078
Payable for securities purchased.............. 2,348,300
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Total liabilities................................. 2,377,005
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NET ASSETS........................................ $23,223,276
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COMPONENTS OF NET ASSETS:
Capital paid in............................... $21,097,038
Distribution in excess of net investment
income....................................... (25,086)
Net unrealized appreciation................... 1,864,904
Accumulated net realized gains................ 286,420
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NET ASSETS........................................ $23,223,276
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SHARES OUTSTANDING................................ 1,938,311
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NET ASSET VALUE PER SHARE......................... $ 11.98
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</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
4
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SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1996
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income............................... $ 38,213
Interest income............................... 23,221
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Total income...................................... 61,434
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EXPENSES:
Advisory...................................... 32,994
Administration................................ 20,000
Shareholder services.......................... 10,998
Transfer agency............................... 8,490
Accounting.................................... 18,000
Legal......................................... 7,500
Auditing and tax reporting.................... 7,500
Compliance.................................... 10,166
Trustees fees and expenses.................... 7,500
Amortization of organization costs............ 7,243
Other......................................... 4,461
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Total expenses.................................... 134,852
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Fees waived................................... (51,365)
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Net expenses...................................... 83,487
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NET INVESTMENT LOSS............................... (22,053)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain............................. 286,420
Net change in unrealized appreciation......... 1,864,904
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Net realized and unrealized gain on investment.... 2,151,324
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INCREASE IN NET ASSETS FROM OPERATIONS............ $2,129,271
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</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
5
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SMALL CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 2, 1995 THROUGH MARCH 31, 1996
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<TABLE>
<CAPTION>
AMOUNT SHARES
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<S> <C> <C>
NET ASSETS--OCTOBER 2, 1995 (a)................... $ 100,000 10,000
OPERATIONS:
Net investment loss........................... (22,053)
Net realized gain on investments.............. 286,420
Net change in unrealized appreciation......... 1,864,904
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2,129,271
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DISTRIBUTIONS TO SHAREHOLERS:
Net investment income......................... (3,033)
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CAPITAL SHARE TRANSACTIONS:
Sale of shares................................ 21,038,348 1,931,941
Reinvested dividends.......................... 3,021 282
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21,041,369 1,932,223
Shares repurchased............................ (44,331) (3,912)
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20,997,038 1,928,311
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NET ASSETS--MARCH 31, 1996........................ $23,223,276
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</TABLE>
(a) See Note 1 of notes to financial statements for commencement of operations.
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
6
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SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
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SELECTED DATA FOR A SHARE OUTSTANDING DURING THE PERIOD
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1996(c)
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<S> <C>
Beginning net asset value per share......... $ 10.00
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Net investment loss......................... (0.01)
Net realized and unrealized gain on
securities................................. 1.99
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Ending net asset value per share............ $ 11.98
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Ratios to average net assets
Expenses (a)............................ 1.90%(b)
Net investment loss..................... (0.50)%(b)
Total return................................ 19.85%
Portfolio turnover rate..................... 39.93%
Average brokerage commission rate (d)....... $0.0295
Net assets at end of period (000's
omitted)................................... $23,223
</TABLE>
<TABLE>
<S> <C>
(a) During the period, various fees and
expenses were waived. Had such
waivers not occurred, the ratio of
expenses to average net assets would
have been: 3.07%(b)
(b) Annualized.
(c) See Note 1 of notes to financial
statements for commencement of
operations.
(d)Amount represents the average
commission per share, paid to
brokers, on the purchase and sale of
portfolio securities.
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS THE CRM FUNDS
7
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SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
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1. ORGANIZATION
Small Cap Value Fund (the "Fund"), a diversified portfolio of The CRM Funds (the
"Trust"), is an open-end management investment company. Investment operations
commenced on October 2, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles ("GAAP") based upon the following significant
accounting policies.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with GAAP requires the Fund's management to make estimates and assumptions
that affect certain reported amounts. Actual results may differ from those
estimates.
SECURITY VALUATION -- Securities held by the Fund for which market
quotations are readily available are valued using the last reported sales
price provided by independent pricing services. If no sales are 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 determined
pursuant to procedures adopted by the Board of Trustees. Short-term
securities, having a maturity of 60 days or less, are valued at amortized
cost.
INTEREST AND DIVIDEND INCOME AND DIVIDENDS TO SHAREHOLDERS -- Interest
income is accrued as earned. Dividend income is recorded on ex-dividend
date. Dividends to shareholders of net investment income and net capital
gains are declared and paid annually.
Distributions from net investment income and realized capital gain are based
on amounts calculated in accordance with applicable income tax regulations.
Any differences between financial statement amounts available for
distribution and distributions made in accordance with income tax
regulations are primarily attributable to wash sales.
Discounts on Treasury Bills purchased are amortized over the life of the
respective securities.
ORGANIZATIONAL COSTS -- The Fund incurred costs in connection with its
organization in the amount of $86,911. These costs have been capitalized and
are being amortized using the straight-line method over a five year period
beginning on the commencement of the Fund's investment operations.
FEDERAL INCOME TAX -- The Fund intends to qualify as a regulated investment
company and distributes all of its taxable income. Therefore, no provision
for Federal income tax provision is required.
OTHER -- Investment security transactions are recorded on trade date.
Realized gains and losses on investments sold are recorded on the basis of
identified cost.
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THE CRM FUNDS
8
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SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
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3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser to the Fund is CRM Advisors, LLC (the "Adviser"). The
Adviser receives from the Fund an advisory fee at an annual rate of 0.75% of the
average daily net assets of the Fund.
The administrator of the Fund is Forum Financial Services, Inc. ("Forum").
Pursuant to an Administration Agreement, Forum receives a fee at an annual rate
of .15% of the average daily net assets of the Fund with an annual minimum of
$40,000. Forum also serves as distributor of the Fund's shares pursuant to a
Distribution Agreement under which it receives no fees.
Forum Financial Corp. ("FFC") serves as the Fund's transfer agent and dividend
disbursing agent, for which it receives $12,000 plus certain shareholder account
fees. FFC also provides fund accounting services to the Fund. For these
services, FFC receives an annual fee of $36,000 plus certain amounts based upon
the number and types of portfolio transactions within the Fund. Forum and FFC
are affiliated companies. The Trust has adopted a shareholder service plan
providing that it may obtain the services of the Adviser and other qualified
financial institutions to act as shareholder servicing agents for their
customers. Under this plan, FFC may pay shareholder servicing agents up to 0.25%
of the average daily net assets of the Fund attributable to accounts for which
the agent provides shareholder services. The Trust reimburses FFC an amount
equal to any shareholder servicing fees it pays to shareholder servicing agents.
For the period ended March 31, 1996, the Adviser waived $20,367 of its advisory
fee and $10,998 of its shareholder service fee. For the same period, Forum
waived $20,000 of its administration fee.
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales (including maturities) of portfolio
securities (excluding short-term investments) during the period ended March 31,
1996 amounted to $24,634,454 and $3,975,097, respectively.
The cost basis of securities for Federal income tax purposes is the same as for
financial accounting purposes. Unrealized appreciation and depreciation as of
March 31, 1996 were $2,212,435 and $347,531, respectively.
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THE CRM FUNDS
9
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DIRECTORS
John E. Appelt
Fred M. Filoon
Louis Klein, Jr.
Clement C. Moore, II
Eugene A. Trainor, III
INVESTMENT ADVISER
CRM Advisors, LLC
707 Westchester Avenue
White Plains, New York 10604
ADMINISTRATOR AND DISTRIBUTOR
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
CUSTODIAN
The First National Bank of Boston, N.A.
150 Royall Street
Canton, Massachusetts 02021
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
INDEPENDENT ACCOUNTANTS
Ernst & Young, LLP
One North Broadway
White Plains, NY 10601
INVESTOR INFORMATION:(800) 844-8258
(207) 879-8910
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO
SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED A
COPY OF THE SMALL CAP VALUE FUND PROSPECTUS.
This report has been printed on recycled paper.
[LOGO]
[LOGO]
SMALL CAP
VALUE FUND
SEMI-ANNUAL REPORT
March 31, 1996
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