<PAGE>
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 MARCH 31, 1997
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Dear Fellow Shareholder:
Having now completed our first year and a half, we are pleased to report that
the CRM Small Cap Value Fund continues to enjoy strong performance. The Fund has
achieved an average return of 21.17% for the twelve months ended March 31, 1997.
This compares favorably to the average small company growth fund return of
(1.94)%, as measured by Lipper Analytical Services, Inc., and the return of
5.18% for the Russell 2000 Index.
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-four 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 a 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.
Our largest holdings as of March 31, 1997 include Mascotech, Fred Meyer, Bindley
Western Industries and AEP Industries. Mascotech has virtually completed a
restructuring which led to the divestiture of 40% of its revenue base and the
repurchase of more than 20% of its stock. Although the stock has appreciated 50%
from our initial purchases, we believe it could continue to rise over the next
two to three years as investors begin to understand the earnings power of its
core metal forgings business. AEP Industries tripled its size with the purchase
of Borden's film and packaging business. As the operations are consolidated,
earnings could double over the next two years, which should propel the stock
price as well. In spite of having $900 million in revenues, there is no
conventional Wall Street analyst coverage. Fred Meyer, having recovered from the
strike-plagued 1995 year, is at the beginning of what we believe will be several
years of significant earnings growth. Bradley Western is in the process of
spinning out its fastest growing subsidiary, Priority Healthcare, which
distributes drugs to renal treatment and oncology centers. This subsidiary is
worth $10-$14 per share and would imply that we are paying 4x earnings for the
base business.
We take pride in the Fund's first year and a half of operations. Within the
short period of eighteen months, the Fund has accumulated over $76 million in
assets. With the thousands of mutual funds from which to choose, we thank you
for deciding to invest in the CRM Small Cap Value Fund.
Sincerely,
The CRM Funds
/s/ Fred M. Filoon /s/ Ronald H. McGlynn /s/ Jay B. Abramson
Fred M. Filoon Jay B. Abramson
President Ronald H. McGlynn Executive Vice President
President Portfolio Manager
<PAGE>
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CRM SMALL CAP VALUE FUND
AN INTERVIEW WITH JAY ABRAMSON
PORTFOLIO MANAGER OF THE CRM SMALL CAP VALUE FUND
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Q. JAY, HOW DID THE FUND PERFORM DURING THE LAST TWELVE MONTHS?
A. The Fund has performed very well. For the 12 months ending March 31, 1997,
the Fund returned 21.17%, which compares very favorably to the increase in the
Russell 2000 Index of 5.18% during the same period.
Q. WHAT FACTORS LED THE FUND TO SUCH STRONG RETURNS IN THE PAST YEAR?
A. Although the market has favored larger cap stocks during the past year, our
strong stock selection and the avoidance of any serious mistakes were the
primary contributors to performance. In addition, the CRM Fund enjoyed the
benefit of having several companies acquired, resulting in a dramatic increase
in their share prices.
Q. HOW DOES YOUR FUND DIFFER FROM OTHER SMALL CAP FUNDS?
A. Cramer Rosenthal McGlynn, an affiliate of the Fund's manager, has
approximately $3 billion of assets under management and pursues a highly
intensive internal research process to identify new investment opportunities. It
is important to remember that our Fund has a "value" as opposed to "growth"
approach. While all small cap funds tend to be more volatile than the general
market, we feel that our value orientation tends to limit downside risk.
Q. HOW DO YOU FIND YOUR SMALL CAP INVESTMENTS?
A. When it comes to finding new opportunities, we act like detectives. By this,
I mean that we search for companies which appear to be undergoing some sort of
dynamic change, such as new management, a new product, a corporate
restructuring, etc. In other words, anything that might change a company's
fortunes for the better. As such, we are very inquisitive about news releases of
all types from many different sources. Our process is very much a "bottom up"
approach to investing.
Q. DO YOU EMPLOY ANY SPECIAL ANALYTICAL METHODS?
A. After identifying a new idea, we commence an intensive due diligence process
in order to become knowledgeable about the business, familiar with management,
and above all, sensitive to the valuation of the stock. We work hard and fast in
order to reach a buy decision before the rest of the investment community
recognizes the same dynamic change and undervaluation.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. We are very optimistic about the general attraction of the small cap
companies relative to the general market, mainly because of reasonable
valuations and low expectations that characterize the group. Also, there appears
to be no shortage of small companies that have some "dynamic change" going for
them and are underfollowed or misunderstood by the investment community.
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THE CRM FUNDS
2
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CRM SMALL CAP VALUE FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
MARCH 31, 1997
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The following chart compares a change in value of a $10,000 investment in the
Fund, including reinvested dividends and distributions, and the performance of
the Russell 2000 Index (a capitalization weighted index of 2000 small
capitalization U.S. companies). The Index excludes the effect of any fees or
sales charges. Investment return and principal value of an investment in the
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. PAST PERFORMANCE CANNOT PREDICT NOR
GUARANTEE FUTURE RESULTS.
CRM SMALL CAP VALUE FUND VS RUSSELL 2000 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CRM SMALL CAP VALUE FUND RUSSELL 2000 INDEX
<S> <C> <C>
10/1/95 $10,000 $10,000
10/31/95 $9,840 $9,554
11/30/95 $10,450 $9,965
12/31/95 $10,734 $10,220
1/31/96 $10,904 $10,208
2/29/96 $11,404 $10,531
3/31/96 $11,985 $10,740
4/30/96 $12,475 $11,317
5/31/96 $13,335 $11,771
6/30/96 $13,405 $11,291
7/31/96 $12,575 $10,306
8/31/96 $13,275 $10,904
9/30/96 $13,715 $11,330
10/31/96 $13,965 $11,154
11/30/96 $14,526 $11,611
12/31/96 $14,915 $11,910
1/31/97 $15,160 $12,145
2/28/97 $15,000 $11,851
3/31/97 $14,521 $11,296
Investment value on 3/31/97
CRM Small Cap Value Fund $14,521
Russell 2000 Index $11,296
Average Annual Total Return*
Since Inception on
One Year 10/1/95
CRM Small Cap Value Fund 21.17% 28.26%
Russell 2000 Index 5.18% 8.66%
</TABLE>
* Annualized return for the Russell 2000 Index based on an inception date of
9/30/95.
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THE CRM FUNDS
3
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CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1997 (UNAUDITED)
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------ -------------
<C> <S> <C>
COMMON STOCKS (92.0%)
ADVERTISING (2.7%)
110,000 True North Communications, Inc.............................. $ 2,062,500
-------------
AEROSPACE (2.6%)
87,000 Tracor, Inc.*............................................... 2,022,750
-------------
APPAREL & ACCESSORY STORES (2.5%)
65,000 Footstar, Inc.*............................................. 1,925,626
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BUILDING & HOME CONSTRUCTION (4.3%)
185,600 Morrison Knudsen Corp.*..................................... 1,948,800
100,000 Walter Industries, Inc.*.................................... 1,362,500
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3,311,300
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BUILDING MATERIALS (3.5%)
91,500 Dal-Tile International, Inc.*............................... 1,431,069
35,500 Fibreboard Corp.*........................................... 1,229,192
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2,660,261
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BUSINESS SERVICES (1.4%)
55,000 Xpedite Systems, Inc.*...................................... 1,086,250
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COMMUNICATIONS (0.8%)
720,000 Digicall Group Ltd.*........................................ 0
27,000 Young Broadcasting Corp.*................................... 651,375
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651,375
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COMPUTER EQUIPMENT & SOFTWARE (2.4%)
70,000 FileNet Corp.*.............................................. 1,128,750
90,000 Interleaf, Inc.*............................................ 140,627
105,000 ProxyMed, Inc.*............................................. 603,750
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1,873,127
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ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTERS (4.4%)
132,600 GSE Systems, Inc.*.......................................... 812,176
62,500 Oak Industries, Inc.*....................................... 1,234,375
86,500 Octel Communications Corp.*................................. 1,373,188
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3,419,739
-------------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------ -------------
<C> <S> <C>
FABRICATED METAL PRODUCTS (9.0%)
45,000 Ball Corp................................................... $ 1,192,500
55,000 DONCASTERS plc ADR*......................................... 1,065,625
18,000 Kaydon Corp................................................. 753,750
37,300 Safety Components International, Inc.*...................... 373,000
81,000 TriMas Corp................................................. 1,903,500
25,000 Watts Industries, Inc. -- Class A........................... 581,250
100,000 Whittaker Corp.*............................................ 1,012,502
-------------
6,882,127
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FINANCIAL SERVICES (3.9%)
70,000 Glendale Federal Bank FSB*.................................. 1,610,000
22,000 Long Island Bancorp, Inc.................................... 727,376
25,000 Ocean Financial Corp.*...................................... 692,188
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3,029,564
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FOOD STORES (1.0%)
58,000 Bruno's, Inc.*.............................................. 775,750
-------------
GENERAL MERCHANDISE STORES (3.2%)
60,000 Fred Meyer, Inc.*........................................... 2,475,000
-------------
HOLDING, INSURANCE & OTHER INVESTMENT COMPANIES (1.6%)
94,000 Express America Holdings Co.*............................... 893,000
47,000 Preferred Employers Holdings, Inc.*......................... 364,250
-------------
1,257,250
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HOTELS (1.5%)
40,000 Interstate Hotels Co.*...................................... 1,130,000
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INDUSTRIAL & COMMERCIAL MACHINERY (1.2%)
40,200 IDEX Corp................................................... 944,700
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MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS
(1.9%)
90,000 Elsag Bailey Process Automation N.V.*....................... 1,440,000
-------------
MEDICAL DISTRIBUTORS & SERVICES (5.4%)
131,000 Bindley Western Industries, Inc............................. 2,456,250
156,500 Medical Resources, Inc.*.................................... 1,701,940
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4,158,190
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</TABLE>
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SEE ACCOMPANYING NOTES THE CRM FUNDS
4
<PAGE>
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CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1997 (UNAUDITED)
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------ -------------
<C> <S> <C>
OIL & GAS EXTRACTION & DISTRIBUTION (8.9%)
36,500 Flores & Rucks, Inc.*....................................... $ 1,478,250
75,000 Forest Oil Corp.*........................................... 993,750
71,000 Getty Petroleum Corp........................................ 1,455,500
42,800 Penn Virginia Corp.......................................... 1,893,900
35,000 South Jersey Industries, Inc................................ 748,126
20,000 Transmontaigne Oil Co.*..................................... 312,501
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6,882,027
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PRIMARY METAL INDUSTRIES (3.4%)
80,000 Commonwealth Aluminum Corp.................................. 1,370,001
50,000 Schnitzer Steel Industries, Inc............................. 1,275,000
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2,645,001
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RAILROAD TRANSPORTATION (2.3%)
106,000 RailTex, Inc.*.............................................. 1,762,253
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REAL ESTATE (1.2%)
50,000 Insignia Financial Group, Inc. -- Class A*.................. 900,000
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RUBBER & MISCELLANEOUS PLASTICS PRODUCTS (2.8%)
45,700 AEP Industries, Inc.*....................................... 2,125,050
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TRANSPORTATION EQUIPMENT (13.9%)
46,000 A. O. Smith Corp............................................ 1,604,251
40,000 AMERCO*..................................................... 1,020,000
62,000 Federal-Mogul Corp.......................................... 1,526,752
86,500 GenCorp, Inc................................................ 1,643,500
170,000 Mascotech, Inc.............................................. 3,485,000
145,000 Quixote Corp................................................ 1,305,000
10,000 Terex Corp.*................................................ 131,250
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10,715,753
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<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
------------- ------------------------------------------------------------ -------------
<C> <S> <C>
WHOLESALE TRADE-DURABLE GOODS (2.8%)
60,000 U.S. Industries, Inc.*...................................... $ 2,115,000
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WHOLESALE TRADE-NONDURABLE GOODS (3.4%)
14,800 Culbro Corp.*............................................... 1,387,500
18,500 General Cigar Holdings, Inc.*............................... 411,626
70,200 Nutramax Products, Inc.*.................................... 843,819
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2,642,945
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TOTAL COMMON STOCKS (COST $67,237,556)...................................... 70,893,538
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CONVERTIBLE PREFERRED STOCK (0.7%)
TRANSPORTATION EQUIPMENT (0.7%)
15,000 Terex Corp., 13.00%, due 12/31/00*(a) (cost $354,375)....... 567,450
-------------
WARRANTS (0.6%)
TRANSPORTATION EQUIPMENT (0.6%)
15,000 Terex Corp.*(a) (cost $135,000)............................. 478,950
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SHORT-TERM HOLDINGS (6.7%)
343,810 1784 Institutional U.S. Treasury Money Market Fund.......... 343,810
1,286,990 Forum Daily Assets Treasury Fund............................ 1,286,990
3,500,000 Trident Capital Finance Commercial Paper, 5.70%, due
4/1/97..................................................... 3,500,000
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TOTAL SHORT-TERM HOLDINGS (COST $5,130,800)................................. 5,130,800
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TOTAL INVESTMENTS (100.0%) (COST $72,857,731)............................... $ 77,070,738
-------------
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</TABLE>
* Non-income producing security.
(a) Securities that may be resold to "qualified institutional buyers" under Rule
144A, or securities offered pursuant to Section 4(2) of the Secutities Act
of 1933, as amended.
ADR American Depositary Receipts.
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SEE ACCOMPANYING NOTES THE CRM FUNDS
5
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CRM SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997 (UNAUDITED)
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<TABLE>
<S> <C>
ASSETS:
Investments at value (cost $72,857,731)..................... $ 77,070,738
Interest, dividends and other receivables................... 38,062
Receivable for securities sold.............................. 439,072
Receivable for Fund shares sold............................. 380,961
Organization costs, net of amortization (Note 2)............ 60,837
------------
Total assets.................................................... 77,989,670
------------
LIABILITIES:
Payable for securities purchased............................ 601,438
Payable to Adviser (Note 3)................................. 111,297
Payable to Administrator (Note 3)........................... 9,935
Accrued fees and other expenses............................. 14,439
------------
Total liabilities............................................... 737,109
------------
NET ASSETS $ 77,252,561
------------
------------
COMPONENTS OF NET ASSETS:
Paid in capital............................................. $ 71,867,077
Undistributed net investment loss........................... (199,101)
Unrealized appreciation on investments...................... 4,213,007
Accumulated net realized gain............................... 1,371,578
------------
NET ASSETS...................................................... $ 77,252,561
------------
------------
SHARES OF BENEFICIAL INTEREST................................... 5,660,933
------------
------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE)....... $ 13.65
------------
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</TABLE>
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SEE ACCOMPANYING NOTES THE CRM FUNDS
6
<PAGE>
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CRM SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income............................................. $ 173,934
Interest income............................................. 82,650
------------
Total investment income......................................... 256,584
------------
EXPENSES:
Investment advisory (Note 3)................................ 227,775
Shareholder Services (Note 3)............................... 75,925
Administration (Note 3)..................................... 45,555
Accounting (Note 3)......................................... 20,000
Transfer agent (Note 3)..................................... 16,101
Reporting................................................... 12,722
Legal....................................................... 11,500
Registration................................................ 10,609
Amortization of organization costs (Note 2)................. 8,691
Audit....................................................... 7,500
Trustees (Note 3)........................................... 7,500
Custody..................................................... 4,155
Miscellaneous............................................... 7,652
------------
Net expenses.................................................... 455,685
------------
NET INVESTMENT LOSS............................................. (199,101)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments sold....................... 2,306,249
Net change in unrealized appreciation on investments........ (233,863)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.......... 2,072,386
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $ 1,873,285
------------
------------
</TABLE>
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SEE ACCOMPANYING NOTES THE CRM FUNDS
7
<PAGE>
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CRM SMALL CAP VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND THE SIX MONTHS ENDED MARCH 31, 1997
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<TABLE>
<CAPTION>
AMOUNT SHARES
-------------- --------------
<S> <C> <C>
NET ASSETS--OCTOBER 1, 1995.................................. $ 100,000 10,000
-------------- --------------
OPERATIONS:
Net investment loss...................................... (93,579)
Net realized gain on investments sold.................... 2,217,922
Net change in unrealized appreciation on investments..... 4,446,870
--------------
Net increase in net assets resulting from
operations.......................................... 6,571,213
--------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................... (3,033)
--------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares........................................... 40,407,658 3,428,401
Reinvestment of distributions............................ 3,021 281
Redemption of shares..................................... (1,694,149) (128,955)
-------------- --------------
Net increase in capital transactions................. 38,716,530 3,309,727
-------------- --------------
--------------
Net increase......................................... 45,284,710
--------------
NET ASSETS--SEPTEMBER 30, 1996 (Including line A)............ 45,384,710
--------------
OPERATIONS:
Net investment loss...................................... (199,101)
Net realized gain on investments sold.................... 2,306,249
Net change in unrealized appreciation on investments..... (233,863)
--------------
Net increase in net assets resulting from
operations.......................................... 1,873,285
--------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments......................... (3,073,364)
--------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares........................................... 33,426,777 2,353,873
Reinvestment of distributions............................ 3,008,999 221,739
Redemption of shares..................................... (3,367,846) (224,406)
-------------- --------------
Net increase in capital transactions................. 33,067,930 2,351,206
-------------- --------------
--------------
Net increase......................................... 31,867,851
--------------
NET ASSETS--MARCH 31, 1997 (Unaudited) (Including line B).... $ 77,252,561
--------------
--------------
(A) Accumulated undistributed net investment income,
September 30, 1996...................................... $ --
--------------
--------------
(B) Accumulated undistributed net investment loss,
March 31, 1997.......................................... $ (199,101)
--------------
--------------
</TABLE>
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SEE ACCOMPANYING NOTES THE CRM FUNDS
8
<PAGE>
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CRM SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
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SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
1997 (a) 1996 (b)
----------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period................... $ 13.71 $ 10.00
------- -------------
Investment Operations
Net Investment Loss.................................. (0.04) (0.02)
Net Realized and Unrealized Gain on Investments...... 0.84 3.73
------- -------------
Total from Investment Operations....................... 0.80 3.71
------- -------------
Distributions from
Net Realized Gain on Investments..................... (0.86) --
------- -------------
Net Asset Value, End of Period......................... $ 13.65 $ 13.71
------- -------------
------- -------------
Total Return........................................... 5.88 %(c) 37.15%
Ratio/Supplementary Data:
Net Assets at End of Period (000's omitted)............ $ 77,253 $ 45,385
Ratios to Average Net Assets:
Expenses including reimbursement/waiver.............. 1.50 %(d) 1.49%
Expenses excluding reimbursement/waiver.............. 1.50 %(d) 1.98%
Net investment loss including reimbursement/waiver... (0.66)%(d) (0.40)%
Average Commission Rate (e)............................ $ 0.0582 $ 0.0467
Portfolio Turnover Rate................................ 67.56 % 111.18%
</TABLE>
<TABLE>
<S> <C> <C>
(a) Unaudited.
(b) For the period October 1, 1995 (commencement of operations)
through September 30, 1996.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share paid to
brokers on the purchase and sale of portfolio securities.
</TABLE>
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SEE ACCOMPANYING NOTES THE CRM FUNDS
9
<PAGE>
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CRM SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997 (UNAUDITED)
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1. ORGANIZATION
The CRM Funds (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust currently has one active
investment portfolio. The Trust Instrument of the Trust authorizes each
portfolio to issue an unlimited number of shares of beneficial interest without
par value. Included in this report is The CRM Small Cap Value Fund (the "Fund"),
a diversified portfolio of the Trust that commenced operations on October 1,
1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates.
The following represent significant accounting policies of the Fund:
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 asked price is used. In the absence of readily
available market quotations, securities are valued at fair value as
determined by the Board of Trustees. Securities with a maturity of 60 days
or less are valued at amortized cost.
INTEREST AND DIVIDEND INCOME -- Interest income is accrued as earned.
Dividends on securities held by the Fund are recorded on the ex-dividend
date.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
and net capital gains, if any, are declared and paid at least annually.
Distributions are based on amounts calculated in accordance with applicable
income tax regulations.
ORGANIZATION COSTS -- The costs incurred by the Fund in connection with
their organization and registration of shares have been capitalized and are
being amortized using the straight-line method over a five year period
beginning with the commencement of the Fund's operations.
FEDERAL TAXES -- The Fund intends to qualify and continue to qualify each
year as a regulated investment company and distribute all of its taxable
income. In addition, by distributing in each calendar year substantially all
of its net investment income, capital gains and certain other amounts, if
any, the Fund will not be subject to a Federal excise tax. Therefore, no
Federal income tax provision is required.
- --------------------------------------------------------------------------------
THE CRM FUNDS
10
<PAGE>
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CRM SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 (UNAUDITED)
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REALIZED GAIN AND LOSS -- Security transactions are accounted for on a trade
date basis and realized gain and loss on investments sold are determined on
the basis of identified cost.
3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser to the Fund is CRM Advisors, LLC (the "Adviser"), an
affiliate of Cramer, Rosenthal, McGlynn, Inc. The Adviser receives monthly, 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.-Registered Trademark- ("Forum"). Pursuant to an Administration Agreement,
Forum receives monthly a fee equal to the greater of an annual rate of 0.15% of
the average daily net assets of the Fund or $40,000 per year. Forum also serves
as distributor of the Fund's shares pursuant to a Distribution Agreement under
which it receives no additional fees.
Forum Financial Corp.-Registered Trademark- ("FFC"), an affiliate of Forum,
serves as the Fund's transfer agent and dividend disbursing agent, for which it
receives a fee of $12,000 per year plus certain shareholder account fees. FFC
also provides fund accounting services to the Fund. For these services, FFC
receives a fee of $36,000 per year 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 servicing plan which
allows it to obtain the services of the Adviser and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this plan, Forum may pay shareholder servicing agents, including the Adviser, 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 Forum an
amount equal to any shareholder servicing fees it pays to shareholder servicing
agents.
Each Trustee, who is not an "affiliated person" as defined in the Investment
Company Act of 1940, receives from the Fund an annual fee of $5,000 plus out of
pocket expenses.
4. SECURITIES TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments,
totaled $66,648,487 and $39,271,414 respectively, for the six months ended March
31, 1997.
For Federal income tax purposes, the tax basis of investment securities owned as
of March 31, 1997 was $72,857,731. The aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost
was $9,017,355 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value was
$4,804,348.
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THE CRM FUNDS
11
<PAGE>
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 AUDITORS
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 CRM SMALL CAP VALUE FUND PROSPECTUS.
[RECYCLE LOGO] This report has been printed on recycled paper.
[LOGO]
SMALL CAP
VALUE FUND
SEMI-ANNUAL REPORT
March 31, 1997
