<PAGE>
CRM FUNDS
- ------------------------------------
- ------------------------------------
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Shareholder Services, LLC
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
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT MARCH 31, 1998
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
Having completed the first six months of our third fiscal year of operation, we
are pleased to report that the investor share class of the CRM Small Cap Value
Fund continues to enjoy strong performance. The Fund has achieved an average
return of 11.26% for the six months ended March 31, 1998. This compares
favorably to the average small company growth fund return of 4.22%, as measured
by Lipper Analytical Services and a return of 6.57% for the Russell 2000 Index.
We take great pride in the Fund's first two and one half years of operations.
Within the short period of thirty months, the Fund has accumulated over $215
million in assets.
To reiterate what we have described in previous reports to shareholders, 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 for investment. 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. As an additional valuation tool, we also develop a
"private market" value for our investments, i.e. what a strategic buyer might
pay for the whole company.
A good example of our invest philosophy and process is GTech, a new position in
the Fund. The significant change at GTech is the resignation under controversial
circumstances of founder and chairman Richard Snowden; he has been replaced by
William O'Connor formerly of General Electric who enjoys a high level of
credibility and is working hard to improve GTech's negative image. In addition,
the company is terminating several unprofitable ventures and concentrating its
efforts on growing international operations. Finally, a problem relating to
their contract with the Texas Lottery should be resolved in the near future.
We are pleased to announce that we launched a new Fund in January, the CRM Value
Fund. This Fund will employ the same value approach that has been in place since
the founding of Cramer Rosenthal McGlynn and will focus on companies without
limitation as to size. In addition, we plan on launching a new CRM Mid Cap Value
Fund later this year. This Fund will also employ our value approach and will
invest in medium sized companies. As a shareholder of the Small Cap Value Fund,
you can expect to receive information about our new Funds in the near future.
If, however, we can provide you with any relevant facts sooner, please contact
us directly at (800) CRM - 2883.
With the thousands of mutual funds to choose from, we thank you for your
decision to invest in the CRM Funds.
Sincerely,
The CRM Funds
[SIG]
Fred M. Filoon
President
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
COMMON STOCK (90.6%)
AEROSPACE (3.9%)
173,300 DONCASTERS plc ADR*............ $ 4,527,413
127,400 Tracor, Inc.*.................. 4,084,765
-----------
8,612,178
-----------
AUTOMOTIVE PARTS AND EQUIPMENT (0.7%)
90,100 Safety Components
International, Inc.*.......... 1,419,075
-----------
AUTOMOTIVE REPAIR, SERVICES AND PARKING (1.1%)
65,500 Budget Group, Inc.*............ 2,456,250
-----------
BANKING AND FINANCIAL (3.4%)
156,000 Penncorp Financial Group,
Inc........................... 4,504,500
84,000 Pilgrim America Capital
Corp.*........................ 2,882,251
-----------
7,386,751
-----------
BUILDING AND CONSTRUCTION (2.2%)
235,600 Morrison Knudsen Corp.*........ 2,635,778
104,300 Walter Industries, Inc.*....... 2,229,413
-----------
4,865,191
-----------
BUILDING MATERIALS (1.2%)
208,500 Dal-Tile International,
Inc.*......................... 2,697,469
-----------
BUSINESS SERVICES (4.8%)
137,000 BTG, Inc.*..................... 1,258,690
350,700 LGS Group, Inc................. 4,685,420
153,300 Laidlaw Environmental Services,
Inc.*......................... 574,875
117,000 World Color Press, Inc.*....... 4,065,750
-----------
10,584,735
-----------
COMMUNICATIONS (4.8%)
157,500 COMSAT Corp.................... 5,423,908
100,000 Young Broadcasting Corp.*...... 5,000,000
-----------
10,423,908
-----------
COMPUTER EQUIPMENT AND SOFTWARE (2.3%)
206,000 Data General Corp.*............ 3,643,627
140,000 Emulex Corp.*.................. 1,277,501
-----------
4,921,128
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
CONSUMER PRODUCTS (6.3%)
133,800 Gibson Greetings, Inc.*........ $ 3,696,229
129,300 Nutramax Products, Inc.*....... 1,624,332
137,238 United Stationers, Inc.*....... 8,483,026
-----------
13,803,587
-----------
DIVERSIFIED INDUSTRIES (2.6%)
62,700 AEP Industries, Inc.*.......... 2,147,475
70,000 Elsag Bailey Process Automation
N.V.*......................... 1,338,753
67,300 United Dominion Industries
Ltd........................... 2,183,044
-----------
5,669,272
-----------
ELECTRONIC EQUIPMENT AND COMPONENTS (5.0%)
198,000 BMC Industries, Inc............ 3,848,625
158,000 CommScope, Inc.*............... 2,281,125
135,000 General Semiconductor, Inc.*... 1,611,563
245,800 Glenayre Technologies, Inc.*... 3,072,500
-----------
10,813,813
-----------
ENERGY EXPLORATION AND DISTRIBUTION (10.6%)
559,500 EEX Corp.*..................... 5,490,095
104,900 Equitable Resources, Inc....... 3,487,925
101,000 Getty Realty Corp.............. 2,316,690
96,100 Nuevo Energy Co.*.............. 3,441,581
245,700 Ocean Energy, Inc.*............ 5,789,308
85,600 Penn Virginia Corp............. 2,493,100
-----------
23,018,699
-----------
FINANCIAL SERVICES (4.0%)
32,000 Astoria Financial Corp......... 1,978,001
100,000 Haven Bancorp, Inc............. 2,425,000
225,000 Richmond County Financial
Corp.*........................ 4,317,188
-----------
8,720,189
-----------
HEALTH CARE (5.1%)
100,000 Acuson Corp.*.................. 1,812,500
111,000 Bindley Western Industries,
Inc........................... 4,211,062
110,000 Integrated Health Services,
Inc........................... 4,324,376
156,500 Medical Resources, Inc.*....... 826,525
-----------
11,174,463
-----------
INDUSTRIAL TECHNOLOGIES (2.0%)
214,500 UNOVA, Inc.*................... 4,290,000
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
2
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
METAL INDUSTRIES (8.4%)
<C> <S> <C>
74,700 Carpenter Technology Corp...... $ 4,033,800
83,000 General Cable Corp............. 3,766,125
36,000 Kaydon Corp.................... 1,471,500
208,800 Oregon Steel Mills, Inc........ 4,593,548
75,000 Schnitzer Steel Industries,
Inc........................... 1,832,816
164,100 WHX Corp.*..................... 2,676,882
-----------
18,374,671
-----------
REAL ESTATE (1.7%)
144,100 Insignia Financial Group,
Inc.-- Class A*............... 3,602,500
-----------
RESTAURANTS (0.3%)
30,000 Luby's Cafeterias, Inc......... 570,000
-----------
RETAIL (6.6%)
105,000 Fred Meyer, Inc.*.............. 4,849,691
145,500 ShopKo Stores, Inc.*........... 4,610,531
473,800 Sunglass Hut International,
Inc.*......................... 4,974,900
-----------
14,435,122
-----------
TECHNOLOGY (7.6%)
140,700 ChoicePoint, Inc.*............. 7,659,361
157,900 GTECH Holdings Corp.*.......... 6,138,363
145,000 Silicon Valley Group, Inc.*.... 2,827,500
-----------
16,625,224
-----------
TRANSPORTATION EQUIPMENT (6.0%)
45,000 Federal-Mogul Corp............. 2,393,440
181,600 GenCorp, Inc................... 5,584,200
222,500 Mascotech, Inc................. 5,131,409
-----------
13,109,049
-----------
TOTAL COMMON STOCK (COST $158,161,800)...... $197,573,274
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT/ SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
SHORT-TERM HOLDINGS (9.4%)
COMMERCIAL PAPER (6.4%)
500,000 Cargill Corp., 5.45%, 4/1/98... $ 500,000
2,000,000 Cargill Corp., 5.60%, 4/7/98... 1,998,135
1,000,000 Central Illinois Light Co.,
5.70%, 4/6/98................. 999,208
2,500,000 Cooperative Association of
Tractor Dealers, 5.67%,
4/3/98........................ 2,499,213
1,000,000 Ford Motor Credit Corp., 5.52%,
4/2/98........................ 1,000,000
2,000,000 GMAC, 5.59%, 4/6/98............ 1,998,447
500,000 General Electric Capital Co.,
5.52%, 5/1/98................. 497,700
1,000,000 IBM Credit Corp., 5.53%,
4/1/98........................ 1,000,000
2,000,000 Merrill Lynch & Co., Inc.,
5.77%, 4/2/98................. 1,999,679
1,000,000 Oyster Creek Fuel Corp., 5.70%,
4/3/98........................ 999,683
500,000 United Airlines First Funding
Corp., 5.57%, 4/1/98.......... 500,000
-----------
TOTAL COMMERCIAL PAPER (COST $13,992,065)... $13,992,065
-----------
U.S. TREASURY BILLS (3.0%)
1,000,000 5.00% yield, 4/2/98............ 999,861
2,500,000 5.30% yield, 4/16/98........... 2,494,472
3,000,000 5.25% yield, 4/23/98........... 2,990,330
-----------
TOTAL U.S. TREASURY BILLS (COST
$6,484,663)................................ $ 6,484,663
-----------
SHORT-TERM HOLDINGS (COST $20,476,728)...... $20,476,728
-----------
TOTAL INVESTMENTS (100.0%) (COST
$178,638,528).............................. $218,050,002
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
3
<PAGE>
- --------------------------------------------------------------------------------
CRM VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
COMMON STOCK (77.9%)
AUTOMOTIVE PARTS AND EQUIPMENT (2.8%)
4,000 Snap-On, Inc..................... $ 182,500
-----------
BANKING AND FINANCIAL (9.1%)
2,500 Aetna, Inc....................... 208,594
2,500 Allmerica Financial Corp......... 159,689
800 Jefferson-Pilot Corp............. 71,150
2,500 Torchmark Corp................... 114,532
700 Union Planters Corp.............. 43,531
-----------
597,496
-----------
BUSINESS SERVICES (3.2%)
8,000 Danka Business Systems plc ADR... 147,000
20,000 StarBase Corp.*.................. 64,376
-----------
211,376
-----------
CHEMICALS AND ALLIED PRODUCTS (1.3%)
4,700 W.R. Grace & Co.*................ 88,713
-----------
COMMUNICATIONS (6.6%)
4,000 Alcatel Alsthom ADR.............. 152,000
6,000 Cincinnati Bell, Inc............. 213,750
2,000 COMSAT Corp...................... 68,875
-----------
434,625
-----------
COMPUTER EQUIPMENT AND SOFTWARE (1.6%)
4,000 Compaq Computer Corp............. 103,500
-----------
CONSUMER PRODUCTS (1.9%)
2,000 United Stationers, Inc.*......... 123,625
-----------
CONTAINERS AND PACKAGING (2.0%)
3,000 Owens-Illinois, Inc.*............ 129,742
-----------
ELECTRONIC EQUIPMENT AND COMPONENTS (5.2%)
6,000 General Instrument Corp.*........ 125,626
5,200 Raychem Corp..................... 216,125
-----------
341,751
-----------
ENERGY EXPLORATION AND DISTRIBUTION (6.7%)
800 Coastal Corp..................... 52,100
6,000 Equitable Resources, Inc......... 199,500
7,800 Ocean Energy, Inc.*.............. 183,787
-----------
435,387
-----------
FINANCIAL SERVICES (2.1%)
1,000 Chase Manhattan Corp............. 134,875
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
HEALTH CARE (7.6%)
2,000 PacifiCare Health Systems, Inc. -
Class B*........................ $ 150,500
2,500 Perkin-Elmer Corp................ 180,781
5,000 Quorum Health Group, Inc.*....... 168,126
-----------
499,407
-----------
HOTELS (1.1%)
3,000 Mirage Resorts, Inc.*............ 72,938
-----------
INDUSTRIAL AND COMMERCIAL MACHINERY (2.6%)
3,500 Ingersoll-Rand Co................ 167,782
-----------
INDUSTRIAL TECHNOLOGIES (2.4%)
5,000 UCAR International, Inc.*........ 156,876
-----------
METAL INDUSTRIES (2.5%)
3,000 Carpenter Technology Corp........ 162,000
-----------
REAL ESTATE (2.5%)
4,500 Excel Realty Trust, Inc.......... 160,313
-----------
RESTAURANTS (1.4%)
4,700 Luby's Cafeterias, Inc........... 89,300
-----------
RETAIL (4.5%)
1,200 Fred Meyer, Inc.*................ 55,425
5,000 KMart Corp.*..................... 83,438
15,000 Sunglass Hut International,
Inc.*........................... 157,500
-----------
296,363
-----------
TECHNOLOGY (5.2%)
5,000 GTECH Holdings Corp.*............ 194,375
5,000 National Semiconductor Corp.*.... 104,688
2,100 Silicon Valley Group*............ 40,950
-----------
340,013
-----------
TRANSPORTATION EQUIPMENT (3.2%)
2,000 ITT Industries, Inc.............. 76,125
5,000 Terex Corp.*..................... 135,313
-----------
211,438
-----------
UTILITIES (2.4%)
5,000 Long Island Lighting Co.......... 157,500
-----------
TOTAL COMMON STOCK (COST $4,601,172).......... $ 5,097,520
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
4
<PAGE>
- --------------------------------------------------------------------------------
CRM VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT/ SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
SHORT-TERM HOLDINGS (22.1%)
<C> <S> <C>
CASH MANAGEMENT ACCOUNTS (5.1%)
34,252 Boston 1784 Institutional U.S.
Treasury Money Market Fund...... $ 34,252
299,970 Forum Daily Assets Treasury
Fund............................ 299,970
-----------
TOTAL CASH MANAGEMENT ACCOUNTS (COST
$334,222).................................... $ 334,222
-----------
COMMERCIAL PAPER (10.1%)
110,000 Alabama Power Co., 5.66%,
4/6/98.......................... 109,914
100,000 Florida Power & Light Co., 5.65%,
4/3/98.......................... 99,969
200,000 Merrill Lynch & Co., Inc., 5.44%,
4/1/98.......................... 200,000
150,000 Southland Corp., 5.71%, 4/9/98... 149,810
100,000 Walt Disney Co., 5.50%, 4/2/98... 99,983
-----------
TOTAL COMMERCIAL PAPER (COST $659,676)........ $ 659,676
-----------
<CAPTION>
FACE
AMOUNT/ SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BILLS (6.9%)
100,000 5.00% yield, 4/2/98.............. $ 99,986
100,000 5.31% yield, 4/16/98............. 99,779
250,000 5.35% yield, 4/23/98............. 249,182
-----------
TOTAL U.S. TREASURY BILLS (COST $448,947)..... $ 448,947
-----------
TOTAL SHORT-TERM HOLDINGS (COST $1,442,845)... $ 1,442,845
-----------
TOTAL INVESTMENTS (100.0%) (COST
$6,044,017).................................. $ 6,540,365
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
5
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP
VALUE FUND VALUE FUND
------------ ----------
<S> <C> <C>
ASSETS:
Investments (Note 2)
Investments at cost........ $178,638,528 $6,044,017
Net unrealized
appreciation.............. 39,411,474 496,348
------------ ----------
Total investments at value..... 218,050,002 6,540,365
Receivable for securities
sold.......................... 596,120 --
Receivable for Fund shares
sold.......................... 546,837 13,000
Interest, dividends and other
receivables................... 62,411 6,669
Organization costs, net........ 43,455 28,581
------------ ----------
Total assets....................... 219,298,825 6,588,615
------------ ----------
LIABILITIES:
Dividends payable.............. 235 --
Payable for securities
purchased..................... 1,991,335 --
Payable for Fund shares
redeemed...................... 1,231,334 --
Payable to Advisor............. 167,286 --
Payable to Administrator....... 16,107 5,914
Payable to Custodian........... 250,331 --
Accrued fees and other
expenses...................... 155,473 34,796
------------ ----------
Total liabilities.................. 3,812,101 40,710
------------ ----------
NET ASSETS......................... $215,486,724 $6,547,905
------------ ----------
------------ ----------
COMPONENTS OF NET ASSETS:
Paid in capital................ $168,704,113 $6,021,405
Undistributed net investment
income (loss)................. (528,762) 4,685
Net unrealized appreciation.... 39,411,474 496,348
Accumulated undistributed net
realized gain................. 7,899,899 25,467
------------ ----------
NET ASSETS......................... $215,486,724 $6,547,905
------------ ----------
------------ ----------
NET ASSETS BY SHARE CLASS
Investor Shares................ $190,407,971 $6,547,905
Institutional Shares........... 25,078,753 --
------------ ----------
NET ASSETS......................... $215,486,724 $6,547,905
------------ ----------
------------ ----------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING
Investor Shares................ 10,209,533 570,259
Institutional Shares........... 1,335,203 --
------------ ----------
------------ ----------
NET ASSET VALUE (OFFERING AND
REDEMPTION PRICE) PER SHARE
Investor Shares................ $ 18.65 $ 11.48
Institutional Shares........... $ 18.78 $ --
------------ ----------
------------ ----------
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
6
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND
VALUE FUND (A)
----------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income................ $ 329,323 $ 5,901
Interest income................ 359,358 10,913
----------- ----------
Total investment income............ 688,681 16,814
----------- ----------
EXPENSES:
Investment advisory fees....... 631,370 6,080
Shareholder services........... 202,813 2,027
Administration fees............ 99,121 5,914
Transfer agent services........ 76,095 6,861
Professional services.......... 43,832 3,755
Registration fees.............. 37,953 5,655
Accounting services............ 24,000 9,516
Custody fees................... 16,175 3
Trustees fees and expenses..... 10,730 45
Amortization of organization
costs......................... 8,691 1,419
Reporting...................... 8,386 --
Miscellaneous.................. 69,233 208
----------- ----------
Total expenses..................... 1,228,399 41,483
----------- ----------
Expenses reimbursed and fees
waived (Note 4)............... (10,956) (29,354)
----------- ----------
Net expenses................... 1,217,443 12,129
----------- ----------
NET INVESTMENT INCOME (LOSS)....... (528,762) 4,685
----------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on
investments sold.............. 8,170,188 25,467
Net change in unrealized
appreciation.................. 14,301,974 496,348
----------- ----------
Net realized and unrealized gain on
investments....................... 22,472,162 521,815
----------- ----------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... $21,943,400 $526,500
----------- ----------
----------- ----------
(a) See Note 1 of Notes to Financial Statements for
commencement of operations.
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
7
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND
SMALL CAP VALUE FUND --------------
----------------------------------- PERIOD ENDED
PERIOD ENDED YEAR MARCH 31, 1998
MARCH 31, 1998 ENDED (UNAUDITED)
(UNAUDITED) SEPTEMBER 30, 1997 (A)
-------------- ------------------ --------------
<S> <C> <C> <C>
NET ASSETS--BEGINNING OF PERIOD.... $ 144,000,755 $ 45,384,710 $ 100
-------------- ------------------ --------------
OPERATIONS:
Net investment income (loss)... (528,762) (476,883) 4,685
Net realized gain on
investments sold.............. 8,170,188 9,079,299 25,467
Net change in unrealized
appreciation.................. 14,301,974 20,662,630 496,348
-------------- ------------------ --------------
Net increase in net assets
resulting from
operations................ 21,943,400 29,265,046 526,500
-------------- ------------------ --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on
investments--Investor
Shares........................ (7,938,033) (3,073,364) --
-------------- ------------------ --------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor
Shares........................ 57,312,115 78,761,282 6,130,005
Sale of shares--Institutional
Shares........................ 25,626,391 -- --
Reinvestment of
distributions--Investor
Shares........................ 7,442,799 3,008,999 --
Redemption of shares--Investor
Shares........................ (29,880,364) (9,345,918) (108,700)
Redemption of
shares--Institutional
Shares........................ (3,020,339) -- --
-------------- ------------------ --------------
Net increase from capital
transactions.............. 57,480,602 72,424,363 6,021,305
-------------- ------------------ --------------
Net increase............... 71,485,969 98,616,045 6,547,805
-------------- ------------------ --------------
NET ASSETS--END OF PERIOD
(Including line A)................ $ 215,486,724 $144,000,755 $6,547,905
-------------- ------------------ --------------
-------------- ------------------ --------------
(A) Accumulated undistributed net
investment income (loss).......... $ (528,762) $ -- $ 4,685
-------------- ------------------ --------------
-------------- ------------------ --------------
<CAPTION>
SHARES SHARES SHARES
-------------- ------------------ --------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor
Shares........................ 3,367,744 5,232,267 580,249
Sale of shares--Institutional
Shares........................ 1,504,695 -- --
Reinvestment of
distributions--Investor
Shares........................ 473,140 221,739 --
Redemption of shares--Investor
Shares........................ (1,774,332) (620,752) (10,000)
Redemption of
shares--Institutional
Shares........................ (169,492) -- --
-------------- ------------------ --------------
Net increase in shares......... 3,401,755 4,833,254 570,249
-------------- ------------------ --------------
-------------- ------------------ --------------
(a) See Note 1 of Notes to Financial Statements for commencement of
operations.
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
8
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR A SHARE OF
BENEFICIAL INTEREST OUTSTANDING, TOTAL INVESTMENT RETURN, RATIOS TO AVERAGE NET
ASSETS AND OTHER SUPPLEMENTAL DATA FOR EACH PERIOD INDICATED.
<TABLE>
<CAPTION>
Small Cap Value Fund
---------------------------------------------------------------
Institutional
Investor Shares Shares
------------------------------------------------ -------------
Six Months Ended Year Ended Year Ended Period Ended
March 31, September 30, September 30, March 31,
1998 (a) 1997 1996 1998 (a)
----------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 17.68 $ 13.71 $ 10.00 $ 15.99
-------- ------------- ------- -------------
Investment Operations
Net investment loss............................. (0.05) (0.06) (0.02) (0.01)
Net realized and unrealized gain on
investments.................................... 1.88 4.89 3.73 2.80
-------- ------------- ------- -------------
Total from Investment Operations.................... 1.83 4.83 3.71 2.79
-------- ------------- ------- -------------
Distributions from
Net investment income........................... -- -- --(b) --
Net realized gain on investments................ (0.86) (0.86) -- --
-------- ------------- ------- -------------
Total distributions................................. (0.86) (0.86) -- --
-------- ------------- ------- -------------
Net asset value, end of period...................... $ 18.65 $ 17.68 $ 13.71 $ 18.78
-------- ------------- ------- -------------
-------- ------------- ------- -------------
Total Return........................................ 11.26 %(c) 37.14 % 37.15 % 16.07%(c)
Ratio/Supplementary Data:
Ratios to average net assets:
Expenses, including reimbursement/waiver........ 1.46 %(d) 1.50 % 1.49 % 1.05%(d)
Expenses, excluding reimbursement/waiver........ 1.46 %(d) 1.50 % 1.98 % 1.40%(d)
Net investment loss, including
reimbursement/waiver........................... (0.64)%(d) (0.56)% (0.40)% (0.31)%(d)
Average commission rate (e)......................... $ 0.0531 $ 0.0560 $ 0.0467 $ 0.0531
Portfolio turnover rate............................. 29.16 % 98.91 % 111.18 % 29.16%
Net assets at end of period (000's omitted)......... $ 190,408 $ 144,001 $ 45,385 $ 25,079
</TABLE>
(a) Unaudited.
(b) Less than $0.01 per share.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share, paid to
brokers, on the purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
9
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR A SHARE OF
BENEFICIAL INTEREST OUTSTANDING, TOTAL INVESTMENT RETURN, RATIOS TO AVERAGE NET
ASSETS AND OTHER SUPPLEMENTAL DATA FOR EACH PERIOD INDICATED.
<TABLE>
<CAPTION>
Value Fund
---------------
Investor Shares
---------------
Period Ended
March 31,
1998 (a)
---------------
<S> <C>
Net asset value, beginning of period (b)...................................... $ 10.00
-------
Investment Operations
Net investment income..................................................... 0.01
Net realized and unrealized gain on investments........................... 1.47
-------
Total from Investment Operations.............................................. 1.48
-------
Net asset value, end of period................................................ $ 11.48
-------
-------
Total Return.................................................................. 14.80%(c)
Ratio/Supplementary Data:
Ratios to average net assets:
Expenses, including reimbursement/waiver.................................. 1.50%(d)
Expenses, excluding reimbursement/waiver.................................. 5.12%(d)
Net investment income, including reimbursement/waiver..................... 0.58%(d)
Average commission rate (e)................................................... $ 0.0551
Portfolio turnover rate....................................................... 19.39%
Net assets at end of period (000's omitted)................................... $ 6,548
</TABLE>
(a) Unaudited.
(b) See Note 1 of Notes to Financial Statements for commencement of
operations.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share, paid to
brokers, on the purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
10
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. ORGANIZATION
The CRM Funds (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust currently has three active
diversified investment portfolios. These financial statements relate to two of
those portfolios (each a "Fund" and collectively the "Funds"). The Trust
Instrument of the Trust authorizes each Fund to issue an unlimited number of
shares of beneficial interest of $0.001 par value. The classes of each Fund and
their date of commencement of operations are as follows:
<TABLE>
<S> <C>
Small Cap Value Fund (Investor Shares).................... October 1, 1995
Small Cap Value Fund (Institutional Shares)............... January 2, 1998
Value Fund (Investor Shares).............................. January 2, 1998
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make certain 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 Funds:
SECURITY VALUATION--Securities, other than short-term securities, held by
the Funds 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.
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.
INTEREST AND DIVIDEND INCOME--Interest income is accrued as earned.
Dividends on securities held by the Funds 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.
- --------------------------------------------------------------------------------
THE CRM FUNDS
11
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ORGANIZATION COSTS--The costs incurred by the Funds 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 Funds' operations.
FEDERAL TAXES--Each Fund intends to qualify and continue to qualify each
year as a regulated investment company under Subchapter M of the Internal
Revenue Code. In addition, by distributing in each calendar year
substantially all of its net investment income, capital gains and certain
other amounts, if any, each Fund will not be subject to a federal excise
tax. Since the Funds intend to meet these minimum distribution requirements,
no federal income tax provision is currently required.
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser to the Funds is Cramer Rosenthal McGlynn, LLC (the
"Adviser"). The Adviser receives monthly, from each Fund, an advisory fee at an
annual rate of 0.75% of the average daily net assets of each Fund. A previous
advisory agreement in effect with CRM Advisors, LLC, an affiliate of Cramer,
Rosenthal, McGlynn, Inc., during the period was identical in all material terms
including fees.
On behalf of each Fund, the Trust has entered into an Administration Agreement
with Forum Administrative Services, LLC-SM- ("FAdS"). For its services, FAdS
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of each Fund for the first $50 million in assets, 0.10%
for the next $50 million in assets and 0.05% thereafter, subject to an annual
minimum of $25,000. Prior to January 1, 1998, the Trust had an Administration
Agreement with Forum Financial Services, Inc.-Registered Trademark- ("FFSI")
pursuant to which FFSI received a monthly fee equal to the greater of an annual
rate of 0.15% of the average daily net assets of each Fund or $40,000 per year.
Forum Shareholder Services, LLC-SM- ("FSS"), an affiliate of FAdS, serves as
each Fund's transfer agent and dividend disbursing agent, for which it receives
a fee of $24,000 per year plus certain account and additional class charges.
Prior to January 1, 1998, Forum Financial Corp.-Registered Trademark- ("FFC")
served as the transfer agent and dividend disbursing agent, for which it was
entitled to receive a fee of $12,000 per year plus certain shareholder account
fees.
Pursuant to a separate Distribution Agreement, FFSI acted as distributor of the
Funds' shares and was not paid any fee for its distribution services.
Effective January 1, 1998, Forum Accounting Services, LLC-SM- ("FAcS") serves as
the fund accountant for each Fund. For these services, FAcS receives a fee of
$36,000 per year per Fund, plus certain class charges and certain amounts based
upon the number and types of portfolio transactions within each Fund. Prior to
January 1, 1998, FFC served as the fund accountant of the Trust pursuant to the
same terms and compensation as FAcS.
- --------------------------------------------------------------------------------
THE CRM FUNDS
12
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, the Trust
pays shareholder servicing agents, including the Adviser, up to 0.25% of the
average daily net assets of each Fund attributable to accounts for which the
agent provides shareholder services.
Each Trustee, who was not an "affiliated person" as defined in the Act, received
from the Fund an annual fee of $5,000 plus out of pocket expenses.
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Adviser has voluntarily waived a portion of its fees and assumed certain
expenses of the Funds. For the period ended March 31, 1998, fees waived and
expenses reimbursed were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER
INVESTMENT SERVICES REIMBURSED
ADVISORY FEE FEE EXPENSES TOTAL
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Small Cap Value Fund--Institutional
Shares.................................. $ 10,956 $ -- $ -- $ 10,956
Value Fund--Investor Shares.............. 6,080 2,027 21,247 29,354
</TABLE>
5. SECURITIES TRANSACTIONS
The cost of securities purchased and the proceeds from sales of securities,
other than short-term securities, for the period ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
PURCHASES SALES
------------- -------------
<S> <C> <C>
Small Cap Value Fund.......................................... $ 93,110,262 $ 45,772,352
Value Fund.................................................... 5,063,609 487,989
</TABLE>
For federal income tax purposes, the tax basis of investment securities owned,
the aggregate gross unrealized appreciation, the aggregate gross unrealized
depreciation and net unrealized appreciation as of March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Small Cap Value Fund........... $ 178,638,528 $ 48,116,562 $ 8,705,088 $ 39,411,474
Value Fund..................... 6,044,017 525,864 29,516 496,348
</TABLE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES
John E. Appelt
Fred M. Filoon
Louis Klein, Jr.
Clement C. Moore, II
INVESTMENT ADVISER
Cramer Rosenthal McGlynn, LLC
707 Westchester Avenue
White Plains, New York 10604
ADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
BankBoston, N.A.
P.O. Box 1959
Boston, Massachusetts 02105
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) CRM-2883
HTTP://WWW.CRMFUNDS.COM
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO
SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED CURRENT PROSPECTUSES OF THE CRM
FUNDS.
[RECYCLE LOGO] This report has been printed on recycled
paper.-------------------------------------------
- -------------------------------------------
CRM
FUNDS
SMALL CAP
VALUE FUND
VALUE FUND
Investor Shares
SEMI-ANNUAL REPORT
March 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CRM FUNDS
- ------------------------------------
- ------------------------------------
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Shareholder Services, LLC
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
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT MARCH 31, 1998
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
Having completed the first six months of our third fiscal year of operation, we
are pleased to report that the institutional share class of the CRM Small Cap
Value Fund continues to enjoy strong performance. The Fund has achieved an
average return of 11.26% for the six months ended March 31, 1998. This compares
favorably to the average small company growth fund return of 4.22%, as measured
by Lipper Analytical Services and a return of 6.57% for the Russell 2000 Index.
We take great pride in the Fund's first two and one half years of operations.
Within the short period of thirty months, the Fund has accumulated over $215
million in assets.
To reiterate what we have described in previous reports to shareholders, 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 for investment. 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. As an additional valuation tool, we also develop a
"private market" value for our investments, i.e. what a strategic buyer might
pay for the whole company.
A good example of our invest philosophy and process is GTech, a new position in
the Fund. The significant change at GTech is the resignation under controversial
circumstances of founder and chairman Richard Snowden; he has been replaced by
William O'Connor formerly of General Electric who enjoys a high level of
credibility and is working hard to improve GTech's negative image. In addition,
the company is terminating several unprofitable ventures and concentrating its
efforts on growing international operations. Finally, a problem relating to
their contract with the Texas Lottery should be resolved in the near future.
We are pleased to announce that we launched a new Fund in January, the CRM Mid
Cap Value Fund. This Fund will employ the same value approach that has been in
place since the founding of Cramer Rosenthal McGlynn and will focus on medium
sized companies. In addition, we plan on launching a new CRM Value Fund later
this year. This Fund will also employ our value approach and will invest in
companies without limitation as to size. As a shareholder of the Small Cap Value
Fund, you can expect to receive information about our new Funds in the near
future. If, however, we can provide you with any relevant facts sooner, please
contact us directly at (800) CRM - 2883.
With the thousands of mutual funds to choose from, we thank you for your
decision to invest in our CRM Funds.
Sincerely,
The CRM Funds
[SIG]
Fred M. Filoon
President
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
COMMON STOCK (90.6%)
AEROSPACE (3.9%)
173,300 DONCASTERS plc ADR*............ $ 4,527,413
127,400 Tracor, Inc.*.................. 4,084,765
-----------
8,612,178
-----------
AUTOMOTIVE PARTS AND EQUIPMENT (0.7%)
90,100 Safety Components
International, Inc.*.......... 1,419,075
-----------
AUTOMOTIVE REPAIR, SERVICES AND PARKING (1.1%)
65,500 Budget Group, Inc.*............ 2,456,250
-----------
BANKING AND FINANCIAL (3.4%)
156,000 Penncorp Financial Group,
Inc........................... 4,504,500
84,000 Pilgrim America Capital
Corp.*........................ 2,882,251
-----------
7,386,751
-----------
BUILDING AND CONSTRUCTION (2.2%)
235,600 Morrison Knudsen Corp.*........ 2,635,778
104,300 Walter Industries, Inc.*....... 2,229,413
-----------
4,865,191
-----------
BUILDING MATERIALS (1.2%)
208,500 Dal-Tile International,
Inc.*......................... 2,697,469
-----------
BUSINESS SERVICES (4.8%)
137,000 BTG, Inc.*..................... 1,258,690
350,700 LGS Group, Inc................. 4,685,420
153,300 Laidlaw Environmental Services,
Inc.*......................... 574,875
117,000 World Color Press, Inc.*....... 4,065,750
-----------
10,584,735
-----------
COMMUNICATIONS (4.8%)
157,500 COMSAT Corp.................... 5,423,908
100,000 Young Broadcasting Corp.*...... 5,000,000
-----------
10,423,908
-----------
COMPUTER EQUIPMENT AND SOFTWARE (2.3%)
206,000 Data General Corp.*............ 3,643,627
140,000 Emulex Corp.*.................. 1,277,501
-----------
4,921,128
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
CONSUMER PRODUCTS (6.3%)
133,800 Gibson Greetings, Inc.*........ $ 3,696,229
129,300 Nutramax Products, Inc.*....... 1,624,332
137,238 United Stationers, Inc.*....... 8,483,026
-----------
13,803,587
-----------
DIVERSIFIED INDUSTRIES (2.6%)
62,700 AEP Industries, Inc.*.......... 2,147,475
70,000 Elsag Bailey Process Automation
N.V.*......................... 1,338,753
67,300 United Dominion Industries
Ltd........................... 2,183,044
-----------
5,669,272
-----------
ELECTRONIC EQUIPMENT AND COMPONENTS (5.0%)
198,000 BMC Industries, Inc............ 3,848,625
158,000 CommScope, Inc.*............... 2,281,125
135,000 General Semiconductor, Inc.*... 1,611,563
245,800 Glenayre Technologies, Inc.*... 3,072,500
-----------
10,813,813
-----------
ENERGY EXPLORATION AND DISTRIBUTION (10.6%)
559,500 EEX Corp.*..................... 5,490,095
104,900 Equitable Resources, Inc....... 3,487,925
101,000 Getty Realty Corp.............. 2,316,690
96,100 Nuevo Energy Co.*.............. 3,441,581
245,700 Ocean Energy, Inc.*............ 5,789,308
85,600 Penn Virginia Corp............. 2,493,100
-----------
23,018,699
-----------
FINANCIAL SERVICES (4.0%)
32,000 Astoria Financial Corp......... 1,978,001
100,000 Haven Bancorp, Inc............. 2,425,000
225,000 Richmond County Financial
Corp.*........................ 4,317,188
-----------
8,720,189
-----------
HEALTH CARE (5.1%)
100,000 Acuson Corp.*.................. 1,812,500
111,000 Bindley Western Industries,
Inc........................... 4,211,062
110,000 Integrated Health Services,
Inc........................... 4,324,376
156,500 Medical Resources, Inc.*....... 826,525
-----------
11,174,463
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
2
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
INDUSTRIAL TECHNOLOGIES (2.0%)
<C> <S> <C>
214,500 UNOVA, Inc.*................... $ 4,290,000
-----------
METAL INDUSTRIES (8.4%)
74,700 Carpenter Technology Corp...... 4,033,800
83,000 General Cable Corp............. 3,766,125
36,000 Kaydon Corp.................... 1,471,500
208,800 Oregon Steel Mills, Inc........ 4,593,548
75,000 Schnitzer Steel Industries,
Inc........................... 1,832,816
164,100 WHX Corp.*..................... 2,676,882
-----------
18,374,671
-----------
REAL ESTATE (1.7%)
144,100 Insignia Financial Group,
Inc.-- Class A*............... 3,602,500
-----------
RESTAURANTS (0.3%)
30,000 Luby's Cafeterias, Inc......... 570,000
-----------
RETAIL (6.6%)
105,000 Fred Meyer, Inc.*.............. 4,849,691
145,500 ShopKo Stores, Inc.*........... 4,610,531
473,800 Sunglass Hut International,
Inc.*......................... 4,974,900
-----------
14,435,122
-----------
TECHNOLOGY (7.6%)
140,700 ChoicePoint, Inc.*............. 7,659,361
157,900 GTECH Holdings Corp.*.......... 6,138,363
145,000 Silicon Valley Group, Inc.*.... 2,827,500
-----------
16,625,224
-----------
TRANSPORTATION EQUIPMENT (6.0%)
45,000 Federal-Mogul Corp............. 2,393,440
181,600 GenCorp, Inc................... 5,584,200
222,500 Mascotech, Inc................. 5,131,409
-----------
13,109,049
-----------
TOTAL COMMON STOCK (COST $158,161,800)...... $197,573,274
-----------
<CAPTION>
FACE
AMOUNT/ SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
SHORT-TERM HOLDINGS (9.4%)
COMMERCIAL PAPER (6.4%)
500,000 Cargill Corp., 5.45%, 4/1/98... $ 500,000
2,000,000 Cargill Corp., 5.60%, 4/7/98... 1,998,135
1,000,000 Central Illinois Light Co.,
5.70%, 4/6/98................. 999,208
2,500,000 Cooperative Association of
Tractor Dealers, 5.67%,
4/3/98........................ 2,499,213
1,000,000 Ford Motor Credit Corp., 5.52%,
4/2/98........................ 1,000,000
2,000,000 GMAC, 5.59%, 4/6/98............ 1,998,447
500,000 General Electric Capital Co.,
5.52%, 5/1/98................. 497,700
1,000,000 IBM Credit Corp., 5.53%,
4/1/98........................ 1,000,000
2,000,000 Merrill Lynch & Co., Inc.,
5.77%, 4/2/98................. 1,999,679
1,000,000 Oyster Creek Fuel Corp., 5.70%,
4/3/98........................ 999,683
500,000 United Airlines First Funding
Corp., 5.57%, 4/1/98.......... 500,000
-----------
TOTAL COMMERCIAL PAPER (COST $13,992,065)... $13,992,065
-----------
U.S. TREASURY BILLS (3.0%)
1,000,000 5.00% yield, 4/2/98............ 999,861
2,500,000 5.30% yield, 4/16/98........... 2,494,472
3,000,000 5.25% yield, 4/23/98........... 2,990,330
-----------
TOTAL U.S. TREASURY BILLS (COST
$6,484,663)................................ $ 6,484,663
-----------
SHORT-TERM HOLDINGS (COST $20,476,728)...... $20,476,728
-----------
TOTAL INVESTMENTS (100.0%) (COST
$178,638,528).............................. $218,050,002
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
3
<PAGE>
- --------------------------------------------------------------------------------
CRM MID CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
COMMON STOCK (85.3%)
AUTOMOTIVE PARTS AND EQUIPMENT (5.0%)
7,500 Safety Components
International, Inc.*.......... $ 116,250
3,400 Snap-On, Inc................... 155,126
-----------
271,376
-----------
BANKING AND FINANCIAL (6.4%)
2,200 Allmerica Financial Corp....... 140,527
3,200 Charter Municipal Mortgage
Acceptance Co................. 43,200
600 Jefferson-Pilot Corp........... 53,363
1,200 Torchmark Corp................. 54,975
800 Union Planters Corp............ 49,750
-----------
341,815
-----------
BUSINESS SERVICES (2.6%)
6,000 Danka Business Systems plc
ADR........................... 110,251
7,900 Laidlaw Environmental Services,
Inc.*......................... 29,625
-----------
139,876
-----------
CHEMICALS AND ALLIED PRODUCTS (1.5%)
4,400 W.R. Grace & Co.*.............. 83,050
-----------
COMMUNICATIONS (6.8%)
4,700 Cincinnati Bell, Inc........... 167,438
1,300 COMSAT Corp.................... 44,769
4,600 United States Cellular
Corp.*........................ 156,113
-----------
368,320
-----------
CONTAINERS AND PACKAGING (4.0%)
4,300 ACX Technologies, Inc.*........ 102,931
2,600 Owens-Illinois, Inc.*.......... 112,450
-----------
215,381
-----------
DIVERSIFIED INDUSTRIES (2.5%)
4,200 United Dominion Industries
Ltd........................... 136,238
-----------
ELECTRONIC EQUIPMENT AND COMPONENTS (5.7%)
4,900 Raychem Corp................... 203,657
1,600 Thomas & Betts Corp............ 102,400
-----------
306,057
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
ENERGY EXPLORATION AND DISTRIBUTION (6.8%)
16,700 EEX Corp.*..................... $ 163,869
3,700 Equitable Resources, Inc....... 123,025
3,510 Ocean Energy, Inc.*............ 82,704
-----------
369,598
-----------
HEALTH CARE (9.0%)
5,200 Acuson Corp.*.................. 94,250
2,400 Bausch & Lomb, Inc............. 109,650
600 PacifiCare Health Systems, Inc.
- Class B*.................... 45,150
2,000 Perkin-Elmer Corp.............. 144,625
2,700 Quorum Health Group, Inc.*..... 90,789
-----------
484,464
-----------
INDUSTRIAL AND COMMERCIAL MACHINERY (3.7%)
5,500 Hussmann International, Inc.... 103,125
2,000 Ingersoll-Rand Co.............. 95,875
-----------
199,000
-----------
INDUSTRIAL TECHNOLOGIES (3.2%)
4,000 UCAR International, Inc.*...... 125,501
2,400 UNOVA, Inc.*................... 48,000
-----------
173,501
-----------
METAL INDUSTRIES (1.7%)
1,700 Carpenter Technology Corp...... 91,800
-----------
REAL ESTATE (3.8%)
2,800 Excel Realty Trust, Inc........ 99,751
4,400 TrizecHahn Corp................ 103,676
-----------
203,427
-----------
RESTAURANTS (2.9%)
8,200 Luby's Cafeterias, Inc......... 155,800
-----------
RETAIL (3.3%)
1,600 Fred Meyer, Inc.*.............. 73,900
10,100 Sunglass Hut International,
Inc.*......................... 106,050
-----------
179,950
-----------
TECHNOLOGY (6.8%)
500 ChoicePoint, Inc.*............. 27,206
5,000 GTECH Holdings Corp.*.......... 194,375
5,200 National Semiconductor
Corp.*........................ 108,875
1,900 Silicon Valley Group*.......... 37,050
-----------
367,506
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
4
<PAGE>
- --------------------------------------------------------------------------------
CRM MID CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
TEXTILE MILL PRODUCTS (2.1%)
<C> <S> <C>
3,000 Unifi, Inc..................... $ 111,750
-----------
UTILITIES (7.5%)
1,700 Columbia Energy Group.......... 132,175
4,500 Long Island Lighting Co........ 141,750
3,200 Pacific Enterprises............ 130,601
-----------
404,526
-----------
TOTAL COMMON STOCK (COST $4,281,060)........ $ 4,603,435
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT/ SECURITY
SHARES DESCRIPTION VALUE
- ----------- ------------------------------- -----------
<C> <S> <C>
SHORT-TERM HOLDINGS (14.7%)
CASH MANAGEMENT ACCOUNTS (3.6%)
195,940 Forum Daily Assets Treasury
Fund (Cost $195,940).......... $ 195,940
-----------
U.S. TREASURY BILLS (11.1%)
200,000 5.31% yield, 4/16/98........... 199,558
400,000 5.27% yield, 4/23/98........... 398,702
-----------
TOTAL U.S. TREASURY BILLS (COST $598,260)... $ 598,260
-----------
TOTAL SHORT-TERM HOLDINGS (COST $794,200)... $ 794,200
-----------
TOTAL INVESTMENTS (100.0%) (COST
$5,075,260)................................ $ 5,397,635
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
5
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP MID CAP
VALUE FUND VALUE FUND
----------- -----------
<S> <C> <C>
ASSETS:
Investments (Note 2)..........................
Investments at cost......................... $178,638,528 $5,075,260
Net unrealized appreciation................. 39,411,474 322,375
----------- -----------
Total investments at value.................... 218,050,002 5,397,635
Receivable for securities sold................ 596,120 --
Receivable for Fund shares sold............... 546,837 3,423
Interest, dividends and other receivables..... 62,411 6,403
Organization costs, net....................... 43,455 28,581
----------- -----------
Total assets...................................... 219,298,825 5,436,042
----------- -----------
----------- -----------
LIABILITIES:
Dividends payable............................. 235 --
Payable for securities purchased.............. 1,991,335 120,927
Payable for Fund shares redeemed.............. 1,231,334 --
Payable to Advisor............................ 167,286 --
Payable to Administrator...................... 16,107 5,914
Payable to Custodian.......................... 250,331 --
Accrued fees and other expenses............... 155,473 30,000
----------- -----------
Total liabilities................................. 3,812,101 156,841
----------- -----------
NET ASSETS........................................ $215,486,724 $5,279,201
----------- -----------
----------- -----------
COMPONENTS OF NET ASSETS:
Paid in capital............................... $168,704,113 $4,927,362
Undistributed net investment income (loss).... (528,762) 5,657
Net unrealized appreciation................... 39,411,474 322,375
Accumulated undistributed net realized gain... 7,899,899 23,807
----------- -----------
NET ASSETS........................................ $215,486,724 $5,279,201
----------- -----------
----------- -----------
NET ASSETS BY SHARE CLASS
Investor Shares............................... $190,407,971 $ --
Institutional Shares.......................... 25,078,753 5,279,201
----------- -----------
NET ASSETS.................................... $215,486,724 $5,279,201
----------- -----------
----------- -----------
SHARES OF BENEFICIAL INTEREST OUTSTANDING
Investor Shares............................... 10,209,533 --
Institutional Shares.......................... 1,335,203 460,241
----------- -----------
----------- -----------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE)
PER SHARE
Investor Shares............................... $ 18.65 $ --
Institutional Shares.......................... $ 18.78 $ 11.47
----------- -----------
----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
6
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MID CAP
SMALL CAP VALUE FUND
VALUE FUND (A)
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income............................... $ 329,323 $ 5,185
Interest income............................... 359,358 6,913
----------- -----------
Total investment income........................... 688,681 12,098
----------- -----------
EXPENSES:
Investment advisory fees...................... 631,370 4,211
Shareholder services.......................... 202,813 --
Administration fees........................... 99,121 5,914
Transfer agent services....................... 76,095 6,162
Professional services......................... 43,832 3,753
Registration fees............................. 37,953 14,788
Accounting services........................... 24,000 9,516
Custody fees.................................. 16,175 13
Trustees fees and expenses.................... 10,730 30
Amortization of organization costs............ 8,691 1,419
Reporting..................................... 8,386 --
Miscellaneous................................. 69,233 127
----------- -----------
Total expenses.................................... 1,228,399 45,933
----------- -----------
Expenses reimbursed and fees waived (Note
4)........................................... (10,956) (39,492 )
----------- -----------
Net expenses...................................... 1,217,443 6,441
----------- -----------
NET INVESTMENT INCOME (LOSS)...................... (528,762) 5,657
----------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold......... 8,170,188 23,807
Net change in unrealized appreciation......... 14,301,974 322,375
----------- -----------
Net realized and unrealized gain on investments... 22,472,162 346,182
----------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $21,943,400 $ 351,839
----------- -----------
----------- -----------
</TABLE>
(a) See Note 1 of Notes to Financial Statements for commencement of operations.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
7
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MID CAP
VALUE FUND
SMALL CAP VALUE FUND -----------
------------------------ PERIOD
PERIOD YEAR ENDED MARCH
ENDED MARCH ENDED 31, 1998
31, 1998 SEPTEMBER (UNAUDITED)
(UNAUDITED) 30, 1997 (A)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSETS--BEGINNING OF PERIOD................... $144,000,755 $45,384,710 $ 100
----------- ----------- -----------
OPERATIONS:
Net investment income (loss).................. (528,762 ) (476,883 ) 5,657
Net realized gain on investments sold......... 8,170,188 9,079,299 23,807
Net change in unrealized appreciation......... 14,301,974 20,662,630 322,375
----------- ----------- -----------
Net increase in net assets resulting from
operations............................... 21,943,400 29,265,046 351,839
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments--Investor
Shares....................................... (7,938,033 ) (3,073,364 ) --
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor Shares............... 57,312,115 78,761,282 --
Sale of shares--Institutional Shares.......... 25,626,391 -- 4,927,262
Reinvestment of distributions--Investor
Shares....................................... 7,442,799 3,008,999 --
Redemption of shares--Investor Shares......... (29,880,364) (9,345,918 ) --
Redemption of shares--Institutional Shares.... (3,020,339 ) -- --
----------- ----------- -----------
Net increase from capital transactions.... 57,480,602 72,424,363 4,927,262
----------- ----------- -----------
Net increase.............................. 71,485,969 98,616,045 5,279,101
----------- ----------- -----------
NET ASSETS--END OF PERIOD (Including line A)...... $215,486,724 $144,000,755 $5,279,201
----------- ----------- -----------
----------- ----------- -----------
(A) Accumulated undistributed net investment
income (loss).................................... $ (528,762 ) $ -- $ 5,657
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
SHARES SHARES SHARES
----------- ----------- -----------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor Shares............... 3,367,744 5,232,267
Sale of shares--Institutional Shares.......... 1,504,695 -- 460,231
Reinvestment of distributions--Investor
Shares....................................... 473,140 221,739 --
Redemption of shares--Investor Shares......... (1,774,332 ) (620,752 ) --
Redemption of shares--Institutional Shares.... (169,492 ) -- --
----------- ----------- -----------
Net increase in shares........................ 3,401,755 4,833,254 460,231
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(a) See Note 1 of Notes to Financial Statements for commencement of operations.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
8
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR A SHARE OF
BENEFICIAL INTEREST OUTSTANDING, TOTAL INVESTMENT RETURN, RATIOS TO AVERAGE NET
ASSETS AND OTHER SUPPLEMENTAL DATA FOR EACH PERIOD INDICATED.
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND
----------------------------------------------------------------
INVESTOR INSTITUTIONAL
SHARES SHARES
------------------------------------------------ --------------
SIX MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
1998 (A) 1997 1996 1998 (A)
----------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 17.68 $ 13.71 $ 10.00 $ 15.99
-------- ------------- ------- -------
Investment Operations
Net investment loss............................. (0.05) (0.06) (0.02) (0.01)
Net realized and unrealized gain on
investments.................................... 1.88 4.89 3.73 2.80
-------- ------------- ------- -------
Total from Investment Operations.................... 1.83 4.83 3.71 2.79
-------- ------------- ------- -------
Distributions from
Net investment income........................... -- -- --(b) --
Net realized gain on investments................ (0.86) (0.86) -- --
-------- ------------- ------- -------
Total distributions................................. (0.86) (0.86) -- --
-------- ------------- ------- -------
Net asset value, end of period...................... $ 18.65 $ 17.68 $ 13.71 $ 18.78
-------- ------------- ------- -------
-------- ------------- ------- -------
Total Return........................................ 11.26 %(c) 37.14% 37.15 % 16.07 %(c)
Ratio/Supplementary Data:
Ratios to average net assets:
Expenses, including reimbursement/waiver........ 1.46 %(d) 1.50% 1.49 % 1.05 %(d)
Expenses, excluding reimbursement/waiver........ 1.46 %(d) 1.50% 1.98 % 1.40 %(d)
Net investment loss, including
reimbursement/waiver........................... (0.64)%(d) (0.56)% (0.40)% (0.31)%(d)
Average commission rate (e)......................... $ 0.0531 $ 0.0560 $ 0.0467 $ 0.0531
Portfolio turnover rate............................. 29.16 % 98.91% 111.18 % 29.16 %
Net assets at end of period (000's omitted)......... $ 190,408 $ 144,001 $ 45,385 $ 25,079
</TABLE>
(a) Unaudited.
(b) Less than $0.01 per share.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share, paid to
brokers, on the purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
9
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR A SHARE OF
BENEFICIAL INTEREST OUTSTANDING, TOTAL INVESTMENT RETURN, RATIOS TO AVERAGE NET
ASSETS AND OTHER SUPPLEMENTAL DATA FOR EACH PERIOD INDICATED.
<TABLE>
<CAPTION>
MID CAP VALUE FUND
--------------------
INSTITUTIONAL SHARES
--------------------
PERIOD ENDED
MARCH 31, 1998 (A)
--------------------
<S> <C>
Net asset value, beginning of period (b)................................. $ 10.00
-------
Investment Operations
Net investment income................................................ 0.01
Net realized and unrealized gain on investments...................... 1.46
-------
Total from Investment Operations......................................... 1.47
-------
Net asset value, end of period........................................... $ 11.47
-------
-------
Total Return............................................................. 14.70%(c)
Ratio/Supplementary Data:
Ratios to average net assets:
Expenses, including reimbursement/waiver............................. 1.15%(d)
Expenses, excluding reimbursement/waiver............................. 8.18%(d)
Net investment income, including reimbursement/waiver................ 1.01%(d)
Average commission rate (e).............................................. $ 0.0570
Portfolio turnover rate.................................................. 16.83%
Net assets at end of period (000's omitted).............................. $ 5,279
</TABLE>
(a) Unaudited.
(b) See Note 1 of Notes to Financial Statements for commencement of
operations.
(c) Not annualized.
(d) Annualized.
(e) Amount represents the average commission per share, paid to
brokers, on the purchase and sale of portfolio securities.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
10
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. ORGANIZATION
The CRM Funds (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust currently has three active
diversified investment portfolios. These financial statements relate to two of
those portfolios (each a "Fund" and collectively the "Funds"). The Trust
Instrument of the Trust authorizes each Fund to issue an unlimited number of
shares of beneficial interest of $0.001 par value. The classes of each Fund and
their date of commencement of operations are as follows:
<TABLE>
<S> <C>
Small Cap Value Fund (Investor Shares) October 1, 1995
Small Cap Value Fund (Institutional Shares) January 2, 1998
Mid Cap Value Fund (Institutional Shares) January 2, 1998
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make certain 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 Funds:
SECURITY VALUATION -- Securities, other than short-term securities, held by
the Funds 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.
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.
INTEREST AND DIVIDEND INCOME -- Interest income is accrued as earned.
Dividends on securities held by the Funds 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.
- --------------------------------------------------------------------------------
THE CRM FUNDS
11
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ORGANIZATION COSTS -- The costs incurred by the Funds 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 Funds' operations.
FEDERAL TAXES -- Each Fund intends to qualify and continue to qualify each
year as a regulated investment company under Subchapter M of the Internal
Revenue Code. In addition, by distributing in each calendar year
substantially all of its net investment income, capital gains and certain
other amounts, if any, each Fund will not be subject to a federal excise
tax. Since the Funds intend to meet these minimum distribution requirements,
no federal income tax provision is currently required.
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser to the Funds is Cramer Rosenthal McGlynn, LLC (the
"Adviser"). The Adviser receives monthly, from each Fund, an advisory fee at an
annual rate of 0.75% of the average daily net assets of each Fund. A previous
advisory agreement in effect with CRM Advisors, LLC, an affiliate of Cramer,
Rosenthal, McGlynn, Inc., during the period was identical in all material terms
including fees.
On behalf of each Fund, the Trust has entered into an Administration Agreement
with Forum Administrative Services, LLC-SM- ("FAdS"). For its services, FAdS
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of each Fund for the first $50 million in assets, 0.10%
for the next $50 million in assets and 0.05% thereafter, subject to an annual
minimum of $25,000. Prior to January 1, 1998, the Trust had an Administration
Agreement with Forum Financial Services, Inc.-Registered Trademark- ("FFSI")
pursuant to which FFSI received a monthly fee equal to the greater of an annual
rate of 0.15% of the average daily net assets of each Fund or $40,000 per year.
Forum Shareholder Services, LLC-SM- ("FSS"), an affiliate of FAdS, serves as
each Fund's transfer agent and dividend disbursing agent, for which it receives
a fee of $24,000 per year plus certain account and additional class charges.
Prior to January 1, 1998, Forum Financial Corp.-Registered Trademark- ("FFC")
served as the transfer agent and dividend disbursing agent, for which it was
entitled to receive a fee of $12,000 per year plus certain shareholder account
fees.
Pursuant to a separate Distribution Agreement, FFSI acted as distributor of the
Funds' shares and was not paid any fee for its distribution services.
Effective January 1, 1998, Forum Accounting Services, LLC-SM- ("FAcS") serves as
the fund accountant for each Fund. For these services, FAcS receives a fee of
$36,000 per year per Fund, plus certain class charges and certain amounts based
upon the number and types of portfolio transactions within each Fund. Prior to
January 1, 1998, FFC served as the fund accountant of the Trust pursuant to the
same terms and compensation as FAcS.
- --------------------------------------------------------------------------------
THE CRM FUNDS
12
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, the Trust
pays shareholder servicing agents, including the Adviser, up to 0.25% of the
average daily net assets of each Fund attributable to accounts for which the
agent provides shareholder services.
Each Trustee, who was not an "affiliated person" as defined in the Act, received
from the Fund an annual fee of $5,000 plus out of pocket expenses.
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Adviser has voluntarily waived a portion of its fees and assumed certain
expenses of the Funds. For the period ended March 31, 1998, fees waived and
expenses reimbursed were as follows:
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY REIMBURSED
FEE EXPENSES TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
Small Cap Value Fund--Institutional Shares.................. $ 10,956 $ -- $ 10,956
Mid Cap Value Fund--Institutional Shares.................... 4,211 35,281 39,492
</TABLE>
5. SECURITIES TRANSACTIONS
The cost of securities purchased and the proceeds from sales of securities,
other than short-term securities, for the period ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
PURCHASES SALES
------------- -------------
<S> <C> <C>
Small Cap Value Fund.............................................. $ 93,110,262 $ 45,772,352
Mid Cap Value Fund................................................ 4,610,850 353,617
</TABLE>
For federal income tax purposes, the tax basis of investment securities owned,
the aggregate gross unrealized appreciation, the aggregate gross unrealized
depreciation and net unrealized appreciation as of March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Small Cap Value Fund............... $ 178,638,528 $ 48,116,562 $ 8,705,088 $ 39,411,474
Mid Cap Value Fund................. 5,075,260 347,594 25,219 322,375
</TABLE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES
John E. Appelt
Fred M. Filoon
Louis Klein, Jr.
Clement C. Moore, II
INVESTMENT ADVISER
Cramer Rosenthal McGlynn, LLC
707 Westchester Avenue
White Plains, New York 10604
ADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101
CUSTODIAN
BankBoston, N.A.
P.O. Box 1959
Boston, Massachusetts 02105
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) CRM-2883
HTTP://WWW.CRMFUNDS.COM
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO
SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED CURRENT PROSPECTUSES OF THE CRM
FUNDS.
[RECYCLE LOGO] This report has been printed on recycled paper.
- -------------------------------------------
- -------------------------------------------
CRM
FUNDS
SMALL CAP
VALUE FUND
MID CAP
VALUE FUND
Institutional Shares
SEMI-ANNUAL REPORT
March 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
