<PAGE>
THE CRM FUNDS
- ------------------------------------
- ------------------------------------
FUND AND SHAREHOLDER ACCOUNT INFORMATION:
PFPC, Inc.
P.O. Box 8742
Wilmington, DE 19899
(800) CRM-2883
- --------------------------------------------------------------------------------
ANNUAL REPORT JUNE 30, 1999
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
This annual report reflects a change in the Funds' fiscal year-end from
September 30 to June 30. This change will not impact the performance or
objective of your investment. Our discussions will focus on the most recent
period, but we will comment on longer and shorter-term performance.
For the nine month period ended June 30, 1999, Investor shares of the Small Cap
Value Fund and the Large Cap Value Fund provided total returns of 9.80% and
22.16%, respectively. These returns compare to a 27.21% and a 36.30% return for
the Russell 2000 Index and S&P 500 Index, respectively.
The period ending June 30, 1999, finally produced what we had been looking for
over the last two years: a capital markets shift that resulted in impressive
showings from smaller cap stocks and value stocks in particular. Investors felt
the renewed allure of more cheaply--and more rationally--priced stocks which has
at least for the moment halted the wide gap between the performance of growth as
opposed to value stocks that has persisted for two years. The evidence is in the
Russell Indices below. Quarterly performance for the Russell 2500 Index
surpassed that of large stocks for the first time since the third quarter of
1997, returning +16.4% versus a gain of 7.1% in large cap issues, as measured by
the Russell 1000 Index.
<TABLE>
<CAPTION>
2ND QUARTER YEAR TO DATE FISCAL YEAR
1999 1999 1999
<S> <C> <C> <C>
Russell 1000 Index 7.12% 11.54% 36.15%
Russell 2500 Index 16.40% 10.88% 30.17%
Russell 2500 Value Index 16.02% 6.74% 18.66%
Russell 2500 Growth Index 16.81% 15.58% 44.88%
</TABLE>
Technology stocks rallied again during the quarter, contributing more to the
performance of the Russell 2500 Index than any other sector, gaining 32.5% over
the three-month period. Our slight over-weighting in this sector contributed to
our performance, as we were fortunate to find a number of interesting
opportunities that met our criteria over the last six months. At the end of the
quarter, we had an allocation of 8.6% to technology, versus 6.3% for the Russell
2500 Value Index.
- --------------------------------------------------------------------------------
THE CRM FUNDS
<PAGE>
- ------------------------------------
A number of factors have contributed to this reversal of fortune, primary among
them the benign attitude of the Federal Reserve. The Fed smiled on the markets,
or, less poetically put, the Fed made a preemptive move at the quarter-end to
raise interest rates by an expected 0.25%. Equally important, the Fed returned
to its "neutral bias" toward future interest rate changes, a move that spawned
an exuberant last day of quarter trading. The Russell 2000 Index climbed to a
yearly high and closed the quarter just below its twelve-month high in July of
last year. Bond prices, which had been priced to include a 0.50% increase over
the next few months, rallied as well, dragging the yield on the bellwether
30-year Treasury bond back down to 5.97%.
Following the quarter-end tightening by the Fed, however, all reports pointed
toward moderate growth with moderate wage increases and little chance of
inflation. During the second calendar quarter an average of 194,000 jobs per
month were created, down slightly from an average of 209,000 in the first
calendar quarter. There was a decline in job growth in manufacturing, mining and
apparel sectors during the second calendar quarter. These factors continue to
support the Fed's current stance that another rate hike is probably not
necessary in the near future.
The recent broadening of the market and corresponding performance of small and
medium capitalization stocks is encouraging. Buyouts, as predicted, have helped
to unlock some of the previously unrecognized values in the small and medium
capitalization arenas, and signs of a continuation of this trend are apparent.
Ten of our top fifteen holdings are undertaking some type of corporate
restructuring; whether it be merger, spin-off or outright sale. Merger and
acquisition activity reached near-record levels in the first half of the year,
surpassed only by the first six months of last year. May was the fifth busiest
month in history, fueled by both domestic and pan-European deals.
Another promising sign was the overwhelming approval by the House of
Representatives of a Senate-approval measure that would tear down Depression-era
barriers between banks, insurers and brokerage houses. If passed by the Clinton
Administration, the bill could open the gates for a flurry of inter-industry
mergers in an effort to provide one-stop financial service companies.
We at CRM Funds remain positioned to take advantage of any continuation in this
shift to a much broader stock market--including a shift to smaller, medium and
larger cap value stocks. We shall continue to seek out businesses that are both
sound and attractively priced, with management dedicated to taking aggressive
steps to enhance shareholder value.
- --------------------------------------------------------------------------------
THE CRM FUNDS
2
<PAGE>
- ------------------------------------
We hope that the above information will help you put your investment in The CRM
Funds into the broader context of the investment climate that prevailed over the
last nine months and in particular the last quarter of the fiscal year.
Thank you for your continued confidence in our efforts.
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 and CEO 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 2500-TM-
Index measures the performance of the 2,500 smallest companies in the Russell
3000-Registered Trademark- Index. The Russell 2500-TM- Value Index measures the
performance of those Russell 2500-TM- companies with lower price-to-book ratios
and lower forecasted growth values. Lastly, the Russell 2500-TM- Growth Index
measures the performance of those Russell 2500-TM- companies with higher
price-to-book ratios and higher forecasted growth values.
These indices do not include the effect of any expenses, which have been
deducted from each Fund's return. Individuals cannot invest directly in any
index.
During the period certain fees and expenses were waived by the service
providers. Without these waivers total returns would have been lower. Additional
performance figures for the Funds can be found in the Comparison of Change in
Value of $10,000 Investment section of this report.
The views in this report were those of the Funds' managers as of June 30, 1999,
and may not reflect the views of the managers on the date this report is first
published or any time thereafter. These views are intended to assist
shareholders of the Funds in understanding their investment in the Funds and do
not constitute investment advice.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
- --------------------------------------------------------------------------------
THE CRM FUNDS
3
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following information compares a change in value of a $10,000 investment in
the Investor Shares of the CRM Small Cap Value Fund ("Fund") with the
performance of the Russell 2000 Index since inception on 10/01/95. The Russell
2000 Index is an unmanaged capitalization weighted index of 2000 small
capitalization U.S. companies and reflects the reinvestment of dividends. The
index excludes the effect of any expenses, which have been deducted from the
Fund's return. Total return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Total return for the Fund assumes reinvestment of
dividends and distributions. PAST PERFORMANCE CANNOT PREDICT NOR GUARANTEE
FUTURE RESULTS.
CRM SMALL CAP VALUE FUND VS RUSSELL 2000 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CRM SMALL CAP VALUE FUND-INVESTOR SHARES RUSSELL 2000 INDEX
<S> <C> <C>
10/01/95 $10,000.00 $10,000.00
10/31/95 $9,840.00 $9,553.70
11/30/95 $10,450.08 $9,965.29
12/31/95 $10,734.32 $10,219.74
01/31/96 $10,903.92 $10,208.06
02/29/96 $11,404.41 $10,530.68
03/31/96 $11,984.90 $10,739.55
04/30/96 $12,475.08 $11,316.63
05/31/96 $13,335.86 $11,771.08
06/30/96 $13,406.54 $11,291.17
07/31/96 $12,576.68 $10,305.79
08/31/96 $13,277.20 $10,904.25
09/30/96 $13,718.00 $11,329.98
10/31/96 $13,967.67 $11,153.69
11/30/96 $14,527.77 $11,611.27
12/31/96 $14,917.12 $11,909.55
01/31/97 $15,161.76 $12,145.25
02/28/97 $15,002.56 $11,851.22
03/31/97 $14,523.98 $11,295.51
04/30/97 $14,470.24 $11,323.34
05/31/97 $16,024.34 $12,586.12
06/30/97 $17,056.31 $13,120.90
07/31/97 $17,950.06 $13,733.09
08/31/97 $18,237.26 $14,042.99
09/30/97 $18,811.74 $15,068.16
10/31/97 $18,002.83 $14,398.38
11/30/97 $17,502.35 $14,300.35
12/31/97 $18,156.94 $14,557.04
01/31/98 $17,931.79 $14,335.34
02/28/98 $19,692.70 $15,410.25
03/31/98 $20,927.43 $16,057.79
04/30/98 $21,364.81 $16,145.99
05/31/98 $20,467.49 $15,279.76
06/30/98 $19,783.88 $15,323.49
07/31/98 $18,234.80 $14,072.17
08/31/98 $14,352.61 $11,343.58
09/30/98 $15,273 $12,221
10/31/98 $14,991.60 $12,722.62
11/30/98 $15,496.81 $13,394.36
12/31/98 $15,938.47 $14,230.58
01/31/99 $15,466.69 $14,415.18
02/28/99 $14,198.42 $13,253.75
03/31/99 $14,255.22 $13,458.08
04/30/99 $15,613.74 $14,662.49
05/31/99 $16,174.27 $14,879.32
06/30/99 $16,769.49 $15,546.57
INVESTMENT VALUE ON 6/30/99
CRM Small Cap Value Fund-Investor Shares $16,769
Russell 2000 Index $15,547
AVERAGE ANNUAL TOTAL RETURN a/o 6/30/99 ONE YEAR SINCE INCEPTION ON 10/1/95
CRM Small Cap Value Fund-Investor Shares (15.23%) 14.79%
Russell 2000 Index 1.46% 12.48%*
</TABLE>
* Annualized return for the Russell 2000 Index based on an inception date of
9/30/95. The Fund is professionally managed while the index is unmanaged and is
not available for investment. Total return would have been lower had certain
fees and expenses not been voluntarily waived and/or reimbursed.
- --------------------------------------------------------------------------------
THE CRM FUNDS
4
<PAGE>
- --------------------------------------------------------------------------------
CRM LARGE CAP VALUE FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following information compares a change in value of a $10,000 investment in
the Investor Shares of the CRM Large Cap Value Fund ("Fund") with the
performance of the Standard and Poor's 500 Composite Index ("S&P 500") since
inception on 8/25/98. The S&P 500 is an unmanaged market weighted index composed
of 500 large capitalization companies and reflects the reinvestment of
dividends. The index excludes the effect of any expenses, which have been
deducted from the Fund's return. Total return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Total return for
the Fund assumes reinvestment of dividends and distributions. PAST PERFORMANCE
CANNOT PREDICT NOR GUARANTEE FUTURE RESULTS.
CRM LARGE CAP VALUE FUND VS S&P 500 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CRM LARGE CAP VALUE FUND-INVESTOR SHARES S&P 500 INDEX
<S> <C> <C>
8/31/98 $10,000.00 $10,000.00
9/30/98 $10,020.05 $10,640.67
10/31/98 $10,700.42 $11,505.43
11/30/98 $11,160.53 $12,202.46
12/31/98 $11,532.18 $12,905.18
1/31/99 $11,813.56 $13,444.62
2/28/99 $11,291.40 $13,026.90
3/31/99 $11,549.98 $13,547.95
4/30/99 $12,102.07 $14,072.61
5/31/99 $11,851.55 $13,740.78
6/30/99 $12,241.47 $14,502.74
INVESTMENT VALUE ON 6/30/99
CRM Large Cap Value Fund-Investor Shares $12,240
S&P 500 Index $14,503
CUMULATIVE TOTAL RETURN a/o 6/30/99
SINCE INCEPTION ON 8/25/98
CRM Large Cap Value Fund-Investor Shares 22.40%
S&P 500 Index 45.03%*
</TABLE>
* Annualized return for the S&P 500 Index based on an inception date of
8/31/98. The Fund is professionally managed while the index is unmanaged and is
not available for investment. Total return would have been lower had certain
fees and expenses not been voluntarily waived and/or reimbursed.
- --------------------------------------------------------------------------------
THE CRM FUNDS
5
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -------------
<C> <S> <C>
COMMON STOCK (97.7%)
AEROSPACE (1.1%)
219,500 OEA, Inc.*.............................. $ 1,948,063
-------------
AUTOMOTIVE PARTS AND EQUIPMENT (0.3%)
105,000 Safety Components International,
Inc.*.................................. 525,000
-------------
BANKING AND FINANCIAL (5.6%)
261,900 AmeriCredit Corp.*...................... 4,190,400
150,000 Community First Bankshares, Inc......... 3,581,250
126,000 Pilgrim America Capital Corp.*.......... 2,441,250
-------------
10,212,900
-------------
BUILDING AND CONSTRUCTION (2.7%)
34,800 International Comfort Products Corp.*... 395,850
282,300 Morrison Knudsen Corp.*................. 2,911,218
130,400 Walter Industries, Inc.*................ 1,687,050
-------------
4,994,118
-------------
BUSINESS SERVICES (7.5%)
46,100 Borg Warner Security Corp.*............. 936,406
380,000 Donnelley (R.H.) Corp.*................. 7,433,750
300,700 LGS Group, Inc.*........................ 2,706,300
99,200 World Color Press, Inc.*................ 2,728,000
-------------
13,804,456
-------------
CHEMICALS (2.2%)
169,800 Arch Chemicals, Inc.*................... 4,128,263
-------------
COMMUNICATIONS (7.2%)
302,100 Allen Telecom, Inc.*.................... 3,247,575
150,000 COMSAT Corp............................. 4,875,000
120,000 Young Broadcasting Corp.*............... 5,107,500
-------------
13,230,075
-------------
CONSUMER CYCLICALS (2.5%)
415,400 Loews Cineplex Entertainment*........... 4,517,475
-------------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -------------
<C> <S> <C>
CONSUMER PRODUCTS (3.4%)
230,500 Central Garden & Pet Co.*............... $ 2,362,625
105,600 Playtex Products, Inc.*................. 1,643,400
102,676 United Stationers, Inc.*................ 2,258,873
-------------
6,264,898
-------------
ELECTRONIC EQUIPMENT AND COMPONENTS (8.8%)
60,900 CommScope, Inc.*........................ 1,872,675
209,300 DII Group, Inc.*........................ 7,809,506
437,900 Oak Technology, Inc.*................... 1,587,388
164,300 Tektronix, Inc.......................... 4,959,806
-------------
16,229,375
-------------
ENERGY EXPLORATION AND DISTRIBUTION (1.7%)
20,000 Equitable Resources, Inc................ 755,000
184,400 Nuevo Energy Co.*....................... 2,443,300
-------------
3,198,300
-------------
FINANCIAL SERVICES (2.5%)
240,000 Richmond County Financial Corp.......... 4,620,000
-------------
HEALTH CARE (3.0%)
192,300 Acuson Corp.*........................... 3,305,157
75,300 CONMED Corp.*........................... 2,306,063
-------------
5,611,220
-------------
INDUSTRIAL AND COMMERCIAL MACHINERY (9.4%)
279,000 MagneTek, Inc.*......................... 2,946,937
74,800 Millipore Corp.......................... 3,034,075
283,100 Terex Corp.*............................ 8,616,856
70,700 Zebra Technologies Corp., A*............ 2,717,531
-------------
17,315,399
-------------
INDUSTRIAL TECHNOLOGY (6.0%)
92,700 Emcor Group, Inc.*...................... 2,334,881
308,100 Safety-Kleen Corp.*..................... 5,584,312
193,400 UNOVA, Inc.*............................ 3,070,225
-------------
10,989,418
-------------
MEDICAL AND HEALTH TECHNOLOGY AND
SERVICES (0.7%)
162,800 QuadraMed Corp.*........................ 1,322,750
-------------
* Non-income producing security.
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
6
<PAGE>
- --------------------------------------------------------------------------------
CRM SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -------------
METAL INDUSTRIES (1.8%)
<C> <S> <C>
33,000 Schnitzer Steel Industries, Inc......... $ 740,437
383,200 WHX Corp.*.............................. 2,514,750
-------------
3,255,187
-------------
REAL ESTATE (0.9%)
157,266 Insignia Financial Group, Inc., A*...... 1,651,294
-------------
REAL ESTATE INVESTMENT TRUST (4.1%)
150,000 SL Green Realty Corp.................... 3,065,625
832,000 Ventas, Inc............................. 4,472,000
-------------
7,537,625
-------------
RESTAURANTS AND LODGING (3.1%)
468,300 Prime Hospitality Corp.*................ 5,619,600
-------------
RETAIL (5.8%)
385,100 Maxim Group, Inc.*...................... 3,345,557
140,000 Shopko Stores, Inc.*.................... 5,075,000
148,200 United Retail Group, Inc.*.............. 2,241,525
-------------
10,662,082
-------------
TECHNOLOGY (13.5%)
140,100 ChoicePoint, Inc.*...................... 9,404,213
82,200 Metamor Worldwide, Inc.*................ 1,977,937
225,500 Symantec Corp.*......................... 5,750,250
532,900 Systems & Computer Technology Corp.*.... 7,760,356
-------------
24,892,756
-------------
TRANSPORTATION EQUIPMENT (1.4%)
150,600 Mascotech, Inc.......................... 2,550,788
-------------
UTILITIES (2.5%)
205,400 Avista Corp............................. 3,337,750
63,600 Public Service Co. of New Mexico........ 1,264,050
-------------
4,601,800
-------------
TOTAL COMMON STOCK (COST, $154,265,581).............. $ 179,682,842
-------------
<CAPTION>
PRINCIPAL SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ---------------------------------------- -------------
<C> <S> <C>
SHORT-TERM HOLDINGS (2.3%)
CASH MANAGEMENT ACCOUNTS (1.2%)
$2,244,437 Daily Assets Cash Fund.................. $ 2,244,437
-------------
COMMERCIAL PAPER (1.1%)
1,000,000 Ford Motor Credit Co.,
5.17%, 7/01/99......................... 1,000,000
500,000 General Electric Capital Corp., 5.17%,
7/06/99................................ 499,641
504,000 Kansas City Power & Light Co., 5.40%,
7/06/99................................ 503,622
-------------
Total Commercial Paper............................... 2,003,263
-------------
TOTAL SHORT-TERM HOLDINGS, AT AMORTIZED COST......... $ 4,247,700
-------------
TOTAL INVESTMENTS (100.0%) (COST $158,513,281)....... $ 183,930,542
-------------
-------------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
7
<PAGE>
- --------------------------------------------------------------------------------
CRM LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -----------
<C> <S> <C>
COMMON STOCK (96.8%)
AUTOMOTIVE (2.6%)
4,403 Delphi Automotive Systems............... $ 81,730
10,900 General Motors Corp..................... 719,400
-----------
801,130
-----------
BANKING AND FINANCIAL (7.1%)
6,900 Aetna Life & Casualty, Inc.............. 617,119
11,100 Banc One Corp........................... 661,143
22,300 CIT Group, Inc. (The)................... 643,912
3,600 Merrill Lynch & Co., Inc................ 287,775
-----------
2,209,949
-----------
BUSINESS SERVICES (9.8%)
42,900 Cendant Corp............................ 879,450
12,700 Ceridian Corp.*......................... 415,132
17,600 First Data Corp......................... 861,300
24,000 Sterling Commerce, Inc.*................ 876,000
-----------
3,031,882
-----------
CHEMICALS AND ALLIED PRODUCTS (2.1%)
4,300 du Pont (E.I.) de Nemours & Co.......... 293,744
8,400 Rohm & Haas Co.......................... 360,150
-----------
653,894
-----------
COMMUNICATIONS (9.8%)
11,700 AT&T Corp............................... 653,007
3,500 Bell Atlantic Corp...................... 228,812
8,500 GTE Corp................................ 643,875
9,200 MCI Worldcom, Inc.*..................... 793,500
9,400 MediaOne Group, Inc.*................... 699,125
-----------
3,018,319
-----------
COMPUTER EQUIPMENT (2.8%)
6,800 IBM Corp................................ 878,900
-----------
CONSUMER DURABLES (3.2%)
21,500 Newell Co............................... 999,750
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -----------
<C> <S> <C>
CONSUMER PRODUCTS (2.7%)
5,400 Johnson & Johnson....................... $ 529,200
3,400 Procter & Gamble Co..................... 303,450
-----------
832,650
-----------
DEFENSE ELECTRONICS (2.6%)
3,000 Raytheon Co., "A"....................... 206,625
8,500 Raytheon Co., "B"....................... 598,188
-----------
804,813
-----------
ELECTRONIC EQUIPMENT AND COMPONENTS (3.9%)
4,500 Honeywell, Inc.......................... 521,437
6,716 Koninklijke (Royal) Philips Electronics
NV..................................... 677,477
-----------
1,198,914
-----------
FINANCIAL SERVICES (3.7%)
5,500 Chase Manhattan Corp. (The)............. 476,438
13,950 Citigroup, Inc.......................... 662,625
-----------
1,139,063
-----------
FOOD AND BEVERAGE PRODUCTS (4.0%)
4,800 Coca-Cola Co............................ 300,000
25,700 Nabisco Group Holdings Corp. ........... 502,757
11,500 PepsiCo, Inc............................ 444,906
-----------
1,247,663
-----------
HEALTH CARE (3.5%)
6,500 Baxter International, Inc............... 394,062
45,700 HealthSouth Corp.*...................... 682,644
-----------
1,076,706
-----------
INDUSTRIAL AND COMMERCIAL MACHINERY (1.9%)
9,300 Ingersoll-Rand Co....................... 601,012
-----------
INSURANCE (3.8%)
4,500 Equitable Cos., Inc..................... 301,500
3,800 Marsh & McLennan Cos., Inc.............. 286,900
15,000 Travelers Property & Casualty Insurance
Co..................................... 586,875
-----------
1,175,275
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
8
<PAGE>
- --------------------------------------------------------------------------------
CRM LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -----------
MEDICAL AND HEALTH TECHNOLOGY AND SERVICES (2.4%)
<C> <S> <C>
23,100 McKesson HBOC, Inc...................... $ 742,088
-----------
NONDEPOSITORY CREDIT INSTITUTIONS (1.3%)
6,000 Federal National Mortgage Assn.......... 410,250
-----------
OIL AND GAS EXTRACTION (2.3%)
4,500 Enron Corp.............................. 367,875
5,600 Schlumberger Ltd........................ 356,650
-----------
724,525
-----------
PETROLEUM REFINING AND RELATED INDUSTRIES (3.0%)
3,000 Mobil Corp.............................. 297,000
5,500 Royal Dutch Petroleum Co................ 331,375
5,000 Texaco, Inc............................. 312,500
-----------
940,875
-----------
PHARMACEUTICALS (3.6%)
11,400 American Home Products Corp............. 655,500
6,000 Merck & Co., Inc........................ 444,000
-----------
1,099,500
-----------
POLLUTION CONTROL (2.6%)
14,700 Waste Management, Inc................... 790,125
-----------
RESTAURANTS AND LODGING (2.3%)
23,300 Starwood Hotels & Resorts............... 712,107
-----------
RETAIL (3.2%)
40,100 K-Mart Corp.*........................... 659,144
12,900 Rite Aid Corp........................... 317,662
-----------
976,806
-----------
TECHNOLOGY (5.9%)
15,300 Cadence Design Systems, Inc.*........... 195,075
10,065 Lucent Technologies..................... 678,759
16,200 Xerox Corp.............................. 956,812
-----------
1,830,646
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- ---------------------------------------- -----------
<C> <S> <C>
TRANSPORTATION (3.0%)
4,200 AMR Corp.*.............................. $ 286,650
9,700 Canadian National Railway Co............ 649,900
-----------
936,550
-----------
UTILITIES (2.1%)
10,300 Entergy Corp............................ 321,875
14,900 Sempra Energy........................... 337,113
-----------
658,988
-----------
WHOLESALE-TRADE NONDURABLE GOODS (1.6%)
16,200 Sysco Corp.............................. 482,962
-----------
TOTAL COMMON STOCK (COST, $26,816,025)............... $29,975,342
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------- ----------------------------------------
-----------
<C> <S> <C>
SHORT-TERM HOLDINGS (3.2%)
CASH MANAGEMENT ACCOUNTS (1.0%)
$ 285,353 Forum Daily Assets Cash Fund............ $ 285,353
-----------
COMMERCIAL PAPER (2.2%)
100,000 Commed Fuel Co., 5.09%, 7/06/99......... 99,929
100,000 General Electric Capital Corp., 5.17%,
7/06/99................................ 99,928
100,000 Merrill Lynch & Co., Inc.,
5.35%, 7/01/99......................... 100,000
252,000 Merrill Lynch & Co., Inc.,
5.30%, 7/06/99......................... 251,814
143,000 Orange & Rockland, UT,
5.06%, 7/01/99......................... 143,000
-----------
Total Commercial Paper............................... 694,671
-----------
TOTAL SHORT-TERM HOLDINGS, AT AMORTIZED COST......... $ 980,024
-----------
TOTAL INVESTMENTS (100.0%) (COST $27,796,049)........ $30,955,366
-----------
-----------
</TABLE>
* Non-income producing security.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
9
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP
VALUE FUND VALUE FUND
------------ -----------
<S> <C> <C>
ASSETS
Investments (Note 2)
Investments, at cost................................ $158,513,281 $27,796,049
Net unrealized appreciation......................... 25,417,261 3,159,317
------------ -----------
Total investments, at value............................. 183,930,542 30,955,366
Cash.................................................... 500 --
Receivable from investment adviser (Note 4)............. -- 819
Receivable for securities sold.......................... 1,729,228 --
Receivable for Fund shares sold......................... 149,296 4,773
Interest and dividends receivable....................... 70,344 38,094
Organization costs (Note 2)............................. 21,728 --
------------ -----------
Total assets................................................ 185,901,638 30,999,052
------------ -----------
LIABILITIES
Payable for securities purchased........................ 520,807 --
Payable for Fund shares redeemed........................ 313,960 1,000
Payable to investment adviser (Note 3).................. 84,550 --
Payable to Administrator (Note 3)....................... 17 7
Payable to Shareholder servicing agent (Note 3)......... 6,756 42,901
Payable to Custodian.................................... 10,279 5,670
Accrued expenses and other liabilities.................. 107,868 13,768
------------ -----------
Total liabilities........................................... 1,044,237 63,346
------------ -----------
NET ASSETS.................................................. $184,857,401 $30,935,706
------------ -----------
------------ -----------
COMPONENTS OF NET ASSETS
Paid in capital......................................... $188,379,608 $27,633,872
Undistributed net investment income..................... -- 2,263
Net unrealized appreciation on investments.............. 25,417,261 3,159,317
Accumulated undistributed net realized gain (loss)...... (28,939,468) 140,254
------------ -----------
NET ASSETS.................................................. $184,857,401 $30,935,706
------------ -----------
------------ -----------
NET ASSETS BY SHARE CLASS
Investor Shares......................................... $ 94,806,567 $30,935,706
Institutional Shares.................................... 90,050,834 --
------------ -----------
$184,857,401 $30,935,706
------------ -----------
------------ -----------
SHARES OF BENEFICIAL INTEREST OUTSTANDING
Investor Shares......................................... 6,344,337 2,542,363
Institutional Shares.................................... 5,960,777 --
NET ASSET VALUE (OFFERING PRICE AND
REDEMPTION PRICE) PER SHARE
Investor Shares......................................... $14.94 $12.17
Institutional Shares.................................... $15.11 --
</TABLE>
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
10
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND
-------------------------------------
PERIOD ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30,
1999(a) 1998
----------------- -----------------
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................... $ 1,188,841 $ 1,132,104
Interest................................................ 423,522 904,574
----------------- -----------------
Total investment income..................................... 1,612,363 2,036,678
----------------- -----------------
EXPENSES
Investment advisory fees (Note 3)....................... 985,563 1,434,005
Shareholder services (Note 3)........................... 190,283 419,344
Administration fees (Note 3)............................ 121,800 190,232
Transfer agent services (Note 3)........................ 140,617 202,963
Professional services................................... 66,679 96,391
Registration fees....................................... 26,444 69,967
Accounting services (Note 3)............................ 41,500 51,000
Custody fees............................................ 37,045 28,869
Trustee fees and expenses (Note 3)...................... 25,138 19,235
Amortization of organization costs (Note 2)............. 13,037 17,383
Printing................................................ 43,088 36,834
Miscellaneous........................................... 20,804 38,910
----------------- -----------------
Total expenses.............................................. 1,711,998 2,605,133
Expenses reimbursed and fees waived (Note 4)............ (37,010) (17,897)
----------------- -----------------
Net expenses............................................ 1,674,988 2,587,236
----------------- -----------------
NET INVESTMENT LOSS......................................... (62,625) (550,558)
----------------- -----------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss from investments...................... (24,868,940) (3,867,578)
Net change in unrealized appreciation (depreciation) of
investments............................................ 39,680,895 (39,373,134)
----------------- -----------------
Net realized and unrealized gain (loss) on investments...... 14,811,955 (43,240,712)
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................................. $ 14,749,330 $ (43,791,270)
----------------- -----------------
----------------- -----------------
</TABLE>
(a) For the period October 1, 1998 through June 30, 1999 (Note 6).
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
11
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP VALUE FUND
-----------------------------------------
PERIOD ENDED PERIOD ENDED
JUNE 30, SEPTEMBER 30,
1999(a) 1998(b)
----------------- ---------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................... $ 249,159 $ 8,884
Interest................................................ 116,909 18,130
----------------- --------
Total investment income..................................... 366,068 27,014
----------------- --------
EXPENSES
Investment advisory fees (Note 3)....................... 128,702 6,174
Shareholder services (Note 3)........................... 42,901 2,058
Administration fees (Note 3)............................ 25,740 2,554
Transfer agent services (Note 3)........................ 38,912 3,487
Professional services................................... 22,623 8,601
Registration fees....................................... 12,975 3,034
Accounting services (Note 3)............................ 28,000 5,677
Custody fees............................................ 18,407 137
Trustee fees and expenses (Note 3)...................... 3,074 --
Printing................................................ 3,207 729
Miscellaneous........................................... 4,394 29
----------------- --------
Total expenses.............................................. 328,935 32,480
Expenses reimbursed and fees waived (Note 4)............ (71,788) (20,137)
----------------- --------
Net expenses............................................ 257,147 12,343
----------------- --------
NET INVESTMENT INCOME....................................... 108,921 14,671
----------------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from investments............... 176,140 (23,760)
Net change in unrealized appreciation of investments.... 3,102,837 56,480
----------------- --------
Net realized and unrealized gain on investments............. 3,278,977 32,720
----------------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. $ 3,387,898 $ 47,391
----------------- --------
----------------- --------
</TABLE>
(a) For the period October 1, 1998 through June 30, 1999 (Note 6).
(b) For the period August 25, 1998 (commencement of operations) through
September 30, 1998 (Note 1).
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
12
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND
-------------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
1999 (a) 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
NET ASSETS--BEGINNING OF PERIOD............................. $ 179,175,027 $ 144,000,755 $ 45,384,710
--------------- --------------- ---------------
OPERATIONS
Net investment loss..................................... (62,625) (550,558) (476,883)
Net realized gain (loss) from investments............... (24,868,940) (3,867,578) 9,079,299
Net change in unrealized appreciation (depreciation) of
investments............................................ 39,680,895 (39,373,134) 20,662,630
--------------- --------------- ---------------
Net increase (decrease) in net assets resulting from
operations........................................... 14,749,330 (43,791,270) 29,265,046
--------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain on investments--Investor Shares....... -- (7,725,721) (3,073,364)
Return of capital--Investor Shares...................... (32,526) (212,312) --
Return of capital--Institutional Shares................. (21,148) -- --
--------------- --------------- ---------------
Total distributions to shareholders................. (53,674) (7,938,033) (3,073,364)
--------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS
Sale of shares--Investor Shares......................... 20,036,102 86,883,053 78,761,282
Sale of shares--Institutional Shares.................... 47,952,631 64,007,466 --
Reinvestment of distributions--Investor Shares.......... 29,522 7,442,799 3,008,999
Reinvestment of distributions--Institutional Shares..... 17,473 -- --
Redemption of shares--Investor Shares................... (61,826,506) (67,420,738) (9,345,918)
Redemption of shares--Institutional Shares.............. (15,222,504) (4,009,005) --
--------------- --------------- ---------------
Net increase (decrease) from capital share
transactions......................................... (9,013,282) 86,903,575 72,424,363
--------------- --------------- ---------------
Total increase in net assets........................ 5,682,374 35,174,272 98,615,045
--------------- --------------- ---------------
NET ASSETS--END OF PERIOD................................... $ 184,857,401 $ 179,175,027 $ 144,000,755
--------------- --------------- ---------------
--------------- --------------- ---------------
Accumulated undistributed net investment income............. $ -- $ -- $ --
--------------- --------------- ---------------
--------------- --------------- ---------------
<CAPTION>
CAPITAL SHARE TRANSACTIONS SHARES SHARES SHARES
<S> <C> <C> <C>
--------------- --------------- ---------------
Sale of shares--Investor Shares......................... 2,003,255 5,036,141 5,232,267
Sale of shares--Institutional Shares.................... 3,827,612 3,750,486 --
Reinvestment of distributions--Investor Shares.......... 2,138 473,135 221,739
Reinvestment of distributions--Institutional Shares..... 1,254 -- --
Redemption of shares--Investor Shares................... (5,278,702) (4,034,611) (620,752)
Redemption of shares--Institutional Shares.............. (1,384,480) (234,095) --
--------------- --------------- ---------------
Net increase (decrease) in shares..................... (828,923) 4,991,056 4,833,254
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
(a) For the period October 1, 1998 through June 30, 1999 (Note 6).
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
13
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP VALUE FUND
----------------------------
PERIOD ENDED PERIOD ENDED
JUNE 30, SEPTEMBER 30,
1999 (b) 1998 (a)
------------- -------------
<S> <C> <C>
NET ASSETS--BEGINNING OF PERIOD............................. $ 10,667,761 $ --
------------- -------------
OPERATIONS
Net investment income................................... 108,921 14,671
Net realized gain (loss) from investments............... 176,140 (23,760)
Net change in unrealized appreciation of investments.... 3,102,837 56,480
------------- -------------
Net increase in net assets resulting from
operations........................................... 3,387,898 47,391
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income--Investor Shares.................. (121,068) --
Net realized gain on investments--Investor Shares....... (12,387) --
------------- -------------
Total distributions to shareholders................. (133,455) --
------------- -------------
CAPITAL SHARE TRANSACTIONS
Sale of shares--Investor Shares......................... 23,136,247 10,620,370
Reinvestment of distributions--Investor Shares.......... 133,426 --
Redemption of shares--Investor Shares................... (6,256,171) --
------------- -------------
Net increase from capital share transactions........ 17,013,502 10,620,370
------------- -------------
Total increase in net assets........................ 20,267,945 10,667,761
------------- -------------
NET ASSETS--END OF PERIOD................................... $ 30,935,706 $ 10,667,761
------------- -------------
------------- -------------
Accumulated undistributed net investment income............. $ 2,524 $ 14,671
------------- -------------
------------- -------------
<CAPTION>
CAPITAL SHARE TRANSACTIONS SHARES SHARES
<S> <C> <C>
------------- -------------
Sale of shares--Investor Shares......................... 2,290,936 1,064,174
Reinvestment of distributions--Investor Shares.......... 11,395 --
Redemption of shares--Investor Shares................... (824,142) --
------------- -------------
Net increase in shares.................................. 1,478,189 1,064,174
------------- -------------
------------- -------------
</TABLE>
(a) For the period August 25, 1998 (commencement of operations) through
September 30, 1998 (Note 1).
(b) For the period October 1, 1998 through June 30, 1999 (Note 6).
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
14
<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
-----------------------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 (b) 1998 1997 1996 (a)
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net asset value -- Beginning of Period.................. $ 13.61 $ 17.68 $ 13.71 $ 10.00
------------- ------------- ------------- -------
Investment operations
Net investment loss................................. (0.02) (0.06) (0.06) (0.02)
Net realized and unrealized gain (loss) on
investments........................................ 1.35 (3.15) 4.89 3.73
------------- ------------- ------------- -------
Total from investment operations........................ 1.33 (3.21) 4.83 3.71
------------- ------------- ------------- -------
Distributions to shareholders from
Net investment income............................... -- -- -- --(c)
Net realized gain on investments.................... -- (0.84) (0.86) --
Return of capital................................... --(c) (0.02) -- --
------------- ------------- ------------- -------
Total distributions to shareholders..................... -- (0.86) (0.86) --
------------- ------------- ------------- -------
Net asset value -- End of Period........................ $ 14.94 $ 13.61 $ 17.68 $ 13.71
------------- ------------- ------------- -------
------------- ------------- ------------- -------
Total Return............................................ 9.80% (18.81)% 37.14% 37.15%
Ratios/Supplemental data
Ratios to average net assets:
Expenses, including reimbursement/waiver............ 1.42%(d) 1.38% 1.50% 1.49%
Expenses, excluding reimbursement/waiver............ 1.46%(d) 1.38% 1.50% 1.98%
Net investment loss, including
reimbursement/waiver............................... (0.16)%(d) (0.34)% (0.56)% (0.40)%
Portfolio turnover rate................................. 64% 57% 99% 111%
Net assets at end of period (000's omitted)............. $ 94,806 $ 130,929 $ 144,001 $ 45,385
</TABLE>
(a) For the year October 1, 1995 (commencement of operations) through
September 30, 1996 (Note 1).
(b) For the period October 1, 1998 through June 30, 1999 (Note 6).
(c) Less than $0.01 per share.
(d) Annualized.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
15
<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
-----------------------------
PERIOD ENDED PERIOD ENDED
JUNE 30, SEPTEMBER 30,
1999 (b) 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value -- Beginning of Period........................................... $ 13.72 $ 15.99
------------- -------------
Investment operations
Net investment income........................................................ 0.01 0.01
Net realized and unrealized gain (loss) on investments....................... 1.38 (2.28)
------------- -------------
Total from investment operations................................................. 1.39 (2.27)
------------- -------------
Distributions to shareholders from
Return of capital............................................................ --(c) --
------------- -------------
Net asset value -- End of Period................................................. $ 15.11 $ 13.72
------------- -------------
------------- -------------
Total Return..................................................................... 10.16% (14.20)%
Ratios/Supplemental data
Ratios to average net assets:
Expenses, including reimbursement/waiver..................................... 1.08%(d) 1.15%(d)
Expenses, excluding reimbursement/waiver..................................... 1.09%(d) 1.23%(d)
Net investment income, including reimbursement/waiver........................ 0.11%(d) 0.08%(d)
Portfolio turnover rate.......................................................... 64% 57%
Net assets at end of period (000's omitted)...................................... $ 90,051 $ 48,246
</TABLE>
(a) For the period January 27, 1998 (inception of Institutional Share class)
through September 30, 1998 (Note 1).
(b) For the period October 1, 1998 through June 30, 1999 (Note 6).
(c) Less than $0.01 per share.
(d) Annualized.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
16
<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>
LARGE CAP VALUE FUND
-----------------------------
INVESTOR SHARES
-----------------------------
PERIOD ENDED PERIOD ENDED
JUNE 30, SEPTEMBER 30,
1999 (b) 1998 (a)
------------- -------------
<S> <C> <C>
Net asset value -- Beginning of Period........................................... $ 10.02 $ 10.00
------------- -------------
Investment operations
Net investment income........................................................ 0.06 0.01
Net realized and unrealized gain on investments.............................. 2.16 0.01
------------- -------------
Total from investment operations................................................. 2.22 0.02
------------- -------------
Distributions to shareholders from
Net investment income........................................................ (0.06) --
Net realized gain on investments............................................. (0.01) --
------------- -------------
Total distributions to shareholders.............................................. (0.07) --
------------- -------------
Net asset value -- End of Period................................................. $ 12.17 $ 10.02
------------- -------------
------------- -------------
Total Return..................................................................... 22.16% 0.20%
Ratios/Supplemental data
Ratios to average net assets:
Expenses, including reimbursement/waiver..................................... 1.50%(c) 1.50%(c)
Expenses, excluding reimbursement/waiver..................................... 1.92%(c) 3.95%(c)
Net investment income, including reimbursement/waiver........................ 0.63%(c) 1.78%(c)
Portfolio turnover rate.......................................................... 56% 7%
Net assets at end of period (000's omitted)...................................... $ 30,936 $ 10,668
</TABLE>
(a) For the period August 25, 1998 (commencement of operations)
through September 30, 1998 (Note 1).
(b) For the period October 1, 1998 through June 30, 1999 (Note 6).
(c) Annualized.
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES. THE CRM FUNDS
17
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. ORGANIZATION
The CRM Funds (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust seeks long-term capital
appreciation by investing primarily in equity securities, using a value-oriented
approach. The Trust currently has three active diversified investment
portfolios. One investment portfolio, the Value Fund, ceased operations on June
22, 1999. These financial statements relate to Small Cap Value Fund and Large
Cap Value Fund (each, a "Fund" and, collectively, the "Funds"), each of which
issues Investor Shares. Small Cap Value Fund also issues Institutional 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
Large Cap Value Fund (Investor Shares)................................ August 25, 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 the 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 June 30, 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 to shareholders from net
investment income are declared and
- --------------------------------------------------------------------------------
THE CRM FUNDS
18
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
paid at least annually by all Funds, except Large Cap Value Fund, for which
dividends representing the net investment income are declared and paid at
least quarterly. Distributions to shareholders from net capital gains, if
any, are declared and paid at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations.
ORGANIZATION COSTS--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.
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 federal excise tax. Since the Funds intend
to meet these minimum distribution requirements, no federal income tax
provision is currently required.
During the period ended June 30, 1999, the Small Cap Value Fund reclassified
($250,178) from undistributed net investment income to paid in capital, $133,879
from undistributed net investment income to accumulated undistributed net
realized loss and ($16,584) from accumulated undistributed net realized loss to
paid in capital. This reclassification had no effect on net assets.
During the period ended June 30, 1999, the Large Cap Value Fund reclassified
$261 from undistributed net investment income to accumulated undistributed net
realized gain. This reclassification had no effect on net assets.
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 an annual fee of $24,000, plus $12,000 per additional share class,
0.10% of the average daily net assets with respect to Investor Shares and $30
per shareholder account.
- --------------------------------------------------------------------------------
THE CRM FUNDS
19
<PAGE>
- --------------------------------------------------------------------------------
THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 an annual fee of $36,000 per Fund, plus
$12,000 per additional share class and certain surcharges based upon the amount
and type of a Fund's portfolio transactions and positions.
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
and Large 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.
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Adviser and Transfer Agent have voluntarily waived a portion of their fees
and/or assumed certain expenses of the Funds. For the period ended June 30,
1999, fees waived and expenses reimbursed were as follows:
<TABLE>
<CAPTION>
INVESTMENT EXPENSES
ADVISORY SHAREHOLDER TRANSFER REIMBURSED BY
FEES SERVICES FEES AGENT FEES ADVISER TOTAL
------------ -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Small Cap Value Fund.......... $ -- $ 12,002 $ -- $25,008 $37,010
Large Cap Value Fund.......... 61,969 -- 9,000 819 71,788
</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 June 30, 1999, were as
follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
-------------- --------------
<S> <C> <C>
Small Cap Value Fund.................................................... $116,843,501 $105,951,229
Large Cap Value Fund.................................................... 32,097,172 11,147,932
</TABLE>
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THE CRM FUNDS
20
<PAGE>
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THE CRM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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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 June 30, 1999, were as
follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Small Cap Value Fund..................... $158,549,883 $37,746,284 $(12,365,625) $ 25,380,659
Large Cap Value Fund..................... 27,796,049 4,126,915 (967,598) 3,159,317
</TABLE>
CAPITAL LOSS CARRYFORWARDS--At June 30, 1999, for federal income tax purposes,
the following Fund had capital loss carryforwards which may be applied against
any net taxable realized gains of each succeeding year until the earlier of
their utilization or expiration.
<TABLE>
<CAPTION>
SMALL CAP
EXPIRATION DATE VALUE FUND
<S> <C>
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June 30, 2007 $ 10,837,449
</TABLE>
6. CHANGE IN FISCAL YEAR END
On May 4, 1999, the Board of Trustees for the Trust approved changing the fiscal
year end for the Funds from September 30 to June 30.
7. SUBSEQUENT EVENT
On behalf of each Fund, the Trust has entered into an Administration and
Accounting Services Agreement, dated July 1, 1999 with PFPC, Inc. ("PFPC"). For
its services, PFPC receives a fee computed daily 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.
Effective July 1, 1999, Provident Distributors, Inc. acts as distributor of the
Funds' shares and is not paid any fee for its distribution services.
8. FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR (UNAUDITED)
INCOME DIVIDENDS--All the income and any short-term capital gain dividends paid
by each Fund were ordinary income for federal income tax purposes. The
percentage of qualifying dividends eligible for the corporate dividends received
deduction was 58.63% for Large Cap Value Fund.
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THE CRM FUNDS
21
<PAGE>
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THE CRM FUNDS
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
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SHAREHOLDERS AND BOARD OF TRUSTEES
THE CRM FUNDS
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of CRM Small Cap Value Fund and CRM Large Cap Value
Fund, two of the Series constituting The CRM Funds, as of June 30, 1999, and the
related statements of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1999 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of CRM
Small Cap Value Fund and CRM Large Cap Value Fund at June 30, 1999, and the
results of their operations, changes in their net assets and their financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
August 10, 1999
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THE CRM FUNDS
22
<PAGE>
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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
INDEPENDENT AUDITORS
Ernst & Young, LLP
787 Seventh Avenue
New York, NY 10019
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
LARGE CAP
VALUE FUND
Investor Shares
ANNUAL REPORT
June 30, 1999
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