<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997
File No. 33-91498
File No. 811-9034
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5
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THE CRM FUNDS
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 207-879-1900
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Max Berueffy, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
Copies of Communications to:
Susan Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 West Third Avenue
New York, New York 10022
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It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
- ----
on [ ] pursuant to Rule 485, paragraph (b)
- ----
60 days after filing pursuant to Rule 485, paragraph (a)(i)
- ----
on [ ] pursuant to Rule 485, paragraph (a)(i)
- ----
X 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
- ----
on [ ] pursuant to Rule 485, paragraph (a)(ii)
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this post-effective amendment designates a new effective date for a
- ---- previously filed post-effective amendment
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the investment Company
Act of 1940; accordingly, no fee is payable herewith. A Rule 24f-2 Notice for
the Registrant's fiscal year ending September 30, 1997 will be filed with the
Commission on or about November 30, 1997.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(a))
PART A
(Prospectus offering Investor Shares of each series of Registrant)
FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
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Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Fund
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description of Prospectus Summary; Investment Risks
Registrant and Practices; Other Information
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Dividends and Tax Matters; Other
Other Securities Information; Purchases and Redemptions
of Shares
Item 7. Purchase of Securities Purchases and Redemptions of Shares;
Being Offered Other Information; Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(a))
PART A
(Prospectus offering Institutional Shares of each series of Registrant)
FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
- --------- ----------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Fund
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description Prospectus Summary; Investment Risks
of Registrant and Practices; Other Information
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Dividends and Tax Matters; Other
Other Securities Information; Purchases and Redemptions
of Shares
Item 7. Purchase of Securities Purchases and Redemptions of Shares;
Being Offered Other Information; Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(a))
PART B
(Statement of Additional Information for Investor Shares and Institutional
Shares of each series of Registrant)
LOCATION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
ITEM NO. (CAPTION)
- --------- -------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and Other Matters
History
Item 13. Investment Objectives and Investment Policies; Investment
Policies Limitations
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Management; Other Matters
Holders of Securities
Item 16. Investment Advisory and Other Management
Services
Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices
Item 18. Capital Stock and Other Determination of Net Asset Value
Securities
Item 19. Purchase, Redemption and Determination of Net Asset Value;
Pricing of Securities Being Additional Purchase and Redemption
Offered Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Performance Data and Advertising
Data
Item 23. Financial Statements Financial Statements
<PAGE>
THE CRM FUNDS
SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
ALL CAP VALUE FUND
PROSPECTUS
JANUARY 1, 1998
EACH OF THESE FUNDS SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES, USING A VALUE-ORIENTED
APPROACH.
INVESTMENT ADVISER:
CRM ADVISORS, LLC,
AN AFFILIATE OF CRAMER ROSENTHAL MCGLYNN, INC.
1-800-CRM-2883
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS. . . . . . . . . . . . . . . . . 8
Investment Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Investment Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ADDITIONAL INVESTMENT PRACTICES. . . . . . . . . . . . . . . . . . . . . . .12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Expenses of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
INVESTMENT IN A FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Purchases and Redemption of Shares . . . . . . . . . . . . . . . . . . . . .17
Purchase and Redemption Procedures . . . . . . . . . . . . . . . . . . . . .17
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Other Investment Information . . . . . . . . . . . . . . . . . . . . . . . .21
DIVIDENDS AND TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . .21
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . .22
The Trust and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . .22
<PAGE>
THE CRM FUNDS
SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
ALL CAP VALUE FUND
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FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Financial Corp.
Two Portland Square P.O. Box 446
Portland, Maine 04101 Portland, Maine 04112
800-CRM-2883 800-844-8258
800-276-2883
INVESTMENT ADVISOR:
CRM Advisors, LLC
707 Westchester Avenue
White Plains, New York 10604
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PROSPECTUS
JANUARY 1, 1998
This Prospectus offers investor shares ("Shares") of the Small Cap Value
Fund, Mid Cap Value Fund, Large Cap Value Fund and All Cap Value Fund (each a
"Fund" and collectively, the "Funds"), each a diversified portfolio of The CRM
Funds (the "Trust"), an open-end, management investment company.
The Funds seek long-term capital appreciation by investing primarily in equity
securities, using a value-oriented approach. Shares of the Funds
are offered to investors without any sales charge.
Please read this Prospectus before investing in the Funds, and retain it for
future reference. It contains important information about the Funds,
their investments and the services available to shareholders.
<PAGE>
To learn more about the Funds and the Trust, you may obtain a copy of the Funds'
Statement of Additional Information, dated January 1, 1998, as amended from time
to time (the "SAI"). The SAI has been filed with the Securities and Exchange
Commission ("SEC") and is available together with other related materials for
reference on the SEC's Internet Web Site (http://www.sec.gov). The SAI is
incorporated by reference into this Prospectus and may be obtained without
charge from the Trust by writing to Two Portland Square, Portland, Maine 04101
or by calling 1-800-CRM-2883.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
3
<PAGE>
PROSPECTUS SUMMARY
SMALL CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with small market
capitalizations, using a value-oriented approach. A small capitalization
company has a market capitalization -- in other words, the value the stock
market assigns all of the company's shares -- of $1 billion or less at the time
of the Fund's investment.
MID CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with medium
market capitalizations, using a value-oriented approach. A medium
capitalization company has a market capitalization of between $1 billion and $10
billion at the time of the Fund's investment.
LARGE CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with large market
capitalizations, using a value-oriented approach. A large capitalization
company has a market capitalization of greater than $10 billion at the time of
the Fund's investment.
ALL CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with varying
market capitalizations, using a value-oriented approach.
MANAGEMENT. CRM Advisors, LLC (the "Adviser"), an affiliate of Cramer Rosenthal
McGlynn, Inc. ("CRM") with the same principals and portofolio managers as CRM,
is each Fund's investment adviser and makes investment decisions for the Funds.
Forum Financial Services, Inc. is the administrator and distributor of the
Funds. SEE "Management" for more detailed information.
The Funds' investment adviser employs a "value" approach to the Funds'
investments, seeking to identify companies that have experienced fundamental
change, are intrinsically undervalued or are misunderstood by the investment
community. The Portfolio Managers view investment prospects on a long-term
basis and do not attempt to time the market. See "Investment Objective,
Strategies and Risks" for more detailed information.
SHARES OF THE FUNDS. Each Fund currently offers two separate classes of shares:
Investor Shares and Institutional Shares. Investor Shares are sold through this
Prospectus. Institutional Shares are offered by a separate prospectus to
fiduciary, agency and custodial clients of bank trust departments, trust
companies and their affiliates. Shares of each class of a Fund have identical
interests in the investment portfolio of the Fund and, with certain exceptions,
have the same rights. See "Other Information -- The Trust and Its Shares."
4
<PAGE>
PURCHASES AND REDEMPTIONS. Shares of the Funds may be purchased or redeemed
without any sales charges Monday through Friday except on days that the New York
Stock Exchange is closed ("Fund Business Day"). The initial minimum investment
for each Fund is $10,000 or $2,000 for retirement accounts and automatic
investment plans. The minimum for subsequent investments in a Fund is $100. SEE
"Investment in the Funds" for more detailed information.
DIVIDENDS. For the Small Cap Value Fund, Mid Cap Value Fund and All Cap Value
Fund, dividends representing the net investment income are declared and paid at
least annually. For the Large Cap Value Fund, dividends representing the net
investment income are declared and paid at least quarterly. Net capital gains
realized by a Fund, if any, also will be distributed annually. Dividends and
distributions are reinvested in additional shares of a Fund unless a shareholder
elects to have them paid in cash. SEE "Dividends and Tax Matters" for more
detailed information.
RISK CONSIDERATIONS
The Funds do not invest for income, and each Fund does not by itself provide a
complete or balanced investment program. It may be an appropriate investment for
investors willing to tolerate possibly significant fluctuations in a Fund's net
asset value while seeking long-term returns that are potentially higher than
market averages. A company's market capitalization is the total market value of
its outstanding common stock. The securities of small and medium capitalization
companies typically are more thinly traded than those of larger companies. Small
and medium capitalization securities may have greater growth potential in the
long-run than other types of securities. In the shorter term, however, the
prices of small and medium capitalization securities may fluctuate significantly
in response to news about the company, the markets or the economy. Other
investments and investment techniques of the Funds, such as investments in
securities of foreign issuers, may entail additional risks or have speculative
characteristics. SEE "Investment Objective, Strategies and Risks" for more
detailed information.
Of course, as with any mutual fund, there is no assurance that a Fund will
achieve its investment objective.
5
<PAGE>
FEE TABLES
The following tables should help you understand the various costs and expenses
that you will bear if you invest in a Fund.
Shareholder transaction expenses are charges an investor would pay when buying,
selling or exchanging shares of a Fund. Operating expenses, which are paid out
of a Fund's assets, and other expenses for services, such as maintaining
shareholder accounts, are factored into a Fund's share price and not charged
directly to shareholder accounts.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on None
purchases
Maximum sales load imposed on None
reinvested dividend
Deferred sales load None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES(1)
SMALL CAP VALUE FUND
Advisory Fees .75%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees .25%
Miscellaneous Expenses %
Total Fund Operating Expenses
(after waivers or reimbursements)(2) %
MID CAP VALUE FUND
Advisory Fees .75%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees .25%
Miscellaneous Expenses %
Total Fund Operating Expenses
(after waivers or reimbursements)(3) 1.50%
6
<PAGE>
LARGE CAP VALUE FUND
Advisory Fees .50%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees .25%
Miscellaneous Expenses %
Total Fund Operating Expenses
(after waivers or reimbursements)(3) 1.25%
ALL CAP VALUE FUND
Advisory Fees .50%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees .25%
Miscellaneous Expenses %
Total Fund Operating Expenses
(after waivers or reimbursements)(3) 1.25%
(1) Annual Fund Operating Expenses are calculated as a percentage of average
net assets after waivers and reimbursements.
(2) The amounts of fees and expenses are based on amounts incurred by the Small
Cap Value Fund during the Small Cap Value Fund's most recent fiscal year ending
September 30, 1997. Absent expense reimbursements and fee waivers, the fees and
expenses for the Small Cap Value Fund would have been: Advisory Fees: 0.75%,
Other Expenses: %, and Total Fund Operating Expenses: %. SEE "Management," for
a more detailed description of the various costs and expenses incurred in the
Small Cap Value Fund's operation. Expense reimbursements and fee waivers are
voluntary and may be reduced or eliminated at any time.
(3) The amounts of fees and expenses are based upon projected annual operating
expenses for the upcoming year for Mid Cap Value Fund, Large Cap Value Fund, and
All Cap Value Fund. The Adviser has voluntarily undertaken to waive a portion of
its fees and assume certain expenses of the Mid Cap Value Fund, Large Cap Value
Fund and All Cap Value Fund to the extent that total expenses exceed 1.50%,
1.25% and 1.25%, respectively. See page __ for further explanation of these
fees.
EXAMPLE
The following is a hypothetical example that indicates the dollar amount of
expenses that an investor in a Fund would pay assuming a $1,000 investment in
the Fund, a 5% annual return, the reinvestment of all dividends and
distributions and redemption at the end of each period. The example is based on
projected expenses of the Mid Cap Value Fund's, Large Cap Value Fund's and All
Cap Value Fund's first year of operation.
7
<PAGE>
SMALL CAP MID CAP LARGE CAP ALL CAP
VALUE FUND VALUE FUND VALUE FUND VALUE FUND
After 1 Year $15 $15 $15 $15
After 3 Years $47 $47 $47 $47
After 5 Years $81 $81 $81 $81
After 10 Years $178 $178 $178 $178
The example is based on the expenses listed in the table. The five percent
annual return is not predictive of and does not represent the Fund's projected
returns; rather, it is required by government regulation. THE EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL
EXPENSES AND RETURN MAY BE GREATER OR LESS THAN INDICATED.
FINANCIAL HIGHLIGHTS
The following table represents selected data for a single outstanding share of
the Small Cap Value Fund for the period shown. This information has been
audited in connection with an audit of the Small Cap Value Fund's financial
statements by independent auditors. The Small Cap Value Fund's financial
statements and independent auditors' report thereon are incorporated by
reference into the SAI. Further information about the Small Cap Value Fund's
performance is contained in the Annual Report to shareholders, which may be
obtained from the Trust without charge by calling 1-800-CRM-2883.
SMALL CAP VALUE FUND
YEAR ENDED SEPTEMBER 30 1996 1997
- ----------------------- ---- ----
BEGINNING NET ASSET VALUE PER SHARE $10.00
Net investment loss (0.02)
Net realized and unrealized gain on securities 3.73
Dividends from net investment income (a) --
ENDING NET ASSET VALUE PER SHARE $13.71
RATIOS TO AVERAGE NET ASSETS:
Expenses (b) 1.49%
Net investment loss (0.40)%
TOTAL RETURN 37.15%
PORTFOLIO TURNOVER RATE 111.18%
AVERAGE BROKERAGE COMMISSION RATE (c) $0.0374
NET ASSETS AT THE END OF PERIOD (000's omitted) $45,385
(a) Less than $0.01 per share.
(b) During the period, various fees and expenses were waived and reimbursed,
respectively. Had such waivers and reimbursements not occurred, the
expenses would have been 1.98% of average net assets.
(c) Amount represents the average commission per share, paid to brokers, on the
purchase and sale of portfolio securities.
8
<PAGE>
Financial highlights information is not included for the Mid Cap Value Fund,
Large Cap Value Fund and All Cap Value Fund, because these Funds commenced
operations on January 1, 1998. Further information will be contained in the
Semi-Annual Report, which will be sent to shareholders when these Funds have
been in operation for three months.
PERFORMANCE
The Funds may, from time to time, include quotations of its average annual total
return, cumulative total return and other non-standard performance measures in
advertisements or reports to shareholders or prospective investors. Average
annual total return is based upon the overall dollar or percentage change in
value of a hypothetical investment each year over specified periods. Average
annual total returns reflect the deduction of a proportional share of a Fund's
expenses (on an annual basis) and assume investment and reinvestment of all
dividends and distributions at NAV. For a description of the methods used to
determine total return and other performance measures for the Funds, please see
the SAI.
The Funds' fiscal year runs from October 1 to September 30. The table below
shows the Small Cap Value Fund's performance over the past fiscal year compared
to investing in a broad selection of stocks as measured by the S&P 500 and
Russell 2000 Index.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE YEAR PAST 1 YEAR
ENDED 9/30/97
Small Cap %
Value Fund
S&P 500 %
Russell 2000
Index %
The Funds may also be compared to various unmanaged securities indices, groups
of mutual funds tracked by mutual fund ratings services, or other general
economic indicators. Unmanaged indices may assume the reinvestment of dividends
but do not reflect deductions for administrative and management costs and
expenses. They also do not include any allowance for the brokerage commissions
or other fees you would pay if you actually invested in those stocks.
The S&P 500 is the Standard & Poor's 500-Registered Trademark- Index, a widely
recognized, unmanaged index of common stock prices. The S&P 500 figures assume
reinvestment of all dividends paid by stocks included in the Index.
The Russell 2000-Registered Trademark- Index (the "Russell 2000") is a market
weighted index composed of 2000 companies with market capitalizations from $50
million to $1.8 billion. The index is unmanaged and reflects the reinvestment of
dividends.
9
<PAGE>
PERFORMANCE INFORMATION REPRESENTS ONLY PAST PERFORMANCE AND DOES NOT
NECESSARILY INDICATE FUTURE RESULTS.
INVESTMENT OBJECTIVES,
STRATEGIES AND RISKS
INVESTMENT OBJECTIVE
Each Fund's investment objective is long-term capital appreciation. The
investment objective of a Fund may not be changed without the approval of
shareholders.
SMALL CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of small capitalization companies. A
small capitalization company has a market capitalization -- in other words, the
value the stock market assigns all of the company's shares -- of $1 billion or
less at the time of the Fund's investment. Companies whose capitalization
exceeds $1 billion after purchase will continue to be considered small for
purposes of this 65% policy. The Small Cap Value Fund may also invest to a
limited degree in companies that have larger market capitalizations. A company
may have a small market capitalization because it is new or has recently gone
public, or because it operates in a minor industry or regional market. These
companies may respond more quickly to change in an industry, and are expected to
increase their earnings more rapidly than larger companies. Historically, small
companies have offered greater opportunity for capital appreciation than larger,
more established companies. At the same time, investing in small companies can
be riskier than other investments.
MID CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of medium capitalization companies. A
medium capitalization company has a market capitalization between $1 billion and
$10 billion at the time of the Fund's investment. Companies whose capitalization
falls below $1 billion or exceeds $10 billion after purchase will continue to be
considered medium for purposes of this 65% policy. The Mid Cap Value Fund may
also invest to a limited degree in companies that have smaller and larger market
capitalizations.
LARGE CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of large capitalization companies. A
large capitalization company has a market capitalization greater than $10
billion at the time of the Fund's investment. Companies whose capitalization
falls below $10 billion after purchase will continue to be considered large for
purposes of this 65% policy. The Large Cap Value Fund may also invest to a
limited degree in companies that have smaller market capitalizations.
ALL CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of companies with varying market
capitalizations.
INVESTMENT STRATEGIES
Value investing provides investors with a less aggressive way to take advantage
of growth opportunities of companies. Using a value approach, the Funds will
seek to invest in stocks priced low relative to comparable companies, determined
by price/earnings ratios, cash flows or other measures. Value investing
therefore may reduce downside risk while offering potential for capital
appreciation as a stock gains favor among other investors and its stock price
rises.
10
<PAGE>
The Funds will be managed in accordance with the investment disciplines that CRM
has employed in managing its equity portfolios for over twenty-four years. The
Adviser relies on stock selection to achieve its results, rather than trying to
time market fluctuations. It seeks out those stocks that are undervalued and, in
some cases, neglected by financial analysts, evaluating the degree of investor
recognition by monitoring the number of analysts who follow the company and
recommend its purchase or sale to investors. The Adviser begins the investment
process by identifying early dynamic change in a company's operations, finances,
or management. This type of dynamic change tends to be material, and may create
misunderstanding in the marketplace, and result in a company's stock becoming
undervalued.
Once change is identified, the Adviser evaluates the company on several levels.
It analyzes financial models based principally upon projected cash flow, as
opposed to reported earnings. The price of the company's stock is evaluated in
the context of what the market is willing to pay for stock of comparable
companies and what a strategic buyer would pay for the whole company. Another
important consideration is the extent of management's ownership interest in the
company. Finally, the Adviser analyzes the company's market, in most instances,
corroborating its observations and assumptions by meeting with management,
customers, and suppliers.
By reviewing historical relationships and understanding the characteristics of a
business, the Adviser establishes valuation parameters using relative ratios or
target prices. In its overall assessment, the Adviser seeks stocks that it
believes have a greater upside potential than risk over an 18 to 24 month
holding period.
INVESTMENT RISKS
GENERALLY. An investment in each of the Funds is not by itself a complete or
balanced investment program. Nevertheless, the small, medium, and large
capitalization segments of the equity markets may be an important part of an
investor's portfolio, particularly for long-term investors able to tolerate
short-term fluctuations in a Fund's net asset value.
Because the Adviser will seek securities that are undervalued by the market,
there is a risk that the market will not recognize a security's intrinsic value
for an unexpectedly long time, or that the Adviser believes undervalued is
actually priced appropriately due to intractable or fundamental problems that
are not yet apparent.
SMALL AND MID CAP FUNDS. The Small Cap Value Fund's and the Mid Cap Value
Fund's investments in small and medium size companies can entail more risk than
investing in larger, more established companies. These companies may have more
limited product lines, markets, and financial resources, making them more
susceptible to economic or market setbacks. Analysts and other investors
typically follow small and medium sized companies less actively, and information
about these companies is not always readily available. For these and other
reasons, the prices of small and mid capitalization securities may fluctuate
more significantly than the securities of larger companies, in response to news
about the company, the markets or the economy. As a result, the price of the
Small Cap Value and Mid Cap Value Funds' shares may exhibit a higher degree of
volatility than the market averages.
11
<PAGE>
A significant portion of the securities in the Small Cap Value Fund's portfolio
are traded in the over-the-counter markets or on a regional securities exchange,
and may be more thinly traded and volatile than the securities of larger
companies. In addition, securities traded in the over-the-counter market or on
a regional securities exchange may not be traded every day or in the volume
typical of securities traded on a national exchange. To a smaller extent, these
characteristics apply to the investments of the Mid Cap Value Fund. There may be
occasions therefore when the Small Cap Value or Mid Cap Value Fund must sell a
portfolio security to meet redemptions at a discount from market prices, or
otherwise sell during periods when disposition is not desirable, or make many
small sales over a lengthy period of time.
--------------------
INVESTMENT POLICIES
Under normal conditions, each Fund will invest at least 65% of its assets in
equity securities.
EQUITY SECURITIES may include common and preferred stock, convertible securities
and warrants. COMMON STOCK represents an equity or ownership interest in a
company. Although this interest often gives a Fund the right to vote on measures
affecting the company's organization and operations, a Fund does not intend to
exercise control over the management of companies in which it invests. Common
stocks have a history of long-term growth in value, but their prices tend to
fluctuate in the shorter term.
PREFERRED STOCK generally does not exhibit as great a potential for appreciation
or depreciation as common stock, although it ranks above common stock in its
claim on income from dividend payments. CONVERTIBLE SECURITIES are securities
that may be converted either at a stated price or formula within a specified
period of time into a specified number of shares of common stock. Traditionally,
convertible securities have paid dividends or interest greater than common
stocks, but less than fixed income or non-convertible securities. By investing
in a convertible security, a Fund may participate in any capital appreciation or
depreciation of a company's stock, but to a lesser degree than its common stock.
A Fund may invest in preferred stock and convertible securities rated BBB or
higher by Standard & Poor's Corporation, Baa by Moody's Investors Service, Inc.,
or the equivalent in the case of unrated instruments. SEE "Description of
Securities Ratings" in Appendix A to the SAI.
WARRANTS are options to purchase an equity security at a specified price at any
time during the life of the warrant. Unlike convertible securities and preferred
stocks, warrants do not pay a fixed dividend. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of a Fund's entire
investment therein).
The market value of all securities, including equity securities, is based upon
the market's perception of value and not necessarily the book value of an issuer
or other objective measure of a company's worth.
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AMERICAN DEPOSITORY RECEIPTS ("ADRS"). A Fund may invest in ADRs, which are
receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. ADRs, in registered form, are
designed for use in U.S. securities markets. In a "sponsored" ADR, the foreign
issuer typically bears certain expenses of maintaining the ADR facility.
"Unsponsored" ADRs may be created without the participation of the foreign
issuer. Holders of unsponsored ADRs generally bear all the costs of the ADR
facility. The bank or trust company depository of an unsponsored ADR may be
under no obligation to distribute shareholder communications received from the
foreign issuer or to pass through voting rights.
SECURITIES OF OTHER INVESTMENT COMPANIES. A Fund may invest in shares of other
investment companies to the extent permitted by the Investment Company Act of
1940 ("Investment Company Act"). To the extent a Fund invests in shares of an
investment company, it will bear its pro rata share of the other investment
company's expenses, such as investment advisory and distribution fees, and
operating expenses.
ILLIQUID AND RESTRICTED SECURITIES. As a nonfundamental investment policy, a
Fund may not purchase a security if, as a result, more than 10% of its net
assets would be invested in illiquid securities. A security is considered
ILLIQUID if it may not be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which a Fund has valued the
security. Over-the-counter options, repurchase agreements not entitling the
holder to payment of principal in 7 days, and certain "restricted securities"
may be illiquid.
A security is RESTRICTED if it is subject to contractual or legal restrictions
on resale to the general public. A liquid institutional market has developed,
however, for certain restricted securities such as repurchase agreements,
commercial paper, foreign securities and corporate bonds and notes. Thus,
restrictions on resale do not necessarily indicate the liquidity of the
security. For example, if a restricted security may be sold to certain
institutional buyers in accordance with Rule 144A under the Securities Act of
1933 or another exemption from registration under the Securities Act, the
Adviser may determine that the security is liquid under guidelines adopted by a
Fund's Board of Trustees. These guidelines take into account trading activity in
the securities and the availability of reliable pricing information, among other
factors. With other restricted securities, however, there can be no assurance
that a liquid market will exist for the security at any particular time. A Fund
might not be able to dispose of such securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemptions. A Fund treats
such holdings as illiquid.
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ADDITIONAL INVESTMENT PRACTICES
CONCENTRATION. As a fundamental investment policy, a Fund may not purchase a
security (other than U.S. Government Securities) if as a result more than 25% of
its net assets would be invested in a particular industry.
DIVERSIFICATION. As a fundamental investment policy, a Fund may not purchase a
security if, as a result (a) more than 5% of a Fund's total assets would be
invested in the securities of a single issuer, or (b) a Fund would own more than
10% of the outstanding voting securities of a single issuer. This limitation
applies only with respect to 75% of a Fund's total assets and does not apply to
U.S. Government Securities.
BORROWING. As a fundamental investment policy, a Fund may borrow money for
temporary or emergency purposes, including the meeting of redemption requests,
in amounts up to 33 1/3% of a Fund's total assets. As a
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nonfundamental investment policy, a Fund may not purchase portfolio
securities if its outstanding borrowings exceed 5% of its total assets or
borrow for purposes other than meeting redemptions in an amount exceeding 5%
of the value of its total assets at the time the borrowing is made.
Borrowing involves special risk considerations. Interest costs on borrowings may
fluctuate with changing market rates of interest and may partially offset or
exceed the return earned on borrowed funds (or on the assets that were retained
rather than sold to meet the needs for which funds were borrowed). Under adverse
market conditions, a Fund might need to sell portfolio securities to meet
interest or principal payments at a time when investment considerations would
not favor such sales.
CASH AND TEMPORARY DEFENSIVE POSITIONS. A Fund will hold a certain portion of
its assets in cash or cash equivalents to retain flexibility in meeting
redemptions, paying expenses, and timing of new investments. Cash equivalents
may include (i) short-term obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities ("U.S. Government Securities"),
(ii) certificates of deposit, bankers' acceptances and interest-bearing savings
deposits of commercial banks doing business in the United States that have an A+
rating from Standard & Poor's Corporation or an A-1+ rating from Moody's
Investors Service, Inc., (iii) commercial paper rated P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Corporation, (iv) repurchase
agreements covering any of the securities in which a Fund may invest directly,
and (v) money market mutual funds.
In addition, when the Adviser believes that business or financial conditions
warrant, a Fund may assume a temporary defensive position. During such periods,
a Fund may invest without limit in cash or cash equivalents. When and to the
extent a Fund assumes a temporary defensive position, it will not pursue its
investment objective.
SHORT SALES. A Fund may not enter into short sales, except short sales "against
the box." In a short sale against the box, a Fund sells securities it owns, or
has the right to acquire at no added cost. A Fund does not immediately deliver
the securities sold, however, and does not receive proceeds from the sale until
it does deliver the securities. A Fund may enter into a short sale against the
box to lock-in a gain or loss in one year, while deferring recognition of the
gain or loss until the next year. A Fund may also sell short against the box to
hedge against the risk that the price of a security may decline. In such a case,
to the extent a Fund limits its future losses in the security, it limits its
opportunity to achieve future gain in the security as well.
CORE AND GATEWAY -Registered Trademark-. Notwithstanding the other investment
policies of the Funds, each Fund may seek to achieve its investment objective by
converting to a Core and Gateway structure. Upon future action by the Board of
Trustees and notice to shareholders, a Fund may convert to this structure. As a
result, the Fund would hold as its only investment, shares of another investment
company having substantially the same investment objective and policies as the
Fund.
PORTFOLIO TRANSACTIONS. The frequency of portfolio transactions is generally
expressed in terms of a portfolio turnover rate. For example, an annual turnover
rate of 100% would occur if all of the securities in a Fund were replaced once a
year. A Fund's portfolio turnover rate will vary from year to year depending on
market conditions. Higher rates of turnover will result in higher brokerage
costs for a Fund. The Adviser weighs the anticipated benefits of short-term
investments against these consequences. A Fund's portfolio turnover rate is
reported under "Financial Highlights." Tax rules applicable to short-term
trading may affect the timing of a Fund's transactions or its ability to realize
short-term trading profits or establish short-term positions.
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INVESTMENT OBJECTIVE AND POLICIES. The investment objective, and investment
policies of a Fund that are identified as fundamental, may not be changed
without approval of the holders of a majority of a Fund's outstanding voting
securities, as defined in the Investment Company Act. Except as otherwise
indicated, however, a Fund's investment policies are not fundamental and may be
changed by the Board of Trustees without shareholder approval. A Fund will
apply the percentage restrictions on its investments set forth in its investment
policies when the investment is made. If the percentage of a Fund's assets
committed to a particular investment or practice later increases because of a
change in the market values of a Fund's assets or redemptions of Fund shares, it
will not constitute a violation of the limitation.
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MANAGEMENT
The business of the Trust and the Funds is managed under the direction of the
Board of Trustees. The Board formulates the general policies of the Funds and
meets periodically to review the Funds' performance, monitor investment
activities and practices, and discuss other matters affecting the Funds and the
Trust. Additional information regarding the Trustees, as well as the Company's
executive officers, may be found in the SAI under the heading "Management -
Trustees and Officers."
INVESTMENT ADVISER
CRM Advisors, LLC (the "Adviser"), 707 Westchester Avenue, White Plains, New
York 10604, serves as investment adviser to the Funds pursuant to an investment
advisory agreement with the Trust. Subject to the general control of the Board,
the Adviser makes investment decisions for the Funds. The Adviser is a limited
liability company organized under the laws of the State of New York on June 20,
1995, and is a registered investment adviser under the Investment Advisers Act
of 1940.
CRM has managed investments in small and medium capitalization companies for
over twenty-four years. As of the date of this prospectus, it has over $3.5
billion of assets under management. The following data relates to historical
performance of the portfolios of all private accounts managed by CRM that have
an investment style and objective substantially similar to a Fund's. The
private accounts, however, have a heavier weighting of mid-capitalization
issuers than the Fund. This data compares the performance of these portfolios
against the Russell 2500-TM- Index. It represents dollar weighted total rates of
return that include the impact of capital appreciation as well as the
reinvestment of interest and dividends. This data is unaudited, and does not
indicate how a Fund may perform in the future.
PERIOD (CALENDAR YEARS) CRM(1) RUSSELL 2500(2)
20 Years: 1977 - 1996 17.5% N/A
15 Years: 1982 - 1996 17.8% 15.2%
10 Years: 1987 - 1996 16.2% 13.9%
5 Years: 1992 - 1996 19.1% 16.0%
3 Years: 1994 - 1996 16.7% 15.8%
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1 Year: 1996 30.1% 19.0%
(1) CRM's results are a dollar weighted composite of tax-exempt, fully
discretionary, separately managed accounts that are over $1 million in size
and under CRM's management for at least 3 months. These accounts have
investment objectives and techniques similar to the Fund, but with a heavier
weighting of mid-capitalization issuers. The composite consists of 35
accounts with $834 million in assets (82% of tax-exempt equity accounts and
49% of all equity accounts). The modified Bank Administration Institute (BAI)
method is used to compute a time-weighted rate of return in accordance with
standards set by the Association for Investment Management and Research
(AIMR). The composite does not reflect all of the assets under CRM's
management and may not accurately reflect the performance of all accounts
it manages.
(2) The Russell 2500-TM- Index (the "Russell 2500") is a market weighted
index composed of 2500 companies with market capitalizations from $50
million to $3.9 billion. The index is unmanaged and reflects the
reinvestment of dividends.
The performance figures are net of advisory fees. The net effect of the
deduction of the operating expenses of the Funds on the annualized performance,
including the effect of compounding over time, may be substantial. SEE "Fee
Table."
All information relies on data supplied by the Adviser or from statistical
services, reports or other sources believed by the Trust to be reliable. It has
not been verified or audited.
The principals of CRM and the Adviser stand on a solid base of more than 130
years of collective investment experience. The principal shareholders and
portfolio managers of the Adviser are:
Gerald B. Cramer, Chairman of CRM, has been in investment banking and portfolio
management for the past thirty-nine years. Before co-founding and forming CRM in
1973, Mr. Cramer was a senior partner at Oppenheimer & Co. His responsibilities
include investment policy and portfolio management. He received a B.S. from
Syracuse University and attended the University of Pennsylvania Wharton Graduate
School of Finance.
Ronald H. McGlynn, President and Chief Executive Officer of CRM, is the
Adviser's Portfolio Manager. He has been with CRM for twenty-four years and is
responsible for investment policy, portfolio management, and investment
research. Prior to his association with CRM and the Adviser, Mr. McGlynn was a
Portfolio Manager at Oppenheimer & Co. He received a B.A. from Williams College
and an MBA from Columbia University.
Jay B. Abramson, Executive Vice President of CRM, is the Adviser's Director of
Research. He has been with CRM for eleven years and is responsible for
investment research and portfolio management. Mr. Abramson received a B.S.E. and
J.D. from the University of Pennsylvania Wharton School and Law School,
respectively. He is also a Certified Public Accountant. Mr. Abramson is
primarily responsible for the day-to-day management of the Fund's portfolio.
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Fred M. Filoon is President of the Funds and Senior Vice President of CRM. Mr.
Filoon has over 30 years of investment experience and is responsible for
portfolio management at CRM. Mr. Filoon received a B.A. from Bowdoin College
and attended New York University Business School.
For its services under the Advisory Agreement, the Adviser receives an advisory
fee at an annual rate of 0.75% of the average daily net assets of the Fund. The
Adviser's fees are accrued daily and paid monthly. The Adviser, at its sole
discretion, may waive all or any portion of its advisory fees. Any waiver would
have the effect of increasing the Fund's total return for the period during
which the waiver was in effect and would not be recouped by the Adviser at a
later date.
ADMINISTRATOR
On behalf of the Fund, the Trust has entered into an Administration Agreement
with Forum Financial Services, Inc. ("Forum"). As provided in this agreement,
Forum is responsible for the supervision of the overall management of the Trust
(including the Trust's receipt of services for which it must pay), providing the
Trust with general office facilities and providing persons satisfactory to the
Board of Trustees to serve as officers of the Trust. For these services, Forum
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of the Fund with an annual minimum of $40,000. Like the
Adviser, Forum, in its sole discretion, may waive all or any portion of its
fees.
Forum is located at Two Portland Square, Portland, Maine 04101. It was
incorporated under the laws of the State of Delaware on February 7, 1986 and as
of the date hereof manages, administers or distributes registered investment
companies and collective investment funds with assets of approximately $18
billion. Forum is a registered broker-dealer and is a member of the National
Association of Securities Dealers, Inc.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Forum acts as distributor
of the Funds' shares. Forum acts as the agent of the Trust in connection with
the offering of shares of the Funds. Forum receives no compensation for its
services under the Distribution Agreement. Forum may enter into arrangements
with banks, broker-dealers or other financial institutions ("Selected Dealers")
through which investors may purchase or redeem shares. Forum may, at its own
expense and from its own resources, compensate certain persons who provide
services in connection with the sale or expected sale of shares of the Funds.
Investors purchasing shares of the Funds through another financial institution
should read any materials and information provided by the financial institution
to acquaint themselves with its procedures and any fees that it may charge.
SHAREHOLDER SERVICES
The Trust has adopted a shareholder services plan providing that the Trust may
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 has authorized Forum to enter into agreements pursuant to which the
shareholder servicing agent performs certain shareholder services not otherwise
provided by the Funds' transfer agent. For these services, the Trust pays the
shareholder servicing agent a fee of up to 0.25% of the average daily net assets
of the Investor Shares owned by investors for which the shareholder servicing
agent maintains a servicing relationship.
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Among the services provided by shareholder servicing agents are: answering
customer inquiries regarding account matters; assisting shareholders in
designating and changing various account options; aggregating and processing
purchase and redemption orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Trust, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Fund
shares held beneficially; and providing such other services as the Trust or a
shareholder may request.
TRANSFER AGENT
The Trust has entered into a Transfer Agency Agreement with Forum Financial
Corp. ("FFC") pursuant to which FFC acts as the Funds' transfer agent and
dividend disbursing agent. FFC maintains an account for each shareholder of the
Trust (unless such accounts are maintained by sub-transfer agents), performs
other transfer agency functions and acts as dividend disbursing agent for the
Trust. In addition, FFC performs portfolio accounting services for the Funds,
including determination of the Funds' net asset value.
EXPENSES OF THE TRUST
A Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund. Subject to the obligation of the Adviser to reimburse a
Fund for excess expenses of a Fund, the Trust pays for all of its expenses. The
Adviser, Forum and FFC, in their sole discretion, may waive all or any portion
of their respective fees, which are accrued daily, and paid monthly. Any such
waiver, which could be discontinued at any time, would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
The Adviser has voluntarily undertaken to assume certain expenses of the Mid Cap
Value Fund Large Cap Value Fund, and All Cap Value Fund (or waive its respective
fees). This undertaking is designed to place a maximum limit on expenses
(including all fees to be paid to the Adviser but excluding taxes, interest,
brokerage commissions and other portfolio transaction expenses and extraordinary
expenses) of 1.50%, 1.25% and 1.25% of the average daily net assets of the Mid
Cap Value Fund, Large Cap Value Fund and All Cap Value Fund, respectively.
INVESTMENT IN A FUND
PURCHASES AND REDEMPTIONS OF SHARES - GENERAL
You may purchase or redeem shares of a Fund without a sales charge at their net
asset value on any weekday except on days when the New York Stock Exchange is
closed ("Fund Business Day"). The Trust does not accept orders on New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Thanksgiving and Christmas. The Fund's net asset value is
calculated at 4:00 p.m., Eastern time on each Fund Business Day. SEE
"Determination of Net Asset Value."
PURCHASES. Fund shares are issued at a price equal to the net asset value per
share next determined after an order in proper form is received and accepted. A
Fund reserves the right to reject any subscription for the purchase of its
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shares and may, in the Adviser's discretion, accept portfolio securities in lieu
of cash as payment for Fund shares. Fund shares become entitled to receive
dividends on the day after the shares are issued to an investor.
REDEMPTIONS. There is no redemption charge, no minimum period of investment, and
no restriction on frequency of redemptions. Shares are redeemed at a price equal
to the net asset value per share next determined following acceptance by FFC of
the redemption order in proper form (and any supporting documentation which FFC
may require). Shares redeemed are not entitled to participate in dividends
declared after the day on which a redemption becomes effective.
The date of payment of redemption proceeds may not be postponed for more than
seven days after shares are tendered to FFC for redemption by a shareholder of
record. The right of redemption may not be suspended except in accordance with
the provisions of the Investment Company Act.
MINIMUM INVESTMENTS. There is a $10,000 minimum for initial investments in a
Fund. For individual retirement accounts and automatic investment plans, the
investment minimum is $2,000. The minimum for subsequent investments is $100.
The Trust and the Administrator each reserve the right to waive the minimum
investment requirement.
ACCOUNT STATEMENTS. Shareholders will receive from the Trust periodic statements
listing account activity during the statement period.
SHARE CERTIFICATES. FFC maintains a shareholder account for each shareholder.
The Trust does not issue share certificates.
PURCHASE AND REDEMPTION PROCEDURES
You may obtain the account application by calling (800) 844-8258 or by writing
The CRM Funds at P.O. Box 446, Portland, Maine 04112.
INITIAL PURCHASE OF SHARES
MAIL. Investors may send a check made payable to "CRM Funds" with a completed
account application to:
The CRM Funds
P.O. Box 446
Portland, Maine 04112
Checks are accepted at full value subject to collection. All checks must be
drawn on a United States bank. If a check is returned unpaid, the purchase will
be canceled, and the investor will be liable for any resulting losses or fees
incurred by a Fund, the Adviser or FFC.
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BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FFC at
207-879-8910 or 800-844-8258 to obtain an account number. You should then
instruct a member commercial bank to wire your money immediately to:
The First National Bank of Boston
Boston, Massachusetts
ABA # 011000390
For Credit to: Forum Financial Corp.
Account # 541-54171
The CRM Funds
(Investor's Name)
(Investor's Account Number)
You should then promptly complete and mail the account application.
If you plan to wire funds, you should instruct your bank early in the day so the
wire transfer can be accomplished the same day. Your bank may assess charges for
transmitting the money by bank wire and for use of Federal Funds. The Trust does
not charge investors for the receipt of wire transfers. Payment in the form of a
bank wire received prior to 4:00 p.m., Eastern time on a Fund Business Day will
be treated as a Federal Funds payment received before that time.
THROUGH BROKERS. You may purchase and redeem shares of a Fund through brokers
and other financial institutions that have entered into sales agreements with
Forum. These institutions may charge a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Trust. The Trust is not responsible for the failure of any institution to
promptly forward these requests.
If you purchase shares through a broker-dealer or financial institution, your
purchase will be subject to its procedures, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. You should acquaint yourself with the institution's procedures and
read this Prospectus in conjunction with any materials and information provided
by your institution. If you purchase a Fund's shares in this manner, you may or
may not be the shareholder of record and, subject to your institution's and a
Fund's procedures, may have a Fund's shares transferred into your name. There is
typically a one to five day settlement period for purchases and redemptions
through broker-dealers.
AUTOMATIC INVESTMENT PLAN. Current shareholders may purchase additional shares
by arranging systematic monthly, bi-monthly or quarterly investments into a Fund
with an automatic investment plan. The initial minimum is $2,000 and the
minimum subsequent automatic investment is $100. After shareholders give the
Trust proper authorization, their bank accounts, which must be with banks that
are members of the Automated Clearing House, will be debited accordingly to
purchase shares. Shareholders will receive a confirmation from the Trust for
every transaction, and a withdrawal will appear on their bank statements.
To participate in an automatic investment plan, shareholders must complete the
appropriate sections of the enrollment form. This form may be obtained by
calling the Trust at 207-879-8910 or 800-844-8258. The amount shareholders
specify will automatically be invested in shares at the Fund's net asset value
per share next determined after payment is received by the Trust.
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SUBSEQUENT PURCHASES OF SHARES
You may purchase additional shares of a Fund by mailing a check or sending a
bank wire as indicated above. Shareholders using the wire system for subsequent
purchases should first telephone FFC at 207-879-8910 or 800-844-8258 to notify
it of the wire transfer. All payments should clearly indicate the shareholder's
name and account number.
REDEMPTION OF SHARES
Redemption requests will not be effected unless any check used for investment
has been cleared by the shareholder's bank, which may take up to 15 calendar
days. This delay may be avoided by investing in a Fund through wire transfers.
Normally redemption proceeds are paid immediately following any redemption, but
in no event later than seven days after redemption, by check mailed to the
shareholder of record at his record address. Shareholders that wish to redeem
shares by Telephone or by Bank Wire must elect these options by properly
completing the appropriate sections of their account application. These
privileges may be modified or terminated by the Trust at any time.
Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $10,000 ($2,000
for IRAs or automatic investment plans). A Fund will not redeem accounts that
fall below these amounts solely as a result of a reduction in net asset value of
a Fund's shares.
REDEMPTION BY MAIL. You may redeem all or any number of your shares by sending a
written request to FFC at the address above. You must sign all written requests
for redemption and provide a signature guarantee. SEE "Signature Guarantees."
TELEPHONE REDEMPTIONS. A shareholder that has elected telephone redemption
privileges may make a telephone redemption request by calling FFC at
207-879-8910 or 800-844-8258. The minimum amount for a telephone redemption
is $1,000. In response to the telephone redemption instruction, a Fund will
mail a check to the shareholder's record address or, if the shareholder has
elected wire redemption privileges, wire the proceeds.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, the Trust and FFC will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FFC with the
shareholder's account number, the exact name in which the shares are registered
and some additional form of identification such as a password. The Trust or FFC
may employ other procedures such as recording certain transactions. If such
procedures are followed, neither FFC nor the Trust will be liable for any losses
due to unauthorized or fraudulent redemption requests. Shareholders should
verify the accuracy of telephone instructions immediately upon receipt of
confirmation statements.
During times of drastic economic or market changes, it may be difficult to make
a redemption by telephone. If you cannot reach FFC by telephone, you may mail or
hand-deliver your request to FFC at Two Portland Square, Portland, Maine 04101.
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BANK WIRE REDEMPTIONS. If you have elected wire redemption privileges, a Fund
will upon request transmit the proceeds of any redemption greater than $10,000
by Federal Funds wire to a bank account designated on your account application.
If you wish to request bank wire redemptions by telephone, you must also elect
telephone redemption privileges.
EXCHANGE PRIVILEGE
Shareholders of a Fund may exchange their shares for shares of the Daily Assets
Treasury Fund, a money market fund managed by Forum and a separate series of
Forum Funds. You may receive a copy of that fund's prospectus by writing FFC or
calling (800) 844-8258. No sales charges are imposed on exchanges between a Fund
and the Daily Assets Treasury Fund.
EXCHANGE PROCEDURES. You may request an exchange by writing to FFC at Two
Portland Square, Portland, Maine 04101. The minimum amount for an exchange to
open an account in the Daily Assets Treasury Fund is $2,500. Exchanges may only
be made between identically registered accounts. You do not need to complete a
new account application, unless you are requesting different shareholder
privileges for the new account. A Fund reserves the right to reject any exchange
request and may modify or terminate the exchange privilege at any time. There is
no charge for the exchange privilege or limitation as to frequency of exchanges.
An exchange of shares in a Fund pursuant to the exchange privilege is, in
effect, a redemption of a Fund's shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes. The exchange privilege is available to
shareholders residing in any state in which shares of the Daily Assets Treasury
Fund may legally be sold.
TELEPHONE EXCHANGES. If you have elected telephone exchange privileges, you may
request an exchange by calling FFC at (800) 844-8258. The Funds and FFC are not
responsible for the authenticity of telephone instructions or losses, if any,
resulting from unauthorized telephone exchange requests. The Funds employ
reasonable procedures to insure that telephone orders are genuine and, if it
does not, may be liable for any losses due to unauthorized transactions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements.
OTHER INVESTMENT INFORMATION
CHANGES TO ACCOUNT INFORMATION. To change the record name or address of your
account, the designated bank account, the dividend election, or the telephone
redemption option election on an account, you must provide a signature
guarantee.
SIGNATURE GUARANTEES. When a signature guarantee is called for, you must have
"Signature Guaranteed" stamped under your signature and signed by a commercial
bank or trust company, a broker, dealer or securities exchange, a credit union
or a savings association that is authorized to guarantee signatures.
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RETIREMENT ACCOUNTS
A Fund may be a suitable investment for part or all of the assets held in
retirement such as IRAs, SEP-IRAs, Keoghs, or other types of retirement
accounts. The minimum initial investment for investors opening a retirement
account or investing through your own IRA is $2,000. There is no minimum for
subsequent investments.
For information on investing in a Fund for retirement, and retirement account
plans, call FFC at (800) 844-8258, or write to Two Portland Square, Portland,
Maine 04101.
DIVIDENDS AND TAX MATTERS
DIVIDENDS
For the Small Cap Value Fund, Mid Cap Value Fund, and All Cap Value Fund
dividends representing the net investment income, if any, are declared and paid
annually. For the Large Cap Value Fund, dividends representing the net
investment income, if any, are declared and paid quarterly. Net capital gains
realized by a Fund, if any, also will be distributed annually. All dividends and
net capital gains distributions are reinvested in additional shares of a Fund,
unless you elect to receive distributions in cash. For Federal income tax
purposes, dividends are treated the same whether they are received in cash or
reinvested in additional shares of a Fund. SEE "Taxes."
Income dividends will be reinvested at a Fund's net asset value as of the last
day of the period with respect to which the dividends are paid and capital gains
dividends will be reinvested at the net asset value of a Fund on the payment
date for the dividend. Cash payments may be made more than seven days following
the date on which dividends would otherwise be reinvested.
TAXES
Each Fund intends to qualify for each fiscal year and elect to be treated as a
"regulated investment company," or "RIC," under Subchapter M of the Internal
Revenue Code of 1986 (the "Code"). As a RIC, a Fund is not liable for Federal
income and excise taxes on the net investment income and capital gains that it
distributes to shareholders in accordance with applicable provisions of the
Code. Each Fund intends to distribute all of its net income and net capital
gains each year. Accordingly, a Fund should not be subject to Federal income and
excise taxes.
Dividends paid by a Fund out of its net investment income and short-term capital
gains are taxable to its shareholders as ordinary income. Distributions of a
Fund's net long-term capital gains, if any, are taxable to the shareholders as
long-term capital gains, regardless of the length of time the shareholder has
held shares in a Fund at the time of distribution. A portion of a Fund's
dividends may qualify for the dividends received deduction available to
corporations.
If a shareholder holds shares for six months or less and redeems shares at a
loss after receiving a distribution taxable to the shareholder as a long-term
capital gain, the loss would be treated as a long-term capital loss to the
extent of the distribution.
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Any dividend or other distribution received by a shareholder on shares of a Fund
will reduce the net asset value of the shareholder's shares by the amount of the
dividend or distribution. Furthermore, a dividend or distribution made shortly
after the purchase of shares by a shareholder, although in effect a return of
capital, would still be taxable to the shareholder as a dividend as described
above.
Dividends and other distributions to shareholders are treated in the same manner
for Federal income tax purposes whether received in cash or reinvested in
additional shares of a Fund.
Each Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemptions) made
to a non-corporate shareholder unless the shareholder certifies in writing that
the social security or tax identification number provided by the shareholder is
correct and that the shareholder is not subject to backup withholding for prior
underreporting to the Internal Revenue Service.
Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by a Fund will be
mailed to shareholders shortly after the close of each year.
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of a Fund as of 4:00 P.M.,
Eastern time, on each Fund Business Day by dividing the value of a Fund's net
assets (I.E., the value of its securities and other assets less its liabilities,
including expenses payable or accrued but excluding capital stock and surplus)
by the number of shares outstanding at the time the determination is made.
Securities owned by a Fund for which market quotations are readily available are
valued using the last reported sales price provided by independent pricing
services. If no sale price is reported, the mean of the last bid and ask price
is used. If no mean price is available, the last bid price is used. In the
absence of readily available market quotations, securities are valued at fair
value as determined by the valuation committee of the Board of Trustees.
Purchases and redemptions will be effected at the time of determination of net
asset value next following the receipt of any purchase or redemption order as
described under "Purchases and Redemptions of Shares."
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on April 24, 1995. The Board has the authority to issue an unlimited
number of shares of beneficial interest of separate series with no par value per
share and to create classes of shares within each series. Currently, the
authorized shares of the Trust are divided into four separate series.
The Funds may issue shares of other classes. The Funds currently issue two
classes of shares: Investor Shares and Institutional Shares, and may in the
future create additional class types. Institutional Shares are offered to
fiduciary, agency and custodial clients of bank trust departments, trust
companies and their affiliates. Each class of a Fund will have a different
expense ratio and may have different sales charges (including distribution
fees). Each class' performance is affected by its expenses and sales charges.
Currently, neither share class has a sales charge. Investors may contact FFC
for more information on either share class. Sales personnel of broker-dealers
and other
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financial institutions selling the Funds' shares may receive differeing
compensation for selling Investor Shares and Institutional Shares of the
Funds. Each share of each series of the Trust and each class of shares has
equal dividend, distribution, liquidation and voting rights, and fractional
shares have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency and administration expenses) are borne solely by those shares
and each class votes separately with respect to the provisions of any Rule
12b-1 plan which pertains to the class and other matters for which separate
class voting is appropriate under applicable law. Generally, shares will be
voted in the aggregate without reference to a particular series or class,
except if the matter affects only one series or class or voting by series or
class is required by law, in which case shares will be voted separately by
series or class, as appropriate.
Delaware law does not require the Trust to hold annual meetings of shareholders,
and it is anticipated that shareholder meetings will be held only when
specifically required by federal or state law. Shareholders (and Trustees) have
available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholders, subject to any contingent deferred sales charge that may
apply. A shareholder in a series is entitled to the shareholder's pro rata share
of all dividends and distributions arising from that series' assets and, upon
redeeming shares, will receive the portion of the series' net assets represented
by the redeemed shares. SEE "OTHER INFORMATION - The Trust and its
Shareholders" in the SAI.
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THE CRM FUNDS
SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
ALL CAP VALUE FUND
PROSPECTUS
JANUARY 1, 1998
EACH OF THESE FUNDS SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES, USING A VALUE-ORIENTED APPROACH.
INVESTMENT ADVISER:
CRM ADVISORS, LLC,
AN AFFILIATE OF CRAMER ROSENTHAL MCGLYNN, INC.
1-800-CRM-2883
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS. . . . . . . . . . . . . . . 8
Investment Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Investment Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . .10
ADDITIONAL INVESTMENT PRACTICES. . . . . . . . . . . . . . . . . . . . .12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . .16
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Expenses of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . .16
INVESTMENT IN A FUND . . . . . . . . . . . . . . . . . . . . . . . . . .17
Purchases and Redemption of Shares . . . . . . . . . . . . . . . . . . .17
Purchase and Redemption Procedures . . . . . . . . . . . . . . . . . . .17
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Other Investment Information . . . . . . . . . . . . . . . . . . . . . .21
DIVIDENDS AND TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . .21
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . .22
The Trust and Its Shares . . . . . . . . . . . . . . . . . . . . . . . .22
<PAGE>
THE CRM FUNDSSMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
ALL CAP VALUE FUND
- --------------------------------------------------------------------------------
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Financial Corp.
Two Portland Square P.O. Box 446
Portland, Maine 04101 Portland, Maine 04112
800-CRM-2883 800-844-8258
800-276-2883
INVESTMENT ADVISOR:
CRM Advisors, LLC
707 Westchester Avenue
White Plains, New York 10604
- --------------------------------------------------------------------------------
PROSPECTUS
JANUARY 1, 1998
This Prospectus offers institutional shares ("Shares") of the Small Cap
Value Fund, Mid Cap Value Fund, Large Cap Value Fund and All Cap Value Fund
(each a "Fund" and collectively, the "Funds"), each a diversified portfolio of
The CRM Funds (the "Trust"), an open-end, management investment company.
The Funds seek long-term capital appreciation by investing
primarily in equity securities, using a value-oriented approach.
Shares of the Funds are offered to investors without any sales charge.
Please read this Prospectus before investing in the Funds,
and retain it for future reference.
It contains important information about the Funds, their investments
and the services available to shareholders.
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To learn more about the Funds and the Trust, you may obtain a copy of the Funds'
Statement of Additional Information, dated January 1, 1998, as amended from time
to time (the "SAI"). The SAI has been filed with the Securities and Exchange
Commission ("SEC") and is available together with other related materials for
reference on the SEC's Internet Web Site (http://www.sec.gov). The SAI is
incorporated by reference into this Prospectus and may be obtained without
charge from the Trust by writing to Two Portland Square, Portland, Maine 04101
or by calling 1-800-CRM-2883.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
3
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PROSPECTUS SUMMARY
SMALL CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with small market
capitalizations, using a value-oriented approach. A small capitalization
company has a market capitalization -- in other words, the value the stock
market assigns all of the company's shares -- of $1 billion or less at the time
of the Fund's investment.
MID CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with medium
market capitalizations, using a value-oriented approach. A medium
capitalization company has a market capitalization of between $1 billion and $10
billion at the time of the Fund's investment.
LARGE CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with large market
capitalizations, using a value-oriented approach. A large capitalization
company has a market capitalization of greater than $10 billion at the time of
the Fund's investment.
ALL CAP VALUE FUND
GOAL: Long-term capital appreciation.
STRATEGY: Invests primarily in equity securities of companies with varying
market capitalizations, using a value-oriented approach.
MANAGEMENT. CRM Advisors, LLC (the "Adviser"), an affiliate of Cramer Rosenthal
McGlynn, Inc. ("CRM") with the same principals and portofolio managers as CRM,
is each Fund's investment adviser and makes investment decisions for the Funds.
Forum Financial Services, Inc. is the administrator and distributor of the
Funds. SEE "Management" for more detailed information.
The Funds' investment adviser employs a "value" approach to the Funds'
investments, seeking to identify companies that have experienced fundamental
change, are intrinsically undervalued or are misunderstood by the investment
community. The Portfolio Managers view investment prospects on a long-term
basis and do not attempt to time the market. See "Investment Objective,
Strategies and Risks" for more detailed information.
SHARES OF THE FUNDS. Each Fund currently offers two separate classes of shares:
Investor Shares and Institutional Shares. Institutional Shares are sold through
this Prospectus. Investor Shares are offered by a separate prospectus. Shares
of each class of a Fund have identical interests in the investment portfolio of
the Fund and, with certain exceptions, have the same rights. See "Other
Information -- The Trust and Its Shares."
PURCHASES AND REDEMPTIONS. Shares of the Funds may be purchased or redeemed
without any sales charges Monday through Friday except on days that the New York
Stock Exchange is closed ("Fund Business Day"). The
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initial minimum investment for each Fund is $10,000 or $2,000 for retirement
accounts and automatic investment plans. The minimum for subsequent investments
in a Fund is $100. SEE "Investment in the Funds" for more detailed information.
DIVIDENDS. For the Small Cap Value Fund, Mid Cap Value Fund and All Cap Value
Fund, dividends representing the net investment income are declared and paid at
least annually. For the Large Cap Value Fund, dividends representing the net
investment income are declared and paid at least quarterly. Net capital gains
realized by a Fund, if any, also will be distributed annually. Dividends and
distributions are reinvested in additional shares of a Fund unless a shareholder
elects to have them paid in cash. SEE "Dividends and Tax Matters" for more
detailed information.
RISK CONSIDERATIONS
The Funds do not invest for income, and each Fund does not by itself provide a
complete or balanced investment program. It may be an appropriate investment for
investors willing to tolerate possibly significant fluctuations in a Fund's net
asset value while seeking long-term returns that are potentially higher than
market averages. A company's market capitalization is the total market value of
its outstanding common stock. The securities of small and medium capitalization
companies typically are more thinly traded than those of larger companies. Small
and medium capitalization securities may have greater growth potential in the
long-run than other types of securities. In the shorter term, however, the
prices of small and medium capitalization securities may fluctuate significantly
in response to news about the company, the markets or the economy. Other
investments and investment techniques of the Funds, such as investments in
securities of foreign issuers, may entail additional risks or have speculative
characteristics. SEE "Investment Objective, Strategies and Risks" for more
detailed information.
Of course, as with any mutual fund, there is no assurance that a Fund will
achieve its investment objective.
5
<PAGE>
FEE TABLES
The following tables should help you understand the various costs and expenses
that you will bear if you invest in a Fund.
Shareholder transaction expenses are charges an investor would pay when buying,
selling or exchanging shares of a Fund. Operating expenses, which are paid out
of a Fund's assets, and other expenses for services, such as maintaining
shareholder accounts, are factored into a Fund's share price and not charged
directly to shareholder accounts.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on
purchases None
Maximum sales load imposed on None
reinvested dividend
Deferred sales load None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES(1)
SMALL CAP VALUE FUND
Advisory Fees .75%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses _%
Total Fund Operating Expenses
(after waivers or reimbursements)(2) 1.25%
MID CAP VALUE FUND
Advisory Fees .75%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses _%
Total Fund Operating Expenses
(after waivers or reimbursements)(3) 1.25%
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LARGE CAP VALUE FUND
Advisory Fees .50%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses _%
Total Fund Operating Expenses
(after waivers or reimbursements)(3) 1.25%
ALL CAP VALUE FUND
Advisory Fees .50%
12b-1 Fees None
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses _%
Total Fund Operating Expenses
(after waivers or reimbursements) 1.25%
(1) Annual Fund Operating Expenses are calculated as a percentage of average
net assets after waivers and reimbursements.
(2) The amounts of fees and expenses are based on amounts incurred by the Small
Cap Value Fund during the Small Cap Value Fund's most recent fiscal year ending
September 30, 1997. Absent expense reimbursements and fee waivers, the fees and
expenses for the Small Cap Value Fund would have been: Advisory Fees: 0.75%,
Other Expenses: %, and Total Fund Operating Expenses: %. SEE "Management," for
a more detailed description of the various costs and expenses incurred in the
Small Cap Value Fund's operation. Expense reimbursements and fee waivers are
voluntary and may be reduced or eliminated at any time.
(3) The amounts of fees and expenses are based upon projected annual operating
expenses for the upcoming year for Mid Cap Value Fund, Large Cap Value Fund, and
All Cap Value Fund. The Adviser has voluntarily undertaken to waive a portion of
its fees and assume certain expenses of the Mid Cap Value Fund, Large Cap Value
Fund and All Cap Value Fund to the extent that total expenses exceed 1.--%, 1.--
% and 1.--%, respectively. See page __ for further explanation of these fees.
EXAMPLE
The following is a hypothetical example that indicates the dollar amount of
expenses that an investor in a Fund would pay assuming a $1,000 investment in
the Fund, a 5% annual return, the reinvestment of all dividends and
distributions and redemption at the end of each period. The example is based on
projected expenses of the Mid Cap Value Fund's, Large Cap Value Fund's and All
Cap Value Fund's first year of operation.
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SMALL CAP MID CAP LARGE CAP ALL CAP
VALUE FUND VALUE FUND VALUE FUND VALUE FUND
After 1 Year $15 $15 $15 $15
After 3 Years $47 $47 $47 $47
After 5 Years $81 $81 $81 $81
After 10 Years $178 $178 $178 $178
The example is based on the expenses listed in the table. The five percent
annual return is not predictive of and does not represent the Fund's projected
returns; rather, it is required by government regulation. THE EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL
EXPENSES AND RETURN MAY BE GREATER OR LESS THAN INDICATED.
FINANCIAL HIGHLIGHTS
The following table represents selected data for a single outstanding share of
the Small Cap Value Fund for the period shown. This information has been
audited in connection with an audit of the Small Cap Value Fund's financial
statements by xxxxxxx, independent auditors. The Small Cap Value Fund's
financial statements and independent auditors' report thereon are incorporated
by reference into the SAI. Further information about the Small Cap Value Fund's
performance is contained in the Annual Report to shareholders, which may be
obtained from the Trust without charge by calling 1-800-CRM-2883.
SMALL CAP VALUE FUND
YEAR ENDED SEPTEMBER 30 1996 1997
BEGINNING NET ASSET VALUE PER SHARE $ 10.00
Net investment loss (0.02)
Net realized and unrealized gain on securities 3.73
Dividends from net investment income (a) --
ENDING NET ASSET VALUE PER SHARE $ 13.71
RATIOS TO AVERAGE NET ASSETS:
Expenses (b) 1.49%
Net investment loss (0.40)%
TOTAL RETURN 37.15%
PORTFOLIO TURNOVER RATE 111.18%
AVERAGE BROKERAGE COMMISSION RATE (c) $0.0374
NET ASSETS AT THE END OF PERIOD ^(000's omitted) $45,385
(a) Less than $0.01 per share.
(b) During the period, various fees and expenses were waived and reimbursed,
respectively. Had such waivers and reimbursements not occurred, the
expenses would have been 1.98% of average net assets.
(c) Amount represents the average commission per share, paid to brokers, on the
purchase and sale of portfolio securities.
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<PAGE>
Financial highlights information is not included for the Mid Cap Value Fund,
Large Cap Value Fund and All Cap Value Fund, because these Funds commenced
operations on January 1, 1998. Further information will be contained in the
Semi-Annual Report, which will be sent to shareholders when these Funds have
been in operation for three months.
PERFORMANCE
The Funds may, from time to time, include quotations of its average annual total
return, cumulative total return and other non-standard performance measures in
advertisements or reports to shareholders or prospective investors. Average
annual total return is based upon the overall dollar or percentage change in
value of a hypothetical investment each year over specified periods. Average
annual total returns reflect the deduction of a proportional share of a Fund's
expenses (on an annual basis) and assume investment and reinvestment of all
dividends and distributions at NAV. For a description of the methods used to
determine total return and other performance measures for the Funds, please see
the SAI.
The Funds' fiscal year runs from October 1 to September 30. The table below
shows the Small Cap Value Fund's performance over the past fiscal year compared
to investing in a broad selection of stocks as measured by the S&P 500 and
Russell 2000 Index.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE YEAR ENDED 9/30/97 PAST 1 YEAR
Small Cap
Value Fund %
S&P 500 %
Russell 2000 Index %
The Funds may also be compared to various unmanaged securities indices, groups
of mutual funds tracked by mutual fund ratings services, or other general
economic indicators. Unmanaged indices may assume the reinvestment of dividends
but do not reflect deductions for administrative and management costs and
expenses. They also do not include any allowance for the brokerage commissions
or other fees you would pay if you actually invested in those stocks.
The S&P 500 is the Standard & Poor's 500-Registered Trademark- Index, a widely
recognized, unmanaged index of common stock prices. The S&P 500 figures assume
reinvestment of all dividends paid by stocks included in the Index.
The Russell 2000-Registered Trademark- Index (the "Russell 2000") is a market
weighted index composed of 2000 companies with market capitalizations from $50
million to $1.8 billion. The index is unmanaged and reflects the reinvestment of
dividends.
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<PAGE>
PERFORMANCE INFORMATION REPRESENTS ONLY PAST PERFORMANCE AND DOES NOT
NECESSARILY INDICATE FUTURE RESULTS.
INVESTMENT OBJECTIVES,
STRATEGIES AND RISKS
INVESTMENT OBJECTIVE
Each Fund's investment objective is long-term capital appreciation. The
investment objective of a Fund may not be changed without the approval of
shareholders.
SMALL CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of small capitalization companies. A
small capitalization company has a market capitalization -- in other words, the
value the stock market assigns all of the company's shares -- of $1 billion or
less at the time of the Fund's investment. Companies whose capitalization
exceeds $1 billion after purchase will continue to be considered small for
purposes of this 65% policy. The Small Cap Value Fund may also invest to a
limited degree in companies that have larger market capitalizations. A company
may have a small market capitalization because it is new or has recently gone
public, or because it operates in a minor industry or regional market. These
companies may respond more quickly to change in an industry, and are expected to
increase their earnings more rapidly than larger companies. Historically, small
companies have offered greater opportunity for capital appreciation than larger,
more established companies. At the same time, investing in small companies can
be riskier than other investments.
MID CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of medium capitalization companies. A
medium capitalization company has a market capitalization between $1 billion and
$10 billion at the time of the Fund's investment. Companies whose capitalization
falls below $1 billion or exceeds $10 billion after purchase will continue to be
considered medium for purposes of this 65% policy. The Mid Cap Value Fund may
also invest to a limited degree in companies that have smaller and larger market
capitalizations.
LARGE CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of large capitalization companies. A
large capitalization company has a market capitalization greater than $10
billion at the time of the Fund's investment. Companies whose capitalization
falls below $10 billion after purchase will continue to be considered large for
purposes of this 65% policy. The Large Cap Value Fund may also invest to a
limited degree in companies that have smaller market capitalizations.
ALL CAP VALUE FUND seeks to achieve its objective by investing at least 65% of
its total assets in the equity securities of companies with varying market
capitalizations.
INVESTMENT STRATEGIES
Value investing provides investors with a less aggressive way to take advantage
of growth opportunities of companies. Using a value approach, the Funds will
seek to invest in stocks priced low relative to comparable companies, determined
by price/earnings ratios, cash flows or other measures. Value investing
therefore may reduce
10
<PAGE>
downside risk while offering potential for capital appreciation as a stock gains
favor among other investors and its stock price rises.
The Funds will be managed in accordance with the investment disciplines that CRM
has employed in managing its equity portfolios for over twenty-four years. The
Adviser relies on stock selection to achieve its results, rather than trying to
time market fluctuations. It seeks out those stocks that are undervalued and, in
some cases, neglected by financial analysts, evaluating the degree of investor
recognition by monitoring the number of analysts who follow the company and
recommend its purchase or sale to investors. The Adviser begins the investment
process by identifying early dynamic change in a company's operations, finances,
or management. This type of dynamic change tends to be material, and may create
misunderstanding in the marketplace, and result in a company's stock becoming
undervalued.
Once change is identified, the Adviser evaluates the company on several levels.
It analyzes financial models based principally upon projected cash flow, as
opposed to reported earnings. The price of the company's stock is evaluated in
the context of what the market is willing to pay for stock of comparable
companies and what a strategic buyer would pay for the whole company. Another
important consideration is the extent of management's ownership interest in the
company. Finally, the Adviser analyzes the company's market, in most instances,
corroborating its observations and assumptions by meeting with management,
customers, and suppliers.
By reviewing historical relationships and understanding the characteristics of a
business, the Adviser establishes valuation parameters using relative ratios or
target prices. In its overall assessment, the Adviser seeks stocks that it
believes have a greater upside potential than risk over an 18 to 24 month
holding period.
INVESTMENT RISKS
GENERALLY. An investment in each of the Funds is not by itself a complete or
balanced investment program. Nevertheless, the small, medium, and large
capitalization segments of the equity markets may be an important part of an
investor's portfolio, particularly for long-term investors able to tolerate
short-term fluctuations in a Fund's net asset value.
Because the Adviser will seek securities that are undervalued by the market,
there is a risk that the market will not recognize a security's intrinsic value
for an unexpectedly long time, or that the Adviser believes undervalued is
actually priced appropriately due to intractable or fundamental problems that
are not yet apparent.
SMALL AND MID CAP FUNDS. The Small Cap Value Fund's and the Mid Cap Value
Fund's investments in small and medium size companies can entail more risk than
investing in larger, more established companies. These companies may have more
limited product lines, markets, and financial resources, making them more
susceptible to economic or market setbacks. Analysts and other investors
typically follow small and medium sized companies less actively, and information
about these companies is not always readily available. For these and other
reasons, the prices of small and mid capitalization securities may fluctuate
more significantly than the securities of larger companies, in response to news
about the company, the markets or the economy. As a result, the price of the
Small Cap Value and Mid Cap Value Funds' shares may exhibit a higher degree of
volatility than the market averages.
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A significant portion of the securities in the Small Cap Value Fund's portfolio
are traded in the over-the-counter markets or on a regional securities exchange,
and may be more thinly traded and volatile than the securities of larger
companies. In addition, securities traded in the over-the-counter market or on
a regional securities exchange may not be traded every day or in the volume
typical of securities traded on a national exchange. To a smaller extent, these
characteristics apply to the investments of the Mid Cap Value Fund. There may be
occasions therefore when the Small Cap Value or Mid Cap Value Fund must sell a
portfolio security to meet redemptions at a discount from market prices, or
otherwise sell during periods when disposition is not desirable, or make many
small sales over a lengthy period of time.
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INVESTMENT POLICIES
Under normal conditions, each Fund will invest at least 65% of its assets in
equity securities.
EQUITY SECURITIES may include common and preferred stock, convertible securities
and warrants. COMMON STOCK represents an equity or ownership interest in a
company. Although this interest often gives a Fund the right to vote on measures
affecting the company's organization and operations, a Fund does not intend to
exercise control over the management of companies in which it invests. Common
stocks have a history of long-term growth in value, but their prices tend to
fluctuate in the shorter term.
PREFERRED STOCK generally does not exhibit as great a potential for appreciation
or depreciation as common stock, although it ranks above common stock in its
claim on income from dividend payments. CONVERTIBLE SECURITIES are securities
that may be converted either at a stated price or formula within a specified
period of time into a specified number of shares of common stock. Traditionally,
convertible securities have paid dividends or interest greater than common
stocks, but less than fixed income or non-convertible securities. By investing
in a convertible security, a Fund may participate in any capital appreciation or
depreciation of a company's stock, but to a lesser degree than its common stock.
A Fund may invest in preferred stock and convertible securities rated BBB or
higher by Standard & Poor's Corporation, Baa by Moody's Investors Service, Inc.,
or the equivalent in the case of unrated instruments. SEE "Description of
Securities Ratings" in Appendix A to the SAI.
WARRANTS are options to purchase an equity security at a specified price at any
time during the life of the warrant. Unlike convertible securities and preferred
stocks, warrants do not pay a fixed dividend. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of a Fund's entire
investment therein).
The market value of all securities, including equity securities, is based upon
the market's perception of value and not necessarily the book value of an issuer
or other objective measure of a company's worth.
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AMERICAN DEPOSITORY RECEIPTS ("ADRS"). A Fund may invest in ADRs, which are
receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. ADRs, in registered form, are
designed for use in U.S. securities markets. In a "sponsored" ADR, the foreign
issuer typically bears certain expenses of maintaining the ADR facility.
"Unsponsored" ADRs may be created without the participation of the foreign
issuer. Holders of unsponsored ADRs generally bear all the costs of the ADR
facility. The bank or trust company depository of an unsponsored ADR may be
under no obligation to distribute shareholder communications received from the
foreign issuer or to pass through voting rights.
SECURITIES OF OTHER INVESTMENT COMPANIES. A Fund may invest in shares of other
investment companies to the extent permitted by the Investment Company Act of
1940 ("Investment Company Act"). To the extent a Fund invests in shares of an
investment company, it will bear its pro rata share of the other investment
company's expenses, such as investment advisory and distribution fees, and
operating expenses.
ILLIQUID AND RESTRICTED SECURITIES. As a nonfundamental investment policy, a
Fund may not purchase a security if, as a result, more than 10% of its net
assets would be invested in illiquid securities. A security is considered
ILLIQUID if it may not be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which a Fund has valued the
security. Over-the-counter options, repurchase agreements not entitling the
holder to payment of principal in 7 days, and certain "restricted securities"
may be illiquid.
A security is RESTRICTED if it is subject to contractual or legal restrictions
on resale to the general public. A liquid institutional market has developed,
however, for certain restricted securities such as repurchase agreements,
commercial paper, foreign securities and corporate bonds and notes. Thus,
restrictions on resale do not necessarily indicate the liquidity of the
security. For example, if a restricted security may be sold to certain
institutional buyers in accordance with Rule 144A under the Securities Act of
1933 or another exemption from registration under the Securities Act, the
Adviser may determine that the security is liquid under guidelines adopted by a
Fund's Board of Trustees. These guidelines take into account trading activity in
the securities and the availability of reliable pricing information, among other
factors. With other restricted securities, however, there can be no assurance
that a liquid market will exist for the security at any particular time. A Fund
might not be able to dispose of such securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemptions. A Fund treats
such holdings as illiquid.
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ADDITIONAL INVESTMENT PRACTICES
CONCENTRATION. As a fundamental investment policy, a Fund may not purchase a
security (other than U.S. Government Securities) if as a result more than 25% of
its net assets would be invested in a particular industry.
DIVERSIFICATION. As a fundamental investment policy, a Fund may not purchase a
security if, as a result (a) more than 5% of a Fund's total assets would be
invested in the securities of a single issuer, or (b) a Fund would own more than
10% of the outstanding voting securities of a single issuer. This limitation
applies only with respect to 75% of a Fund's total assets and does not apply to
U.S. Government Securities.
BORROWING. As a fundamental investment policy, a Fund may borrow money for
temporary or emergency purposes, including the meeting of redemption requests,
in amounts up to 33 1/3% of a Fund's total assets. As a
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nonfundamental investment policy, a Fund may not purchase portfolio securities
if its outstanding borrowings exceed 5% of its total assets or borrow for
purposes other than meeting redemptions in an amount exceeding 5% of the value
of its total assets at the time the borrowing is made.
Borrowing involves special risk considerations. Interest costs on borrowings may
fluctuate with changing market rates of interest and may partially offset or
exceed the return earned on borrowed funds (or on the assets that were retained
rather than sold to meet the needs for which funds were borrowed). Under adverse
market conditions, a Fund might need to sell portfolio securities to meet
interest or principal payments at a time when investment considerations would
not favor such sales.
CASH AND TEMPORARY DEFENSIVE POSITIONS. A Fund will hold a certain portion of
its assets in cash or cash equivalents to retain flexibility in meeting
redemptions, paying expenses, and timing of new investments. Cash equivalents
may include (i) short-term obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities ("U.S. Government Securities"),
(ii) certificates of deposit, bankers' acceptances and interest-bearing savings
deposits of commercial banks doing business in the United States that have an A+
rating from Standard & Poor's Corporation or an A-1+ rating from Moody's
Investors Service, Inc., (iii) commercial paper rated P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Corporation, (iv) repurchase
agreements covering any of the securities in which a Fund may invest directly,
and (v) money market mutual funds.
In addition, when the Adviser believes that business or financial conditions
warrant, a Fund may assume a temporary defensive position. During such periods,
a Fund may invest without limit in cash or cash equivalents. When and to the
extent a Fund assumes a temporary defensive position, it will not pursue its
investment objective.
SHORT SALES. A Fund may not enter into short sales, except short sales "against
the box." In a short sale against the box, a Fund sells securities it owns, or
has the right to acquire at no added cost. A Fund does not immediately deliver
the securities sold, however, and does not receive proceeds from the sale until
it does deliver the securities. A Fund may enter into a short sale against the
box to lock-in a gain or loss in one year, while deferring recognition of the
gain or loss until the next year. A Fund may also sell short against the box to
hedge against the risk that the price of a security may decline. In such a case,
to the extent a Fund limits its future losses in the security, it limits its
opportunity to achieve future gain in the security as well.
CORE AND GATEWAY -Registered Trademark-. Notwithstanding the other investment
policies of the Funds, each Fund may seek to achieve its investment objective by
converting to a Core and Gateway structure. Upon future action by the Board of
Trustees and notice to shareholders, a Fund may convert to this structure. As a
result, the Fund would hold as its only investment, shares of another investment
company having substantially the same investment objective and policies as the
Fund.
PORTFOLIO TRANSACTIONS. The frequency of portfolio transactions is generally
expressed in terms of a portfolio turnover rate. For example, an annual turnover
rate of 100% would occur if all of the securities in a Fund were replaced once a
year. A Fund's portfolio turnover rate will vary from year to year depending on
market conditions. Higher rates of turnover will result in higher brokerage
costs for a Fund. The Adviser weighs the anticipated benefits of short-term
investments against these consequences. A Fund's portfolio turnover rate is
reported under "Financial Highlights." Tax rules applicable to short-term
trading may affect the timing of a Fund's transactions or its ability to realize
short-term trading profits or establish short-term positions.
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INVESTMENT OBJECTIVE AND POLICIES. The investment objective, and investment
policies of a Fund that are identified as fundamental, may not be changed
without approval of the holders of a majority of a Fund's outstanding voting
securities, as defined in the Investment Company Act. Except as otherwise
indicated, however, a Fund's investment policies are not fundamental and may be
changed by the Board of Trustees without shareholder approval. A Fund will
apply the percentage restrictions on its investments set forth in its investment
policies when the investment is made. If the percentage of a Fund's assets
committed to a particular investment or practice later increases because of a
change in the market values of a Fund's assets or redemptions of Fund shares, it
will not constitute a violation of the limitation.
---------------
MANAGEMENT
The business of the Trust and the Funds is managed under the direction of the
Board of Trustees. The Board formulates the general policies of the Funds and
meets periodically to review the Funds' performance, monitor investment
activities and practices, and discuss other matters affecting the Funds and the
Trust. Additional information regarding the Trustees, as well as the Company's
executive officers, may be found in the SAI under the heading "Management -
Trustees and Officers."
INVESTMENT ADVISER
CRM Advisors, LLC (the "Adviser"), 707 Westchester Avenue, White Plains, New
York 10604, serves as investment adviser to the Funds pursuant to an investment
advisory agreement with the Trust. Subject to the general control of the Board,
the Adviser makes investment decisions for the Funds. The Adviser is a limited
liability company organized under the laws of the State of New York on June 20,
1995, and is a registered investment adviser under the Investment Advisers Act
of 1940.
CRM has managed investments in small and medium capitalization companies for
over twenty-four years. As of the date of this prospectus, it has over $3.5
billion of assets under management. The following data relates to historical
performance of the portfolios of all private accounts managed by CRM that have
an investment style and objective substantially similar to a Fund's. The
private accounts, however, have a heavier weighting of mid-capitalization
issuers than the Fund. This data compares the performance of these portfolios
against the Russell 2500-TM- Index. It represents dollar weighted total rates of
return that include the impact of capital appreciation as well as the
reinvestment of interest and dividends. This data is unaudited, and does not
indicate how a Fund may perform in the future.
PERIOD (CALENDAR YEARS) CRM(1) RUSSELL
2500(2)
20 Years: 1977 - 1996 17.5% N/A
15 Years: 1982 - 1996 17.8% 15.2%
10 Years: 1987 - 1996 16.2% 13.9%
5 Years: 1992 - 1996 19.1% 16.0%
3 Years: 1994 - 1996 16.7% 15.8%
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1 Year: 1996 30.1% 19.0%
(1) CRM's results are a dollar weighted composite of tax-exempt, fully
discretionary, separately managed accounts that are over $1 million in size
and under CRM's management for at least 3 months. These accounts have
investment objectives and techniques similar to the Fund, but with a
heavier weighting of mid-capitalization issuers. The composite consists of
35 accounts with $834 million in assets (82% of tax-exempt equity accounts
and 49% of all equity accounts). The modified Bank Administration Institute
(BAI) method is used to compute a time-weighted rate of return in
accordance with standards set by the Association for Investment Management
and Research (AIMR). The composite does not reflect all of the assets under
CRM's management and may not accurately reflect the performance of all
accounts it manages.
(2) The Russell 2500-TM- Index (the "Russell 2500") is a market weighted index
composed of 2500 companies with market capitalizations from $50 million to
$3.9 billion. The index is unmanaged and reflects the reinvestment of
dividends.
The performance figures are net of advisory fees. The net effect of the
deduction of the operating expenses of the Funds on the annualized performance,
including the effect of compounding over time, may be substantial. SEE "Fee
Table."
All information relies on data supplied by the Adviser or from statistical
services, reports or other sources believed by the Trust to be reliable. It has
not been verified or audited.
The principals of CRM and the Adviser stand on a solid base of more than 130
years of collective investment experience. The principal shareholders and
portfolio managers of the Adviser are:
Gerald B. Cramer, Chairman of CRM, has been in investment banking and portfolio
management for the past thirty-nine years. Before co-founding and forming CRM in
1973, Mr. Cramer was a senior partner at Oppenheimer & Co. His responsibilities
include investment policy and portfolio management. He received a B.S. from
Syracuse University and attended the University of Pennsylvania Wharton Graduate
School of Finance.
Ronald H. McGlynn, President and Chief Executive Officer of CRM, is the
Adviser's Portfolio Manager. He has been with CRM for twenty-four years and is
responsible for investment policy, portfolio management, and investment
research. Prior to his association with CRM and the Adviser, Mr. McGlynn was a
Portfolio Manager at Oppenheimer & Co. He received a B.A. from Williams College
and an MBA from Columbia University.
Jay B. Abramson, Executive Vice President of CRM, is the Adviser's Director of
Research. He has been with CRM for eleven years and is responsible for
investment research and portfolio management. Mr. Abramson received a B.S.E. and
J.D. from the University of Pennsylvania Wharton School and Law School,
respectively. He is also a Certified Public Accountant. Mr. Abramson is
primarily responsible for the day-to-day management of the Fund's portfolio.
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Fred M. Filoon is President of the Funds and Senior Vice President of CRM. Mr.
Filoon has over 30 years of investment experience and is responsible for
portfolio management at CRM. Mr. Filoon received a B.A. from Bowdoin College
and attended New York University Business School.
For its services under the Advisory Agreement, the Adviser receives an advisory
fee at an annual rate of 0.75% of the average daily net assets of the Fund. The
Adviser's fees are accrued daily and paid monthly. The Adviser, at its sole
discretion, may waive all or any portion of its advisory fees. Any waiver would
have the effect of increasing the Fund's total return for the period during
which the waiver was in effect and would not be recouped by the Adviser at a
later date.
ADMINISTRATOR
On behalf of the Fund, the Trust has entered into an Administration Agreement
with Forum Financial Services, Inc. ("Forum"). As provided in this agreement,
Forum is responsible for the supervision of the overall management of the Trust
(including the Trust's receipt of services for which it must pay), providing the
Trust with general office facilities and providing persons satisfactory to the
Board of Trustees to serve as officers of the Trust. For these services, Forum
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of the Fund with an annual minimum of $40,000. Like the
Adviser, Forum, in its sole discretion, may waive all or any portion of its
fees.
Forum is located at Two Portland Square, Portland, Maine 04101. It was
incorporated under the laws of the State of Delaware on February 7, 1986 and as
of the date hereof manages, administers or distributes registered investment
companies and collective investment funds with assets of approximately $18
billion. Forum is a registered broker-dealer and is a member of the National
Association of Securities Dealers, Inc.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Forum acts as distributor
of the Funds' shares. Forum acts as the agent of the Trust in connection with
the offering of shares of the Funds. Forum receives no compensation for its
services under the Distribution Agreement. Forum may enter into arrangements
with banks, broker-dealers or other financial institutions ("Selected Dealers")
through which investors may purchase or redeem shares. Forum may, at its own
expense and from its own resources, compensate certain persons who provide
services in connection with the sale or expected sale of shares of the Funds.
Investors purchasing shares of the Funds through another financial institution
should read any materials and information provided by the financial institution
to acquaint themselves with its procedures and any fees that it may charge.
TRANSFER AGENT
The Trust has entered into a Transfer Agency Agreement with Forum Financial
Corp. ("FFC") pursuant to which FFC acts as the Funds' transfer agent and
dividend disbursing agent. FFC maintains an account for each shareholder of the
Trust (unless such accounts are maintained by sub-transfer agents), performs
other transfer agency functions and acts as dividend disbursing agent for the
Trust. In addition, FFC performs portfolio accounting services for the Funds,
including determination of the Funds' net asset value.
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EXPENSES OF THE TRUST
A Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund. Subject to the obligation of the Adviser to reimburse a
Fund for excess expenses of a Fund, the Trust pays for all of its expenses. The
Adviser, Forum and FFC, in their sole discretion, may waive all or any portion
of their respective fees, which are accrued daily, and paid monthly. Any such
waiver, which could be discontinued at any time, would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
The Adviser has voluntarily undertaken to assume certain expenses of the Mid Cap
Value Fund Large Cap Value Fund, and All Cap Value Fund (or waive its respective
fees). This undertaking is designed to place a maximum limit on expenses
(including all fees to be paid to the Adviser but excluding taxes, interest,
brokerage commissions and other portfolio transaction expenses and extraordinary
expenses) of 1.50%, 1.25% and 1.25% of the average daily net assets of the Mid
Cap Value Fund, Large Cap Value Fund and All Cap Value Fund, respectively.
INVESTMENT IN A FUND
PURCHASES AND REDEMPTIONS OF SHARES - GENERAL
You may purchase or redeem shares of a Fund without a sales charge at their net
asset value on any weekday except on days when the New York Stock Exchange is
closed ("Fund Business Day"). The Trust does not accept orders on New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Thanksgiving and Christmas. The Fund's net asset value is
calculated at 4:00 p.m., Eastern time on each Fund Business Day. SEE
"Determination of Net Asset Value."
PURCHASES. Fund shares are issued at a price equal to the net asset value per
share next determined after an order in proper form is received and accepted. A
Fund reserves the right to reject any subscription for the purchase of its
shares and may, in the Adviser's discretion, accept portfolio securities in lieu
of cash as payment for Fund shares. Fund shares become entitled to receive
dividends on the day after the shares are issued to an investor.
REDEMPTIONS. There is no redemption charge, no minimum period of investment, and
no restriction on frequency of redemptions. Shares are redeemed at a price equal
to the net asset value per share next determined following acceptance by FFC of
the redemption order in proper form (and any supporting documentation which FFC
may require). Shares redeemed are not entitled to participate in dividends
declared after the day on which a redemption becomes effective.
The date of payment of redemption proceeds may not be postponed for more than
seven days after shares are tendered to FFC for redemption by a shareholder of
record. The right of redemption may not be suspended except in accordance with
the provisions of the Investment Company Act.
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MINIMUM INVESTMENTS. There is a $10,000 minimum for initial investments in a
Fund. For individual retirement accounts and automatic investment plans, the
investment minimum is $2,000. The minimum for subsequent investments is $100.
The Trust and the Administrator each reserve the right to waive the minimum
investment requirement.
ACCOUNT STATEMENTS. Shareholders will receive from the Trust periodic statements
listing account activity during the statement period.
SHARE CERTIFICATES. FFC maintains a shareholder account for each shareholder.
The Trust does not issue share certificates.
PURCHASE AND REDEMPTION PROCEDURES
You may obtain the account application by calling (800) 844-8258 or by writing
The CRM Funds at P.O. Box 446, Portland, Maine 04112.
INITIAL PURCHASE OF SHARES
MAIL. Investors may send a check made payable to "CRM Funds" with a completed
account application to:
The CRM Funds
P.O. Box 446
Portland, Maine 04112
Checks are accepted at full value subject to collection. All checks must be
drawn on a United States bank. If a check is returned unpaid, the purchase will
be canceled, and the investor will be liable for any resulting losses or fees
incurred by a Fund, the Adviser or FFC.
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BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FFC at
207-879-8910 or 800-844-8258 to obtain an account number. You should then
instruct a member commercial bank to wire your money immediately to:
The First National Bank of Boston
Boston, Massachusetts
ABA # 011000390
For Credit to: Forum Financial Corp.
Account # 541-54171
The CRM Funds
(Investor's Name)
(Investor's Account Number)
You should then promptly complete and mail the account application.
If you plan to wire funds, you should instruct your bank early in the day so the
wire transfer can be accomplished the same day. Your bank may assess charges for
transmitting the money by bank wire and for use of Federal Funds. The Trust does
not charge investors for the receipt of wire transfers. Payment in the form of a
bank wire received prior to 4:00 p.m., Eastern time on a Fund Business Day will
be treated as a Federal Funds payment received before that time.
THROUGH BROKERS. You may purchase and redeem shares of a Fund through brokers
and other financial institutions that have entered into sales agreements with
Forum. These institutions may charge a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Trust. The Trust is not responsible for the failure of any institution to
promptly forward these requests.
If you purchase shares through a broker-dealer or financial institution, your
purchase will be subject to its procedures, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. You should acquaint yourself with the institution's procedures and
read this Prospectus in conjunction with any materials and information provided
by your institution. If you purchase a Fund's shares in this manner, you may or
may not be the shareholder of record and, subject to your institution's and a
Fund's procedures, may have a Fund's shares transferred into your name. There is
typically a one to five day settlement period for purchases and redemptions
through broker-dealers.
AUTOMATIC INVESTMENT PLAN. Current shareholders may purchase additional shares
by arranging systematic monthly, bi-monthly or quarterly investments into a Fund
with an automatic investment plan. The initial minimum is $2,000 and the
minimum subsequent automatic investment is $100. After shareholders give the
Trust proper authorization, their bank accounts, which must be with banks that
are members of the Automated Clearing House, will be debited accordingly to
purchase shares. Shareholders will receive a confirmation from the Trust for
every transaction, and a withdrawal will appear on their bank statements.
To participate in an automatic investment plan, shareholders must complete the
appropriate sections of the enrollment form. This form may be obtained by
calling the Trust at 207-879-8910 or 800-844-8258. The amount shareholders
specify will automatically be invested in shares at the Fund's net asset value
per share next determined after payment is received by the Trust.
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SUBSEQUENT PURCHASES OF SHARES
You may purchase additional shares of a Fund by mailing a check or sending a
bank wire as indicated above. Shareholders using the wire system for subsequent
purchases should first telephone FFC at 207-879-8910 or 800-844-8258 to notify
it of the wire transfer. All payments should clearly indicate the shareholder's
name and account number.
REDEMPTION OF SHARES
Redemption requests will not be effected unless any check used for investment
has been cleared by the shareholder's bank, which may take up to 15 calendar
days. This delay may be avoided by investing in a Fund through wire transfers.
Normally redemption proceeds are paid immediately following any redemption, but
in no event later than seven days after redemption, by check mailed to the
shareholder of record at his record address. Shareholders that wish to redeem
shares by Telephone or by Bank Wire must elect these options by properly
completing the appropriate sections of their account application. These
privileges may be modified or terminated by the Trust at any time.
Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $10,000 ($2,000
for IRAs or automatic investment plans). A Fund will not redeem accounts that
fall below these amounts solely as a result of a reduction in net asset value of
a Fund's shares.
REDEMPTION BY MAIL. You may redeem all or any number of your shares by sending a
written request to FFC at the address above. You must sign all written requests
for redemption and provide a signature guarantee. SEE "Signature Guarantees."
TELEPHONE REDEMPTIONS. A shareholder that has elected telephone redemption
privileges may make a telephone redemption request by calling FFC at
207-879-8910 or 800-844-8258. The minimum amount for a telephone redemption is
$1,000. In response to the telephone redemption instruction, a Fund will mail a
check to the shareholder's record address or, if the shareholder has elected
wire redemption privileges, wire the proceeds.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, the Trust and FFC will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FFC with the
shareholder's account number, the exact name in which the shares are registered
and some additional form of identification such as a password. The Trust or FFC
may employ other procedures such as recording certain transactions. If such
procedures are followed, neither FFC nor the Trust will be liable for any losses
due to unauthorized or fraudulent redemption requests. Shareholders should
verify the accuracy of telephone instructions immediately upon receipt of
confirmation statements.
During times of drastic economic or market changes, it may be difficult to make
a redemption by telephone. If you cannot reach FFC by telephone, you may mail or
hand-deliver your request to FFC at Two Portland Square, Portland, Maine 04101.
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BANK WIRE REDEMPTIONS. If you have elected wire redemption privileges, a Fund
will upon request transmit the proceeds of any redemption greater than $10,000
by Federal Funds wire to a bank account designated on your account application.
If you wish to request bank wire redemptions by telephone, you must also elect
telephone redemption privileges.
EXCHANGE PRIVILEGE
Shareholders of a Fund may exchange their shares for shares of the Daily Assets
Treasury Fund, a money market fund managed by Forum and a separate series of
Forum Funds. You may receive a copy of that fund's prospectus by writing FFC or
calling (800) 844-8258. No sales charges are imposed on exchanges between a Fund
and the Daily Assets Treasury Fund.
EXCHANGE PROCEDURES. You may request an exchange by writing to FFC at Two
Portland Square, Portland, Maine 04101. The minimum amount for an exchange to
open an account in the Daily Assets Treasury Fund is $2,500. Exchanges may only
be made between identically registered accounts. You do not need to complete a
new account application, unless you are requesting different shareholder
privileges for the new account. A Fund reserves the right to reject any exchange
request and may modify or terminate the exchange privilege at any time. There is
no charge for the exchange privilege or limitation as to frequency of exchanges.
An exchange of shares in a Fund pursuant to the exchange privilege is, in
effect, a redemption of a Fund's shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a shareholder realizing a taxable gain or
loss for Federal income tax purposes. The exchange privilege is available to
shareholders residing in any state in which shares of the Daily Assets Treasury
Fund may legally be sold.
TELEPHONE EXCHANGES. If you have elected telephone exchange privileges, you may
request an exchange by calling FFC at (800) 844-8258. The Funds and FFC are not
responsible for the authenticity of telephone instructions or losses, if any,
resulting from unauthorized telephone exchange requests. The Funds employ
reasonable procedures to insure that telephone orders are genuine and, if it
does not, may be liable for any losses due to unauthorized transactions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements.
OTHER INVESTMENT INFORMATION
CHANGES TO ACCOUNT INFORMATION. To change the record name or address of your
account, the designated bank account, the dividend election, or the telephone
redemption option election on an account, you must provide a signature
guarantee.
SIGNATURE GUARANTEES.. When a signature guarantee is called for, you must have
"Signature Guaranteed" stamped under your signature and signed by a commercial
bank or trust company, a broker, dealer or securities exchange, a credit union
or a savings association that is authorized to guarantee signatures.
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RETIREMENT ACCOUNTS
A Fund may be a suitable investment for part or all of the assets held in
retirement such as IRAs, SEP-IRAs, Keoghs, or other types of retirement
accounts. The minimum initial investment for investors opening a retirement
account or investing through your own IRA is $2,000. There is no minimum for
subsequent investments.
For information on investing in a Fund for retirement, and retirement account
plans, call FFC at (800) 844-8258, or write to Two Portland Square, Portland,
Maine 04101.
DIVIDENDS AND TAX MATTERS
DIVIDENDS
For the Small Cap Value Fund, Mid Cap Value Fund, and All Cap Value Fund
dividends representing the net investment income, if any, are declared and paid
annually. For the Large Cap Value Fund, dividends representing the net
investment income, if any, are declared and paid quarterly. Net capital gains
realized by a Fund, if any, also will be distributed annually. All dividends and
net capital gains distributions are reinvested in additional shares of a Fund,
unless you elect to receive distributions in cash. For Federal income tax
purposes, dividends are treated the same whether they are received in cash or
reinvested in additional shares of a Fund. SEE "Taxes."
Income dividends will be reinvested at a Fund's net asset value as of the last
day of the period with respect to which the dividends are paid and capital gains
dividends will be reinvested at the net asset value of a Fund on the payment
date for the dividend. Cash payments may be made more than seven days following
the date on which dividends would otherwise be reinvested.
TAXES
Each Fund intends to qualify for each fiscal year and elect to be treated as a
"regulated investment company," or "RIC," under Subchapter M of the Internal
Revenue Code of 1986 (the "Code"). As a RIC, a Fund is not liable for Federal
income and excise taxes on the net investment income and capital gains that it
distributes to shareholders in accordance with applicable provisions of the
Code. Each Fund intends to distribute all of its net income and net capital
gains each year. Accordingly, a Fund should not be subject to Federal income and
excise taxes.
Dividends paid by a Fund out of its net investment income and short-term capital
gains are taxable to its shareholders as ordinary income. Distributions of a
Fund's net long-term capital gains, if any, are taxable to the shareholders as
long-term capital gains, regardless of the length of time the shareholder has
held shares in a Fund at the time of distribution. A portion of a Fund's
dividends may qualify for the dividends received deduction available to
corporations.
If a shareholder holds shares for six months or less and redeems shares at a
loss after receiving a distribution taxable to the shareholder as a long-term
capital gain, the loss would be treated as a long-term capital loss to the
extent of the distribution.
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Any dividend or other distribution received by a shareholder on shares of a Fund
will reduce the net asset value of the shareholder's shares by the amount of the
dividend or distribution. Furthermore, a dividend or distribution made shortly
after the purchase of shares by a shareholder, although in effect a return of
capital, would still be taxable to the shareholder as a dividend as described
above.
Dividends and other distributions to shareholders are treated in the same manner
for Federal income tax purposes whether received in cash or reinvested in
additional shares of a Fund.
Each Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemptions) made
to a non-corporate shareholder unless the shareholder certifies in writing that
the social security or tax identification number provided by the shareholder is
correct and that the shareholder is not subject to backup withholding for prior
underreporting to the Internal Revenue Service.
Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by a Fund will be
mailed to shareholders shortly after the close of each year.
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of a Fund as of 4:00 P.M.,
Eastern time, on each Fund Business Day by dividing the value of a Fund's net
assets (I.E., the value of its securities and other assets less its liabilities,
including expenses payable or accrued but excluding capital stock and surplus)
by the number of shares outstanding at the time the determination is made.
Securities owned by a Fund for which market quotations are readily available are
valued using the last reported sales price provided by independent pricing
services. If no sale price is reported, the mean of the last bid and ask price
is used. If no mean price is available, the last bid price is used. In the
absence of readily available market quotations, securities are valued at fair
value as determined by the valuation committee of the Board of Trustees.
Purchases and redemptions will be effected at the time of determination of net
asset value next following the receipt of any purchase or redemption order as
described under "Purchases and Redemptions of Shares."
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on April 24, 1995. The Board has the authority to issue an unlimited
number of shares of beneficial interest of separate series with no par value per
share and to create classes of shares within each series. Currently, the
authorized shares of the Trust are divided into four separate series.
The Funds may issue shares of other classes. The Funds currently issue two
classes of shares: Investor Shares and Institutional Shares, and may in the
future create additional class types. Institutional Shares are offered to
fiduciary, agency and custodial clients of bank trust departments, trust
companies and their affiliates. Each class of a Fund will have a different
expense ratio and may have different sales charges (including distribution
fees). Each class' performance is affected by its expenses and sales charges.
Currently, neither share class has a sales charge. Investors may contact FFC
for more information on either share class. Sales personnel of broker-dealers
and other
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financial institutions selling the Funds' shares may receive differeing
compensation for selling Investor Shares and Institutional Shares of the Funds.
Each share of each series of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency and administration expenses) are borne solely by those shares
and each class votes separately with respect to the provisions of any Rule 12b-1
plan which pertains to the class and other matters for which separate class
voting is appropriate under applicable law. Generally, shares will be voted in
the aggregate without reference to a particular series or class, except if the
matter affects only one series or class or voting by series or class is required
by law, in which case shares will be voted separately by series or class, as
appropriate.
Delaware law does not require the Trust to hold annual meetings of shareholders,
and it is anticipated that shareholder meetings will be held only when
specifically required by federal or state law. Shareholders (and Trustees) have
available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholders, subject to any contingent deferred sales charge that may
apply. A shareholder in a series is entitled to the shareholder's pro rata share
of all dividends and distributions arising from that series' assets and, upon
redeeming shares, will receive the portion of the series' net assets represented
by the redeemed shares. SEE "OTHER INFORMATION - The Trust and its
Shareholders" in the SAI.
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THE CRM FUNDS
SMALL CAP VALUE FUND MID CAP VALUE FUND
LARGE CAP VALUE FUND ALL CAP VALUE FUND
Fund Information: Account Information and
Two Portland Square Shareholder Services:
Portland, Maine 04101
(800) CRM-2883 Forum Financial Corp.
P.O. Box 446
Investment Adviser: Portland, Maine 04112
CRM Advisors, LLC (207) 879-8910
707 Westchester Avenue (800) 844-8258
White Plains, New York 10604
STATEMENT OF ADDITIONAL INFORMATION
January 1, 1998
The CRM Funds (the "Trust") is a registered open-end investment company.
This Statement of Additional Information supplements the Prospectuses dated
January 1, 1998, as may be amended from time to time, offering Investor Shares
and Institutional Shares of the Small Cap Value Fund, Mid Cap Value Fund, Large
Cap Value Fund, and All Cap Value Fund (the "Funds"). The SAI should be read
only in conjunction with a corresponding Prospectus, a copy of which may be
obtained by an investor without charge by contacting shareholder servicing at
the address listed above.
TABLE OF CONTENTS
Page
1. Investment Policies 2
2. Investment Limitations 5
3. Performance Data and Advertising 7
4. Management 9
5. Determination of Net Asset Value 15
6. Portfolio Transactions 15
7. Additional Purchase and
Redemption Information 16
8. Taxation 17
9. Other Matters 22
10. Appendix A -- Description of Securities Ratings 25
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES
The following discussion is intended to supplement the disclosure in the
Prospectus concerning each Fund's investments, investment techniques and the
risks associated therewith.
DEFINITIONS
These terms in the SAI shall have the following meanings:
"Board" shall mean the Board of Trustees of the Trust.
"U.S. Treasury obligations" shall mean securities issued by the United
States Treasury, such as Treasury bills, notes and bonds, that are
fully guaranteed as to payment of principal and interest by the United
States.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
ILLIQUID SECURITIES
A Fund may invest up to 10% of its net assets in illiquid securities. The
term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities and includes,
among other things, purchased over-the-counter (OTC) options and repurchase
agreements maturing in more than seven days.
The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to CRM Advisers, LLC (the
"Adviser"), pursuant to guidelines approved by the Board. The Adviser takes into
account a number of factors in reaching liquidity decisions, including but not
limited to: (1) the frequency of trades and quotations for the security; (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (3) the willingness of dealers to undertake to make a
market in the security; and (4) the nature of the marketplace trades, including
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of the transfer. The Adviser monitors the liquidity of the
securities in a Fund's portfolio and reports periodically on such decisions to
the Board.
OPTIONS
A Fund may seek to hedge against a decline in the value of securities it
owns or an increase in the price of securities which it plans to purchase by
purchasing and writing (i.e., selling) covered options on an exchange or over
the counter. An option is covered if, as long as a Fund is obligated under the
option, it owns an offsetting position in the underlying security or maintains
cash, U.S. Government Securities or other liquid, high-grade debt securities in
a segregated account with a value at all times sufficient to cover a Fund's
obligation under the option.
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The use of options subjects a Fund to certain investment risks and
transaction costs to which it might not otherwise be subject. These risks
include: (1) dependence on the Adviser's ability to predict movements in the
prices of individual securities and fluctuations in the general securities
markets; (2) imperfect correlation between movements in the prices of options
and movements in the price of the securities hedged or used for cover; (3) the
fact that skills and techniques needed to trade these instruments are different
from those needed to select the other securities in which a Fund invests; (4)
lack of assurance that a liquid secondary market will exist for any particular
option at any particular time; and (5) the possible need to defer closing out of
certain options to avoid adverse tax consequences. Other risks include the
inability of a Fund, as the writer of covered call options, to benefit from the
appreciation of the underlying securities above the exercise price and the
possible loss of the entire premium paid for options purchased by a Fund.
A Fund will not hedge more than 30% of its total assets by buying put
options and writing call options.
CORPORATE DEBT SECURITIES AND COMMERCIAL PAPER
A Fund may invest in corporate debt securities including corporate bonds
and notes and short-term investments such as commercial paper and variable rate
demand notes. Commercial paper (short-term promissory notes) is issued by
companies to finance their or their affiliates' current obligations. Variable
and floating rate demand notes are unsecured obligations redeemable upon not
more than 30 days' notice. These obligations include master demand notes that
permit investment of fluctuating amounts at varying rates of interest pursuant
to direct arrangement with the issuer of the instrument. The issuer of these
obligations often has the right, after a given period, to prepay the outstanding
principal amount of the obligations upon a specified number of days' notice.
These obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent a demand note
does not have a 7 day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.
CONVERTIBLE SECURITIES
A Fund may also invest in convertible securities. A convertible security is
a bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock of the same or a
different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities in that they ordinarily provide a stable stream of income with
generally higher yields than those of common stocks of the same or similar
issuers. Convertible securities rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Although no securities investment is without some risk, investment
in convertible securities generally entails less risk than in the issuer's
common stock. However, the extent to which such risk is reduced
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depends in large measure upon the degree to which the convertible security
sells above its value as a fixed income security. Convertible securities have
unique investment characteristics in that they generally (1) have higher
yields than common stocks, but lower yields than comparable non-convertible
securities, (2) are less subject to fluctuation in value than the underlying
stocks since they have fixed income characteristics and (3) provide the
potential for capital appreciation if the market price of the underlying
common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value and
generally the conversion value decreases as the convertible security approaches
maturity. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. In addition, a
convertible security generally will sell at a premium over its conversion value
determined by the extent to which investors place value on the right to acquire
the underlying common stock while holding a fixed income security.
A convertible security may be subject to redemption at the option of the
issuer at a price established in the convertible security's governing
instrument. If a convertible security held by a Fund is called for redemption,
the Fund will be required to permit the issuer to redeem the security, convert
it into the underlying common stock or sell it to a third party.
RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") are private services that provide ratings of the credit
quality of debt obligations, including convertible securities. A description of
the range of ratings assigned to corporate bonds, including convertible
securities by Moody's and S&P is included in Appendix A to this Statement of
Additional Information. A Fund may use these ratings in determining whether to
purchase, sell or hold a security. It should be emphasized, however, that
ratings are general and are not absolute standards of quality. Consequently,
securities with the same maturity, interest rate and rating may have different
market prices. Subsequent to its purchase by a Fund, an issue of securities may
cease to be rated or its rating may be reduced. The Adviser will consider such
an event in determining whether a Fund should continue to hold the obligation.
Credit ratings attempt to evaluate the safety of principal and interest payments
and do not evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial condition may be better
or worse than the rating indicates.
4
<PAGE>
2. INVESTMENT LIMITATIONS
FUNDAMENTAL INVESTMENT LIMITATIONS
Each Fund has adopted the following fundamental investment limitations that
cannot be changed without the affirmative vote of the lesser of (i) more than
50% of the outstanding shares of a Fund or (ii) 67% of the shares of a Fund
present or represented at a shareholders meeting at which the holders of more
than 50% of the outstanding shares of a Fund are present or represented. Each
Fund may not:
(1) Purchase the securities of issuers (other than U.S. Government
Securities) conducting their business activity in the same industry if,
immediately after such purchase, the value of a Fund's investments in such
industry would comprise 25% or more of the value of its total assets.
(2) Purchase a security if, as a result (a) more than 5% of a Fund's total
assets would be invested in the securities of a single issuer, or (b) a
Fund would own more than 10% of the outstanding voting securities of a
single issuer. This limitation applies only with respect to 75% of a Fund's
total assets and does not apply to U.S. Government Securities.
(3) Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio securities, a
Fund may be deemed to be an underwriter for purpose of the Securities Act
of 1933.
(4) Purchase or sell real estate or any interest therein, except that a
Fund may invest in securities issued or guaranteed by corporate or
governmental entities secured by real estate or interests therein, such as
mortgage pass-throughs and collateralized mortgage obligations, or issued
by companies that invest in real estate or interests therein.
(5) Purchase or sell physical commodities or contracts, options or options
on contracts to purchase or sell physical commodities.
(6) Make loans to other persons except for the purchase of debt securities
that are otherwise permitted investments or loans of portfolio securities
through the use of repurchase agreements.
(7) Issue senior securities except pursuant to Section 18 of the Investment
Company Act and except that a Fund may borrow money subject to its
investment limitation on borrowing.
5
<PAGE>
OTHER INVESTMENT LIMITATIONS
Each Fund has adopted the following nonfundamental investment limitations
that may be changed by the Board without shareholder approval. Each Fund may
not:
(a) Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted to be incurred by a Fund. The deposit in escrow of
securities in connection with the writing of put and call options,
collateralized loans of securities and collateral arrangements with respect
to margin for futures contracts are not deemed to be pledges or
hypothecations for this purpose.
(b) Make short sales of securities except short sales against the box.
(c) Purchase securities on margin except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities,
but a Fund may make margin deposits in connection with permitted
transactions in options.
(d) Purchase a security if, as a result, more than 10% of its net assets
would be invested in illiquid securities.
(e) Purchase portfolio securities if its outstanding borrowings exceed 5%
of the value of its total assets or borrow for purposes other than meeting
redemptions in an amount exceeding 5% of the value of its total assets at
the time the borrowing is made.
(f) Invest more than 5% of its net assets in securities (other than fully-
collateralized debt obligations) issued by companies that have conducted
continuous operations for less than three years, including the operations
of predecessors, unless guaranteed as to principal and interest by an
issuer in whose securities a Fund could invest.
(g) Invest in or hold securities of any issuer if officers and Trustees of
the Trust or the Adviser, individually owning beneficially more than 1/2 of
1% of the securities of the issuer, in the aggregate own more than 5% of
the issuer's securities.
(h) Invest in interests in oil or gas or interests in other mineral
exploration or development programs.
If a percentage restriction contained in an investment policy set forth
above is adhered to at the time an investment is made, a later change in
percentage resulting from a change in the market values of a Fund's assets or
redemptions of Fund shares will not be considered a violation of the limitation.
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<PAGE>
3. PERFORMANCE DATA AND ADVERTISING
PERFORMANCE DATA
A Fund may quote performance in various ways. All performance information
supplied by a Fund in advertising is historical and is not intended to indicate
future returns. A Fund's net asset value and total return will fluctuate in
response to market conditions and other factors, and the value of Fund shares
when redeemed may be more or less than their original cost.
In performance advertising a Fund may compare any of its performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc., CDA/Wiesenberger or other
companies which track the investment performance of investment companies ("Fund
Tracking Companies"). A Fund may also compare any of its performance information
with the performance of recognized stock, bond and other indices, including but
not limited to the Standard & Poor's 500-Registered Trademark- Index, the
Russell 2000-Registered Trademark- Index, the Russell 2500-Registered Trademark-
Index, the Dow Jones Industrial Average, the Salomon Brothers Bond Index, the
Shearson Lehman Bond Index, U.S. Treasury bonds, bills or notes and changes in
the Consumer Price Index as published by the U.S. Department of Commerce. A Fund
may refer to general market performances over past time periods such as those
published by Ibbotson Associates. In addition, a Fund may refer in such
materials to mutual fund performance rankings and other data published by Fund
Tracking Companies. Performance advertising may also refer to discussions of a
Fund and comparative mutual fund data and ratings reported in independent
periodicals, such as newspapers and financial magazines.
TOTAL RETURN CALCULATIONS
A Fund may advertise total return. Total returns quoted in advertising
reflect all aspects of a Fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in a Fund's net asset
value per share over the period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a Fund over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. For example, a
cumulative return of 100% over ten years would produce an average annual return
of 7.18%, which is the steady annual rate that would equal 100% growth on a
compounded basis in ten years. The average annual total return is computed
separately for each class of shares of a Fund. While average annual returns are
a convenient means of comparing investment alternatives, investors should
realize that the performance is not constant over time but changes from year to
year, and that average annual returns represent averaged figures as opposed to
the actual year-to-year performance of a Fund.
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<PAGE>
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:
P(1+T)to the power of n = ERV; where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value (ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 payment made at the
beginning of the applicable period).
In addition to average annual total returns, a Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
Period total return is calculated according to the following formula:
PT = (ERV/P-1); where:
PT = period total return;
The other definitions are the same as in average annual total return
above.
For the one year period ended September 30, 1997, the average annual total
return of the Small Cap Value Fund was __%. The Small Cap Value Fund commenced
operations ON OCTOBER 3, 1995. Accordingly, the previously stated figure also
reflects the average annual total return for the period since inception of the
Small Cap Value Fund.
OTHER INFORMATION
A Fund may include other information in its advertisements including, but
not limited to, (i) portfolio holdings and portfolio allocation as of certain
dates, such as portfolio diversification by instrument type, by instrument, by
location of issuer or by maturity; (ii) statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds that may be
employed by an investor to meet specific financial goals; (iii) descriptions of
a Fund's portfolio managers and the portfolio management staff of the Adviser or
summaries of the views of the portfolio managers with respect to the financial
markets; (iv) information regarding the background, experience or areas of
expertise of a Fund's trustees; (v) the results of a hypothetical investment in
a Fund over a given number of years, including the amount that the investment
would be at the end of the period; and, (vi) the net asset value, net assets or
number of shareholders of a Fund as of one or more dates. A Fund may also
compare its
8
<PAGE>
operations to the operations of other funds or similar investment
products. Such comparisons may refer to such aspects of operations as the nature
and scope of regulation of the products and the products' weighted average
maturity, liquidity, investment policies, and the manner of calculating and
reporting performance.
In connection with its advertisements a Fund may provide "shareholders'
letters" to provide shareholders or investors an introduction to a Fund's , the
Trust's or any of the Trust's service provider's policies or business practices.
A Fund may also include in sales materials information regarding the Adviser
including the nature of its management techniques.
4. MANAGEMENT
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and their principal occupations
during the past five years are set forth below. Trustees deemed to be
"interested persons" of the Trust as defined in the 1940 Act are marked with an
asterisk (*).
*Fred M. Filoon, Chairman and President.
Senior Vice President, Cramer Rosenthal McGlynn, Inc., New York, New York
since June 1991. From June 1989 to June 1991, Mr. Filoon was Vice-President
and Senior Portfolio Manager with Morgan Stanley Asset Management, New
York, New York. He is 53 year old. His address is 520 Madison Avenue, New
York, New York 10022.
John E. Appelt, Trustee.
Certified Financial Planner, The Equitable from 1993 to the Present;
Equitable From 1990 to 1993, Mr. Appelt was a District Manager with The
Equitable. He is 49 years old. His address is 1221 Avenue of the Americas,
32nd Floor, New York, New York 10020-1088.
Louis Klein Jr., Trustee.
From 1991 to the Present, Mr. Klein has been self-employed as a financial
and professional services consultant. He has also held the following
positions during that period: Trustee, Manville Personal Injury Settlement
Trust; Director, Riverwood International Corporation; Director, Manville
Corporation. From 1989 to 1991, Mr. Klein was Chairman and CEO of Stendig
Inc., a New York based importer and marketer of office, institutional and
residential furniture and textiles. He is 60 years old. His address is 114
West 27th Street, New York, New York 10001.
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Clement C. Moore, II, Trustee.
President, Mariemont Corporation, a commercial real estate holding and
management company, from 1980 to present. He is 51 years old. His address
is 717 Fifth Avenue, Suite 2300, New York, New York.
*Eugene A. Trainor, III, Trustee, Secretary and Treasurer.
Senior Vice-President and CFO, Cramer Rosenthal McGlynn, Inc., New York,
New York since August 1994. From July 1990 to August 1994, he was CFO of
Grotech Capital Group, Timonium, Maryland. He is 34 years old. His address
is 707 Westchester Avenue, White Plains, NY 10604.
Max Berueffy, Assistant Secretary.
Counsel, Forum Financial Services, Inc., with which he has been associated
since May 1994. Prior to that, Mr. Berueffy was a member of the staff of
the U.S. Securities and Exchange Commission. Mr. Berueffy is also an
officer of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. He is 44 years old. His address is Two Portland Square,
Portland, Maine 04101.
David I. Goldstein, Assistant Secretary.
Counsel, Forum Financial Services, Inc., with which he has been associated
since 1991. Prior to that, Mr. Goldstein was associated with the law firm
of Kirkpatrick & Lockhart. Mr. Goldstein also serves as an officer of
various registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor. He is 35 years
old. His address is Two Portland Square, Portland, Maine 04101.
Michael J. McKeen, Assistant Treasurer.
Fund Accounting Manager, Forum Financial Corp., with which he has been
associated since June 1993. Prior to that, Mr. McKeen was attending the
University of Maine, from which he obtained a B.S. degree in Finance in May
of 1993. Mr. McKeen also serves as an officer for various registered
investment companies for which Forum Financial Corp. serves as fund
accountant and /or transfer agent. He is 25 years old. His address is Two
Portland Square, Portland, Maine 04101.
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The following table sets forth the fees paid to each Trustee of the Trust for
the period from October 1, 1996 to September 30, 1997.
Name of Person Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
from Trust Benefits Benefits upon from Trust and
Accrued as Retirement Fund Complex
Part of Fund to Trustees
Expenses
Fred M. Filoon $0.00 $0.00 $0.00 $0.00
John E. Appelt $5000.00 $0.00 $0.00 $5000.00
Louis Klein, Jr. $5000.00 $0.00 $0.00 $5000.00
Clement C. Moore II $5000.00 $0.00 $0.00 $5000.00
Eugene A. Trainor III $0.00 $0.00 $0.00 $0.00
THE INVESTMENT ADVISER
The Funds' investment adviser, CRM Advisors, LLC (the "Adviser"), furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing a Fund's investments and effecting portfolio
transactions for a Fund. The Advisory Agreement will remain in effect for a
period of twelve months from the date of its effectiveness and will continue in
effect thereafter only if its continuance is specifically approved at least
annually by the Board of Trustees or by vote of the shareholders, and in either
case by a majority of the Trustees who are not parties to the Advisory Agreement
or interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreement.
The Advisory Agreement is terminable without penalty by the Trust with
respect to a Fund on 60 days' written notice when authorized either by vote of
its shareholders or by a vote of a majority of the Board of Trustees, or by the
Adviser on 60 days' written notice to the Trust, and will automatically
terminate in the event of its assignment. The Advisory Agreement also provides
that, with respect to a Fund, the Adviser shall not be liable for any error of
judgment or mistake of law or for any act or omission in the performance of its
duties to a Fund, except for willful misfeasance, bad faith or gross negligence
in the performance of its duties or by reason of reckless disregard of its
obligations and duties under the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. In addition to receiving its advisory fee from each Fund, CRM and the
Adviser may also act and be compensated as investment manager for its clients
with respect to assets which are invested in
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a Fund. If an investor in a Fund also has a separately managed account with
CRM with assets invested in a Fund, CRM will credit an amount equal to all or
a portion of the fees received by the Adviser against any investment
management fee received from a client.
The dollar amount of the fees payable under the Investment Advisory
Agreement between CRM and the Adviser, the amount of the fee waived by the
Adviser and the actual fee received by the Adviser, respectively, for the fiscal
year ended September 30, 1997, were as follows: $___, $___ and $___.
ADMINISTRATOR
Forum Financial Services, Inc. ("Forum") acts as administrator to the Trust
pursuant to an Administration Agreement with the Trust. As administrator, Forum
provides management and administrative services necessary to the operation of
the Trust (which include, among other responsibilities, negotiation of contracts
and fees with, and monitoring of performance and billing of, the transfer agent
and custodian and arranging for maintenance of books and records of the Trust),
and provides the Trust with general office facilities. The Administration
Agreement will remain in effect for a period of twelve months with respect to a
Fund and thereafter is automatically renewed each year for an additional term of
one year.
The Administration Agreement terminates automatically if it is assigned and
may be terminated without penalty with respect to a Fund by vote of a Fund's
shareholders or by either party on not more than 60 days' written notice. The
Administration Agreement also provides that Forum shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of Forum's duties or by reason of
reckless disregard of its obligations and duties under the Administration
Agreement.
At the request of the Board, Forum provides persons satisfactory to the
Board to serve as officers of the Trust. Those officers, as well as certain
other employees and Trustees of the Trust, may be directors, officers or
employees of Forum, the Adviser, or their affiliates.
The dollar amount of the fees payable under the Administration Agreement
between CRM and Forum, the amount of the fee waived by Forum and the actual fee
received by Forum, respectively, for the fiscal year ended September 30, 1997,
were as follows: $___, $___ and $___.
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DISTRIBUTOR
Forum is also the Trust's distributor and acts as the agent of the Trust in
connection with the offering of shares of each Fund pursuant to a Distribution
Agreement. The Distribution Agreement will continue in effect for twelve months
and will continue in effect thereafter only if its continuance is specifically
approved at least annually by the Board or by vote of the shareholders entitled
to vote thereon, and in either case, by a majority of the Trustees who (i) are
not parties to the Distribution Agreement, (ii) are not interested persons of
any such party or of the Trust and (iii) with respect to any class for which the
Trust has adopted a distribution plan, have no direct or indirect financial
interest in the operation of that distribution plan or in the Distribution
Agreement, at a meeting called for the purpose of voting on the Distribution
Agreement. All subscriptions for shares obtained by Forum are directed to the
Trust for acceptance and are not binding on the Trust until accepted by it.
Forum receives no compensation or reimbursement of expenses for the distribution
services provided pursuant to the Distribution Agreement and is under no
obligation to sell any specific amount of Fund shares.
The Distribution Agreement provides that Forum shall not be liable for any
error of judgment or mistake of law or in any event whatsoever, except for
willful misfeasance, bad faith or gross negligence in the performance of Forum's
duties or by reason of reckless disregard of its obligations and duties under
the Distribution Agreement.
The Distribution Agreement is terminable with respect to a Fund without
penalty by the Trust on 60 days' written notice when authorized either by vote
of a Fund's shareholders or by a vote of a majority of the Board, or by Forum on
60 days' written notice. The Distribution Agreement will automatically terminate
in the event of its assignment.
Forum may enter into agreements with selected broker-dealers, banks, or
other financial institutions for distribution of shares of a Fund. These
financial institutions may charge a fee for their services and may receive
shareholders service fees even though shares of a Fund are sold without sales
charges or distribution fees. These financial institutions may otherwise act as
processing agents, and will be responsible for promptly transmitting purchase,
redemption and other requests to a Fund.
Investors who purchase shares in this manner will be subject to the
procedures of the institution through whom they purchase shares, which may
include charges, investment minimums, cutoff times and other restrictions in
addition to, or different from, those listed herein. Information concerning any
charges or services will be provided to customers by the financial institution.
Investors purchasing shares of a Fund in this manner should acquaint themselves
with their institution's procedures and should read this Prospectus in
conjunction with any materials and information provided by their institution.
The financial institution and not its customers will be the shareholder of
record, although customers may have the right to vote shares depending upon
their arrangement with the institution.
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TRANSFER AGENT
Forum Financial Corp. (the "Transfer Agent") acts as transfer agent and
dividend disbursing agent of the Trust pursuant to a Transfer Agency Agreement.
For its services, the Transfer Agent receives with respect to each Fund an
annual fee of $12,000 plus $25 per shareholder account. Pursuant to a Fund
Accounting Agreement, the Transfer Agent also provides each Fund with portfolio
accounting, including the calculation of a Fund's net asset value. For these
services, the Transfer Agent receives with respect to each Fund an annual fee
ranging from $36,000 to $60,000 depending upon the amount and type of a Fund's
portfolio transactions and positions.
The dollar amount of the fees payable under the Transfer Agency Agreement
and the Fund Accounting Agreement between CRM and the Transfer Agent, the amount
of the fees waived by the Transfer Agent and the actual fees received by the
Transfer Agent for the fiscal year ended September 30, 1997, were as follows:
Fees Payable Amount of Fees Waived Fees Received
or Reimbursed
Transfer Agency $___ 0 $___
Fund Accounting $___ 0 $___
Both the Transfer Agency Agreement and Fund Accounting Agreement were
approved by the Board of Trustees, including a majority of the Trustees who are
not parties to the respective agreements or interested persons of any such
party, at a meeting called for the purpose of voting on the respective
agreements. Each of these agreements will remain in effect for a period of one
year and will continue in effect thereafter only if its continuance is
specifically approved at least annually by the Board of Trustees or by a vote of
the shareholders and in either case by a majority of the Trustees who are not
parties to the respective agreement or interested persons of any such party, at
a meeting called for the purpose of voting on the respective agreements.
EXPENSES
Under the Advisory Agreement, the Trust has confirmed its obligation to pay
all its expenses subject to the obligation of the Adviser to reimburse the Trust
for its excess expenses as described in the Prospectus. The Trust's expenses
include: interest charges, taxes, brokerage fees and commissions; certain
insurance premiums; fees, interest charges and expenses of the Trust's custodian
and transfer agent; fees of pricing, interest, dividend, credit and other
reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information and shareholder reports and delivering them to
existing shareholders; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; compensation of the Trust's Trustees;
compensation of the Trust's officers and
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employees who are not employees of the Adviser, Forum or their respective
affiliates and costs of other personnel performing services for the Trust;
costs of corporate meetings; Securities and Exchange Commission registration
fees and related expenses; state securities laws registration fees and
related expenses; the fees payable under the Advisory Agreement, and the
Administration and Distribution Agreement.
5. DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00
P.M., Eastern Standard Time, on Fund Business Days (as defined in the
Prospectus), by dividing the value of a Fund's net assets (i.e., the value of
its securities and other assets less its liabilities, including expenses payable
or accrued) by the number of shares outstanding at the time the determination is
made. The Trust does not determine net asset value on the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas.
6. PORTFOLIO TRANSACTIONS
A Fund generally will effect purchases and sales through brokers who charge
commissions. Allocations of transactions to brokers and dealers and the
frequency of transactions are determined by the Adviser in its best judgment and
in a manner deemed to be in the best interest of shareholders of a Fund rather
than by any formula. The primary consideration is prompt execution of orders in
an effective manner and at the most favorable price available to a Fund.
A Fund may not always pay the lowest commission or spread available.
Rather, in determining the amount of commission, including certain dealer
spreads, paid in connection with Fund transactions, the Adviser takes into
account such factors as size of the order, difficulty of execution, efficiency
of the executing broker's facilities (including the services described below)
and any risk assumed by the executing broker. The Adviser may also take into
account payments made by brokers effecting transactions for a Fund (i) to a Fund
or (ii) to other persons on behalf of a Fund for services provided to it for
which it would be obligated to pay. The Adviser may also take into account sales
of Fund shares when allocating brokerage.
In addition, the Adviser may give consideration to research services
furnished by brokers to the Adviser for its use and may cause a Fund to pay
these brokers a higher amount of commission than may be charged by other
brokers. Such research and analysis may be used by the Adviser in connection
with services to clients other than a Fund, and the Adviser's fee is not reduced
by reason of the Adviser's receipt of the research services.
Investment decisions for a Fund will be made independently from those for
any other account or investment company that is or may in the future become
managed by the Adviser or its affiliates. If, however, a Fund and other
investment companies or accounts managed by the Adviser are contemporaneously
engaged in the purchase or sale of the same security, the transactions may be
averaged as to price and allocated equitably to each account. In some cases,
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this policy might adversely affect the price paid or received by a Fund or the
size of the position obtainable for a Fund. In addition, when purchases or sales
of the same security for a Fund and for other investment companies and accounts
managed by the Adviser occur contemporaneously, the purchase or sale orders may
be aggregated in order to obtain any price advantages available to large
denomination purchases or sales.
A Fund contemplates that, consistent with the policy of obtaining best net
results, brokerage transactions may be conducted through the Adviser's
affiliates, affiliates of those persons or Forum. The Advisory Agreement
authorizes the Adviser to so execute trades. The Board of Trustees has adopted
procedures in conformity with applicable rules under the Investment Company Act
to ensure that all brokerage commissions paid to these persons are reasonable
and fair.
7. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of each Fund are sold on a continuous basis by the distributor at
net asset value without any sales charge. Shareholders may effect purchases or
redemptions or request any shareholder privilege in person at FFC's offices
located at Two Portland Square, Portland, Maine 04101.
The Trust accepts orders for the purchase or redemption of shares Monday
through Friday on all Fund Business Days (as defined in the prospectus) between
the hours of 9:00 a.m. and 6:00 p.m. (Eastern Standard Time). The Trust does not
determine net asset value, and does not accept orders, on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas. The Trust also reserves the right to cease accepting
purchase and redemption orders for same day credit when the Public Securities
Association (PSA) recommends that the securities market close early. On days
that the Trust closes early, purchase and redemption orders received after the
PSA recommended closing time will be credited for the next Business Day. In
addition, the Trust reserves the right to advance the time by which purchase and
redemption orders must be received for same Business Day credit as permitted by
the SEC.
ADDITIONAL REDEMPTION MATTERS
The Trust may redeem shares involuntarily to reimburse a Fund for any loss
sustained by reason of the failure of a shareholder to make full payment for
shares purchased by the shareholder or to collect any charge relating to
transactions effected for the benefit of a shareholder which is applicable to a
Fund's shares as provided in the Prospectus from time to time.
Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partly in portfolio securities if the Board of Trustees
determines economic conditions exist which would make payment in cash
detrimental to the best interests of a Fund. If payment for shares redeemed is
made wholly or partly in portfolio securities, brokerage costs may be
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incurred by the shareholder in converting the securities to cash. The Trust
has filed an election with the Securities and Exchange Commission pursuant to
which a Fund may only effect a redemption in portfolio securities if the
particular shareholder is redeeming more than $250,000 or 1% of a Fund's
total net assets, whichever is less, during any 90-day period.
Shareholders' rights of redemption may not be suspended, except (i) for any
period during which the New York Stock Exchange, Inc. is closed (other than
customary weekend and holiday closings) or during which the Securities and
Exchange Commission determines that trading thereon is restricted, (ii) for any
period during which an emergency (as determined by the Securities and Exchange
Commission) exists as a result of which disposal by a Fund of its securities is
not reasonably practicable or as a result of which it is not reasonably
practicable for a Fund fairly to determine the value of its net assets, or (iii)
for such other period as the Securities and Exchange Commission may by order
permit for the protection of the shareholders of a Fund.
Fund shares are normally issued for cash only. In the Adviser's discretion,
however, a Fund may accept portfolio securities that meet the investment
objective and policies of a Fund as payment for Fund shares. A Fund will only
accept securities that (i) are not restricted as to transfer either by law or
liquidity of market and (ii) have a value which is readily ascertainable (and
not established only by valuation procedures).
8. TAXATION
Each Fund intends for each taxable year to qualify for tax treatment as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Such qualification does not involve
governmental supervision of management or investment practices or policies of a
Fund. The information set forth in the Prospectus and the following discussion
relates solely to Federal income taxes on dividends and distributions by a Fund
and assumes that each Fund qualifies as a regulated investment company.
Investors should consult their own counsel as to the consequences to them of
Federal, state and local tax laws.
As a regulated investment company, a Fund will not be subject to Federal
income tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of
investment company taxable income (i.e., net investment income and capital loss)
for the taxable year (the "Distribution Requirement"), and satisfies certain
other requirements of the Code that are described below. Distributions by a Fund
made during the taxable year or, under specified circumstances, within twelve
months after the close of the taxable year, will be considered distributions of
income and gains of the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or
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foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock
or securities) and other income (including but not limited to gain from
options, futures or forward contracts) derived with respect to its business
of investing in such stock, securities or currencies (the "Income
Requirement"); and (2) derive less than 30% of its gross income (exclusive of
certain gains on designated hedging transactions that are offset by realized
or unrealized losses on offsetting positions) from the sale or other
disposition of stock, securities or foreign currencies (or options, futures
or forward contracts thereon) held for less than three months (the
"Short-Short Gain Test"). However, foreign currency gains, including those
derived from options, futures and forwards, will not in any event be
characterized as Short-Short Gains if they are directly related to the
regulated investment company's investments in stock or securities (or options
or futures thereon). Because of the Short-Short Gain Test, a Fund may have to
limit the sale of appreciated securities that it has held for less than three
months. However, the Short-Short Gain Test will not prevent a Fund from
disposing of investments at a loss, since the recognition of a loss before
the expiration of the three-month holding period is disregarded for this
purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. For purposes of determining whether
capital gain or loss recognized by a Fund on the disposition of an asset is
long-term or short-term, the holding period of the asset may be affected if (1)
the asset is used to close a "short sale" (which includes for certain purposes
the acquisition of a put option) or is substantially identical to another asset
so used, or (2) the asset is otherwise held by a Fund as part of a "straddle"
(which term generally excludes a situation where the asset is stock and a Fund
grants a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto). However, for purposes of Short-Short
Gain Test, the holding period of the asset disposed of may be reduced only in
the case of clause (1) above. In addition, a Fund may be required to defer the
recognition of a loss on the disposition of an asset held as part of a straddle
to the extent of any unrecognized gain on the offsetting position.
FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment
company taxable income (i.e., the taxable income of a regulated investment
company adjusted pursuant to Section 852(b)(2) of the Code) for each taxable
year. Such distributions will be taxable for shareholders as ordinary income and
treated as dividends for federal income tax purposes, and may qualify for the
70% dividends-received deduction for corporate shareholders.
A Fund may either retain or distribute to shareholders its net capital gain
for each taxable year. Each Fund currently intends to distribute any such
amounts, except to the extent that they may be offset by capital loss
carryovers. Net capital gain that is distributed and designated as a capital
gain dividend will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by a Fund prior to the date on which the shareholder
acquired his shares.
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Distributions by a Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess will
be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of a Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of a Fund, distributions of such amounts
will be taxable to the shareholder in the manner described above, although such
distributions economically constitute a return of capital to the shareholder.
Shareholders purchasing shares of a Fund just prior to the ex-dividend date
will be taxed on the entire amount of the dividend received, even though the net
asset value per share on the date of such purchase reflected the amount of such
dividend.
Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which they are made. However, dividends declared in
October, November or December of any year and payable to shareholders of record
on a specified date in such a month will be deemed to have been received by the
shareholders (and made by a Fund) on December 31 of such calendar year if such
dividends are actually paid in January of the following year. Shareholders will
be advised annually as to the U.S. federal income tax consequences of
distributions made (or deemed made) to them during the year.
A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemptions of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to a Fund
that it is not subject to backup withholding or that it is a corporation or
other "exempt recipient."
For Federal income tax purposes, when put and call options purchased by a
Fund expire unexercised, the premiums paid by a Fund give rise to short- or
long-term capital losses at the time of expiration (depending on the length of
the respective exercise periods for the options). When put and call options
written by a Fund expire unexercised, the premiums received by a Fund give rise
to short-term capital gains at the time of expiration. When a Fund exercises a
call, the purchase price of the underlying security is increased by the amount
of the premium paid by a Fund. When a Fund exercises a put, the proceeds from
the sale of the underlying security are decreased by the premium paid. When a
put or call written by a Fund is exercised, the purchase price (selling price in
the case of a call) of the underlying security is decreased (increased in the
case of a call) for tax purposes by the premium received. There may be short- or
long-term gains and losses associated with closing purchase or sale
transactions. For purposes of the Short-Short
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Gain Test, the holding period of an option written by a Fund will commence on
the date it is written and end on the date it lapses or the date a closing
transaction is entered into. Accordingly, a Fund may be limited in its
ability to write options which expire within three months and to enter into
closing transactions at a gain within three months of the writing of options.
Treasury Regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) for any taxable
year, to elect (unless it has made a taxable year election for excise tax
purposes as discussed below) to treat all or any part of any net capital loss,
any net long-term capital loss or any net foreign currency loss incurred after
October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of a Fund's assets must consist of cash
and cash items, U.S. government securities, securities of other regulated
investment companies, and securities of other issuers (as to which a Fund has
not invested more than 5% of the value of a Fund's total assets in securities of
such issuer and as to which a Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of a Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30, or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain)
by the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31
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of any year (or after the end of its taxable year if it has made a taxable
year election) in determining the amount of ordinary taxable income for the
current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that a Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of a Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital gain
or loss and will be long-term capital gain or loss if the shares were held for
longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code Section
246(c) (3) and (4) generally will apply in determining the holding period of
shares. Long-term capital gains of noncorporate taxpayers are currently taxed at
a maximum federal rate 11.6% lower than the maximum rate applicable to ordinary
income. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from a Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from a Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
a foreign shareholder will be subject to U.S. withholding tax at the rate of 30%
(or lower applicable treaty rate) upon the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. Federal income tax on
gains realized on the sale of shares of a Fund, capital gain dividends and
amounts retained by a Fund that are designated as undistributed
capital gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any
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gains realized upon the sale of shares of a Fund will be subject to U.S.
Federal income tax at the rates applicable to U.S. citizens or domestic
corporations.
In the case of a noncorporate foreign shareholder, a Fund may be required
to withhold U.S. Federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes a Fund with proper notification of its foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. Federal income tax consequences is
based on the Code and Treasury Regulations issued thereunder as in effect on the
date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. Federal income taxation described above. Shareholders are urged to
consult their tax advisers as to the consequences of Federal, state and local
tax rules with respect to an investment in a Fund.
9. OTHER MATTERS
CUSTODIAN
Pursuant to an agreement (the "Custodian Agreement"), The First National
Bank of Boston (the "Custodian"), P.O. Box 1959, Boston, Massachusetts 02105,
acts as the custodian of each Fund's assets. The Custodian's responsibilities
include safeguarding and controlling a Fund's cash and securities, determining
income and collecting interest on Fund investments. The Custodian may employ
foreign subcustodians to provide custody of a Fund's foreign assets in
accordance with applicable regulations. The Custodian is paid a fee at an annual
rate of 0.02% of the first $100 million of the average daily net assets of a
Fund, 0.015% of the next $100 million of the average daily net assets of a Fund
and 0.001% of the average daily net assets of a Fund over $200 million, and
certain transaction fees.
22
<PAGE>
COUNSEL
Legal matters in connection with the issuance of shares of stock of the
Trust are passed upon by Kramer, Levin, Naftalis & Frankel, 919 Third Avenue,
New York, New York 10022. Kramer, Levin, Naftalis & Frankel has relied upon the
opinion of Morris, Nichols, Arsht & Tunnell, 1201 N. Market Street, Wilmington,
Delaware, for matters relating to Delaware law.
AUDITORS
_________, independent auditors, have been selected as auditors for the
Trust.
THE TRUST AND ITS SHAREHOLDERS
The Trust was organized as a Delaware business trust on April 24, 1995.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The securities regulators of some states, however, have
indicated that they and the courts in their state may decline to apply Delaware
law on this point. The Trust Instrument contains an express disclaimer of
shareholder liability for the debts, liabilities, obligations, and expenses of
the Trust and requires that a disclaimer be given in each contract entered into
or executed by the Trust or the Trustees. The Trust Instrument provides for
indemnification out of each series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual limitation of
liability was in effect and the portfolio is unable to meet its obligations.
Forum believes that, in view of the above, there is no risk of personal
liability to shareholders.
The Trust Instrument further provides that the Trustees shall not be liable
to any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Fund capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees. The Trust or any series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
23
<PAGE>
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Trust's registration
statement.
OWNERSHIP OF SHARES OF THE FUND
As of September 30, 1997, the amount of shares owned by all officers and
directors of a Fund, as a group, was less than 1.00% of a Fund's outstanding
shares. Also as of that date, no person owned of record 5% or more of the
shares outstanding in any class of any Fund.
FINANCIAL STATEMENTS
The financial statements of the Small Cap Value Fund for the year ended
September 30, 1997 (which includes the statement of assets and liabilities,
including the schedule of investments of the Small Cap Value Fund and the
related statement of operations, the statement of changes in net assets, the
financial highlights, and the independent auditors' report thereon) included in
the Annual Report to shareholders of the Trust are delivered along with this SAI
and incorporated herein by reference.
24
<PAGE>
10. APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS (INCLUDING CONVERTIBLE DEBT)
(a) MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Moody's rates corporate bond issues, including convertible debt issues, as
follows:
Bonds which are rated Aaa are judged by Moody's to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payment and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments of or maintenance of
other terms of the contract over any long period of time may be small.
<PAGE>
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1, and B1.
(b) STANDARD & POOR'S CORPORATION ("S&P")
S&P rates corporate bond issues, including convertible debt issues, as
follows:
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.
Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas, they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for debt
in this category than in higher rated categories.
Bonds rated BB, B, CCC, CC and C are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Bonds rated 'BB' have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
Bonds rated 'B' have a greater vulnerability to default but currently have
the capacity to meet interest payments and principal payments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
2
<PAGE>
Bonds rated 'CCC' have currently identifiable vulnerability to default, and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
The 'C' rating may be used to cover a situation where a bankruptcy petition
has been filed, but debt service payments are continued. The rating 'Cl' is
reserved for income bonds on which no interest is being paid.
Bonds are rated D when the issue is in payment default, or the obligor has
filed for bankruptcy. Bonds rated 'D' are in payment default. The 'D' rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes that such payments will made during such grace period. The 'D' rating
also will be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
Note: The ratings from AA to CCC may be modified by the addition of a plus
(+) or minus (-) sign to show the relative standing within the rating category.
PREFERRED STOCK
(a) MOODY'S
Moody's rates preferred stock issues as follows:
An issue which is rated aaa is a top-quality preferred stock. This rating
indicates good asset protection and the least risk of dividend impairment among
preferred stock issues.
An issue which is rated "aa" is a high-grade preferred stock. This rating
indicates that there is a reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
An issue which is rated "a" is an upper-medium grade preferred stock. While
risks are judged to be somewhat greater than in the aaa and aa classification,
earnings and asset protection are, nevertheless, expected to be maintained at
adequate levels.
An issue which is rated "baa" is a medium-grade preferred stock, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
An issue which is rated "ba" has speculative elements and its future cannot
be considered well assured. Earnings and asset protection may be very moderate
and not well safeguarded during adverse periods. Uncertainty of position
characterizes preferred stocks in this class.
3
<PAGE>
An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.
An issue which is rated "ca" is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.
An issue which is rated "c" can be regarded as having extremely poor
prospects of ever attaining any real investment standing. This is the lowest
rated class of preferred or preference stock.
(b) STANDARD & POOR'S
Standard & Poor's rates preferred stock issues as follows:
"AAA" is the highest rating that is assigned by S&P to a preferred stock
issue and indicates an extremely strong capacity to pay the preferred stock
obligations.
A preferred stock issue rated "AA" also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated "AAA."
An issue rated "A" is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
An issue rated "BBB" is regarded as backed by an adequate capacity to pay
the preferred stock obligations. While it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
Preferred stock rated "BB," "B," and "CCC" are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. "BB" indicates the lowest degree of speculation and "CCC" the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.
A preferred stock rated "C" is a non-paying issue.
4
<PAGE>
A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
To provide more detailed indications of preferred stock quality, the
ratings from "AA" to "B" may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing within the major rating categories.
5
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS.
Included in the Prospectus (Part A):
Financial Highlights
Included in the Statement of Additional Information (Part B):
Unaudited financial statements for the six month period ended March
31, 1996 including: statement of assets and liabilities, statement of
operations, statement of changes in net assets, notes to financial
statements, financial highlights and schedule of investments.
(b) EXHIBITS:
NOTE: * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY REFERENCE. ALL
REFERENCES TO A POST-EFFECTIVE AMENDMENT ("PEA") OR PRE-EFFECTIVE AMENDMENT
("PREEA") ARE TO PEAS AND PREEAS TO REGISTRANT'S REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 33-91498.
(1) Copy of Trust Instrument (filed via EDGAR on April 30,
1996 as Exhibit (1) to PEA No. 1, Accession No.
0000912057-96-007562).
(2) Copy of Bylaws (filed via EDGAR on April 30, 1996, as
Exhibit (2) to PEA No. 1, Accession No.
0000912057-96-007562).
(3) Inapplicable.
(4) Inapplicable.
(5) Investment Advisory Agreement between Registrant and CRM
Advisors, Inc. (filed on August 21, 1995 as Exhibit (5)
of PreEA No.1, and filed herewith).
(6) Distribution Agreement between Registrant and Forum
Financial Services, Inc. (filed on August 21, 1995 as
Exhibit (6) of PreEA No.1, and filed herewith).
(7) Inapplicable.
(8) Custodian Agreement (filed on August 21, 1995 as Exhibit
(8) of PreEA No.1, and filed herewith).
<PAGE>
(9) (a) Administration Agreement between Registrant and
Forum Financial Services, Inc. (filed on August 21,
1995 as Exhibit 9(a) of PreEA No.1, and filed
herewith).
(b) Transfer Agency Agreement between Registrant and
Forum Financial Corp. (filed on August 21, 1995 as
Exhibit 9(b) of PreEA No.1, and filed herewith).
(c) Fund Accounting Agreement to be between Registrant
and Forum Financial Corp. (filed on August 21, 1995
as Exhibit 9(c) of PreEA No.1, and filed herewith).
(10) (a) Opinion of Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel (filed on September 29, 1995 as Exhibit
10(a) of PreEA No.2, and filed herewith).
(b) Opinion of Morris, Nichols, Arsht & Tunnell (filed
on September 29, 1995 as Exhibit 10(b) of PreEA
No.2, and filed herewith).
(11) Not applicable to this filing.
(12) Inapplicable.
(13) Form of Investment Representation Letter (filed on
September 29, 1995 as Exhibit 13 of PreEA No.2, and filed
herewith).
(14) Inapplicable.
(15) Inapplicable.
(16) Inapplicable.
Other Exhibits:
(A) Power of Attorney of Fred M. Filoon (filed herewith).
(B) Power of Attorney of John E. Appelt (filed herewith).
(C) Power of Attorney of Louis Klein Jr. (filed herewith).
(D) Power of Attorney of Clement C. Moore, II (filed herewith).
(E) Power of Attorney of Eugene A. Trainor, III (filed
herewith).
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF SEPTEMBER 30, 1997.
Title of Class of Shares
of Beneficial Interest Number of Holders
---------------------- -----------------
The CRM Small Cap Value Fund 1,254
ITEM 27. INDEMNIFICATION.
Section 10.01 of the Registrant's Trust Instrument provides that a Trustee,
when acting in such capacity, will not be personally liable to any person other
than the Trust or Shareholders for any act, omission or obligation of the Trust
or any Trustee. Section 10.01 also provides that a Trustee, when acting in such
capacity, will not be liable to the Trust or to Shareholder except for acts or
omissions constituting willful misfeasance, bad faith, gross negligence or
reckless disregard of the Trustee's duties under the Trust Instrument.
The general effect of Section 10.02 of the Registrant's Trust Instrument
is to indemnify existing or former trustees and officers of the Trust to the
fullest extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable
to the Registrant or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. Section 10.02 also provides that the Trust may obtain
insurance coverage for the indemnification rights provided for section 10.02.
The foregoing description of the limitation of liability, indemnification
and insurance provisions of the Trust Instrument is modified in its entirety by
the provisions of Article X of the Trust Instrument contained in this
Registration Statement as Exhibit 1 and incorporated herein by reference.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
The description of CRM Advisors, LLC, under the caption "Management of the
Trust - The Adviser" and "Management - Investment Adviser" in the Prospectus and
Statement of Additional Information, constituting certain of Parts A and B,
respectively, of this Registration Statement, are incorporated by reference
herein.
The address of CRM Advisors, LLC, is 707 Westchester Avenue, White Plains,
New York 10604. The following are the partners and executive officers of CRM
Advisors, LLC, including any business connections of a substantial nature which
they have had in the past two years.
Gerald Bertram Cramer, Member; Chairman of the Board
Chairman of the Board of Cramer Rosenthal McGlynn, Inc., and CRM
Management, Inc., 707 Westchester Avenue, White Plains, New York
10604.
Edward John Rosenthal, Member; Vice Chairman
Currently Vice Chairman and Treasurer of Cramer Rosenthal McGlynn,
Inc., and CRM Management, Inc., 707 Westchester Avenue, White Plains,
New York 10604, Mr. Rosenthal was formerly Executive Vice President of
Cramer Rosenthal McGlynn, Inc., and CRM Management, Inc.
Ronald Harward McGlynn, Member; President
President of Cramer Rosenthal McGlynn, Inc., and CRM Management, Inc.,
707 Westchester Avenue, White Plains, New York 10604.
Jay Brian Abramson, Member; Executive Vice President
Executive Vice President and General Counsel of Cramer Rosenthal
McGlynn, Inc., and CRM Management, Inc., 707 Westchester Avenue, White
Plains, New York 10604.
Fred Marden Filoon, Member; Senior Vice President
Senior Vice President of Cramer Rosenthal McGlynn, Inc., and CRM
Management, Inc., 707 Westchester Avenue, White Plains, New York
10604.
<PAGE>
Arthur Jay Pergament, Member; Senior Vice President
Senior Vice President of Cramer Rosenthal McGlynn, Inc., and CRM
Management, Inc., 707 Westchester Avenue, White Plains, New York
10604.
Eugene Anthony Trainor, III, Treasurer and Assistant Secretary
Currently Vice President and Chief Financial Officer of Cramer
Rosenthal McGlynn, Inc., 707 Westchester Avenue, White Plains, New
York 10604, Mr. Trainor was formerly the Chief Financial Officer and
Controller of Grotech Capital Group, Inc., in Timonium, MD.
Amelia Claudette Jones Sher, Secretary and Assistant Treasurer
Currently Vice President and Director of Operations and Compliance of
Cramer Rosenthal McGlynn, Inc., 707 Westchester Avenue, White Plains,
New York 10604, Ms. Sher was formerly Director, Senior Vice President,
Director of Operations, Treasurer and Assistant Secretary of Schaenen
Wood & Associates, Inc., 600 Madison Avenue, New York, NY.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc., Registrant's underwriter, serves
as underwriter to Core Trust (Delaware), The CRM Funds, The Cutler Trust, Forum
Funds, The Highland Family of Funds, Monarch Funds, Norwest Advantage Funds,
Norwest Select Funds, Sound Shore Fund, Inc.
(b) John Y. Keffer, President of Forum Financial Services, Inc., is the
Chairman and President of the Registrant. Sara M. Morris is the Treasurer of
Forum Financial Services. David I. Goldstein, Secretary of Forum Financial
Services, Inc., is the Secretary of the Registrant. Margaret J. Fenderson is
the Assistant Treasurer of Forum Financial Services, Inc. and Dana Lukens is the
Assistant Secretary of Forum Financial Services, Inc. Their business address is
Two Portland Square, Portland, Maine 04101.
(c) Not Applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 (the "1940
Act") and the Rules thereunder are maintained at the offices of Forum Financial
Services, Inc., and Forum Financial Corp. The offices of both companies are
located at Two Portland Square, Portland, Maine 04101. The records required to
be maintained under Rule 31a-1(b)(1) with respect to journals of receipts and
deliveries of securities and receipts and disbursements of cash are maintained
at the offices of the
<PAGE>
Registrant's custodian, as listed under "Other Information - Custodian" in Part
B to this Registration Statement.
ITEM 31. MANAGEMENT SERVICES.
Inapplicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to:
(i) contain in its Trust Instrument or bylaws provisions for
assisting shareholder communications and for the removal of trustees
substantially similar to those provided for in Section 16(c) of the 1940
Act, except to the extent such provisions are mandatory or prohibited under
applicable Delaware law; and,
(ii) furnish each person to whom a prospectus is delivered a copy of
Registrant's latest annual report to shareholders relating to the portfolio
or class thereof to which the prospectus relates upon request and without
charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Portland, State of Maine on the 17th day
of October, 1997.
THE CRM FUNDS
By: FRED M. FILOON*
President
*By: /s/ Max Berueffy
-------------------------------
Max Berueffy, Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 17th
day of October, 1997.
Signatures Title
---------- -----
(a) Principal Executive Officer
FRED M. FILOON* President and Trustee
*By: /s/ Max Berueffy
--------------------------------
Max Berueffy, Attorney-in-Fact
(b) Principal Financial and
Accounting Officer
EUGENE A. TRAINOR, III Treasurer
*By: /s/ Max Berueffy
--------------------------------
Max Berueffy, Attorney-in-Fact
(c) Majority of the Directors
JOHN E. APPELT* Trustee
FRED M. FILOON* Trustee
LOUIS KLEIN, JR.* Trustee
CLEMENT C. MOORE, II* Trustee
EUGENE A. TRAINOR III* Trustee
*By: /s/ Max Berueffy
--------------------------------
Max Berueffy, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
5 Investment Advisory Agreement between The CRM
Funds and CRM Advisers . . . . . . . . . . . . . . . .
6 Distribution Agreement between The CRM Funds and
Forum Financial Services, Inc. . . . . . . . . . . . .
8 Custodian Agreement between The CRM Funds and First
National Bank of Boston. . . . . . . . . . . . . . . .
9(a) Administration Agreement between The CRM Funds
and Forum Financial Services, Inc. . . . . . . . . . .
9(b) Transfer Agency Agreement between The CRM Funds
and Forum Financial Corp.. . . . . . . . . . . . . . .
9(c) Fund Accounting Agreement between The CRM Funds
and Forum Financial Corp.. . . . . . . . . . . . . . .
10(a) Opinion of Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel. . . . . . . . . . . . . . . . . . . .
10(b) Opinion of Morris, Nichols, Arsht & Tunnell. . . . . .
13 Investment Representation Letter . . . . . . . . . . .
(Other Exhibits)
(A) Power of Attorney of Fred M. Filoon. . . . . . . . . .
(B) Power of Attorney of John E. Appelt. . . . . . . . . .
(C) Power of Attorney of Louis Klein Jr. . . . . . . . . .
(D) Power of Attorney of Clement C. Moore, II. . . . . . .
(E) Power of Attorney of Eugene A. Trainor, III. . . . . .
<PAGE>
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE CRM FUNDS
AND
CRM ADVISORS, LLC
THIS AGREEMENT is made as of the 29th day of September, 1995, by and between THE
CRM FUNDS, a Delaware business trust which may issue one or more series and
classes of shares of beneficial interest (the "Trust"), on behalf of The CRM
Small Cap Value Fund (the "Fund"), and CRM ADVISORS, LLC, a New York limited
liability company (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Trust wishes to retain the Adviser to act as investment
adviser with respect to shares of the Fund, and the Adviser is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt whereof
is hereby acknowledged, it is agreed between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints the Adviser, and the
Adviser hereby undertakes, to act as investment adviser of the Fund and, subject
to the supervision of the Trust's Board of Trustees, to direct the investments
of the Fund in accordance with the investment objectives, policies, and
limitations provided in the Fund's Prospectus (as defined herein) or other
governing instruments, as amended from time to time, under the 1940
<PAGE>
Act and rules thereunder, and such other limitations as the Fund may impose by
notice in writing to the Adviser.
SECTION 2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser
with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser to provide certain advisory services to the Trust and
approving this agreement;
(b) The Trust's Trust Instrument and all amendments thereto;
(c) The Trust's By-Laws and all amendments thereto;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") and under the 1940 Act (File
Nos. 33-91498 and 811-9034), as filed with the Securities and Exchange
Commission (the "Commission") relating to the Trust's shares of beneficial
interest, no par value ("Shares"), and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission; and
(f) The Trust's most recent prospectus and statement of additional
information and all amendments and supplements thereto (the "Prospectus").
The Trust will furnish the Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
SECTION 3. INVESTMENT ADVISORY SERVICES. On behalf of the Fund, the
Adviser is authorized, in its discretion and without prior consultation with the
Fund, to buy, sell, lend and otherwise trade, consistent with the Fund's then
current investment objective, policies
<PAGE>
and restrictions, any stocks, bonds and other securities and investment
instruments subject to the control and direction of the Trust's Board of
Trustees.
The Adviser shall furnish such reports, evaluations, information or
analyses to the Trust with respect to the Fund as the Trust's Board of Trustees
may request from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Trust's Board of Trustees with respect
to Trust policies, and shall carry out such policies as are adopted by the
Trustees. The Adviser shall, subject to review by the Board of Trustees,
furnish such other services as the Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this Agreement,
including but not limited to, the appointment and supervision of any
sub-adviser.
The Adviser shall place all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by the Adviser, which
may include brokers or dealers affiliated with the Adviser to the extent
permitted by the 1940 Act. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the Fund and
at commission rates which are reasonable in relation to the benefits received.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) to the Fund and/or the other accounts over
which the Adviser or its affiliates exercise investment discretion. The Adviser
is authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction
<PAGE>
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Board of Trustees shall periodically review
the commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Trust or the Fund.
SECTION 4. COMPENSATION. As compensation for the services which the
Adviser is to provide or cause to be provided pursuant to Paragraph 3, the Fund
shall pay to the Adviser out of Fund assets an annual fee equal to 0.75% of the
average daily net asset value of the Fund (computed in the manner set forth in
the Fund's most recent Prospectus and determined as of the close of business on
each business day throughout the month) which shall be accrued daily and paid in
arrears on the first business day of every month. The fee for any partial month
under this agreement shall be calculated on a proportionate basis. In the event
that the total expenses of the Fund exceed the limits on investment company
expenses imposed by any state or any regulatory authority of any jurisdiction in
which shares of such Fund are qualified for offer and sale, the Adviser will
bear the amount of such excess, except: (i) the Adviser shall not be required
to bear such excess to an extent greater than the compensation due to the
Adviser for the period for which such expense limitation is required to be
calculated unless such state or regulatory authority shall so require, and (ii)
the Adviser shall not be required to bear the
<PAGE>
expenses of the Fund to an extent which would result in the Trust's inability to
qualify as a regulated investment company under the provisions of Subchapter M
of the federal Internal Revenue Code of 1986, as amended.
SECTION 5. INTERESTED PERSONS. It is understood that the Trustees,
officers and shareholders of the Trust are or may be or become interested
persons of the Adviser as directors, officers or otherwise and that directors,
officers and shareholders of the Adviser are or may be or become similarly
interested persons of the Trust.
SECTION 6. PAYMENT OF EXPENSES. The Fund will pay, or contract with
persons not parties to this Agreement to pay for, all its expenses other than
those expressly stated to be payable by the Adviser hereunder, which expenses
payable by the Fund shall include, without limitation, (i) interest and taxes;
(ii) brokerage commissions and other costs in connection with the purchase or
sale of securities and other investment instruments, which the parties
acknowledge might be higher than other brokers would charge if the Fund pays a
broker which provides research services to the Adviser for use in rendering
services to the Fund; (iii) fees and expenses of the Fund's Trustees; (iv) legal
and audit expenses; (v) administrator, custodian, pricing and bookkeeping,
registrar and transfer agent fees and expenses; (vi) compensation of the Trust's
officers and employees who are not employees of the Adviser, the distributor or
their respective affiliates and the costs of other personnel performing services
for the Trust; (vii) fees payable under this Advisory Agreement and the
Administration and Distribution Agreements; (viii) fees and expenses related to
the registration and qualification of the Trust and the Fund's shares for
distribution under state and federal securities laws; (ix) expenses of printing
and mailing reports and notices and proxy material to shareholders of the
<PAGE>
Fund; (x) all other expenses incidental to holding meetings of the Fund's
shareholders, including proxy solicitations therefor; (xi) expenses of
typesetting for printing Prospectuses and supplements thereto; (xii) expenses of
printing and mailing Prospectuses and supplements thereto sent to existing
shareholders; (xiii) insurance premiums for fidelity bonds and other coverage to
the extent approved by the Board of Trustees; (xiv) association membership dues
authorized by the Board of Trustees; and (xv) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust is a party (or the Fund's assets are subject)
and any legal obligation which the Trust may have to indemnify the Trust's
Trustees and officers with respect thereto.
SECTION 7. NON-EXCLUSIVE SERVICES. The services of the Adviser to the
Fund are not to be deemed exclusive and the Adviser shall be free to render
similar services to others and engage in other activities. The Adviser shall be
free to enter into other agreements with the Fund and the Trust for providing
additional services to the Fund and the Trust which are not covered by this
Agreement, and to receive additional compensation for such services. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, neither
the Adviser nor any of its directors, officers, shareholders, agents, or
employees shall be liable or responsible to the Fund or the Trust or to any
shareholder of the Fund or the Trust for any act or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
SECTION 8. TERM OF AGREEMENT.
<PAGE>
(a) The Trust represents that this Agreement as it pertains to the
Fund has been approved by the Board of Trustees and shareholders pursuant to
Section 15 of the 1940 Act. This Agreement as it pertains to the Fund shall
become effective on the date hereof and shall remain in effect for a period of
two years from such date, and thereafter for successive twelve-month periods
with respect to the Fund; provided, however, that such continuance is
specifically approved at least annually by the Board of Trustees of the Trust or
by a majority vote of the holders of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, and, in either case, by a majority of the
Board of Trustees of the Trust, who have no direct or indirect financial
interest in this Agreement and who are not interested persons, as defined in the
1940 Act, of any such party, who cast their vote in person at a meeting called
for the purpose of voting on such approval; provided further, however, that if
the continuation of this Agreement is not approved as to the Fund, the Adviser
may continue to render the Fund the services described herein in the manner and
to the extent permitted by the 1940 Act and the rules and regulations
thereunder. This Agreement may be terminated (i) by the Trust with respect to
the Fund at any time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities (as so defined) of the Fund, or by
a vote of the majority of the Board of Trustees of the Trust on sixty days'
written notice to the Adviser; or (ii) by the Adviser with respect to the Fund
on sixty days' written notice to the Trust.
This Agreement may be amended at any time with the approval of the Trustees
of the Trust, provided, however, that any material amendments of the terms
hereof will become effective only upon approval as provided in the first proviso
of Section 8(a) hereof.
<PAGE>
SECTION 9. NO ASSIGNMENT. This Agreement may not be assigned, sold or
in any manner hypothecated or pledged by either party hereto and this agreement
shall terminate automatically in the event of any such assignment, sale,
hypothecation or pledge. The terms "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Commission thereunder.
SECTION 10. NOTICES. All notices and other communications, including
Written Instruction (collectively referred to as "Notice" or "Notices" in this
Paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex, or facsimile sending device. Notices shall be addressed (a) if to the
Adviser at the Adviser's address, 707 Westchester Avenue, White Plains, New
York; (b) if to the Trust, at the address of the Trust; or (c) if to neither of
the foregoing, at such other address as shall have been notified to the sender
of any such Notice or other communication. A Notice may be mailed, in which
case it shall be deemed to have been given three days after it is sent, or if
sent by facsimile sending device, it shall be deemed to have been given
immediately, or if sent by messenger, it shall be deemed to have been given on
the day it is delivered, or if sent by confirming telegram, cable, telex, and
facsimile sending device it shall be deemed to have been given immediately. All
postage, cable, telex, or facsimile sending device charges arising from the
sending of a Notice hereunder shall be paid by the sender.
SECTION 11. NON-EXCLUSIVE USE OF THE NAME "CRM." The Trust acknowledges
that it adopted its name through the permission of the Adviser. The Adviser
hereby consent to the non-exclusive use by the Trust of the name "CRM" only so
long as the
<PAGE>
Adviser serves as the Fund's adviser. The Trust covenants and agrees to
protect, exonerate, defend, indemnify and hold harmless the Adviser, its
shareholders, officers, directors, agents and employees from and against any and
all costs, losses, claims, damages or liabilities, joint or several, including
all legal expenses, which may arise or have arisen out of the Trust's use or
misuse of the name "CRM", or out of any breach of or failure to comply with this
Section 11.
SECTION 12. FURTHER ACTIONS. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
SECTION 13. AMENDMENTS. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 15. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York.
SECTION 16. LIMIT OF LIABILITY. The Adviser acknowledges the limitation
of shareholder liability set forth in the Trust's Declaration of Trust. The
obligations of the Trust under this Agreement shall not be binding upon the
Trustees individually or upon holders of shares of the Trust individually but
shall be binding only upon the assets and property of the Trust, and upon the
Trustees insofar as they hold title thereto.
<PAGE>
SECTION 18. DEFINITIONS. The terms "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act, as
now in effect or as hereafter amended, and subject to such orders as may be
granted by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers designated below on the day and year first above written.
THE CRM FUNDS, ON BEHALF OF CRM ADVISORS, LLC
The CRM Small Cap Value Fund
By: /s/ Fred M. Filoon By: /s/ Ronald H. McGlynn
------------------------- ------------------------
Name: Fred M. Filoon Name: Ronald H. McGlynn
Title: President Title: President
<PAGE>
EXHIBIT 6
THE CRM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made the 19th day of November, 1996, between The CRM Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, ME
04101, and Forum Financial Services, Inc. (the "Distributor"), a corporation
organized under the laws of the State of Delaware with its principal place of
business at Two Portland Square, Portland, ME 04101.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust desires that the Distributor, as principal underwriter,
offer the Shares of the Trust representing interests in each of the classes now
existing or in the future created in each of the separate investment portfolios
of the Trust as listed from time to time on Schedule A hereto (each a
"Portfolio" and, collectively, the "Portfolios") and the Distributor is willing
to act as principal underwriter on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Distributor, and the Distributor hereby
agrees, to act as distributor of the Shares for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to
the Distributor copies of its Trust Instrument and Bylaws, the Trust's
Registration Statement and all amendments thereto filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act") or the 1940 Act (the
"Registration Statement") and the current Prospectus and Statement of Additional
Information of each Portfolio (collectively, as currently in effect and as
amended or supplemented, the "Prospectus") and shall promptly furnish the
Distributor with all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES
Subject to the direction and control of the board of trustees of the Trust
(the "Board"), the Distributor shall serve as distributor of the Shares.
(a) As agent of and sole distributor for the Trust, the Distributor shall
offer, and solicit offers to subscribe to, the unsold balance of Shares as shall
then be effectively registered under the Securities Act and applicable state
securities laws. All subscriptions for Shares obtained by the Distributor shall
be directed to the Trust for acceptance and shall not be binding
<PAGE>
on the Trust until accepted by it. The Distributor shall have no authority to
make binding subscriptions on behalf of the Trust. The Trust reserves the right
to sell Shares directly to investors through subscriptions received by the
Trust. The Distributor's rights hereunder shall not apply to Shares issued in
connection with (i) the merger or consolidation of the Trust or its series or
classes with any other investment company or series or class thereof, (ii) the
Trust's acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company, or (iii) the reinvestment in
Shares by the Trust's shareholders of dividends or other distributions or any
other offering by the Trust of securities to its shareholders.
(b) The Distributor shall use its best efforts to obtain subscriptions to
Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. The Distributor shall send to the Trust promptly
all subscriptions placed with the Distributor. The Trust shall advise the
Distributor in its capacity as distributor of the approximate net asset value
per Share at any time requested by the Distributor which is a net asset value
determination time as disclosed in the Prospectus and at such other times as it
shall have been determined. The Trust shall furnish the Distributor from time
to time, for use in connection with the offering of Shares, such other
information with respect to the Trust and Shares as the Distributor may
reasonably request. The Trust shall supply the Distributor with such copies of
the Prospectus as the Distributor may request. The Distributor may use its
employees, agents and other persons who need not be its employees, at its cost
and expense, to assist it in carrying out its obligations hereunder, but no such
employee, agent or other person shall be deemed to be an agent of the Trust or
have any rights under this Agreement.
(c) The Trust reserves the right to suspend the offering of Shares at any
time, in the absolute discretion of the Board, and upon notice of such
suspension the Distributor shall cease to offer Shares.
(d) The Trust and the Distributor will cooperate with each other in taking
such action as may be necessary to qualify Shares for sale under the securities
laws of such states as the Trust may designate, provided that the Distributor
shall not be required to register as a broker-dealer or file a consent to
service of process in any such state. The Trust shall pay all fees and expenses
of registering Shares under the Securities Act and of registering or qualifying
Shares and the Trust's qualification under applicable state securities laws.
The Distributor shall pay all expenses relating to its broker-dealer
qualification.
(e) The Trust represents that its Registration Statement and Prospectus
under the Securities Act have been or will be, as the case may be, carefully
prepared in conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission (the "Commission")
thereunder. The Trust represents and warrants that its Registration Statement
and Prospectus contain or will contain all statements required to be stated
therein in accordance with the Securities Act and the rules and regulations of
the Commission thereunder, and that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or on
the effective date as the case may be; and that the Trust's Registration
Statement and Prospectus, when they shall become effective or be authorized for
use, will not include an untrue statement of a material fact or omit to state a
material fact
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of Shares. The Trust will from time to time file such
amendment or amendments to its Registration Statement and Prospectus as, in the
light of future developments, shall, in the opinion of the Trust's counsel, be
necessary in order to have such Registration Statement and Prospectus at all
times contain all material facts required to be stated therein or necessary to
make any statements therein not misleading to a purchaser of Shares, but, if the
Trust shall not file such amendment or amendments within fifteen days after
receipt of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this Agreement immediately. The Trust shall not file
any amendment to its Registration Statement and Prospectus without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing in this Agreement contained shall in any way limit the Trust's right to
file at any time such amendments to its Registration Statement and Prospectus,
of whatever character, as it deems advisable, such right being in all respects
absolute and unconditional. The Trust represents and warrants that any
amendment to its Registration Statement and Prospectus hereafter filed will,
when it becomes effective, contain all statements required to be stated therein
in accordance with the 1940 Act and the rules and regulations of the Commission
thereunder, that all statements of fact contained therein will, when the same
shall become effective, be true and correct and that no such amendment, when it
becomes effective, will include an untrue statement of a material fact or will
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of Shares.
(f) The Trust will indemnify, defend and hold the Distributor, its several
officers and directors, and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act (collectively, the "Distributor
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which any Distributor Indemnitee may incur, under the
Securities Act, or under common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the Trust's
Registration Statement and Prospectus under the Securities Act or arising out of
or based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon, and in conformity
with, information furnished to the Trust in connection therewith by or on behalf
of Distributor; provided, however, that in no event shall anything contained in
this paragraph (f) be so construed as to protect the Distributor against any
liability to the Trust or its security holders to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Section 2. This agreement to
indemnify Distributor Indemnitees is expressly conditioned upon the Trust being
notified of any action brought against any Distributor Indemnitee, such
notification to be given by letter, facsimile transmission or telegram to the
Trust and referring to the person against whom such action is brought within ten
days after the summons or other first legal process shall have been served on
such person. The failure so to notify the Trust of any such action shall not
relieve the Trust from any liability which it may have to any Distributor
Indemnitee otherwise than on account of the indemnification provided for in this
paragraph (f). The Trust will be entitled to assume the defense of any suit
brought to enforce any such claim, and to retain
<PAGE>
counsel of good standing chosen by it and approved by the Distributor, which
approval shall not be withheld unreasonably. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by the Distributor, the defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them. In the event the Trust does
not elect to assume the defense of any such suit, or in case the Distributor
does not approve of counsel chosen by the Trust or has been advised that it may
have available defenses or claims which are not available to or conflict with
those available to the Trust, the Trust will reimburse any Distributor
Indemnitee named as defendant in such suit for the reasonable fees and expenses
of any counsel retained by any such person. The indemnification provisions
contained in this paragraph (f) and the Trust's representations and warranties
in this Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Distributor Indemnitee and
shall survive the sale of any Shares made pursuant to subscriptions obtained by
the Distributor. The indemnification provisions of this paragraph (f) will
inure exclusively to the benefit of the Distributor Indemnitees and their
respective successors and assigns. The Trust agrees promptly to notify the
Distributor of the commencement of any litigation or proceeding against the
Trust or any of its trustees or officers in connection with the issue or sale of
Shares.
(g) The Distributor agrees to indemnify, defend and hold the Trust, its
several officers and directors, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act (collectively, the "Trust
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which any Trust Indemnitee may incur under the Securities
Act, or under common law or otherwise, but only to the extent that such
liability or expense incurred by the Trust Indemnitees resulting from such
claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor in its capacity as distributor to the Trust for use in the
Trust's Registration Statement or Prospectus under the Securities Act, or shall
arise out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or Prospectus or necessary to make such information not misleading.
The Distributor's agreement to indemnify the Trust Indemnitees is expressly
conditioned upon the Distributor being notified of any action brought against a
Trust Indemnitee, such notification to be given by letter, facsimile
transmission or telegram addressed and referring to the person against whom such
action is brought within ten days after the summons or other first legal process
shall have been served on such person. The Distributor shall have a right to
control the defense of such action, with counsel of its own choosing,
satisfactory to the Trust, if such action is based solely upon such alleged
misstatement or omission on the Distributor's part, and in any other event the
Distributor and the Trust Indemnitees named shall each have the right to
participate in the defense or preparation of the defense of any such action.
The failure so to notify the Distributor of any such action shall not relieve
the Distributor from any liability which it may have to any Trust Indemnitee
otherwise than on account of the indemnification provisions in this
paragraph (g).
<PAGE>
(h) The Trust shall advise the Distributor immediately: (i) of any request
by the Commission for amendments to the Trust's Registration Statement or
Prospectus or for additional information; (ii) in the event of the issuance by
the Commission of any stop order suspending the effectiveness of the Trust's
Registration Statement or Prospectus or the initiation of any proceedings for
that purpose; (iii) of the happening of any material event which makes untrue
any statement made in the Trust's Registration Statement or Prospectus or which
requires the making of a change in either thereof in order to make the
statements therein not misleading; and (iv) of all action of the Commission with
respect to any amendments to the Trust's Registration Statement or Prospectus
which may from time to time be filed with the Commission under the 1940 Act or
the Securities Act.
SECTION 3. STANDARD OF CARE
The Distributor shall use its best judgment and efforts in rendering
services to the Trust under this Agreement. The Distributor shall not be liable
to the Trust for any error of judgment or mistake of law, for any loss arising
out of any investment, or for any action or inaction of the Distributor in the
absence of bad faith, willful misconduct or gross negligence or based upon
information, instructions or requests with respect to a Portfolio made to the
Distributor by an officer of the Trust duly authorized. The Distributor shall
not be responsible or liable for any failure or delay in performance of its
obligations under this Agreement caused by circumstances beyond its reasonable
control.
SECTION 4. EXPENSES
Subject to any expense reimbursement arrangements between the Distributor
or others and the Trust, the Trust shall be responsible and assumes the
obligation for payment of all its expenses.
SECTION 5. COMPENSATION
(a) The Distributor shall be entitled to no compensation or reimbursement
of expenses for the distribution and service activities provided by the
Distributor pursuant to this Agreement, except to the extent such compensation
or reimbursement is provided, with respect to any Portfolio or any class of a
Portfolio, pursuant to a plan of distribution adopted under Rule 12b-1 under the
1940 Act.
(b) Notwithstanding anything in this Agreement to the contrary, the
Distributor and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of distribution and service
activities on behalf of the Portfolios in accordance with any distribution plan
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act, (ii) the
provision of shareholder support or other services, (iii) the provision of
management services or (iv) service as a Trustee or officer of the Trust.
<PAGE>
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Portfolio
on the date on which the Trust's Registration Statement relating to the shares
of the Portfolio becomes effective.
(b) This Agreement shall continue in effect for twenty-four months as it
pertains to a Portfolio and, thereafter, with respect to such Portfolio shall
continue in effect for successive twelve-month periods, provided that such
continuance is specifically approved at least annually (i) by the Board or by a
vote of a majority of the outstanding voting securities of the Portfolio and
(ii) by a vote of a majority of Trustees of the Trust (A) who are not parties to
this Agreement or interested persons of any such party and (B) with respect to
each class of a Portfolio, who do not have any direct or indirect financial
interest in any plan of distribution adopted under Rule 12b-1 under the 1940 Act
applicable to the class or in any agreements related to such plan, cast in
person at a meeting called for the purpose of voting on such approval. If the
continuation of this Agreement is not approved, the Distributor may continue to
render the services described herein in the manner and to the extent permitted
by the 1940 Act.
(c) This Agreement may be terminated at any time with respect to a
Portfolio, without the payment of any penalty, (i) by the Board or by a vote of
a majority of the outstanding voting securities of the Portfolio or, with
respect to each class of a Portfolio for which there is an effective plan of
distribution adopted under Rule 12b-1 under the 1940 Act, a majority of Trustees
of the Trust who do not have any direct or indirect financial interest in any
such plan or in any agreements related to such plan, on 60 days' written notice
to the Distributor or (ii) by the Distributor on 60 days' written notice to the
Trust. This Agreement shall automatically terminate in the event of its
assignment.
SECTION 7. ACTIVITIES OF DISTRIBUTOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of its officers, directors or employees (whether or
not they are a director, officer, employee or other affiliated person of the
Trust) to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Portfolio shall not
be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and the Distributor agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Distributor's rights or claims relate in
settlement of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Portfolios.
<PAGE>
SECTION 9. CONFIDENTIALITY
The Distributor agrees to treat all records and other information related
to the Trust as proprietary information of the Trust and, on behalf of itself
and its employees, to keep confidential all such information, except that the
Distributor may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 10. MISCELLANEOUS
(a) Except for Schedule A, no provisions of this Agreement may be amended
or modified in any manner except by a written agreement properly authorized and
executed by both parties hereto and, if required by the 1940 Act, by a vote of a
majority of the outstanding voting securities of a Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CRM FUNDS
/s/ Fred M. Filoon
--------------------------
Fred M. Filoon
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
--------------------------
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF NOVEMBER 19, 1996
The CRM Small Cap Value Fund
<PAGE>
EXHIBIT 8
CUSTODIAN AGREEMENT
THIS AGREEMENT made as of this 15th day of September 1995, between CRM
Small Cap Value Fund, a Delaware business trust, with its principal place of
business at __________________________________ (hereinafter called the "Fund"),
and The first National Bank of Boston, a national banking association with its
principal place of business in Boston, Massachusetts (hereinafter called the
"Custodian").
WHEREAS, the Fund desires that its Securities and cash shall be hereafter
held and administered by custodian as the fund's agent pursuant to the terms of
this Agreement; and
WHEREAS, the Custodian provides services in the ordinary course of its
business which will meet the fund's needs as provided for hereinafter;
NOW, THEREFORE, in consideration of the mutual promises herein made, the
Fund and the custodian agree as follows:
Section 1. DEFINITIONS.
"Bank" shall mean a bank as defined in Sec. 2(a)5 of the Investment Company
Act of 1940.
"Securities" shall mean and include stocks, shares, bonds, debentures,
notes, money market instruments or other obligations and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, or subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or assets. Unless
otherwise indicated herein, "Securities" shall mean both U. S. and "foreign
securities", as that term is defined in Sec. 17(f) of the Investment
Company Act of 1940.
"Officers' Certificate" shall mean a request or directions in writing or
confirmation of oral requests or directions in writing signed in the name
of the Fund by any two of the chairman of the Executive Committee, the
President, a Vice President, the Secretary, the Clerk or the Treasurer of
the Corporation or any other persons duly authorized to sign by the Board
of Trustees or the Executive Committee of the Fund.
Section 2. CUSTODIAN AS AGENT.
The Custodian is authorized to act under the terms of this Agreement as the
Fund's agent and shall be representing the fund whenever acting within the
scope of the Agreement.
Section 3. NAMES, TITLES AND SIGNATURE OF FUND'S OFFICERS.
An Officer of the Fund will certify to the Custodian the names, titles, and
signatures of those persons authorized to sign the Officers' Certificates,
as well as names of the Board of Trustees and the Executive Committee.
Said Officer, or his or her successor, will provide the Custodian with any
changes which may occur from time to time.
The Custodian is authorized to rely and act upon written and manually
signed instructions of any person or persons (if more than one, so
indicated) names in a separate list listing separately those persons who
may authorize the withdrawal of any portion of the cash or Securities which
will be furnished from time to time signed by Officers of Fund and
certified by its Secretary or an Assistant Secretary, ("Authorized
Persons"). The Fund will provide the custodian with authenticated specimen
signatures of Authorized Persons.
<PAGE>
The Custodian is further authorized to rely upon any instructions received
by any other means and identified as having been given or authorized by any
Authorized Person; regardless of whether such instructions shall in fact
have been authorized or given by any such persons; provided, that,
(a) the Custodian and the Fund shall have previously agreed in writing
upon the means of transmission and the method of identification for
such instructions;
(b) the Custodian has not been notified by the Fund to cease to
recognize such means and methods, and
(c) such means and methods have in fact been used.
If the Fund should so choose to have dial-up or other means of direct
access to the Custodian's accounting system for Securities in custodial
accounts, the Custodian is also authorized to rely and act upon any
instructions received by the Custodian through the terminal device,
regardless of whether such instructions shall in fact have been given or
authorized by the Fund provided that such instructions are accompanied by
passwords which have been mutually agreed to in writing by the Custodian
and the Fund and the Custodian has not been notified by the Corporation to
cease recognizing such passwords.
Where dial-up or other direct means of access to the Custodian's accounting
system for cash or Securities is utilized, the Fund agrees to indemnify the
Custodian and hold it harmless from and against any and all liabilities,
losses, damages, costs, reasonable counsel fees, and other reasonable
expenses of every nature suffered or incurred by the Custodian by reason of
or in connection with the improper use, unauthorized use and misuse by the
Fund or its employees of any terminal device with access to the Custodian's
accounting system for Securities in Custodial Accounts, unless such losses,
damages, etc., result from grossly negligent or wrongful acts of the
Custodian, its employees or agents.
Section 4. RECEIPT AND DISBURSEMENT OF MONEY.
A. The Custodian shall open and maintain the Account, subject to debit
only by a draft or order by the Custodian acting pursuant to the terms
of this Agreement. The Custodian shall hold in the Account, subject
to the provisions hereof, all cash received by it from or for the
account of the Fund.
1. The Custodian shall make payment of cash to the Account or shall debit
the Account only
(a) for the purchase of Securities for the portfolio of the Fund
upon the delivery of such Securities to the Custodian,
registered in the name of the Fund or of the nominee of the
Custodian referred to in Section 8 below;
(b) for payments in connection with the conversion, exchange or
surrender of Securities owned or subscribed to by the Fund held
by or to be delivered to the Custodian;
(c) for payments in connection with the return of the cash
collateral received in connection with Securities loaned by the
Fund;
(d) for payments in connection with futures contracts positions
held by the Fund;
(e) for payments of interest, dividends, taxes and in connection
with rights offerings; or
(f) for other proper Fund purposes.
<PAGE>
All Securities accepted in connection with the purchase of such
Securities, if (a) usual in the course of local market practice or
(b) specifically required in instructions from the Fund, shall be
accompanied by payment of, or a "due bill" for, any dividends,
interest or other distributions o the issue due the purchaser.
2. Except as hereinafter provided, the Custodian shall make any payment
for which it receives direction from an Authorized Person so long as
such direction (i) is (a) in writing (or is a facsimile transmission
of a written direction), (b) electronically transmitted to the
Custodian a provided in Section 3 or (c) when written or electronic
directions cannot reasonably be given within the relevant time period,
orally when the person giving such direction assures the Custodian
that the directions will be confirmed in writing by an Authorized
Persons within twenty-four (24) hours and (ii) states that such
payment is for a purpose permitted under the terms of this subsection.
3. All funds received by the Custodian in connection with the sale,
transfer, exchange or loan of Securities will be credited to the
Account in immediately available funds as soon as reasonably possible
on the date such received funds are immediately available. Payments
for purchase of Securities for the Account made in immediately
available funds will be charged against the Account on the day of
delivery of such Securities and all other payments will be charged on
the business day after the day of delivery.
A. The Custodian is hereby authorized and required to (a) collect on
a timely basis all income and other payments with respect to
Securities held hereunder to which the Fund shall be entitled
either by law or pursuant to custom in the securities business,
and to credit such income to the Account, (b) detach and present
for payment all coupons and other income items requiring
presentation as and when they become due, (c) collect interest
when due on Securities held hereunder, and (d) endorse and
collect all checks, drafts or other orders for the payment of
money received by the Custodian for the account of the Fund.
B. If the Custodian agrees to advance cash or Securities of the
Custodian for delivery on behalf of the Fund to a third party,
any property received by the Custodian on behalf of the Fund in
respect of such delivery shall serve as security for the Fund's
obligation to repay such advance until such time as such advance
is repaid, and, in the case where such advance is extended for
the purchase of Securities which constitute "margin stock" under
Regulation U of the Board of Governors of the Federal Reserve
System, such additional Securities of the Fund, as shall be
necessary for the Custodian, in the Custodian's reasonable
determination, to be in compliance with such Regulation U also
shall constitute security for the Fund's obligation to repay such
advance. The Fund hereby grants the Custodian a security
interest in such property of the Fund to secure such advance and
agrees to repay such advance promptly without demand from the
Custodian (and in any event, as soon as reasonably practicable
following any demand by the Custodian), unless otherwise agreed
by both parties. Should the Fund fail to repay such advance as
required, the Custodian shall be entitled immediately to apply
such security to the extent necessary to obtain repayment of the
advance, subject, in the case of Fund failure to make prompt
repayment without demand, to prior notice to the Fund.
Section 5. RECEIPT OF SECURITIES.
The Custodian shall hold in the Account, segregated at all times from those
of any other persons, firms or corporations, pursuant to the provisions
hereof, all Securities received by it from or for the account of the Fund.
All such Securities are to be held or disposed of by the
<PAGE>
Custodian for, and subject at all times to the instructions of, the Fund
pursuant to the terms of this Agreement. The Custodian shall have no power
or authority to assign, hypothecate, pledge or otherwise dispose of any of
the Securities and cash, except pursuant to the directive of the Fund and
only for the account of the Fund as set for in Section 7 of this Agreement.
The Custodian and its agents (including foreign subcustodians) may make
arrangements with Depository Trust Fund ("DTC") and other foreign or
domestic depositories or clearing agencies, including the Federal Reserve
Bank and any foreign depository or clearing agency, whereby certain
Securities may be deposited for the purpose of allowing transactions to be
made by bookkeeping entry without physical delivery of such Securities,
subject to such restrictions as may be agreed upon by the Custodian and the
Fund. The Custodian shall immediately commence procedures to replace
Securities lost due to robbery, burglary or theft while such Securities are
within its control or that of its agents or employees upon discovery of
such loss.
Section 6. FOREIGN SUBCUSTODIANS AND OTHER AGENTS.
(a) In the event the Custodian places Securities, pursuant to this
Agreement, with any foreign subcustodian, the Custodian agrees
that it shall place such Securities only with those foreign
subcustodians which either satisfy the requirements of "eligible
foreign custodian" under Section 17(f) of the U. S. Investment
Company Act of 1940, or with respect to which exemptive relief
has been granted by the U. S. Securities and Exchange Commission
from the requirements of Section 17(f).
The Custodian agrees further that in placing Securities with any
such foreign subcustodian, it will enter into a written
subcustodian agreement which shall provide that: (1) the
Custodian will be adequately indemnified and the Securities so
placed adequately insured in the event of loss, as provided in
part (b) of this section; (ii) the Securities will not be
subject to any right, charge, security interest, lien or claim
of any kind in favor of the foreign subcustodian or its
creditors (except any claim for payment for the services
provided by such subcustodian and any related expenses;
provided, however that the Custodian shall use its best efforts
promptly to release any such right, charge, security interest,
lien or claim on the assets, except to the extent such right,
charge, security interest, lien or claim arises with respect to
a special request or requirement by the Fund for services the
cost of which and the expenses incurred in connection with which
the Fund has not paid or has declined to pay, it being agreed
and understood that, in the ordinary course, all payments for
usual and routine services rendered and expenses incurred by a
subcustodian shall be the obligation of the custodian); (iii)
beneficial ownership of the Securities will be freely
transferable without payment of money or value other than for
safe custody or administration; (iv) adequate records will be
maintained identifying the Securities as belonging to the Fund;
(v) the Custodian's independent public accountants will be given
access to those records or the confirmation of the contents of
those records; and (vi) the Custodian will receive periodic
reports with respect to the safekeeping of the Securities,
including, but not necessarily limited to, notification of any
transfer to or from the Account.
(b) In addition to the indemnities included in Section 13 hereof, the
Custodian agrees to indemnify and hold harmless the Fund from
any and all loss or damage incurred or suffered by the Fund as a
result of placement by the Custodian of Securities with a
foreign subcustodian hereunder, to the extent the Custodian
receives indemnification from such foreign subcustodian pursuant
to part (a)(i) of this section.
(c) With respect to any Securities to be placed with foreign
subcustodians pursuant to this section, the Custodian represents and
warrants that during the term of this Agreement it
<PAGE>
will carry Bankers Blanket Bond or similar insurance for losses
incurred as a result of such sub-custodial arrangements.
(d) The Fund authorizes the Custodian to release any and all information
regarding Securities placed with foreign subcustodians hereunder as
may be required by court order of a court of competent jurisdiction.
Section 7. TRANSFER, EXCHANGE AND REDELIVERY OF SECURITIES.
The Custodian (or a subcustodian or any other agent of the Custodian) shall
have sole power to release or deliver any Securities of the Fund held by
the Custodian (or such subcustodian or agent) pursuant to this Agreement.
The custodian agrees (and will obtain an undertaking from each subcustodian
or other agent) that Securities held by the Custodian (or by a subcustodian
or other agent of the Custodian) will be transferred, exchanged or
delivered only
(a) for sales of Securities for the account of the Fund in accordance
with (i) "New York Street Practice", (ii) predominant established
practice in the relevant local market, or (iii) specific instructions
from the Fund; or
(b) when Securities are called, redeemed or retired or otherwise become
payable;
(c) for examination by any broker selling any such Securities in
accordance with "street delivery" custom or other relevant local
market practice;
(d) in exchange for or upon conversion into other Securities whether
pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such Securities pursuant to their terms into other
Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities pursuant to their terms;
(g) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(h) for the purpose of tendering Securities;
(i) for the purpose of delivering Securities lent by the Fund;
(j) for purposes of delivering collateral upon redelivery of Securities
lent or for purposes of delivering excess collateral; or
(k) for other proper Fund purposes.
As to any deliveries made by Custodian pursuant to items (b), (d), (e),
(f), (g), (i), (j) and (k), Securities in exchange therefor shall be
deliverable to the Custodian (or a subcustodian or other agent of the
Custodian). The Custodian may rely upon any written, electronic or oral
instructions or an Officers' Certificate relating thereto as provided for
in Sections 3 and 4 above.
Section 8. THE CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
Unless and until the Custodian receives instructions to the contrary, the
Custodian (or a subcustodian or other agent of the Custodian) shall:
<PAGE>
(a) present for payment all coupons and other income items held by it for
the account of the Fund which call for payment upon presentation and
hold the cash received by it upon such payment in the Account;
(b) collect interest and cash dividends and other distributions, provide
notice to the Fund of receipts, and deposit to the Account;
(c) hold for the account of the Fund all stock dividends, rights and
similar Securities issued with respect to any Securities held by the
Custodian under the terms of this Agreement;
(d) execute as agent on behalf of the Fund all necessary ownership
certificates required by the Internal Revenue Code or the Income Tax
Regulations of the United States Treasury Department, the laws of any
State or territory of the United States, or, in the case of
Securities held through foreign subcustodians, the laws of the
jurisdiction in which such Securities are held, now or hereafter in
effect, inserting the Fund's name on such certificates as the owner
of the Securities covered thereby, to the extent it may lawfully do
so;
(e) use its best efforts, in cooperation with the Fund, to file such
forms, certificates and other documents as may be required to comply
with all applicable laws and regulations relating to withholding
taxation applicable to the Securities; and
(f) use its best efforts to assist the Fund in obtaining any refund of
local taxes to which the Fund may have a reasonable claim.
The Fund agrees to furnish to the Custodian such information and to execute
such forms and other documents as the Custodian may reasonably request or
as otherwise may be reasonably necessary in connection with the Custodian's
performance of its obligations under clauses (e) and (f).
Section 9. REGISTRATION OF SECURITIES.
Except as otherwise directed by an Officers' Certificate, the Custodian
shall register all Securities, except such as are in bearer form, in the
name of the Fund or a registered nominee of the Fund or a registered
nominee of the Custodian or a subcustodian. Securities deposited with DTC
or a foreign securities depository permitted under Section 5 may be
registered in the nominee name of DTC or such foreign securities
depository. The Custodian shall execute and deliver all such certificates
in connection therewith as may be required by the applicable provisions of
the Internal Revenue Code, the laws of any State or territory of the United
States, or, in the case of Securities placed with foreign subcustodians,
the laws of the jurisdiction in which such Securities are held. The
Custodian shall maintain such books and records as may be necessary to
identify the specific Securities held by it hereunder at all times.
The Fund shall from time to time furnish the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any
Securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund.
Section 10. VOTING AND OTHER ACTION.
Neither the Custodian nor any nominee of the Custodian or of DTC shall vote
any of the Securities held hereunder by or for the account of the Fund
except in accordance with the instructions contained in an Officers'
Certificate.
<PAGE>
The Custodian shall deliver or have delivered to the Fund all notices,
proxies and proxy soliciting materials with relation to such Securities,
such proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Fund), but without indicating
the manner in which such proxies are to be voted.
With respect to Securities deposited with DTC or any other depository,
including a foreign subcustodian, as provided for in Section 6 hereof,
where such Securities may be registered in the nominee name of DTC, or
other such depository the Custodian shall request that the nominee shall
not vote any of such deposited Securities or execute any proxy to vote
thereon or give any consent or take any other action with respect thereto
unless instructed to do so by the Custodian following receipt by the
Custodian of an Officers' Certificate.
Section 11. TRANSFER TAX AND OTHER DISBURSEMENTS.
The Fund shall pay or reimburse the Custodian from time to time for any
transfer taxes payable upon transfers of Securities made hereunder and for
all other necessary and proper disbursements and expenses made or incurred
by the Custodian in the performance of this Agreement, as required by U. S.
law or the laws of the jurisdiction in which the Securities are held, as
the case may be.
The Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be
required under the laws of any jurisdiction to exempt from taxation any
exemptible transfers and/or deliveries of any such Securities.
Section 12. COMPENSATION AND THE CUSTODIAN'S EXPENSES.
The Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties.
Section 13. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless the Custodian and its
employees, agents and nominee from all taxes, charges, expenses,
assessments, claims and liabilities (including attorneys' fees) incurred or
assessed against them in connection with the performance of the Agreement,
except such as may arise from their own grossly negligent action, negligent
failure to act or willful misconduct. The Custodian agrees to indemnify
and hold harmless the Fund and its trustees, officers, employees, and
agents from all taxes, charges, expenses, assessments, claims and
liabilities (including attorneys fees) incurred or assessed against the
Fund in connection with the performance of the Agreement, which may arise
from grossly negligent action, grossly negligent failure to act or willful
misconduct on the part of the Custodian. In the event of any advance of
cash for any purpose made by the Custodian resulting from orders or
instructions of the Fund, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominee's own grossly negligent
action, grossly negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be security
therefor.
Within a reasonable time after receipt by an indemnified party of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party, notify in
writing the indemnifying party of the commencement thereof; and the
omission so to notify the indemnifying party will not relieve it from any
<PAGE>
liability hereunder as to the particular item for which indemnification is
then being sought, unless such omission is a result of the failure to
exercise reasonable care on the part of the indemnified party. In case any
such action is brought against an indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to assume the defense thereof, with
counsel who shall be to the reasonable satisfaction of such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation. Any such
indemnifying party shall not be liable to any such indemnified party on
account of any settlement of any claim or action effected without the
consent of such indemnifying party.
Section 14. REPORTS BY THE CUSTODIAN.
The Custodian shall furnish the Fund daily with a statement of all
transactions and entries for the Account of the Fund. The Custodian shall
furnish the Fund with such reports covering Securities held by it or under
its control as may be agreed upon from time to time. The books and records
of the Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times and upon reasonable notice
to the Fund. All such books and records shall be the property of the Fund
(and such other persons as the Fund may designate from time to time) and
the Custodian shall forthwith upon the Fund's request, turn over to the
Fund and cease to retain in its files, records and documents created and
maintained by the Custodian pursuant to this Agreement, which are no longer
needed by the Custodian in performance of its services or for its
protection.
Section 15. TERMINATION AND ASSIGNMENT.
This agreement may be terminated by the Fund or the custodian, immediately
upon written notice from the Fund or the Custodian, as applicable, to the
other party, if the other party fails materially to perform its obligations
hereunder, and may otherwise be terminated by the Fund or by the Custodian
on ninety (90) days' notice, given in writing and sent by registered mail
to the Custodian or the Fund as the case may be. Upon termination of this
Agreement, the Custodian shall deliver the Securities and cash in the
account of the Fund to such entity as is designated in writing by the Fund
and in the absence of such a designation may, but shall not be obligated
to, deliver them to a bank or trust company of the Custodian's own
selection having an aggregate capital, surplus and undivided profits as
shown by its last published report of not less than 50 million dollars
($50,000,000), the Securities and cash to be held by such bank or trust
company for the benefit of the Fund under terms similar to those of this
Agreement and the Fund to be obligated to pay to such transferee the then
currents of such transferee for services rendered by it; provided, however,
that the Custodian may decline to transfer such amount of such Securities
equivalent to all fees and other sums owing by the Fund to the Custodian,
and the Custodian shall have a charge against and security interest in such
amount until all monies owing to it have been paid, or escrowed to its
satisfaction.
This Agreement may not be assigned by the Custodian without the consent of
the Fund, authorized or approved by a resolution of the Fund's Board of
Trustees.
Section 16. FORCE MAJEURE.
The Custodian shall not be liable or accountable for any loss or damage
resulting from any condition or event beyond its reasonable control;
provided, however, that the Custodian shall promptly use its best efforts
to mitigate any such loss or damage to the Fund as a result of any such
condition or event. For the purposes of the foregoing, the actions or
inactions of the
<PAGE>
Custodian's subcustodians and other agents shall not be deemed to be beyond
the reasonable control of the Custodian. In connection with the foregoing,
the Custodian agrees (and agrees that it will use its best efforts to
obtain the undertaking of its subcustodians and other agents to the effect)
that the Custodian (and/or such subcustodian or agent) shall maintain such
alternate power sources for computer and related systems and alternate
channels for electronic communication with such computers and related
systems that the failure of the primary power source and/or communications
channel of the Custodian (and/or its subcustodians or other agents) will
not foreseeably result in any loss or damage to the Fund.
Section 17. THIRD PARTIES.
This Agreement shall be binding upon and the benefits hereof shall insure
to the parties hereto and their respective successors and assigns.
However, nothing in this Agreement shall give or be construed to give or
confer upon any third party any rights hereunder.
Section 18. AMENDMENTS.
The terms of this Agreement shall not be waived, altered, modified,
amended, supplemented or terminated in any manner whatsoever, except by
written instrument signed by both of the parties hereto.
Section 19. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of The Commonwealth of Massachusetts.
Section 20. COUNTERPARTS.
This agreement may be executed in several counterparts, each of which is an
original.
Section 21. NOTICES.
All notices provided for herein shall be in writing and shall become
effective when deposited in the United States mail, postage prepaid and
certified, addressed
(a) if to the Custodian, at 150 Royall Street
Canton, MA 02021
Attention: Worldwide Custody - MS: 45-02-16
(b) if to the Fund, at
----------------------------
----------------------------
Attention:
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or to such other address as either party may notify the other in writing.
<PAGE>
A copy of the Incorporation of the Fund is on file with the Delaware Secretary
of State, and notice is hereby given that this instrument is executed on behalf
of the Trustees of the Fund as Trustees, and the obligations of this instrument
are not binding upon any of the Trustees, officers, or shareholders of the Fund
individually but binding only upon assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
written above.
CRM SMALL CAP VALUE FUND
By: /s/ Max Berueffy
-------------------------------
Name: Max Berueffy
Title: Assistant Secretary
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Herbert Alleyne, Jr.
-------------------------------
Name: Herbert Alleyne, Jr.
Title: Administration Manager
<PAGE>
EXHIBIT 9(a)
THE CRM FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made the 29th day of September, 1995, between The CRM Funds
(the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at Two Portland Square, and Forum
Financial Services, Inc. (the "Administrator"), a corporation organized under
the laws of the State of Delaware with its principal place of business at Two
Portland Square, Portland, ME 04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust desires that the Administrator perform administrative
services for series of the Trust now existing or that in the future may be
created, and for classes that may in the future be created in each of the
separate investment portfolios of the Trust as listed on Schedule A hereto, as
it may be amended from time to time (each a "Portfolio" and, collectively, the
"Portfolios"), and the Administrator is willing to provide those services on the
terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Administrator do hereby agree as
follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Administrator, and the Administrator hereby
agrees, to act as administrator of the Trust for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to
the Administrator copies of its Trust Instrument and Bylaws, the Trust's
Registration Statement and all amendments thereto filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Act (the
"Registration Statement") and the current Prospectus and Statement of Additional
Information of each Portfolio (collectively, as currently in effect and as
amended or supplemented, the "Prospectus") and shall promptly furnish the
Administrator with all amendments of or supplements to the foregoing.
SECTION 2. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the board of trustees of
the Trust (the "Board"), the Administrator shall manage all aspects of the
Trust's operations with respect to the Portfolios except those which are the
responsibility of CRM Advisers, LLC, or any other investment adviser to a
Portfolio or the Portfolios (the "Adviser"), all in such manner and to such
extent as may be authorized by the Board.
<PAGE>
(b) With respect to the Trust or each Portfolio, as applicable, the
Administrator shall:
(i) oversee (A) the preparation and maintenance by the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and fund accountant
(or if appropriate, prepare and maintain) in such form, for such periods and in
such locations as may be required by applicable law, of all documents and
records relating to the operation of the Trust required to be prepared or
maintained by the Trust or its agents pursuant to applicable law; (B) the
reconciliation of account information and balances among the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant; (C) the transmission of purchase and redemption orders for Shares;
(D) the notification to the Adviser of available funds for investment; and (E)
the performance of fund accounting, including the calculation of the net asset
value of the Shares;
(ii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its custodian, transfer
agent and dividend disbursing agent as well as legal, auditing, shareholder
servicing and other services performed for the Portfolios;
(iii) be responsible for the preparation and the printing of the
periodic updating of the Registration Statement and Prospectus, tax returns, and
reports to shareholders, the Securities and Exchange Commission and state
securities commissions;
(iv) be responsible for the preparation of proxy and information
statements and any other communications to shareholders;
(v) at the request of the Board, provide the Trust with adequate
general office space and facilities and provide persons suitable to the Board to
serve as officers of the Trust;
(vi) provide the Trust, at the Trust's expense, with the services of
persons, who may be officers of the Trust, competent to perform such
supervisory, administrative and clerical functions as are necessary to provide
effective operations of the Trust;
(vii) with the approval of the Trust's counsel, prepare, file and
maintain the Trust's governing documents, including the Trust Instrument, the
Bylaws and minutes of meetings of trustees and shareholders;
(viii) with the approval of the Trust's counsel and cooperation from the
Adviser and other relevant parties, prepare and disseminate materials for
meetings of the Board;
(ix) monitor sales of Shares and ensure that such Shares are properly
and duly registered with the Securities and Exchange Commission and applicable
state securities commissions;
<PAGE>
(x) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for sales
literature of the Trust and other appropriate purposes;
(xi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as necessary
to, among other things, maintain the qualification of each Portfolio as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, and prepare and distribute to appropriate parties notices announcing
the declaration of dividends and other distributions to shareholders; and
(xii) advise the Trust and the Board on matters concerning the Trust and
its affairs.
(c) The books and records pertaining to the Trust which are in
possession of the Administrator shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during the Administrator's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided promptly by the Administrator to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor to any of the
Administrator's obligations hereunder, the Administrator shall, at the expense
and direction of the Trust, transfer to such successor all relevant books,
records and other data established or maintained by the Administrator under this
Agreement.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY
(a) The Administrator shall use its best judgment and efforts in
rendering the services described in this Agreement. The Administrator shall not
be liable to the Trust for any action or inaction of the Administrator in the
absence of bad faith, willful misconduct or gross negligence or based upon
information, instructions or requests with respect to a Portfolio made to the
Administrator by an officer of the Trust duly authorized. The Administrator
shall not be responsible or liable for any failure or delay in performance of
its obligations under this Agreement caused by circumstances beyond its
reasonable control.
(b) The Trust agrees to indemnify and hold harmless the Administrator,
its employees, agents, officers and trustees against and from any and all
claims, judgments, losses, charges (including attorneys' fees) and other
reasonable expenses arising out of the Administrator's actions or omissions that
are consistent with the standard of care set forth in paragraph (a) of this
section.
(c) The Administrator agrees to indemnify and hold harmless the Trust,
its employees, agents, officers and trustees against and from any and all
claims, judgments, losses, charges (including attorneys' fees) and other
reasonable expenses arising out of the Administrator's actions or omissions that
are not consistent with the standard of care set forth in paragraph (a) of this
section.
<PAGE>
(d) Neither party shall be required to indemnify the other if, prior
to confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 4. EXPENSES
Subject to any agreement by the Advisor or other person to reimburse any
expenses of the Trust that relate to the Portfolios, the Trust shall be
responsible for and assumes the obligation for payment of all of its reasonable
expenses, including: (a) the fee payable under Section 5 hereof; (b) the fees
payable to the Adviser under an agreement between the Adviser and the Trust; (c)
expenses of issue, repurchase and redemption of Shares; (d) interest charges,
taxes and brokerage fees and commissions, including the fees and commissions of
introducing brokers; (e) premiums of insurance for the Trust, its trustees and
officers and fidelity bond premiums; (f) fees, interest charges and expenses of
third parties, including the Trust's custodian, transfer agent, dividend
disbursing agent and fund accountant; (g) fees of pricing, interest, dividend,
credit and other reporting services; (h) costs of membership in trade
associations; (i) telecommunications expenses; (j) funds transmission expenses;
(k) auditing, legal and compliance expenses; (l) costs of forming the Trust and
maintaining its existence; (m) costs of preparing and printing Trust's
Prospectuses, subscription application forms and shareholder reports and
delivering them to existing shareholders; (n) expenses of meetings of
shareholders and proxy solicitations therefor; (o) costs of maintaining books of
original entry for portfolio and fund accounting and other required books and
accounts, of calculating the net asset value of Shares of the Trust and of
preparing tax returns; (p) costs of reproduction, stationery and supplies; (q)
fees and expenses of the Trust's trustees; (r) compensation of the Trust's
officers and employees who are not employees of the Adviser or Administrator or
their respective affiliated persons and costs of other personnel (who may be
employees of the Adviser, Forum or their respective affiliated persons)
performing services for the Trust; (s) costs of trustee meetings; (t) Securities
and Exchange Commission registration fees and related expenses; (u) state or
foreign securities laws registration fees and related expenses; and (v) all fees
and expenses paid by the Trust in accordance with any distribution plan adopted
pursuant to Rule 12b-1 under the Act or under any shareholder service plan or
agreement.
SECTION 5. COMPENSATION
(a) For the administrative services provided by the Administrator
pursuant to this Agreement, the Trust shall pay the Administrator, with respect
to each of the Portfolios, a fee at an annual rate equal to the amount set forth
in Schedule B hereto. Such fees shall be accrued by the Trust daily and shall
be payable monthly in arrears on the first day of each calendar month for
services performed under this Agreement during the prior calendar month. Upon
the termination of this Agreement, the Trust shall pay to the Administrator such
compensation as shall be payable prior to the effective date of such
termination.
(b) Notwithstanding anything in this Agreement to the contrary, the
Administrator and its affiliated persons may receive compensation or
reimbursement from the Trust with
<PAGE>
respect to (i) the provision of services on behalf of the Portfolios in
accordance with any distribution plan adopted by the Trust pursuant to Rule
12b-1 under the Act, (ii) the provision of shareholder support or other services
or (iii) service as a trustee or officer of the Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each
Portfolio on the date on which the Trust's Registration Statement relating to
the Shares of the Portfolio become effective.
(b) This Agreement shall continue in effect for twelve months as it
pertains to a Portfolio and, thereafter, shall be automatically renewed each
year for an additional term of one year with respect to such Portfolio.
(c) This Agreement may be terminated with respect to a Portfolio at
any time, without the payment of any penalty (i) by the Board on 60 days'
written notice to the Administrator or (ii) by the Administrator on 60 days'
written notice to the Trust.
SECTION 7. ACTIVITIES OF ADMINISTRATOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the
Administrator's right, or the right of any of its officers, directors or
employees (whether or not they are a trustee, officer, employee or other
affiliated person of the Trust) to engage in any other business or to devote
time and attention to the Administration or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and the Administrator agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Administrator's rights or claims relate in
settlement of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Portfolios.
SECTION 9. CONFIDENTIALITY
The Administrator agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Administrator may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
<PAGE>
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where the Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 10. MISCELLANEOUS
(a) Except for the Schedules, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of a Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) The terms "vote of a majority of the outstanding voting
securities," "interested person," and "affiliated person" shall have the
meanings ascribed thereto in the Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CRM FUNDS
/s/ Fred M. Filoon
----------------------
Fred M. Filoon
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
----------------------
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF SEPTEMBER 29, 1995
The CRM Small Cap Value Fund
SCHEDULE B
ADMINISTRATION FEES
Fee as a % of
the Annual Average Daily
Portfolio Net Assets of the Portfolio
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The CRM Small Cap Value Fund The greater of 0.15%
or $40,000
<PAGE>
EXHIBIT 9(b)
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
AGREEMENT made the 29th day of September, 1995, between The CRM Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101, and Forum Financial Corp. ("FFC"), a corporation organized under the laws
of the State of Delaware with its principal place of business at Two Portland
Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Act (as defined below) as an
open-end management investment company and may issue its shares of beneficial
interest, no par value, in separate series and classes; and
WHEREAS, the Trust desires that FFC perform transfer agency, dividend
disbursement agent and related services for each series of the Trust now
existing or that in the future may be created, and for classes that may in the
future be created in each of the separate investment portfolios of the Trust as
listed on Schedule A hereto, as it may be amended from time to time (each a
"Portfolio" and, collectively, the "Portfolios") and FFC is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and FFC do hereby agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints FFC as its transfer agent and FFC agrees to act
in such capacity upon the terms set forth in this Agreement.
SECTION 2. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the
meanings specified, insofar as the context will allow:
(a) ACT: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.
(b) BOARD: The term Board shall mean the board of trustees of the Trust.
(c) CLASS: The term Class shall mean any future classes of each Series
listed in Schedule A or any class of any Series that the Trust shall
subsequently establish.
(d) CUSTODIAN; CUSTODIAN AGREEMENT: The term Custodian shall mean The
First National Bank of Boston, or any successor or other custodian acting as
such for any current or
<PAGE>
future Series. The term Custodian Agreement shall mean the agreement or
agreements between the Trust and the Custodian or Custodians providing for
custodial services to the Trust.
(e) TRUST: The term Trust shall mean The CRM Funds.
(f) FUND ACCOUNTANT. The term Fund Accountant shall mean FFC or any
successor thereto that is responsible for calculating a Series's net asset value
and maintaining its accounting books and records.
(g) FUND BUSINESS DAY: The term Fund Business Day shall mean each day
that a Fund is open for trading as set forth in a Fund's then current
prospectus.
(h) ORAL INSTRUCTION: The term Oral Instruction shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to FFC in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed in good faith by
FFC to be a person or persons authorized by a resolution of the Board to give
Oral Instructions on behalf of the Trust. Each Oral Instruction shall specify
whether it is applicable to all of the Trust or to a specific Series or Class.
(i) PROSPECTUS: The term Prospectus shall mean the then-current
prospectus forming a part of an effective Registration Statement of the Trust
under the Securities Act of 1933, as amended, and the Act covering the Shares of
a Series or Class as the case may be, as the same may be amended or supplemented
from time to time.
(j) SERIES: The term Series shall mean each series listed in Schedule A
or any series that the Trust shall subsequently establish.
(k) Share Certificates: The term "Share Certificates" shall mean the
certificates evidencing ownership of Shares of a series or class.
(l) SHAREHOLDERS: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry records of
the Trust.
(m) SHARES: The term Shares shall mean the issued and outstanding shares
of beneficial interest, no par value, stock of the Trust, or any series or class
of the Trust, including any fractions thereof.
(n) VALUATION TIME: The term Valuation Time shall mean, with respect to
each Series, the time at which the Series' net asset value is calculated, as
disclosed in the Series' Prospectus.
(o) WRITTEN INSTRUCTIONS: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to FFC in original writing containing original signatures, or a
copy of such document transmitted by facsimile, including transmission of such
signature, or other mechanical or documentary means
<PAGE>
at the request of a person or persons reasonably believed in good faith by FFC
to be a person or persons authorized by a resolution of the Board to give
Written Instructions on behalf of the Trust. Each Written Instruction shall
specify whether it is applicable to all of the Trust or a specific Series or
Class.
SECTION 3. SHARE CERTIFICATES
The Trust shall furnish to FFC a supply of blank Share Certificates of each
Class of each Series and, from time to time, will renew such supply upon FFC's
request. Blank Share Certificates shall be signed manually or by facsimile
signatures of officers of the Trust authorized to sign by the by-laws of the
Trust and, if required by FFC, shall bear the Trust's seal or a facsimile
thereof.
SECTION 4. ISSUANCE OF SHARES.
FFC shall make original issues of Shares of each Class of each Series in
accordance with Section 11, and the Trust's then current Prospectus, upon
receipt of (i) Written Instructions requesting the issuance, (ii) a certified
copy of a resolution of the Board authorizing the issuance, (iii) necessary
funds for the payment of any original issue tax applicable to such Shares, and
(iv) an opinion of the Trust's counsel as to the legality and validity of the
issuance, which opinion may provide that it is contingent upon the filing by the
Trust of an appropriate notice with the Securities and Exchange Commission, as
required by Rule 24f-2 under the Act. If the opinion described in (iv) above is
contingent upon a filing under Rule 24f-2, the Trust shall fully indemnify FFC
for any liability arising from the failure of the Trust to comply with that
rule.
SECTION 5. TRANSFER OF SHARES.
Transfers of Shares of each Class of each Series shall be registered on the
Shareholder records maintained by FFC. In registering transfers of Shares, FFC
may rely upon the Uniform Commercial Code or any other statutes that, in the
opinion of FFC's counsel, protect FFC and the Trust from liability arising from
(i) not requiring complete documentation, (ii) registering a transfer without an
adverse claim inquiry, (iii) delaying registration for purposes of such inquiry
or (iv) refusing registration whenever an adverse claim requires such refusal.
As Transfer Agent, FFC will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code
or any other statutes.
SECTION 6. ISSUANCE AND TRANSFER OF SHARE CERTIFICATES
Subject to the provisions of Section 8, new Share Certificates shall be
issued by FFC upon surrender of outstanding Share Certificates in the form
deemed by FFC to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. FFC shall forward Share Certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means FFC deems equally reliable
and expeditious. While in transit to the addressee, all deliveries of Share
Certificates shall be insured as FFC deems appropriate. FFC shall not mail
Share Certificates in "negotiable" form unless
<PAGE>
requested in writing by the Trust and fully indemnified by the Trust to FFC's
satisfaction. FFC may issue new Share Certificates in place of those lost,
destroyed or stolen, upon receiving indemnity satisfactory to FFC, and may issue
new Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates as FFC deems appropriate. Unless otherwise directed by the Trust,
FFC may issue or register Share Certificates reflecting the signature, or
facsimile thereof, of an officer who has died, resigned or been removed by the
Trust. The Trust shall file promptly with FFC approval, adoption or
ratification of such action as may be required by law or FFC. All share
certificates submitted for transfer or replacement shall be marked "canceled" or
destroyed by FFC following the issuance in lieu of the Share Certificate of a
new or replacement Share Certificate or shares not evidenced by a Share
Certificate.
SECTION 7. MAINTENANCE OF STOCK RECORDS.
FFC shall maintain customary stock registry records for each Class of each
Series, noting the issuance, transfer or redemption of Shares and the issuance
and transfer of Share Certificates. FFC will also maintain for each Class of
each Series an account entitled "Unissued Certificate Account" (or similar name)
in which it will record the Shares issued and outstanding from time to time for
which issuance of Share Certificates has not been requested. FFC is authorized
to keep records for each Class of each Series, containing the names and
addresses of record of Shareholders, and the number of Shares from time to time
owned by them for which no Share Certificates are outstanding. Each Shareholder
account will be assigned a single account number for each Class of each Series,
even though Shares for which Certificates have been issued will be accounted for
separately.
SECTION 8. RECORDS REFLECTING ISSUANCES AND REDEMPTIONS.
FFC shall issue Share Certificates for Shares only upon receipt of a
written request from a Shareholder. If Shares are purchased without such
request, FFC shall merely note on its stock registry records the issuance of the
Shares and credit the Unissued Certificate Account and the respective
Shareholders' accounts with the Shares. Whenever Shares owned by Shareholders
are surrendered for redemption, FFC shall make appropriate entries in the stock
transfer records and debit the Unissued Certificate Account, if appropriate, and
the record of issued Shares outstanding; and shall cancel any Share Certificate
surrendered for redemption.
SECTION 9. RELIANCE BY FFC.
In performing its duties hereunder, FFC may rely conclusively and act
without further investigation upon any list, instruction, certification,
authorization, Share Certificate or other instrument or paper reasonably
believed by it in good faith to be genuine and unaltered, and to have been
signed, countersigned or executed or authorized by a duly-authorized person or
persons, or by the Trust, or upon the advice of counsel for the Trust or for
FFC. FFC may record any transfer of Shares and Share Certificates which it
reasonably believes in good faith to have been duly-authorized, or may refuse to
record any transfer of Shares or Share Certificates if, in good faith, it deems
such refusal necessary in order to avoid any liability on the part of either the
Trust or FFC. The Trust agrees to indemnify and hold harmless FFC from and
against any and
<PAGE>
all losses, claims, damages, liabilities or expenses that it may suffer or incur
by reason of such good faith reliance, action or failure to act.
SECTION 10. INSPECTION OF RECORDS.
FFC shall notify the Trust of any request or demand for the inspection of
the Trust's share records. FFC shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that FFC may grant the
inspection without such instructions if it is advised by counsel to FFC that
failure to do so will result in liability to FFC.
SECTION 11. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Shares shall be issued to investors at the net asset value next
determined after FFC receives a completed purchase order.
(b) A purchase order shall be complete when FFC receives:
(i) an instruction directing investment in a Series or Class of a
Series of the Trust;
(ii) a check or wire in the amount designated in the instruction; and,
(iii) in the case of an initial purchase, a completed account
application; or,
(iv) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar contract
with a financial intermediary.
(c) Shares issued after receipt of a completed purchase order shall be
eligible to receive dividend and capital gain distributions:
(i) in the case of Series that do not declare dividends daily, on the
next Fund Business Day after FFC receives the completed purchase order;
(ii) in the case of Series that are money market funds, on the same
Fund Business Day as FFC receives Federal Funds; and,
(iii) in the case of Series, other than money market funds, that
declare dividends daily, on the next Fund Business Day after FFC receives
Federal Funds.
(d) Shareholder payments shall be considered Federal Funds no later than
on the day indicated below unless such other times shall be noted in a
Prospectus:
(i) for a wire received, at the time of the receipt of the wire;
<PAGE>
(ii) for a check drawn on a member bank of the Federal Reserve System
and received prior to 12:00 noon., Eastern Time on a Fund Business Day, on
the Fund Business Day following receipt;
(iii) for a check drawn on a member bank of the Federal Reserve
System and received at or after 12:00 noon., Eastern time on a Fund
Business Day, on the second Fund Business Day following receipt; and
(iv) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as the Transfer Agent actually
receives Federal Funds in respect of that check.
SECTION 12. COMPUTATION OF NET ASSET VALUE; CONFIRMATIONS.
(a) On each Fund Business Day, as soon as possible after each Valuation
Time for a Series, FFC shall obtain from the Fund Accountant a quotation (on
which it may conclusively rely) of the net asset value for each Class of the
Series as of that Valuation Time. FFC shall use the net asset value determined
as of the Valuation Time to compute the number of Shares of each Class of a
Series to be purchased and the aggregate purchase proceeds to be deposited with
the Custodian based on the completed purchase orders received by FFC on that day
prior to the Valuation Time for the Series. FFC shall thereupon pay the
Custodian the aggregate net asset value of shares of each Class of the Series
purchased for which payment has been received by FFC.
(b) As necessary but no more frequently than once daily (unless a more
frequent basis is agreed to by FFC), FFC shall issue the proper number of Shares
to be purchased pursuant to subsection (a) above. Promptly thereafter FFC shall
send written confirmation of such purchase to the Custodian and the Trust or
Fund Accountant.
(c) FFC shall also credit each Shareholder's separate account with the
number of Shares purchased by such Shareholder. FFC shall promptly thereafter
mail written confirmation of the purchase to each Shareholder and to the Trust
if requested. Each confirmation shall indicate the prior Share balance, the new
Share balance, the amount invested and the price paid for the newly-purchased
Shares.
SECTION 13. SHARE REDEMPTIONS.
Prior to each Valuation Time for a Series on each Fund Business Day, as
specified in accordance with Section 12, FFC shall process all requests to
redeem Shares of each Series or Class of the Series in accordance with Section
8. Upon confirmation of the net asset value by the Fund Accountant, FFC shall
notify the Trust and the Custodian of the redemption amount, apply the
redemption proceeds in accordance with Section 14 and the Prospectus, record the
redemption in the stock registry books, and debit the redeemed Shares from the
Unissued
<PAGE>
Certificates Account, if appropriate, and the account of the Shareholder, and
mark "canceled" or destroy any Share Certificates evidencing the redeemed
shares.
In lieu of carrying out the redemption procedures described in the
preceding paragraph, FFC may, at the request of the Trust, sell Shares of each
class of each Series to the Trust as repurchases from Shareholders, provided
that the sale price is not less than the applicable redemption price. The
redemption procedures shall then be appropriately modified. The Trust may
authorize FFC by Written Instruction to effect any redemptions upon provision of
an indemnity satisfactory in form to FFC.
SECTION 14. REDEMPTION PROCEEDS.
The proceeds of redemption shall be remitted by FFC in accordance with the
Prospectus as follows:
(a) By check mailed to the Shareholder at the Shareholder's address of
record. The redemption request and Share Certificates, if any, for Shares being
redeemed must reflect a guarantee of the owner's signature as described in
Section 23; or
(b) By other procedures commonly followed by mutual funds, as set forth in
the Prospectus and in a Written Instruction from the Trust and mutually agreed
upon by the Trust and FFC. For purposes of redemption of shares of any Class of
any Series that have been purchased by check within fifteen (15) days prior to
receipt of the redemption request, the Trust shall provide FFC with Written
Instructions concerning the time within which such requests may be honored. The
authority of FFC to perform its responsibilities under Sections 12 and 13 shall
be suspended if FFC receives notice of the suspension of the determination of
the net asset value of any series of the Trust.
SECTION 15. DIVIDENDS.
Upon the declaration with respect to a Series or Class of a Series of each
dividend and capital gain distribution by the Board, the Trust shall notify FFC
of the date of such declaration, the amount payable per Share, the record date
for determining the Shareholders entitled to payment, and the payment and
reinvestment date. On or before each payment date the Trust will transfer, or
cause the Custodian to transfer, to FFC the total amount of the dividend or
distribution currently payable. FFC will, as of the ex-dividend date, reinvest
all dividends and distributions in additional Shares of the same Series or Class
of a Series and promptly mail to each Shareholder at his address of record, a
statement showing the number of Shares (rounded to three decimal places) of that
Class then owned by the Shareholder and the net asset value of such Shares, or
transmit such information in accordance with any arrangement between the
Shareholder and FFC; provided, however, that if a Shareholder elects to receive
dividends and distributions in cash, FFC shall prepare a check in the
appropriate amount and mail it to the Shareholder at the Shareholder's address
of record within five (5) Fund Business Days after the designated payment date
or transmit the appropriate amount in Federal Funds in accordance with any
arrangement between the Shareholder and FFC.
<PAGE>
SECTION 16. BOOKS AND RECORDS.
(a) The Trust shall deliver or cause to be delivered over to FFC (i) an
accurate list of Shareholders of the Trust, showing each Shareholder's address
of record, number of Shares owned and whether such Shares are represented by
outstanding Share Certificates or by non-certificated Share accounts and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by FFC under this Agreement
(collectively referred to as the "Materials"). The Trust shall indemnify and
hold harmless FFC from and against any and all losses, claims, damages,
liabilities or expenses arising out of or in connection with any error,
omission, inaccuracy or other deficiency of the Materials, or out of the failure
of the Trust to provide any portion of the Materials or to provide any
information in the Trust's possession needed by FFC to knowledgeably perform its
functions.
(b) FFC shall prepare and maintain or cause to be prepared and maintained
records in such form for such periods and in such locations as may be required
by applicable regulations, all documents and records relating to the services
provided to the Trust pursuant to this Agreement required to be maintained
pursuant to the Act, rules and regulations of the Securities and Exchange
Commission, the Internal Revenue Service and any other national, state or local
government entity with jurisdiction over the Trust. The books and records
pertaining to the Trust which are in possession of FFC shall be the property of
the Trust. The Trust, or the Trust's authorized representatives, shall have
access to such books and records at all times during FFC's normal business
hours. Upon the reasonable request of the Trust, copies of any such books and
records shall be provided promptly to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor to any of FFC's
obligations hereunder, FFC shall, in good faith and at the expense and direction
of the Trust, transfer to such successor all relevant books, records and other
data established or maintained by FFC under this Agreement.
SECTION 17. COOPERATION WITH INDEPENDENT ACCOUNTANTS.
FFC shall cooperate with the Trust's independent public accountants and
shall take reasonable action to make all necessary information available to such
accountants for the performance of their duties.
SECTION 18. OTHER SERVICES.
In addition to the services described above, FFC will perform other
services for the Trust as mutually agreed upon in writing from time to time,
including but not limited to preparing and filing federal tax forms with the
Internal Revenue Service, mailing federal tax information to Shareholders,
mailing Shareholder reports, preparing the annual list of Shareholders, mailing
notices of Shareholders' meetings, proxies and proxy statements and tabulating
proxies. FFC shall answer certain Shareholder inquiries related to their share
accounts and other correspondence requiring an answer from the Trust.
SECTION 19. SERVICE DAYS.
<PAGE>
Nothing contained in this Agreement is intended to or shall require FFC, in
any capacity hereunder, to perform any functions or duties on any day other than
a Fund Business Day. Functions or duties normally scheduled to be performed on
any day which is not a Fund Business Day shall be performed on, and as of, the
next Fund Business Day, unless otherwise required by law.
SECTION 20. COMPENSATION.
(a) The Trust agrees to pay to FFC compensation for its services as set
forth in Schedule B attached hereto, or as shall be set forth in written
amendments to Schedule B approved by the Trust and FFC from time to time. These
fees shall be paid monthly in advance. Fees will begin to accrue for each
Series on the latter of the effective date of this Agreement or the date of
commencement of operations of such Series.
(b) FFC shall be reimbursed for its reasonable out of pocket and ancillary
costs incurred in providing any transfer agency services hereunder, including
the cost of (or appropriate share of the cost of): (i) any and all forms and
stationery used or specially prepared for the purpose; (ii) postage; (iii)
telephone services; (iv) bank fees; (v) electronic or facsimile transmission;
and (vi) any items the Trust is responsible for as described in the Trust's
agreements with CRM Advisers, LLC; FFC; or Forum Financial Services, Inc. The
Trust shall reimburse FFC for all reasonable expenses and employee time
attributable to any review of the Trust's accounts and records by the Trust's
independent public accountants or any regulatory body outside of routine and
normal periodic reviews. In the event that this agreement is terminated and a
successor transfer agent is appointed, FFC shall be reimbursed for reasonable
charges and disbursements associated with promptly transferring to the
successor transfer agent the original or copies of all books and records
maintained by FFC hereunder, and cooperating with, and providing reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
(c) FFC may, with the consent of the Trust, which consent shall not be
withheld unreasonably, subcontract the performance of all, or any portion of,
the services to be provided hereunder with respect to any Shareholder or group
of Shareholders to any Processing Organization or agent of FFC and may reimburse
any such Processing Organization or agent for the services it performs; provided
that no such reimbursement will increase the amount payable by the Trust
pursuant to this Agreement.
(d) Except as permitted by this Agreement with regard to indemnity, the
foregoing shall be full and complete compensation and reimbursement for all
FFC's expenses incurred in connection with the services contemplated by this
Agreement, and FFC shall be entitled to no additional expense reimbursement or
other payments of any nature.
SECTION 21. TAXES.
<PAGE>
FFC shall not be liable for any taxes, assessments or governmental charges
that may be levied or assessed on any basis whatsoever in connection with the
Trust or any Shareholder, excluding taxes assessed against FFC for compensation
received by it hereunder.
SECTION 22. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) FFC shall use its best judgment and efforts in rendering the services
described in this agreement. FFC shall not be liable to the Trust for any action
or inaction of FFC in the absence of bad faith, willful misconduct or gross
negligence or based upon information, instructions or requests with respect to a
Portfolio made to FFC by an officer of the Trust duly authorized. FFC shall not
be responsible or liable for any failure or delay in performance of its
obligations under this Agreement caused by circumstances beyond its reasonable
control.
(b) The Trust agrees to indemnify and hold harmless FFC, its employees,
agents, officers and trustees against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FFC's actions or omissions that are consistent with the standard
of care set forth in paragraph (a) of this section.
(c) FFC agrees to indemnify and hold harmless the Trust, its employees,
agents, officers and trustees against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FFC's actions or omissions that are inconsistent with the
standard of care set forth in paragraph (a) of this section.
(d) Neither party shall be required to indemnify the other if, prior to
confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 23. SIGNATURE GUARANTEES.
Upon receipt of Written Instructions, FFC is authorized to make payment
upon redemption of Shares or otherwise effect any transaction or class of
transaction without a signature guarantee, and the Trust hereby agrees to
indemnify and hold FFC harmless from any and all expenses, damages, claims,
suits, liabilities, actions, demands or losses whatsoever arising out of or in
connection with such payment or transactions if made in accordance with such
Written Instructions. Signature guarantees may be provided by any eligible
institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, that is authorized to guarantee signatures, and is acceptable to FFC.
SECTION 24. ADOPTION OF PROCEDURES.
The parties hereto may adopt procedures as may be appropriate or practical
under the circumstances, and FFC may conclusively rely on the determination of
the Trust that any procedure that has been approved by the Trust does not
conflict with or violate any requirement
<PAGE>
of its Trust Instrument, Bylaws or Registration Statement, or any rule,
regulation or requirement of any appropriate regulatory body.
SECTION 25. BOARD RESOLUTIONS.
The Trust shall file with FFC a certified copy of the operative resolution
of the Board authorizing the execution of Written Instructions or the
transmittal of Oral Instructions.
SECTION 26. RETURNED CHECKS.
In the event that any check or other order for the payment of money is
returned unpaid for any reason, FFC shall promptly notify the Trust of the
non-payment.
SECTION 27. NOTICES.
Any notice or other communication required by or permitted to be given in
connection with this Agreement shall be in writing and shall be delivered in
person, or by first-class mail, postage prepaid, or by overnight or two-day
private mail service to the respective party. Notice to the Trust shall be
given as follows until further notice:
The CRM Funds
Two Portland Square
Portland, ME 04101
Notice to FFC shall be given as follows until further notice:
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
SECTION 28. REPRESENTATIONS AND WARRANTIES.
The Trust represents and warrants to FFC that the execution and delivery of
this Agreement by the undersigned officer of the Trust has been duly and validly
authorized by resolution of the Board. FFC represents and warrants to the Trust
that the execution and delivery of this Agreement by the undersigned officer of
FFC has also been duly and validly authorized.
SECTION 29. EFFECTIVENESS, DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date first above
written with respect to existing series of the Trust, and shall relate to every
other Series as of the date on which the Trust's Registration Statement relating
to the shares of such Series becomes effective.
(b) This Agreement shall remain in effect indefinitely.
<PAGE>
(c) This Agreement may be terminated with respect to any Series, or Class
thereof, without the payment of any penalty, (i) by a vote of a majority of the
Board on 60 days' written notice to FFC or (ii) by FFC on not less than 60 days'
written notice to the Trust. Such termination shall be effective as of the date
specified in the notice. Upon receiving notice of termination by FFC, the Trust
shall use its best efforts to obtain a successor transfer agent. Upon receipt
of written notice from the Trust of the appointment of the successor transfer
agent and Oral or Written Instructions, and upon payment to FFC of all fees owed
through the effective termination date, and reimbursement for reasonable charges
and disbursements (as described in Section 20), FFC shall promptly transfer to
the successor transfer agent the original or copies of all books and records
maintained by FFC hereunder including, in the case of records maintained on
computer systems, copies of such records in machine-readable form, and shall
cooperate with, and provide reasonable assistance to, the successor transfer
agent in the establishment of the books and records necessary to carry out the
successor transfer agent's responsibilities. For so long as FFC continues to
perform any of the services contemplated by this Agreement after termination of
this Agreement (as agreed to by the Trust and FFC), the provisions of Sections
20 and 21 hereof shall continue in full force and effect.
SECTION 30. CONFIDENTIALITY
FFC agrees to treat all records and other information related to the Trust
as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that FFC may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information when approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
FFC may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities or when so requested by the Trust.
SECTION 31. MISCELLANEOUS.
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
<PAGE>
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(e) Notices, requests, instructions and communications received by the
parties at their respective principal addresses, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the written consent of
FFC, or by FFC, without the written consent of the Trust authorized or approved
by a resolution of the Board.
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of Maine.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CRM FUNDS
/s/ Fred M. Filoon
------------------------
Fred M. Filoon
President
FORUM FINANCIAL CORP.
/s/ John Y. Keffer
------------------------
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF SEPTEMBER 29, 1995
The CRM Small Cap Value Fund
<PAGE>
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
SCHEDULE B
FEES
For its services hereunder, FFC will receive fees calculated as follows:
(i) a fee of $12,000 per year with respect to each series, such amounts to be
computed and paid monthly in advance by the Trust; (ii) Annual Shareholder
Account Fees of $30.00 per shareholder account; such fees to be paid monthly and
computed as of the last business day of the prior month; (iii) for series with
multiple share classes, an additional fee of $12,000 per additional class per
year; and (iv) reasonable out-of-pocket expenses billed at cost.
The rates set forth above shall remain fixed through December 31, 1996. On
January 1, 1997, and on each successive January 1, the rates shall be adjusted
to reflect changes in the Consumer Price Index for the preceding calendar year,
as published by the U.S. Department of Labor, Bureau of Labor Statistics.
<PAGE>
EXHIBIT 9(c)
THE CRM FUNDS
FUND ACCOUNTING AGREEMENT
AGREEMENT made the 29th day of September, 1995, between The CRM Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101, and Forum Financial Corp. ("FFC"), a corporation organized under the laws
of the State of Delaware with its principal place of business at Two Portland
Square, Portland, ME 04101.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust desires that FFC perform certain fund accounting
services for each series of the Trust now existing or that in the future may be
created, and for classes that may in the future be created in each of the
separate investment portfolios of the Trust as listed on Schedule A hereto, as
it may be amended from time to time (each a "Portfolio" and, collectively, the
"Portfolios"), and FFC is willing to provide those services on the terms and
conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and FFC do hereby agree as follows:
SECTION 1. SERVICES TO BE PERFORMED
For each Portfolio, FFC shall perform the services listed in this Section.
FFC and the Trust's administrator, Forum Financial Services, Inc. ("Forum"), may
from time to time adopt such procedures as they agree upon to implement the
terms of this Section.
(a) BOOKS AND RECORDS. FFC shall prepare and maintain on behalf of the
Trust the following books and records of each Portfolio, and each class thereof,
pursuant to Rule 31a-1 under the Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection
(b)(1) of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of
the Trust for, or in connection with, the purchase or sale of
securities, and all other portfolio purchases or sales, as required by
subsections (b)(5) and (b)(6) of the Rule;
<PAGE>
(iv) A record of all options, if any, in which the Trust has any
direct or indirect interest or which the Trust has granted or
guaranteed and a record of any contractual commitments to purchase,
sell, receive or deliver any property as required by subsection (b)(7)
of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule;
and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to these provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
The forgoing books and records shall be prepared and maintained in such
form, for such periods and in such locations as may be required by applicable
regulation and shall be the property of the Trust. FFC agrees to make such books
and records available for inspection by the Trust or by the Securities and
Exchange Commission at reasonable times and as otherwise directed by Forum.
(b) ACCOUNTING SERVICES. FFC shall:
(i) Calculate the net asset value per share with the frequency
prescribed in each Portfolio's then-current Prospectus;
(ii) Calculate dividends and capital gain distributions, if any, as
required by the Trust;
(iii) Calculate the yield, effective yield, tax equivalent yield
and total return for each Portfolio, and each class thereof, as
applicable, and such other measure of performance as may be agreed
upon between the parties hereto;
(iv) Provide the Trust and such other persons as Forum may direct with
the following reports:
(A) a current securities position report,
(B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each
portfolio security in maturity date order), and
(C) a current cash position and projection report;
<PAGE>
(v) Prepare and record, as of each time when the net asset value of a
Portfolio is calculated or as otherwise directed by Forum, either
(A) a valuation of the assets in the Portfolio (based upon the
use of outside services normally used and contracted for this
purpose by FFC in the case of securities for which information
and market price or yield quotations are readily available and
based upon evaluations conducted in accordance with Forum's
instructions in the case of all other assets) or
(B) a calculation confirming that the market value of the
Portfolio's assets does not deviate from the amortized cost value
of those assets by more than a specified percentage agreed to
from time to time by FFC and Forum;
(vi) Make such adjustments over such periods as FFC deems necessary to
reflect over-accruals or under-accruals of estimated expenses or
income; and
(vii) Obtain necessary information from Forum and the Trust's
transfer agent in order to prepare, and prepare, the Trust's Form
N-SAR.
(c) OTHER SERVICES. FFC shall:
(i) Assist the Trust's independent accountants and, upon approval of
the Trust or Forum, any regulatory body in any requested review of the
Trust's books and records maintained by FFC; and
(ii) Prepare periodic reports to shareholders and the Securities and
Exchange Commission and such other reports as may be agreed to from
time to time and provide information typically supplied in the
investment company industry to companies that track or report price,
performance or other information with respect to investment companies.
SECTION 2. COMPENSATION
(a) FEE. For the services provided by FFC pursuant to this Agreement, the
Trust shall pay to FFC a fee with respect to each Portfolio, as calculated in
accordance with Schedule B hereto. These fees shall be paid monthly in advance.
Fees will begin to accrue for each Portfolio on the latter of the effective date
of this Agreement or the date of commencement of operations of the Portfolio.
(b) REIMBURSEMENT OF EXPENSES. The Trust shall reimburse FFC for all of
FFC's reasonable out-of-pocket expenses incurred in the performance of its
duties hereunder. The Trust also shall reimburse FFC for all reasonable
expenses and employee time attributable to any review of the Trust's accounts
and records by the Trust's independent accountants or any regulatory body
outside of routine and normal periodic reviews and for all reasonable expenses
<PAGE>
for services in connection with FFC's activities in effecting any termination of
this Agreement (except the termination of FFC for cause), including reasonable
expenses incurred by FFC to deliver the Trust's property in FFC's possession to
the Trust or other persons.
SECTION 3. TERM
This Agreement shall become effective as of the date first above written
and shall remain in effect for 12 months. Thereafter, this Agreement shall
remain in effect indefinitely. This Agreement may be terminated with respect to
any Portfolio, or class thereof, without the payment of any penalty, (i) by a
vote of a majority of the Trust's Board of Trustees on 60 days' written notice
to FFC or (ii) by FFC on 60 days' written notice to the Trust. For so long as
FFC continues to perform any of the services contemplated by this Agreement
after termination of this Agreement (as agreed to by the Trust and FFC), the
provisions of Sections 2 and 4 hereof shall continue in full force and effect.
SECTION 4. STANDARD OF CARE; LIMITATION OF LIABILITY
(a) FFC shall use its best judgment and efforts in rendering the services
described in this Agreement. FFC shall not be liable to the Trust for any
action or inaction of FFC in the absence of bad faith, willful misconduct or
gross negligence or based upon information, instructions or requests with
respect to a Portfolio made to FFC by an officer of the Trust duly authorized.
FFC shall not be responsible or liable for any failure or delay in performance
of its obligations under this Agreement caused by circumstances beyond its
reasonable control.
(b) The Trust agrees to indemnify and hold harmless FFC, its employees,
agents, officers and trustees against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FFC's actions taken or failures to act under the circumstances
described in paragraph (a) of this section.
(c) FFC agrees to indemnify and hold harmless the Trust, its employees,
agents, officers and trustees against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FFC's actions taken or failures to act with respect to a
Portfolio in cases of FFC's own bad faith, willful misconduct or gross
negligence.
(d) Neither party shall be required to indemnify the other if, prior to
confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 5. ASSIGNMENT
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
<PAGE>
SECTION 6. CONFIDENTIALITY
FFC agrees to treat all records and other information related to the Trust
as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that FFC may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
FFC may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities or when so requested by the Trust.
SECTION 7. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal addresses, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.
<PAGE>
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CRM FUNDS
/s/ Fred M. Filoon
------------------------------
Fred M. Filoon
President
FORUM FINANCIAL CORP.
/s/ John Y. Keffer
------------------------------
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
FUND ACCOUNTING AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
The CRM Small Cap Value Fund
<PAGE>
THE CRM FUNDS
FUND ACCOUNTING AGREEMENT
SCHEDULE B
FEES
Standard Fee per Series with one Class $36,000/year
Fee for each additional Class $12,000/year
Plus additional surcharges for each of:
portfolios with asset levels exceeding:
$100 million $6,000/year
$250 million $6,000/year
$500 million $6,000/year
$1 billion $6,000/year
Portfolios requiring international custody,
or holding futures, options, forward contracts,
foreign currencies, or other hedge instruments $12,000/year
Portfolios with more than 30 international
positions $12,000/year
Tax Free Money Market Portfolios $12,000/year
Series with more than 25% of net assets
invested in asset backed securities $12,000/year
Series with more than 50% of net assets
invested in asset backed securities $12,000/year
Series with more than 100 security positions $12,000/year
Series with a monthly portfolio turnover
rate of 10% or greater $12,000/year
Surcharges are paid on a monthly basis, and are determined based upon the
total assets or security positions as of the end of the prior month and on the
portfolio turnover rate for the prior month. Portfolio turnover rate shall have
the meaning ascribed thereto in Securities and Exchange Commission Form N-1A.
The rates set forth above shall remain fixed through December 31, 1996. On
January 1, 1997, and on each successive January 1, the rates shall be adjusted
to reflect changes in the Consumer Price Index for the preceding calendar year,
as published by the U.S. Department of Labor, Bureau of Labor Statistics.
<PAGE>
EXHIBIT 10(a)
[Letterhead]
Kramer, Levin, Naftalis, Nessen , Kamin & Frankel
919 Third Avenue
New York, N.Y. 10022-3852
(212) 715-9100
September 26, 1995
The CRM Funds
Two Portland Square
Portland, ME 04101
Gentlemen:
We have acted as counsel for The CRM Funds, a Delaware business trust
(the "Trust"), in connection with the proposed public offering of shares of
beneficial interest, no par value (the "Shares") of the CRM Small Cap Value Fund
series pursuant to a registration statement on Form N-1A (File No. 33-91498)
(the "Registration Statement"), filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended.
We have reviewed the Trust's Trust Instrument dated April 20, 1995
(the "Governing Instrument"), its By-Laws, resolutions of the Board of Trustees
of the Trust, and the Registration Statement (including exhibits thereto). We
have also made such inquires and have examined originals, certified copies or
copies otherwise identified to our satisfaction of such documents, records and
other instruments as we have deemed necessary or appropriate for the purposes of
this opinion. For purposes of such examination, we have assumed the genuineness
of all signatures on original documents and the conformity to the original
documents of all copies submitted.
We are members of the Bar of the State of New York and do not hold
ourselves out as experts as to the law of any other state or jurisdiction. We
have received and relied upon an opinion from Morris, Nichols, Arsht & Tunnell,
Special Delaware Counsel, a copy of which is attached herewith, concerning the
organization of the Trust and the authorization and issuance of the Shares.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion, and so
advise you as follows:
i. The Trust is duly organized and validly existing as a business
trust in good standing under the laws of the State of Delaware.
ii. The Shares of The CRM Small Cap Value Fund series of the Trust,
when issued to shareholders in accordance with the terms, conditions,
requirements and procedures set forth in the Governing Instrument, will
constitute legally issued, fully paid and non-assessable shares of
beneficial interest in the Trust.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel
<PAGE>
EXHIBIT 10(b)
[Letterhead]
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilimington, Delaware 19899-1347
Telephone (302) 658-9200
Telecopy (302) 658-3989
September 26, 1995
The CRM Funds
61 Broadway, Suite 2770
New York, NY 10006
Re: The CRM Funds
-------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to the CRM Funds, a Delaware
business trust (the "Trust"), in connection with certain matters relating to the
issuance of Shares of beneficial interest in the Trust. Capitalized terms used
herein and not otherwise herein defined are used as defined in the Trust
Instrument of the Trust dated April 20, 1995 (the "Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents, each in the form provided to us: the Certificate of Trust of the
Trust as filed in the Office of the Secretary of State of the State of Delaware
(the "Recording Office") on April 24, 1995 (the "Certificate"); the Governing
Instrument; the Bylaws of the Trust; certain resolutions of the Trustees of the
Trust; the Trust's Notification of Registration Filed Pursuant to Section 8(a)
of the Investment Company Act of 1940 on Form N-8A as filed with the Securities
and Exchange Commission on April 24, 1995; the Trust's Registration Statement on
Form N-1A as filed with the Securities and Exchange Commission on April 24, 1995
(the "Registration Statement"); Pre-Effective Amendment No. 1 to the Trust's
Registration Statement as filed with the Securities and Exchange Commission on
August 21, 1995; and a certification of good standing of the Trust obtained as
of a recent date from the Recording Office. In such examinations, we have
assumed the genuineness of all signatures, the conformity to original documents
of all documents submitted to us as copies or drafts of documents to be
executed, and the legal capacity of natural persons to complete the execution of
documents. We have further assumed for the purpose of this opinion: (i) the
due authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced instruments, certificates and other
documents, and of all documents contemplated by the Governing Instrument and
applicable resolutions of the Trustees
<PAGE>
to be executed by investors desiring to become Shareholders; (ii) the payment of
consideration for Shares, and the application of such consideration, as provided
in the Governing Instrument, and compliance with the other terms, conditions and
restrictions set forth in the Governing Instrument and all applicable
resolutions of the Trustees in connection with the issuance of Shares
(including, without limitation, the taking of all appropriate action by the
Trustees to designate Series of Shares and the rights and preferences
attributable thereto as contemplated by the Governing Instrument); (iii) that
appropriate notation of the names and addresses of, the number of shares held
by, and the consideration paid by, Shareholders will be maintained in the
appropriate registers and other books and records of the Trust in connection
with the issuance or transfer of Shares; (iv) that no event has occurred
subsequent to the filing of the Certificate that would cause a termination or
dissolution of the Trust under Sections 11.04 or 11.05 of the Governing
Instrument; (v) that the activities of the Trust have been and will be conducted
in accordance with the terms of the Governing Instrument and the Delaware Act;
and (vi) that each of the documents examined by us is in full force and effect
and has not been modified, supplemented or otherwise amended except as herein
referenced. No opinion is expressed herein with respect to the requirements of,
or compliance with, federal or state securities or blue sky laws. Further, we
express no opinion on the sufficiency or accuracy of the Registration Statement
or any other registration or offering documentation relating to the Trust or the
Shares. As to any facts material to our opinion, other than those assumed, we
have relied without independent investigation on the above-referenced documents
and on the accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The Shares, when issued to Shareholders in accordance with the
terms, conditions, requirements and procedures set forth in the Governing
Instrument, will constitute legally issued, fully paid and non-assessable Shares
of beneficial interest in the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Shareholder of the Trust, in such capacity, will be entitled to the same
limitation of personal liability as that extended to stockholders of private
corporations for profit organized under the general corporation law of the State
of Delaware; provided, however, that we express no opinion with respect to the
liability of any Shareholder who is, was or may become a named Trustee of the
Trust.
We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as part of a pre-effective amendment to the
Trust's Registration Statement. In giving this consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
provided in this paragraph, the opinion set forth above is expressed solely for
the benefit of the
<PAGE>
addressee hereof in connection with the matters contemplated hereby and may not
be relied upon by, or filed with, any other person or entity or for any other
purpose without our prior written consent.
Sincerely,
/s/ Morris, Nichols, Arsht & Tunnell
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
EXHIBIT 13
New York, New York
September *, 1995
The CRM Funds
Two Portland Square
Portland, ME 04101
Dear Gentlemen:
I have this day purchased * shares of beneficial interest (the
"Shares"), no par value, of The CRM Funds (the "Company") at a price of $10.00
per Share. I hereby represent that I have purchased the Shares for investment
purposes and not with a view to or for sale in connection with any distribution
hereof, provided, however, that the disposition of the Shares shall at all times
be and remain within my control. I further agree that the Shares will not be
resold except for redemption by the Company and that the proceeds of any such
redemption will be reduced by an amount of the organization expenses of the
Company remaining unamortized at the time of the redemption based on the
proportion that the number of Shares being redeemed bears to the total number of
Shares of the Company outstanding at the time of the redemption.
Sincerely yours,
*
<PAGE>
EXHIBIT A
THE CRM FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Fred M. Filoon constitutes and
appoints Max Berueffy and David I. Goldstein, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of The CRM Funds and to file the same with the Securities and
Exchange Commission, granting unto the said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ Fred M. Filoon
-----------------------
Fred M. Filoon
Date: September 13, 1995
<PAGE>
EXHIBIT B
THE CRM FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that John E. Appelt constitutes and
appoints Max Berueffy and David I. Goldstein, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of The CRM Funds and to file the same with the Securities and
Exchange Commission, granting unto the said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ John E. Appelt
------------------------
John E. Appelt
Dated: September 13, 1995
<PAGE>
EXHIBIT C
THE CRM FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Louis Klein, Jr. constitutes and
appoints Max Berueffy and David I. Goldstein, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of The CRM Funds and to file the same with the Securities and
Exchange Commission, granting unto the said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ Louis Klein, Jr.
---------------------------
Louis Klein, Jr.
Dated: September 13, 1995
<PAGE>
EXHIBIT D
THE CRM FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Clement C. Moore, II constitutes
and appoints Max Berueffy and David I. Goldstein, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of The CRM Funds and to file the same with the Securities and
Exchange Commission, granting unto the said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ Clement C. Moore, II
-------------------------
Clement C. Moore, II
Dated: September 13, 1995
<PAGE>
EXHIBIT E
THE CRM FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Eugene A. Trainor, III
constitutes and appoints Max Berueffy and David I. Goldstein, and each of them,
as true and lawful attorneys-in-fact and agents with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of The CRM Funds and to file the same with the Securities and
Exchange Commission, granting unto the said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ Eugene A. Trainor, III
---------------------------
Eugene A. Trainor, III
Dated: September 13, 1995
