<PAGE>
CRM FUNDS
- ------------------------------------
- ------------------------------------
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Fund Services, LLC Forum Shareholder Services, LLC
Two Portland Square P.O. Box 446
Portland, ME 04101 Portland, ME 04112
(800) CRM-2883 (800) 844-8258
(800) 276-2883 (207) 879-8910
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT MARCH 31, 1999
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
Other than the conflict in Kosovo, the big news during the last six months was
the Dow Jones closing above the 10,000 mark. The lesser-known fact is that few
active managers were able to tangibly taste the benefits of this latter historic
event. In fact, the average diversified U.S. stock mutual fund (including large,
medium and small stocks, both value and growth) underperformed the Dow's gain of
25.85% and the S&P 500 Index gain of 27.32%. The dramatic narrowness of the
market that characterized 1998 has continued to swell to unprecedented levels
rather than abating. Only three of the thirty stocks within the Dow contributed
more than half of the gains in the index so far this year. The Value Line Index,
on the other hand, which measures the average performance of 1,700 major stocks,
actually declined by -6.4% over the same period. Within the S&P 500 Index,
approximately twenty stocks contributed all of the performance during the first
three months of the year, with the remaining 480 stocks rendering each other
null and void. Only two stocks, Microsoft and America Online, contributed an
alarming one third of the S&P 500 Index performance.
Furthermore, the disparity that widened last year between large stocks and small
stocks, growth stocks and value stocks has continued to expand in 1999. Large
growth stocks have gained a staggering 16.66% over the last twelve months, while
small value stocks have declined -22.03%. If history is to teach us anything,
however, it is that the market and its underlying segments are indeed a current
with a conforming ebb and flow. And while we cannot predict at what point in
time or exactly what event will transpire to effect a reversal of fortune,
surely this party, like all others, shall come to an end. As such, we remain
dedicated to our philosophy and mindful of long-term market cycles. That being
said, the current environment, while difficult in terms of short-term
performance of value investors, is one in which an abundance of opportunity
exists. The lack of attention given to value stocks, and in particular smaller
issues, creates an inefficient marketplace in which we continue to find quality
businesses selling at considerable discounts to both broad market multiples and
industry specific comparables.
<TABLE>
<CAPTION>
TRAILING TRAILING TRAILING
SMALL VS. LARGE AND GROWTH VS. VALUE SIX MONTHS ONE YEAR THREE YEARS
<S> <C> <C> <C>
Large Stocks (Russell 1000 Index) 26.90% 16.66% 26.81%
Small Stocks (Russell 2000 Index) 10.00% (16.26%) 7.72%
Small Value Stocks (R2000 Value) (1.50%) (22.03%) 8.98%
Small Growth Stocks (R2000 Growth) 21.56% (11.04%) 5.76%
</TABLE>
For the six months ended March 31, 1999, Institutional shares of the Small Cap
Value Fund and the Mid Cap Value Fund provided total returns of -6.53% and
2.96%, respectively. These returns compare to a -1.50% and a 2.27% return for
the Russell 2000 Value and Russell 2500 Indices, respectively.
INSTITUTIONAL SHARE OPERATIONS FOR THE SMALL CAP VALUE, AND MID CAP VALUE FUNDS
COMMENCED 1/27/98 AND 1/06/98, RESPECTIVELY.
- --------------------------------------------------------------------------------
THE CRM FUNDS
<PAGE>
In the CRM Mid Cap Value Fund, stocks that performed very well for us included
Montana Power, Golden State Bancorp, Fortune Brands and Commscope. We purchased
Santa Fe International as a "call option" on the price of oil after oil service
stocks had sunk to more than 70% below their highs. Santa Fe had very good
contract protection one to two years out and a strong balance sheet. We
subsequently sold Santa Fe after the price of oil began to recover and after the
stock price appreciated more than 40%.
The best performing issues in the CRM Small Cap Value Fund over the last six
months include CommScope, DII Group and Americredit. Our largest recent
additions to the portfolio include Americredit, Systems & Computer Technology,
Terex Corporation, Central Garden & Pet and Tektronix. Several issues that we
recently moved out of the portfolio include Bindley Western, which had tripled
in price over an eighteen-month period and reached our target price, and GTECH
Holdings, due to poor operating performance and concerns over management
direction.
Despite milestone records for many of the narrowly driven indices such as the
S&P 500 and Dow Jones, the U.S. economy continues to look favorable relative to
many other investment opportunities. The shrinking trade deficit and
overwhelming consumer spending fueled an annualized growth in gross domestic
product (GDP) of 4.8% in the fourth quarter of 1998. Early reports show a
continued annualized growth in GDP during the first quarter of 3%, fueled in
part by a recovery in U.S. manufacturing. Many pundits contend that despite the
short-term recovery of markets such as Japan and Mexico, the volatility in Asian
and emerging markets is far from over and have new concerns over the
post-convergence boom in Europe following the recently unified currency. In
light of this we hold fast to our conviction regarding companies that rely less
on foreign expansion and customer base than domestic growth and are more
insulated from such overseas volatility, as evinced by our sale of Glenayre
Technologies.
The daily volatility in stocks has created a stock-pickers market, and we
continue to see opportunities within most of the underlying sectors.
Furthermore, we are increasingly looking for smaller companies who might be
acquired by larger companies whose stock prices have not only driven a wedge
between valuations of large and small stocks, but have given large companies
tremendous currency to effect acquisitions. We hope to benefit from some of this
continued market consolidation. And while much of the world is focused on
momentum stocks at inflated valuations, we maintain our philosophy of buying
understandable, sound businesses at inexpensive relative prices, a strategy that
has proven the test of time over our twenty-five years of experience.
Sincerely,
The CRM Funds Cramer Rosenthal McGlynn, LLC
/s/ Fred M. Filoon /s/ Ronald H. McGlynn /s/ Jay B. Abramson
Fred M. Filoon Ronald H. McGlynn Jay B. Abramson
President President Executive Vice President
The Russell 3000-Registered Trademark- Index measures the performance of the
3,000 largest U.S. companies, based on total market capitalization. The Russell
1000-Registered Trademark- Index measures the performance of the 1,000 largest
companies in the Russell 3000-Registered Trademark- Index. The Russell
2000-Registered Trademark- Index measures the performance of the 2,000 smallest
companies in the Russell 3000-Registered Trademark- Index. Russell MidCap-TM-
Index measures the performance of the 800 smallest companies in the Russell
1000-Registered Trademark- Index. The Russell 2500-TM- Index measures the
performance of the 2,500 smallest companies in the Russell
3000-Registered Trademark- Index. The Russell 2000-Registered Trademark- Value
Index measures the performance of those Russell 2000-Registered Trademark-
companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000-Registered Trademark- Growth Index measures the performance of
those Russell 2000-Registered Trademark- companies with higher price-to-book
ratios and higher forecasted growth values. Lastly, the Russell
1000-Registered Trademark- Value Index measures the performance of those Russell
1000-Registered Trademark- companies with lower price-to-book ratios and lower
forecasted growth values.
These indices do not include the effect of any expenses, which have been
deducted from each Fund's return. All of the indices are unmanaged and
capitalization weighted and are not available for investment. Total return and
principal value of an investment in a Fund will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost. Total
return for a Fund assumes reinvestment of dividends and distributions.
PAST PERFORMANCE CANNOT PREDICT NOR GUARANTEE FUTURE RESULTS.
- --------------------------------------------------------------------------------
THE CRM FUNDS
2
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCK (98.6%)
AEROSPACE (1.2%)
219,500 OEA, Inc.*........................................... $ 1,810,875
-------------
AUTOMOTIVE PARTS AND EQUIPMENT (0.6%)
105,000 Safety Components International, Inc.*............... 905,625
-------------
BANKING AND FINANCIAL (5.7%)
254,000 AmeriCredit Corp.*................................... 3,333,750
150,000 Community First Bankshares, Inc...................... 3,000,000
126,000 Pilgrim America Capital Corp.*....................... 2,394,000
-------------
8,727,750
-------------
BUILDING AND CONSTRUCTION (3.5%)
270,000 Morrison Knudsen Corp.*.............................. 2,683,125
233,600 Walter Industries, Inc.*............................. 2,628,000
-------------
5,311,125
-------------
BUSINESS SERVICES (9.8%)
457,200 Caribiner International, Inc.*....................... 4,171,950
300,700 LGS Group, Inc.*..................................... 2,330,425
413,400 R.H. Donnelley Corp.................................. 6,020,625
114,200 World Color Press, Inc.*............................. 2,426,750
-------------
14,949,750
-------------
COMMUNICATIONS (8.3%)
302,100 Allen Telecom, Inc.*................................. 1,831,481
170,000 COMSAT Corp.......................................... 4,919,375
130,000 Young Broadcasting Corp.*............................ 5,931,250
-------------
12,682,106
-------------
CONSUMER CYCLICALS (2.7%)
415,400 Loews Cineplex Entertainment*........................ 4,128,038
-------------
CONSUMER PRODUCTS (4.6%)
206,600 Central Garden & Pet Co.*............................ 3,486,375
241,000 Gibson Greetings, Inc.*.............................. 1,762,312
115,476 United Stationers, Inc.*............................. 1,761,009
-------------
7,009,696
-------------
ELECTRONIC EQUIPMENT AND COMPONENTS (9.3%)
210,000 CommScope, Inc. *.................................... 4,396,875
194,200 DII Group, Inc.*..................................... 5,680,350
164,300 Tektronix, Inc....................................... 4,148,575
-------------
14,225,800
-------------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
ENERGY EXPLORATION AND DISTRIBUTION (3.5%)
180,000 EEX Corp.*........................................... $ 877,500
77,500 Equitable Resources, Inc............................. 2,019,843
184,400 Nuevo Energy Co.*.................................... 2,489,400
-------------
5,386,743
-------------
FINANCIAL SERVICES (2.5%)
252,000 Richmond County Financial Corp....................... 3,732,750
-------------
HEALTH CARE (2.8%)
192,300 Acuson Corp.*........................................ 2,872,481
46,000 CONMED Corp.*........................................ 1,426,000
-------------
4,298,481
-------------
INDUSTRIAL AND COMMERCIAL MACHINERY (5.6%)
396,000 MagneTek, Inc.*...................................... 3,316,500
74,800 Millipore Corp....................................... 1,804,550
142,800 Terex Corp.*......................................... 3,445,050
-------------
8,566,100
-------------
INDUSTRIAL TECHNOLOGY (4.6%)
308,100 Safety Kleen Corp.*.................................. 4,082,325
227,300 UNOVA, Inc.*......................................... 2,997,519
-------------
7,079,844
-------------
MEDICAL AND HEALTH TECHNOLOGY AND SERVICES (0.8%)
85,200 ADAC Laboratories*................................... 1,160,850
-------------
METAL INDUSTRIES (1.5%)
38,500 Schnitzer Steel Industries, Inc...................... 457,188
229,300 WHX Corp.*........................................... 1,805,737
-------------
2,262,925
-------------
POLLUTION CONTROL (2.2%)
166,200 Superior Services, Inc.*............................. 3,292,837
-------------
REAL ESTATE (1.3%)
139,266 Insignia Financial Group, Inc., "A"*................. 1,958,428
-------------
REAL ESTATE INVESTMENT TRUST (3.1%)
177,000 SL Green Realty Corp................................. 3,329,813
232,000 Ventas, Inc.......................................... 1,392,000
-------------
4,721,813
-------------
RESTAURANTS AND LODGING (3.1%)
468,300 Prime Hospitality Corp.*............................. 4,653,731
-------------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
3
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
RETAIL (3.3%)
<C> <S> <C>
168,000 Shopko Stores, Inc.*................................. $ 5,019,000
-------------
SCHOOLS (0.3%)
15,000 Career Education Corp.*.............................. 519,375
-------------
TECHNOLOGY (12.8%)
152,100 ChoicePoint, Inc.*................................... 7,585,988
70,900 GTECH Holdings Corp.*................................ 1,728,187
289,000 Symantec Corp.*...................................... 4,894,938
523,900 Systems & Computer Technology Corp.*................. 5,329,000
-------------
19,538,113
-------------
TRANSPORTATION EQUIPMENT (1.9%)
190,600 Mascotech, Inc....................................... 2,954,300
-------------
UTILITIES (3.6%)
205,400 Avista Corp.......................................... 3,341,451
127,300 Public Service Co. of New Mexico..................... 2,164,101
-------------
5,505,552
-------------
TOTAL COMMON STOCK (COST, $159,184,278)............................ $ 150,401,607
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
SHORT-TERM HOLDINGS (1.4%)
CASH MANAGEMENT ACCOUNTS (1.1%)
1,706,995 Forum Daily Assets Cash Fund......................... $ 1,706,995
-------------
COMMERCIAL PAPER (0.2%)
250,000 Ford Motor Credit Co., 4.78%, 4/01/99................ 250,000
-------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (0.1%)
250,000 Federal National Mortgage Assn., 4.73%, 4/06/99...... 249,836
-------------
TOTAL SHORT-TERM HOLDINGS, AT AMORTIZED COST....................... $ 2,206,831
-------------
TOTAL INVESTMENTS--100.0% (COST $161,391,108)...................... $ 152,608,438
-------------
-------------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
4
<PAGE>
- --------------------------------------------------------------------------------
CRM MID CAP VALUE FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCK (91.6%)
AEROSPACE (2.4%)
9,700 Coltec Industries.................................... $ 176,419
-------------
APPAREL (2.3%)
8,300 Polo Ralph Lauren Corp.*............................. 164,963
-------------
AUTOMOTIVE PARTS AND EQUIPMENT (2.0%)
7,500 Safety Components International, Inc.*............... 64,687
2,800 Snap-On, Inc......................................... 81,200
-------------
145,887
-------------
BANKING AND FINANCIAL (11.2%)
3,300 Allmerica Financial Corp............................. 181,706
6,500 CIT Group, Inc. (The)................................ 198,656
2,402 FINOVA Group, Inc. (The)............................. 124,603
3,000 Golden State Bancorp, Inc.*.......................... 66,750
13,100 John Hancock Bank and Thrift Opportunity Fund........ 120,356
9,400 Sovereign Bancorp, Inc............................... 115,150
200 UnionBanCal Corp..................................... 6,812
-------------
814,033
-------------
BUSINESS SERVICES (3.3%)
9,100 Convergys Corp....................................... 155,838
9,900 Modis Professional Services, Inc.*................... 89,719
-------------
245,557
-------------
COMMUNICATIONS (5.0%)
7,000 Cincinnati Bell, Inc................................. 157,063
7,100 COMSAT Corp.......................................... 205,456
-------------
362,519
-------------
CONSUMER PRODUCTS (5.4%)
4,800 Fortune Brands, Inc.................................. 185,700
13,800 United Stationers, Inc.*............................. 210,450
-------------
396,150
-------------
DEFENSE ELECTRONICS (2.2%)
3,500 L-3 Communications Holdings, Inc.*................... 161,875
-------------
ELECTRONIC EQUIPMENT AND COMPONENTS (2.7%)
3,500 Raychem Corp......................................... 78,967
3,100 Thomas & Betts Corp.................................. 116,444
-------------
195,411
-------------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
ENERGY (1.9%)
2,700 Columbia Energy Group................................ $ 141,075
-------------
ENERGY EXPLORATION AND DISTRIBUTION (3.4%)
17,266 EEX Corp.*........................................... 84,172
24,010 Ocean Energy, Inc.*.................................. 163,568
-------------
247,740
-------------
ENTERTAINMENT (2.5%)
6,000 King World Productions, Inc.......................... 183,375
-------------
FOOD AND BEVERAGE PRODUCTS (3.7%)
13,100 Chiquita Brands International, Inc................... 133,456
4,500 Dole Food Co., Inc................................... 133,875
-------------
267,331
-------------
HEALTH CARE (7.4%)
4,700 HCR Manor Care....................................... 107,219
12,400 HealthSouth Corp..................................... 128,650
5,900 Humana, Inc.*........................................ 101,775
2,700 Wellpoint Health Networks, Inc.*..................... 204,694
-------------
542,338
-------------
INDUSTRIAL AND COMMERCIAL MACHINERY (3.6%)
3,000 Ingersoll-Rand Co.................................... 148,875
3,200 York International Corp.............................. 113,000
-------------
261,875
-------------
INDUSTRIAL TECHNOLOGY (2.6%)
14,600 Safety Kleen Corp.*.................................. 193,450
-------------
MEDICAL AND HEALTH PRODUCTS (1.5%)
4,200 Mallinckrodt, Inc.................................... 111,825
-------------
OIL AND GAS EXTRACTION (1.9%)
3,400 Burlington Resources, Inc............................ 135,788
-------------
PHARMACEUTICALS (2.0%)
29,100 PharMerica, Inc.*.................................... 145,500
-------------
REAL ESTATE (1.3%)
5,100 TrizecHahn Corp...................................... 93,713
-------------
RESTAURANTS AND LODGING (2.9%)
7,300 Starwood Hotels & Resorts............................ 208,506
-------------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
5
<PAGE>
- --------------------------------------------------------------------------------
CRM MID CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
RETAIL (6.0%)
<C> <S> <C>
5,100 Borders Group, Inc.*................................. $ 71,719
14,800 K-Mart Corp.*........................................ 248,825
2,000 Meyer (Fred), Inc.*.................................. 117,750
-------------
438,294
-------------
TECHNOLOGY (5.7%)
2,900 ChoicePoint, Inc.*................................... 144,637
5,200 General Instrument Corp.*............................ 157,625
3,700 Sterling Commerce, Inc.*............................. 113,775
-------------
416,037
-------------
TRANSPORTATION EQUIPMENT (1.6%)
4,200 Ryder System, Inc.................................... 116,026
-------------
UTILITIES (7.1%)
4,900 Entergy Corp......................................... 134,750
5,200 Montana Power Co..................................... 382,525
-------------
517,275
-------------
TOTAL COMMON STOCK (COST, $6,983,416).............................. $ 6,682,962
-------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY
WARRANTS DESCRIPTION VALUE
- ------------ ----------------------------------------------------- -------------
<C> <S> <C>
WARRANT (0.9%)
14,200 Golden State Bancorp, Inc. (COST, $69,023)........... $ 68,782
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
SHORT-TERM HOLDINGS (7.5%)
CASH MANAGEMENT ACCOUNTS (3.4%)
245,855 Forum Daily Assets Cash Fund......................... $ 245,855
-------------
COMMERCIAL PAPER (2.7%)
100,000 GTE Funding, Inc., 4.89%, 4/05/99.................... 99,944
100,000 United Parcel Service, 7.90%, 4/01/99................ 100,000
-------------
Total Commercial Paper............................................. 199,944
-------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (1.4%)
100,000 U.S. Treasury Bill, 4.63%, 4/22/99................... 99,729
-------------
TOTAL SHORT-TERM HOLDINGS, AT AMORTIZED COST....................... $ 545,528
-------------
TOTAL INVESTMENTS--100.0% (COST $7,597,967)........................ $ 7,297,272
-------------
-------------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
6
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP MID CAP VALUE
VALUE FUND FUND
------------- -------------
<S> <C> <C>
ASSETS:
Investments (Note 2)
Investments, at cost........................ $ 161,391,108 $ 7,597,967
Net unrealized depreciation................. (8,782,670) (300,695)
------------- -------------
Total investments, at value................... 152,608,438 7,297,272
Cash.......................................... -- 49,320
Receivable for securities sold................ 2,681,011 63,104
Receivable for Fund shares sold............... 159,990 --
Interest, dividends and other receivables..... 92,055 2,381
Organization costs, net (Note 2).............. 26,073 22,581
------------- -------------
Total assets...................................... 155,567,567 7,434,658
------------- -------------
------------- -------------
LIABILITIES:
Dividends payable............................. 210 --
Payable for securities purchased.............. 1,215,540 169,825
Payable for Fund shares redeemed.............. 269,323 --
Payable to Investment adviser (Note 3)........ 98,194 --
Payable to Administrator (Note 3)............. 12,916 --
Payable to Shareholder servicing agent (Note
3)........................................... 18,131 --
Payable to Custodian.......................... 9,678 3,571
Accrued expenses and other liabilities........ 92,711 33,018
------------- -------------
Total liabilities................................. 1,716,703 206,414
------------- -------------
NET ASSETS........................................ $ 153,850,864 $ 7,228,244
------------- -------------
------------- -------------
COMPONENTS OF NET ASSETS:
Paid-in capital............................... $ 185,032,402 $ 7,828,250
Undistributed net investment income........... 130,610 11,633
Net unrealized depreciation................... (8,782,670) (300,695)
Accumulated undistributed net realized loss... (22,529,478) (310,944)
------------- -------------
NET ASSETS........................................ $ 153,850,864 $ 7,228,244
------------- -------------
------------- -------------
NET ASSETS BY SHARE CLASS:
Investor Shares............................... $ 82,264,758 $ --
Institutional Shares.......................... 71,586,106 7,228,244
------------- -------------
$ 153,850,864 $ 7,228,244
------------- -------------
------------- -------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING:
Investor Shares............................... 6,481,127 --
Institutional Shares.......................... 5,584,874 732,436
NET ASSET VALUE (OFFERING PRICE AND REDEMPTION
PRICE) PER SHARE:
Investor Shares............................... $ 12.70 --
Institutional Shares.......................... $ 12.82 $ 9.87
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
7
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE
FUND MID CAP VALUE FUND
------------------ ----------------------
INVESTMENT INCOME:
<S> <C> <C>
Dividends..................................... $ 953,063 $ 33,440
Interest...................................... 355,318 15,522
------------------ ----------
Total investment income........................... 1,308,381 48,962
------------------ ----------
EXPENSES:
Investment advisory fees (Note 3)............. 665,772 24,366
Shareholder services (Note 3)................. 134,583 --
Administration fees (Note 3).................. 81,782 4,873
Transfer agent services (Note 3).............. 97,941 14,332
Professional services......................... 26,949 8,185
Registration fees............................. 19,834 5,945
Accounting services (Note 3).................. 28,000 21,000
Custody fees.................................. 21,399 5,194
Trustee fees and expenses (Note 3)............ 12,773 434
Amortization of organization costs (Note 2)... 8,691 3,000
Miscellaneous................................. 26,373 1,409
------------------ ----------
Total expenses.................................... 1,124,097 88,738
Expenses reimbursed and fees waived (Note
4)........................................... -- (51,409)
------------------ ----------
Net expenses...................................... 1,124,097 37,329
------------------ ----------
NET INVESTMENT INCOME............................. 184,284 11,633
------------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments sold......... (18,308,487) (310,944)
Net change in unrealized appreciation
(depreciation)............................... 5,480,964 386,713
------------------ ----------
Net realized and unrealized gain (loss) on
investments...................................... (12,827,523) 75,769
------------------ ----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $(12,643,239) $ 87,402
------------------ ----------
------------------ ----------
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
8
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND MID CAP VALUE FUND
------------------------------------- -------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, YEAR ENDED MARCH 31, PERIOD ENDED
1999 SEPTEMBER 30, 1999 SEPTEMBER 30,
(UNAUDITED) 1998 (UNAUDITED) 1998 (a)
------------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
NET ASSETS--BEGINNING OF PERIOD................... $179,175,027 $ 144,000,755 $5,338,282 $ 100
------------------ ---------------- ------------------ ----------------
OPERATIONS:
Net investment income (loss).................. 184,284 (550,558) 11,633 28,981
Net realized gain (loss) on investments
sold......................................... (18,308,487) (3,867,578) (310,944) 27,223
Net change in unrealized appreciation
(depreciation)............................... 5,480,964 (39,373,134) 386,713 (687,408)
------------------ ---------------- ------------------ ----------------
Net increase (decrease) in net assets
resulting from operations................ (12,643,239) (43,791,270) 87,402 (631,204)
------------------ ---------------- ------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income--Investor Shares........ (32,526) -- -- --
Net Investment Income--Institutional Shares... (21,148) -- (28,981) --
Net realized gain on investments--Investor
Shares....................................... -- (7,725,721) -- --
Net realized gain on
investments--Institutional Shares............ -- -- (27,223) --
Return of capital--Investor Shares............ -- (212,312) -- --
------------------ ---------------- ------------------ ----------------
Net decrease in net assets resulting from
distributions to shareholders............ (53,674) (7,938,033) (56,204) --
------------------ ---------------- ------------------ ----------------
CAPITAL SHARE TRANSACTIONS:
Sale of shares--Investor Shares............... 13,694,138 86,883,053 -- --
Sale of shares--Institutional Shares.......... 38,008,552 64,007,466 1,906,727 5,998,670
Reinvestment of distributions--Investor
Shares....................................... 29,606 7,442,799 -- --
Reinvestment of distributions--Institutional
Shares....................................... 17,473 -- 55,971 --
Redemption of shares--Investor Shares......... (53,623,153) (67,420,738) -- --
Redemption of shares--Institutional Shares.... (10,753,866) (4,009,005) (103,934) (29,284)
------------------ ---------------- ------------------ ----------------
Net increase (decrease) from capital
transactions............................. (12,627,250) 86,903,575 1,858,764 5,969,386
------------------ ---------------- ------------------ ----------------
Total increase (decrease) in net assets... (25,324,163) 35,174,272 1,889,962 5,338,182
------------------ ---------------- ------------------ ----------------
NET ASSETS--END OF PERIOD......................... $153,850,864 $ 179,175,027 $7,228,244 $ 5,338,282
------------------ ---------------- ------------------ ----------------
------------------ ---------------- ------------------ ----------------
Accumulated undistributed net investment income... $ 130,610 $ -- $ 11,633 $ 28,981
------------------ ---------------- ------------------ ----------------
------------------ ---------------- ------------------ ----------------
<CAPTION>
CAPITAL SHARE TRANSACTIONS: SHARES SHARES SHARES SHARES
------------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Sale of shares--Investor Shares................ 979,033 5,036,141 -- --
Sale of shares--Institutional Shares.......... 2,865,379 3,750,486 185,229 555,219
Reinvestment of distributions--Investor
Shares....................................... 2,144 473,135 -- --
Reinvestment of distributions--Institutional
Shares....................................... 1,254 -- 5,483 --
Redemption of shares--Investor Shares......... (4,117,696) (4,034,611) -- --
Redemption of shares--Institutional Shares.... (798,150) (234,095) (10,425) (3,080)
------------------ ---------------- ------------------ ----------------
Net increase (decrease) in shares............. (1,068,036) 4,991,056 180,287 552,139
------------------ ---------------- ------------------ ----------------
------------------ ---------------- ------------------ ----------------
</TABLE>
(a) See Note 1 of Notes to Financial Statements for commencement of operations.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
9
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR AN AVERAGE 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 SHARES
-------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED YEAR ENDED YEAR ENDED
1999 SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
UNAUDITED 1998 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 13.61 $ 17.68 $ 13.71 $ 10.00
------------- ------------- ------------- -------------
Investment Operations
Net investment income (loss)................. 0.01 (0.06) (0.06) (0.02)
Net realized and unrealized gain (loss) on
investments................................. (0.92) (3.15) 4.89 3.73
------------- ------------- ------------- -------------
Total from investment operations................. (0.91) (3.21) 4.83 3.71
------------- ------------- ------------- -------------
Distributions from
Net investment income........................ --(a) -- -- --(a)
Net realized gain on investments............. -- (0.84) (0.86) --
Return of capital............................ -- (0.02) -- --
------------- ------------- ------------- -------------
Total distributions.............................. -- (0.86) (0.86) --
------------- ------------- ------------- -------------
Net asset value, end of period................... $ 12.70 $ 13.61 $ 17.68 $ 13.71
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Total Return..................................... (6.66)% (18.81)% 37.14% 37.15%
Ratio/Supplemental data:
Ratios to average net assets:
Expenses, including reimbursement/waiver..... 1.39%(b) 1.38% 1.50% 1.49%
Expenses, excluding reimbursement/waiver..... 1.39%(b) 1.38% 1.50% 1.98%
Net investment income (loss), including
reimbursement/waiver........................ 0.09%(b) (0.34)% (0.56)% (0.40)%
Portfolio turnover rate.......................... 44.01% 57.32% 98.91% 111.18%
Net assets at end of period (000's omitted)...... $ 82,265 $130,929 $144,001 $45,385
</TABLE>
(a) Less than $0.01 per share.
(b) Annualized.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
10
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR AN AVERAGE 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 SHARES
-----------------------------
SIX MONTHS
ENDED
MARCH 31, PERIOD ENDED
1999 SEPTEMBER 30,
UNAUDITED 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value, beginning of period............................................ $ 13.72 $ 15.99
------------- -------------
Investment Operations
Net investment income....................................................... 0.03 0.01
Net realized and unrealized loss on investments............................. (0.93) (2.28)
------------- -------------
Total from investment operations................................................ (0.90) (2.27)
------------- -------------
Distributions from
Net investment income....................................................... --(c) --
Net realized gain on investments............................................ -- --
------------- -------------
Total distributions............................................................. -- --
------------- -------------
Net asset value, end of period.................................................. $ 12.82 $ 13.72
------------- -------------
------------- -------------
Total Return.................................................................... (6.53)% (14.20)%
Ratio/Supplemental data:
Ratios to average net assets:
Expenses, including reimbursement/waiver.................................... 1.07%(b) 1.15%(b)
Expenses, excluding reimbursement/waiver.................................... 1.07%(b) 1.23%(b)
Net investment income, including reimbursement/waiver....................... 0.40%(b) 0.08%(b)
Portfolio turnover rate......................................................... 44.01% 57.32%
Net assets at end of period (000's omitted)..................................... $ 71,586 $ 48,246
</TABLE>
(a) See Note 1 of Notes to Financial Statements for commencement of
operations.
(b) Annualized.
(c) Less than $0.01 per share.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
11
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTAINED BELOW IS PER SHARE OPERATING PERFORMANCE DATA FOR AN AVERAGE 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
-----------------------------
SIX MONTHS
ENDED
MARCH 31, PERIOD ENDED
1999 SEPTEMBER 30,
UNAUDITED 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value, beginning of period............................................ $ 9.67 $ 10.00
------ ------
Investment Operations
Net investment income....................................................... 0.02 0.05
Net realized and unrealized gain (loss) on investments...................... 0.27 (0.38)
------ ------
Total from investment operations 0.29 (0.33)
------ ------
Distributions from
Net investment income....................................................... (0.05) --
Net realized gain on investments............................................ (0.04) --
------ ------
Total distributions............................................................. (0.09) --
------ ------
Net asset value, end of period.................................................. $ 9.87 $ 9.67
------ ------
------ ------
Total Return.................................................................... 2.96% (3.30)%
Ratio/Supplemental data:
Ratios to average net assets:
Expenses, including reimbursement/waiver.................................... 1.15%(b) 1.15%(b)
Expenses, excluding reimbursement/waiver.................................... 2.73%(b) 4.16%(b)
Net investment income, including reimbursement/waiver....................... 0.36%(b) 0.84%(b)
Portfolio turnover rate......................................................... 56.90% 77.75%
Net assets at end of period (000's omitted)..................................... $ 7,228 $ 5,338
</TABLE>
(a) See Note 1 of Notes to Financial Statements for commencement of
operations.
(b) Annualized.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
12
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (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 four active
diversified investment portfolios. These financial statements relate to Small
Cap Value Fund and Mid Cap Value Fund (each, a "Fund" and, collectively, the
"Funds"), each of which issues Institutional Shares. Small Cap Value Fund also
issues Investor Shares. 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 respective dates 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 27, 1998
Mid Cap Value Fund (Institutional Shares) January 6, 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, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual 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. As of March 31, 1999, the
Funds held no positions in fair valued securities. 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
13
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ORGANIZATION COSTS -- The costs incurred by the Funds in connection with
their organization and registration of shares prior to June 30, 1998, 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 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
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.
On behalf of each Fund, the Trust has entered into an Administration Agreement
with Forum Administrative Services, LLC ("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.
Forum Shareholder Services, LLC ("Transfer Agent"), 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 per Fund, plus 0.10% of the average daily net
assets of the Investor Share class of the Small Cap Value Fund.
Pursuant to a separate Distribution Agreement, Forum Fund Services, LLC acts as
distributor of the Funds' shares and is not paid any fee for its distribution
services.
Forum Accounting Services, LLC ("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.
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 the Investor Share class of the Small Cap Value Fund
attributable to accounts for which the agent provides shareholder services.
Each Trustee, who was not an "affiliated person" as defined in the Investment
Company Act of 1940, received from the Fund an annual fee of $10,000, plus out
of pocket expenses.
- --------------------------------------------------------------------------------
THE CRM FUNDS
14
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Adviser and Transfer Agent have voluntarily waived a portion of their fees
and assumed certain expenses of the Funds. For the period ended March 31, 1999,
fees waived and expenses reimbursed were as follows:
<TABLE>
<CAPTION>
INVESTMENT TRANSFER
ADVISORY AGENT EXPENSES
FEE FEE REIMBURSED
WAIVED WAIVED BY ADVISER TOTAL
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Mid Cap Value Fund................................ $ 24,366 $ 6,000 $21,043 $ 51,409
</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, 1999, were as
follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
------------- -------------
<S> <C> <C>
Small Cap Value Fund.............................................. $ 83,257,938 $ 75,295,908
Mid Cap Value Fund................................................ 5,387,320 3,363,151
</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 depreciation as of March 31, 1999, were as
follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST APPRECIATION DEPRECIATION DEPRECIATION
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Small Cap Value Fund............... $ 161,391,108 $ 16,723,910 $ 25,506,580 $ 8,782,670
Mid Cap Value Fund................. 7,597,967 632,395 933,090 300,695
</TABLE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
15
<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, NY 10604
ADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, ME 04101
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel, LLP
919 Third Avenue
New York, NY 10022
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
[LOGO]
SMALL CAP
VALUE FUND
MID CAP
VALUE FUND
Institutional Shares
SEMI-ANNUAL REPORT
March 31, 1999
[LOGO]
- --------------------------------------------------------------------------------
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