(File Nos. 33-91498 and 811-9034)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c)or ss.240.14a-12
THE CRM FUNDS
(Name of Registrant as Specified in its Charter)
BOARD OF TRUSTEES OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
-----------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
THE CRM FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
November 7, 1997
Dear Shareholder:
The Board of Trustees of The CRM Funds (the "Trust") has called a Special
Meeting of Shareholders of the CRM Small Cap Value Fund (the "Fund") (the
"Company") to be held on December 18, 1997, to consider three proposals: (i) a
proposal to approve a new investment advisory agreement between the Trust and
Cramer Rosenthal McGlynn, LLC to provide investment advisory services to the
Fund, (ii) a proposal to ratify the Trustees selection of Ernst & Young, LLP as
the Fund's independent accountants, and (iii) a proposal to approve or
disapprove amendments to certain investment policies of the Fund.
The first proposal is being presented to you because the proposed reorganization
of CRM Advisors, LLC, the Fund's current investment advisor, will cause the
current investment advisory agreement to terminate on January 2, 1998. Upon
completion of the reorganization, the approval of a new investment advisory
agreement will allow the same staff who currently manages the Fund to continue
to manage the Fund after the reorganization. The new investment advisory
agreement will have the same terms as the current investment advisory agreement
between the Trust Manager and CRM Advisors, LLC. The rate at which the advisory
fees are determined will remain the same as well.
Second, the Trustees ask that you ratify their selection of Ernst & Young, LLP
as the Fund's independent accountants.
The third proposal would make technical changes to the Fund's investment
policies so that the Fund may, in the future, invest in another investment
company with identical investment objectives and policies that would be managed
by Cramer Rosenthal McGlynn, LLC. This arrangement is known as a "master-feeder"
or "Core and Gateway(R)" structure. There is no present intention to convert to
a Core and Gateway structure, and the Fund would do so only if the Board of
Trustees determines in the future that it would be in the best interests of the
Fund and its shareholders.
After careful consideration, the Board of Trustees unanimously approved these
proposals and recommends that you vote "FOR" all of them.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO
AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT AND CAST YOUR VOTE. IT IS
IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN DECEMBER 17, 1997. IF YOU
HAVE ANY QUESTIONS ABOUT THE PROXY STATEMENT, PLEASE DO NOT HESITATE TO CALL US
AT (800) CRM - 2883.
<PAGE>
The Company is using Automatic Data Processing, Inc. ("ADP"), a professional
proxy solicitation firm, to assist shareholders in the voting process. As the
date of the meeting approaches, if we have not already heard from you, you may
receive a telephone call from ADP reminding you to exercise your right to vote.
We appreciate your participation and prompt response in this matter and thank
you for your continued support.
Sincerely,
Fred M. Filoon
President and Chairman of the Board
<PAGE>
THE CRM FUNDS
CRM SMALL CAP VALUE FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD [DATE]
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To the Shareholders of the CRM Small Cap Value Fund:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of CRM Small Cap Value Fund (the "Fund"), a series of The CRM Funds
(the "Trust"), will be held at the offices of Forum Financial Services, Inc.,
Two Portland Square, Portland, Maine on December 13, 1997 at 10:00 a.m. Eastern
Time. The purpose of the Meeting is:
1. To approve or disapprove a new Investment Advisory Agreement between
the Trust and Cramer Rosenthal McGlynn, LLC, a newly-formed Delaware
Limited Liability Company;
2. To approve or disapprove the selection by the Board of Trustees of
Ernst & Young LLP as independent accountants to the Trust;
3. To approve or disapprove amendments to certain investment policies
to permit the Fund to invest all of its investable assets in another
investment company; and
4. To transact such other business as may properly come before the
Meeting.
The Trust's Board of Trustees has fixed the close of business on [Date],
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting or any adjournment thereof. Your attention is
called to the accompanying proxy statement.
By order of the Board of Trustees,
Eugene A. Trainor III
Secretary
[Location]
[Date]
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN IT, AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
THE CRM FUNDS
CRM SMALL CAP VALUE FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Trustees of The CRM
Funds (the "Trust"), a Delaware business trust, on behalf of the CRM Small Cap
Value Fund (the "Fund"). The Trust is a registered open-end investment company
having its executive offices at Two Portland Square, Portland, Maine 04101.
Proxies will be voted at the Special Meeting of Shareholders of the Fund to be
held at Forum Financial Services, Inc., Two Portland Square, Portland, Maine
04101 on [date], 1997 at 10:00 a.m. Eastern Time, and any adjournment thereof
(the "Meeting"), for the purposes set forth in the accompanying Notice of
Special Meeting of Shareholders. This Proxy Statement and the enclosed notice of
meeting and proxy card are first being mailed to shareholders on or about
November 17, 1997.
The Trust's Annual Report to Shareholders for the fiscal year ended
September 30, 1997, which includes financial statements for the Fund, has
previously been mailed to Shareholders receiving this Proxy Statement or is
included herewith.
The solicitation of proxies will be primarily by mail but may also
include telephone or oral communications by the officers of the Trust or by
regular employees of CRM Advisors, LLC (the "Current Advisor"), Forum
Administrative Services, Inc. ("FAS"), the Trust's administrator, or their
affiliates. Current Advisor will bear all of the costs of the Meeting and the
preparation, printing and mailing of proxies. FAS has engaged Automatic Data
Processing, Inc. on behalf of Current Advisor and the Trust to mail proxy
materials and tabulate voting results.
INTRODUCTION
The Meeting is being called
(1) to approve or disapprove a new Investment Agreement between the
Trust and Cramer Rosenthal McGlynn, LLC, a Delaware Limited Liability
Company organized on September 23, 1997 (the "New Advisor");
(2) to approve or disapprove the selection by the Trust's Board of
Trustees (the "Board") of Ernst & Young LLP as independent accountants
to the Trust; and
(3) to approve or disapprove amendments to certain fundamental
investment policies of the Fund.
DESCRIPTION OF VOTING
Approval of Proposals One and Three require the affirmative vote of "a
majority of the outstanding voting securities" of the Fund as that term is
defined under the Investment Company Act of 1940 (the "1940 Act"). Under the
1940 Act, "a majority of the outstanding voting securities" of the Fund means
the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund
present at the Meeting or represented by proxy if the holders of more than 50%
of the outstanding shares are present or represented by proxy at the Meeting or
(b) more than 50% of the
<PAGE>
outstanding shares of the Fund. Proposal Two requires the affirmative vote of a
plurality of the votes cast at the Meeting, if a quorum is present.
Shareholders of record at the close of business on November 7, 1997,
(the "Record Date"), will be entitled to notice of, and to vote at, the Meeting
including any adjournment thereof. As of the Record Date there were ____________
shares outstanding of the Fund. As of the record date, the Trustees and officers
of the Trust as a group owned beneficially less than 1% of the outstanding
Shares of the Fund. As of the record date, the following shareholders
beneficially owned more than 5% of the outstanding shares of the Fund: ________
owned ____ shares representing ___% of the Fund.
The Fund consists of a single class of shares. Each Shareholder will be
entitled to one vote for each whole share and a fractional vote for each
fractional share held. Shares may be voted in person or by proxy. Shareholders
holding one-third of the outstanding Shares of the Fund at the close of business
on the Record Date present in person or by proxy will constitute a quorum for
the transaction of business regarding the Fund at the Meeting. All properly
executed proxies received in time to be voted at the Meeting will be counted at
the Meeting, and any adjournment thereof, in accordance with the instructions
marked thereon or otherwise provided therein.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast at the Meeting.
Under the 1940 Act, the affirmative vote necessary to approve a matter under
consideration may be determined with reference to a percentage of votes present
at the Meeting. For this reason, abstentions and non-votes have the effect of
votes AGAINST the proposal. In completing proxies, therefore, shareholders
should be aware that checking the box labeled ABSTAIN will result in the shares
covered by the proxy being treated as if they were voted AGAINST the proposal.
In the absence of any instructions, properly executed proxies that are
returned in time to be voted at the meeting will be voted for the APPROVAL of
each Proposal described in this Proxy Statement. If a quorum is not present at
the Meeting, or if a quorum is present at the Meeting, but sufficient votes to
approve any of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies with respect to the proposal. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of the proposals
that are the subject of the Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of shares represented in person or by proxy at the Meeting.
In that case, the persons named as proxies will vote all proxies that they are
entitled to vote FOR such an adjournment; provided, however, any proxies
required to be voted against the proposal will be voted AGAINST such
adjournment. A shareholder vote may be taken on the proposal prior to such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Any shareholder may revoke his or her proxy at any time prior to
exercise thereof by giving written notice of revocation or by executing and
delivering a later dated proxy to Forum Financial Corp., the Trust's transfer
agent, at Two Portland Square, Portland, Maine, 04101, or by personally casting
a vote at the Meeting.
PROPOSAL ONE
APPROVAL OR DISAPPROVAL OF
A NEW INVESTMENT ADVISORY AGREEMENT
Shareholders of the Fund are being asked to approve a new investment
advisory agreement between the Trust and New Advisor, for New Advisor to serve
as the Fund's investment adviser (the "New Agreement"). Current Advisor, which
is located at 707 Westchester Avenue, White Plains, New York, 10604, serves as
investment adviser to the Fund pursuant to an Investment Advisory Agreement
dated September 29, 1995, between the Trust and Current Advisor (the "Current
Agreement"). The Current Agreement was approved by the Trust's Board of
Trustees, including a majority of the Trustees who were not parties to the
Current Agreement or interested
<PAGE>
persons of such parties, at a meeting held on September 13, 1995 and by the
unanimous consent dated September 27, 1995 of the initial shareholders of the
Fund in lieu of a meeting.
On October 31, 1997, Current Advisor , Cramer, Rosenthal, McGlynn, Inc.
("CRM"), and the individuals owning all of the equity interests in Current
Advisor and CRM, entered into various agreements with WT Investments, Inc.
("WTI"), an indirect wholly-owned subsidiary of Wilmington Trust Corporation
("WTC"), pursuant to which the owners of Current Advisor will transfer, directly
or indirectly, all of their liability company interests in Current Advisor to
New Advisor and CRM will transfer substantially all of its assets to New Advisor
in exchange for an aggregate 76% interest in New Advisor and WTI will acquire a
24% interest in New Advisor .
The Board of Trustees recommends that shareholders of the Fund approve
the New Agreement. The New Agreement will replace the Trust's Current Agreement
pursuant to which Current Advisor provides investment advisory services for the
Fund. Your approval is being sought because the transactions contemplated by
these agreements may constitute an "assignment" (as defined in the 1940 Act) of
the Current Agreement, resulting in its automatic termination.
The transactions are expected to be completed on or about January 2,
1998. If the Fund's shareholders approve the New Agreement, the New Agreement
will become effective on that date, and the New Advisor will become the
investment adviser to the Fund.
CURRENT ADVISOR AND NEW ADVISOR HAVE ADVISED THE FUND THAT THEY
ANTICIPATE NO CHANGE IN THE INVESTMENT MANAGEMENT AND OTHER PERSONNEL IN
CONNECTION WITH THE TRANSACTION, THAT THE SAME PERSONS RESPONSIBLE FOR
MANAGEMENT OF THE FUND UNDER THE CURRENT AGREEMENT WILL CONTINUE TO BE
RESPONSIBLE UNDER THE NEW AGREEMENT AND THAT THE ADVISORY FEES PAID BY THE FUND
WILL REMAIN THE SAME. NEITHER CURRENT ADVISOR OR NEW ADVISOR ANTICIPATE THAT THE
TRANSACTION WILL CAUSE ANY REDUCTION IN THE QUALITY OF SERVICES NOW PROVIDED TO
THE FUND, OR HAVE ANY ADVERSE EFFECT ON NEW ADVISOR'S ABILITY TO FULFILL ITS
OBLIGATIONS TO THE FUNDS.
SUMMARY OF TRANSACTION LEADING TO THE NEW AGREEMENT
Gerald B. Cramer, Ronald H. McGlynn, Edward J. Rosenthal, Fred M.
Filoon, Jay B. Abramson, Arthur J. Pergament and Eugene A. Trainor III (each a
"Principal" and collectively, the "Principals") together own all of the
outstanding limited liability company interests in Current Advisor, the
investment adviser to the Fund, and all of the outstanding common shares of CRM,
a registered investment adviser under the Investment Advisers Act of 1940. On
October 31, 1997, the Principals, CRM, Current Advisor and New Advisor entered
into various agreements with WTI, pursuant to which the Principals will
transfer, directly or indirectly, all of their liability company interests in
Current Advisor to New Advisor, CRM will transfer substantially all of its
assets to New Advisor and WTI will acquire a 24% interest in New Advisor. The
Principals and CRM together will own 76% of New Advisor.
These transactions, which are expected to be consummated on or about
January 2, 1998, are subject to various conditions, among which are (i) the
approval of the new advisory agreement by Fund shareholders (ii) the consent of
advisory clients of CRM and (iii) completion of necessary filings and receipt of
government approvals. Following the transactions, Current Advisor will be merged
into New Advisor or liquidated, and if the Fund shareholders approve the New
Agreement, New Advisor will become the investment adviser to the Fund.
The limited liability company agreement governing New Advisor grants
each of the Principals, directly or indirectly, the right to put their limited
liability company interests in New Advisor to WTC at a price equal to the then
current fair market value of such limited liability company interests. The
agreement limits the amount of puts that may be exercised in any one year. The
agreement also grants to certain employees, including the Principals, options to
purchase up to 22% of the limited liability company interests in New Advisor at
fair market value.
Current Advisor has informed the Trustees that the provisions limiting
the exercise of puts by the Principals, and granting options to purchase
additional interests in the New Advisor, are primarily designed to provide
incentives to certain key employees of Current Advisor to continue their
association with New Advisor.
<PAGE>
In addition, the limited liability company agreement also (i) requires
WTC to purchase at fair market value the limited liability company interests of
any Principal, and the limited liability company interest of CRM attributable to
any such Principal, who dies, becomes disabled or retires at a specified age;
and (ii) gives WTC the option to purchase the limited liability company interest
of any Principal, and the limited liability company interest of CRM attributable
to such Principal, whose employment with New Advisor is otherwise terminated, or
who has exercised puts in excess of more than 50% of his highest direct and
indirect interest in New Advisor. If, in the future, WTI, WTC or their
affiliates acquire additional limited liability company interests in New Advisor
(as a result of the exercise of puts or otherwise) WTI and its affiliates may
own a controlling block (as defined in the Act), or have actual control, of New
Advisor.
The transactions described above may be deemed to constitute an
assignment (as that term is defined in the Act) of the investment advisory
agreement currently in effect between the Trust and Current Advisor (the
"Current Agreement"). The Current Agreement provides for its automatic
termination in the event of an assignment. Therefore, a new investment advisory
agreement between the Trust and New Advisor is being proposed for approval by
shareholders of the Fund. A form of the New Agreement is attached as Exhibit A.
The New Agreement is identical in all material respects to the Current Agreement
except for the dates of effectiveness and expiration.
The New Agreement was approved by the Trust's Board of Trustees,
including a majority of the Trustees who were not interested persons of the
parties to the New Agreement, at a meeting held on October 17, 1997.
If the New Agreement is approved by the Fund's shareholders, it will
remain in effect, unless earlier terminated, for an initial term expiring two
years from the date of effectiveness and will continue in effect thereafter for
successive twelve-month periods, provided that each such continuance is
specifically approved at least annually (i) by the Trust's Board of Trustees or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case and (ii) by a majority of the Trustees who are not parties to the
New Agreement or interested persons of any such party (other than as Trustees of
the Trust).
If the Shareholders of the Fund do not approve the New Agreement before
the consummation of the transactions described above, the Trustees of the Trust
would obtain interim advisory services for the Fund, either from New Advisor or
from another advisory organization. Fees payable by the Fund under any interim
investment advisory arrangement will be held in an interest-bearing escrow
account to be paid to the interim investment adviser only upon shareholder
approval of an agreement with that adviser. Thereafter, the Trustees would
either negotiate a new investment advisory agreement for the Fund with an
investment advisory organization selected by the Trustees or make other
appropriate arrangements, in either event subject to approval by the
Shareholders of the Fund.
COMPARISON OF THE NEW AGREEMENT AND THE CURRENT AGREEMENT
Under the terms of the New and Current Agreements (collectively, the
"Agreements"), the investment adviser manages the investment and reinvestment of
the assets of the Fund. Under the Agreements, the investment adviser is
responsible for placing orders for the purchase and sale of the Fund's
investments directly with brokers and dealers selected by it in its discretion.
See "Portfolio Transactions" below. The investment adviser furnishes at its own
expense all services, facilities and personnel necessary in connection with
managing the Fund's investments and effecting portfolio transactions for the
Fund. The investment adviser also furnishes to the Board, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.
Each Agreement also provides that, with respect to the Fund, the
investment 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 the 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 Agreement.
<PAGE>
The Agreements are terminable without penalty by the Trust with respect
to the 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
investment adviser on 60 days' written notice to the Trust, and will
automatically terminate in the event of its assignment.
The terms of the Agreements obligate Current Advisor and New Advisor to
manage the Fund in accordance with applicable laws and regulations. The
provision of investment advisory services by Current Advisor or New Advisor to
the Fund is not exclusive under the terms of the Agreements. Current Advisor and
New Advisor are free to and do render investment advisory services to others.
See "Information About New Advisor below.
ADVISORY FEES
Under the Current Agreement, the Current Advisor receives from the Fund
an advisory fee at an annual rate of 75% of the Fund's average daily net assets.
For the fiscal year ended September 30, 1997, the Fund paid Current Advisor
$635,864 in advisory fees under the Current Agreement. The fee payable under the
New Agreement following approval by shareholders will be the same as the fee
under the Current Agreement.
INFORMATION ABOUT NEW ADVISOR
New Advisor is a limited liability company organized under the laws of
the State of Delaware on September 23, 1997. It will operate as a successor,
registered investment adviser under the Investment Advisers Act of 1940 under
the current registrations of CRM and Current Advisor from the date on which the
transactions between Current Advisor, CRM and WTI are completed until a date no
more than 30 days thereafter. Although as a new entity New Advisor has no
previous experience managing an investment company, the principal shareholders
and portfolio managers of New Advisor have significant experience in portfolio
management of the Fund through Current Advisor and of private investment
accounts through CRM, which has managed investments in small and mid
capitalization companies for over twenty-four years. As of this date, CRM has
over $3.6 billion of assets under management.
New Advisor will be managed by a board of managers consisting of five
managers. Certain Principals, individually and collectively, CRM and WTI will
have the right to designate managers depending upon each party's percent of
ownership interest in New Advisor. The remaining managers will be elected by
majority vote of the members of New Advisor. Initially, the board of managers of
New Advisor is expected to consist of Messrs. Cramer and McGlynn, one designee
of WTI and two other individuals selected by CRM. If WTI or its affiliates
acquire a majority of the limited liability company interests of New Advisor as
a result of the exercise of the options described above, WTI will be able to
elect a majority of the board of managers.
The agreements leading to the establishment of New Advisor do not
contemplate any changes in the investment advisory services, or the personnel
providing those services, to the Fund.
WTC is a bank and thrift holding company organized under the General
Corporation Law of Delaware. WTC holds all of the outstanding capital stock of
Wilmington Trust Company, a Delaware chartered bank and trust company engaged in
commercial and trust banking activities since 1903. WTC also owns two other
financial institutions, Wilmington Trust of Pennsylvania, a
Pennsylvania-chartered bank and trust company acquired in 1993 and Wilmington
Trust FSB, a Federally-chartered savings bank organized in 1994. Through its
subsidiaries WTC engages in residential, commercial and construction lending,
deposit taking, insurance, travel , investment advisory and broker-dealer
services and mutual fund administration. At December 31, 1996 WTC, together with
its subsidiaries had total assets of over $5.5 billion. WTC is among the
nation's ten largest personal trust companies and is responsible for $100
billion in assets on behalf of its customers. Wilmington Trust Company, the
largest subsidiary of WTC holds approximately $95 billion in a fiduciary
capacity.
New Advisor's principal executive officers and managers, their
addresses and their principal occupations are listed below.
<PAGE>
<TABLE>
<S> <C> <C>
NAME AND ADDRESS POSITION WITH NEW ADVISOR PRINCIPAL OCCUPATION
Gerald Bertram Cramer Member; Chairman of the Board Member and Chairman of the Board CRM
707 Westchester Avenue and Manager Advisors, LLC; and Chairman of the
White Plains, New York 10604 Board of Cramer Rosenthal McGlynn,
Inc. and CRM Management, Inc
Edward John Rosenthal Member and Vice Chairman Member and Vice Chairman CRM
707 Westchester Avenue Advisors, LLC; and Vice Chairman and
White Plains, New York 10604 Treasurer of Cramer Rosenthal
McGlynn, Inc. and CRM Management, Inc.
Ronald Harward McGlynn Member and President Member, Chief Executive Officer
707 Westchester Avenue and President CRM Advisors, LLC; and
White Plains, New York 10604 Chief Executive Officer and
President Cramer Rosenthal
McGlynn, Inc. and CRM Management, Inc.
Jay Brian Abramson Member; Chief Executive Officer; Member and Executive Vice President
707 Westchester Avenue Executive VicePresident and CRM Advisors, LLC; and Executive
White Plains, New York 10604 Manager Vice President Cramer
Rosenthal McGlynn, Inc. and CRM
Management, Inc
Fred Marden Filoon Member and Senior Vice President Member and Senior Vice President CRM
707 Westchester Avenue Advisors, LLC; and Senior Vice
White Plains, New York 10604 President of Cramer Rosenthal
McGlynn, Inc. and CRM Management, Inc.
Arthur Jay Pergament Member and Senior Vice President Member and Senior Vice President CRM
707 Westchester Avenue Advisors LLC; and Senior Vice
White Plains, New York 10604 President of Cramer Rosenthal
McGlynn, Inc. and CRM Management, Inc.
Eugene Anthony Trainor, III Member; Senior Vice President Vice President and Chief Financial
707 Westchester Avenue Treasurer and Secretary Officer Cramer Rosenthal
White Plains, New York 10604 McGlynn, Inc.; and Senior Vice
President, Treasurer and Secretary
CRM Advisors, LLC
</TABLE>
EVALUATION BY THE BOARD OF TRUSTEES
The Board of Trustees has determined that, by approving the New
Agreement on behalf of the Fund, the Fund can best assure itself that services
from Current Advisor and New Advisor will be provided without interruption. The
Board believes that, as under the Current Agreement, the New Agreement will
enable the Fund to obtain services of high quality at reasonable costs and will
be in the best interests of the Fund and its shareholders.
In evaluating the New Agreement, the Board of Trustees requested and
reviewed materials furnished by FAS, New Advisor and Current Advisor. These
materials included information regarding New Advisor, LLC, its personnel,
operations and financial condition, and investment management capabilities and
methodologies. The Board met with representatives of New Advisor and reviewed
its commitment to service the Fund. Consideration was given to comparative
expense information on other mutual funds with similar investment objectives.
The Board of Trustees also reviewed and discussed the terms and provisions of
the New Agreement and Current Agreement.
<PAGE>
The Board of Trustees also considered the terms of the New Agreement
and the possible effects of the Transaction upon New Advisor and its ability to
provide services to the Fund. In this regard, the Board evaluated such factors
as New Advisor's experience in providing various financial services to
individuals and businesses, as well as its reputation, integrity and financial
responsibility and stability. The Board of Trustees considered the demonstrated
skills and capability of employees of New Advisor and the representations by New
Advisor that no material change was currently planned in New Advisor's
management and facilities and that New Advisor would be able to provide high
quality investment management services with respect to the Fund.
Based upon its review, the Board of Trustees concluded that the New
Agreement is reasonable, fair and in the best interests of the Fund and its
shareholders, and that the fees provided for in the New Agreement are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. In the Board's view, retaining New
Advisor to serve as investment manager of the Fund is desirable and in the best
interests of the Fund and its shareholders. Accordingly, after consideration of
the above factors, and such other factors and information it deemed relevant,
the Board of Trustees unanimously approved the New Agreement and voted to
recommend its approval by the Fund's shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL ONE
PROPOSAL TWO
SELECTION OF INDEPENDENT AUDITORS
The Board of Trustees, including the Trustees who are not interested
persons of the Fund, have selected Ernst & Young LLP as independent auditors for
the Trust for the fiscal year ending September 30, 1998. Ernst & Young LLP was
selected primarily on the basis of its expertise as auditors of investment
companies, the quality of its audit services, and the competitiveness of the
fees charged for these services. A representative of Ernst & Young LLP will be
present at the Meeting and will have an opportunity to make a statement if he or
she desires to do so and to respond to appropriate questions.
The Board of Trustees' policy regarding engaging independent
accountants' services is that management may engage the Trust's independent
auditors to perform any services normally provided by independent accounting
firms, provided that any such services meet any and all of the independence
requirements of the American Institute of Certified Public Accountants and the
Securities and Exchange Commission.
The affirmative vote of a plurality of the votes cast at the Meeting,
if a quorum is present, is required to ratify the Trustees' selection of
independent auditors.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL TWO
PROPOSAL THREE
APPROVAL OR DISAPPROVAL OF INVESTMENT POLICIES ALLOWING THE
FUND TO INVEST IN A CORE AND GATEWAY(R) STRUCTURE
INTRODUCTION
GENERAL. Approval of this Proposal would enable the Fund to invest its
assets in a "master-feeder," or "Core and Gateway(R)," structure (Core and
Gateway is a registered service mark of Forum Financial Services, Inc.). In a
Core and Gateway structure, the Fund would seek to achieve its investment
objective by investing in a single investment company, or "Core Portfolio"
having substantially the same investment objective, policies and risk
<PAGE>
profile as the Fund. The Core Portfolio in turn would invest directly in the
securities of individual issuers. A fund investing in a Core Portfolio may be
referred to as a "Gateway Fund."
If approved, the new investment policies will be effective on January
2, 1998, although there is no present intention to convert to a Core and Gateway
structure. The Fund would convert to a Core and Gateway structure solely upon a
future determination by the Board that the conversion is in the best interests
of the Fund and its shareholders. The Fund would provide shareholders prior
notice of a conversion. The Board would retain the right to withdraw the Fund's
investment in a Core Portfolio at any time, and the Fund could thereafter resume
investing directly in individual securities or could re-invest its assets in
another Core Portfolio.
SPECIFIC APPROVALS UNDER THIS PROPOSAL. Approval by shareholders of
this Proposal will permit the Fund to convert to a Core and Gateway structure or
otherwise invest all of its investable assets in another investment company to
the extent permitted by law. To do so, the Fund's investment policies relating
to its investments in other investment companies, concentration and
diversification would be amended as described below.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Specifically, approval of
this Proposal will amend the Fund's investment policy regarding
investment in other investment companies. That policy currently
provides that The Fund may not invest in shares of other investment
companies except to the extent permitted by the Investment Company Act
of 1940.
If shareholders approve this proposal, the new policy governing the
Fund's investment in other investment companies would provide that
The Fund may not invest in shares of other investment companies except
to the extent permitted by the Investment Company Act of 1940,
including investment of all or a part of its investment assets in one
or more registered, open-end investment companies having substantially
the same investment objective and policies as the Fund.
DIVERSIFICATION AND CONCENTRATION. In addition, the proposal would
supplement the Fund's policies regarding diversification and concentration to
clarify that, if the Fund converted to a Core and Gateway structure, those
policies would apply to the portfolio securities of the Core Portfolios in which
the Fund invests rather than to the interests in the Core Portfolios held by the
Fund. Upon approval of this proposal by the shareholders of the Fund, the
following statement would be added to the Fund's policies on diversification and
concentration:
Notwithstanding anything to the contrary, to the extent permitted by
the 1940 Act, the Fund may invest in one ore more investment companies
provided that, except to the extent the Fund invests in other
investment companies pursuant to section 12(d)(1)(A) of the 1940 Act,
the Fund treats the assets of the investment companies in which its
invests as its own for purposes of this policy.
CORE AND GATEWAY STRUCTURES
IN GENERAL. In a Core and Gateway structure, a Gateway Fund holds as
its primary asset an interest in a Core Portfolio that has substantially the
same investment objective and policies as the Fund. In addition, to the extent
necessary to manage cash balances, a Gateway Fund may invest directly in cash
and cash equivalents. The Fund would otherwise continue its normal operations.
The structure is designed to achieve investment and administrative efficiencies
and enhanced portfolio diversification by allowing a Fund to pool its assets
with the assets of other entities invested in the Core Portfolio.
The conversion to a Core and Gateway structure would be accomplished by
the Fund transferring its assets in-kind to the Core Portfolio in exchange for
an interest in the Core Portfolio equal in value to the assets transferred. The
assets transferred by the Fund would be valued in accordance with the Fund's
normal valuation procedures. The conversion would not affect the net asset value
of the Fund's shares. The Fund would bear all costs of the conversion.
<PAGE>
The Core Portfolio would offer its shares only to institutional
shareholders. The Fund would invest in a Core Portfolio on the same terms and
conditions as any of the other investors in the Core Portfolio and will bear a
proportionate share of the Core Portfolio's expenses. Other pooled investment
vehicles that invest in the Core Portfolio, including other mutual funds, may be
marketed in different ways than those used by a Gateway Fund or to different
types of investors than those investing in that Gateway Fund. Another mutual
fund investing in a Core Portfolio might sell fund shares to the general public
at a different public offering price than the Fund's Shares and could have
different fees and expenses than the Fund. Also, other investors in a Core
Portfolio may have different yields and returns than those of a particular
Gateway Fund.
SHAREHOLDER VOTING IN A CORE AND GATEWAY STRUCTURE. When required under
the 1940 Act or Delaware law, a Core Portfolio will hold a meeting of
interestholders in order to obtain their approval of a change to the Portfolio's
operations. As an interestholder of a Core Portfolio, a Gateway Fund would be
entitled to vote in proportion to the Fund's relative interest in the Core
Portfolio. A Fund investing through a master-feeder structure will hold a
meeting of its shareholders to obtain instructions on how to vote its interest
in the Core Portfolio and will vote its interest in the Core Portfolio in
proportion to the votes cast by the Fund's shareholders when required by the
1940 Act or Delaware law. In other circumstances, the Board will vote the
Gateway Fund's interest in the Core Portfolio in accordance with the best
interests of the shareholders of the Fund.
Subject to applicable legal requirements, the Gateway Fund will not
seek instructions from its shareholders with respect to: (i) any proposal
relating to a Core Portfolio that, if made with respect to the Fund, would not
require the vote of Fund shareholders; or (ii) any proposal relating to the Core
Portfolio that is substantially the same as a proposal previously approved by
the Fund's shareholders.
If there are other investors in a Core Portfolio, there can be no
assurance that a vote of all the interestholders of the Core Portfolio would
result in the same outcome as a vote of the shareholders of the Gateway Fund. If
the outcome of a Core Portfolio vote was not consistent with the vote of the
shareholders of the Fund, the Board would consider whether it was still in the
best interests of the Fund and its shareholders to invest in the Core Portfolio.
WITHDRAWING FROM A CORE PORTFOLIO. The Board will retain the right to
redeem a Gateway Fund's investment in a Core Portfolio at any time if the Board
determines that it is in the best interests of the Fund and its shareholders to
do so. A Fund might redeem, for example, if the outcome of a vote of the
interestholders of a Core Portfolio was not acceptable to the Board. A
redemption could result in an in-kind distribution of portfolio securities (as
opposed to a cash distribution) to the Fund by the Core Portfolio.
If a Gateway Fund withdrew its investment from a Core Portfolio, the
Board would consider what action should be taken to manage the withdrawn assets,
including management of the Fund's assets in accordance with its investment
objectives and policies by Current Advisor or New Advisor or investment of the
assets in another Core Portfolio. The inability of a Fund to find a suitable
replacement investment(s) could have a significant impact on the shareholders of
the Fund.
CERTAIN RISKS OF INVESTING IN A CORE AND GATEWAY STRUCTURE. The actions
of other large investors in the Core Portfolio could affect a Gateway Fund's
investments in a Core Portfolio. For example, if a Core Portfolio had another
large investor that redeemed its interest in the Core Portfolio, the Fund and
the Core Portfolio's remaining investors could experience higher pro rata
operating expenses and resulting lower returns.
Investment of a Gateway Fund's assets in a Core Portfolio would affect
the Fund's current arrangements for management and administrative services. As a
result of the investment, some of those services would be provided by the
service providers of the relevant Core Portfolio while others would continue to
be provided directly to the Fund. As a result, shareholders of Gateway Fund
might bear some additional costs that they would not otherwise. Before approving
a conversion to a Core and Gateway structure, however, the Board of Trustees
would consider these additional costs and whether they would be outweighed by
other savings that the Fund would enjoy following the conversion.
<PAGE>
TAX CONSEQUENCES. Even if the Board of Trustees determines in the
future that investing in a Core and Gateway structure would be in the best
interests of the Fund and shareholders, management of the Trust would proceed
with a conversion to a Core and Gateway structure only upon receipt of an
opinion of counsel to the effect that neither a contribution of the Gateway
Fund's investment assets to a Core Portfolio in exchange for an interest in the
Core Portfolio nor a withdrawal of a Fund's assets at that time from a Core
Portfolio would result in the recognition of gain or loss to the Fund for
federal income tax purposes.
The Fund qualifies and will continue to seek to qualify for treatment
as a regulated investment company under the Internal Revenue Code of 1986. As
such, it does not pay federal income or excise taxes to the extent that it
distributes to shareholders its net investment income and any net realized
capital gain at certain times. The Fund is not liable for any income, corporate
excise or franchise taxes in the state of Delaware. If the Fund were to convert
to a Core and Gateway structure, the Core Portfolio in which the Fund would
invest would conduct its operations in a manner such that the Fund would
continue to qualify for treatment as a regulated investment company.
The Core Portfolio would not be required to pay federal income taxes on
its net investment income and capital gain, because it would be treated as a
partnership for federal income tax purposes. All interest, dividends and gains
and losses of the Core Portfolio would be deemed to have been "passed through"
to each Gateway Fund in proportion to its holdings of the Core Portfolio,
regardless of whether such interests, dividends or gains have been distributed
by the Portfolios or losses were realized by the Portfolios.
REVIEW BY THE BOARD OF TRUSTEES. The Board of Trustees has concluded
that it is reasonable to present this proposal to shareholders at this time for
the following reasons. First, a shareholder meeting is necessary to consider
Proposals One and Two. The Board also considered that the Fund would not convert
to a Core and Gateway structure, unless the Board further determines that a
conversion is in the best interests of the Fund and its shareholders.
Accordingly, after consideration of the above factors, and such other factors
and information it deemed relevant, the Board of Trustees unanimously voted to
recommend that the Fund's shareholders approve this proposal.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL THREE
OTHER BUSINESS
Management knows of no other business to be presented at the Meeting.
If any additional matters should be properly presented, it is intended that the
enclosed proxy will be voted in accordance with the judgment of the persons
named in the proxy.
ADDITIONAL INFORMATION
PORTFOLIO TRANSACTIONS
The 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 Current Advisor in its best judgment
and in a manner deemed to be in the best interest of shareholders of the 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 the
Fund.
<PAGE>
The 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, Current Advisor 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. Current Advisor may also take into
account payments made by brokers effecting transactions for the Fund (i) to the
Fund or (ii) to other persons on behalf of the Fund for services provided to it
for which it would be obligated to pay. Current Advisor may also take into
account sales of Fund shares when allocating brokerage.
In addition, Current Advisor may give consideration to research
services furnished by brokers to Current Advisor for its use and may cause the
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 Current Advisor in
connection with services to clients other than the Fund, and Current Advisor's
fee is not reduced by reason of Current Advisor's receipt of the research
services.
Investment decisions for the Fund will be made independently from those
for any other account or investment company that is or may in the future become
managed by Current Advisor or its affiliates. If, however, the Fund and other
investment companies or accounts managed by Current Advisor 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, this policy might adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund. In
addition, when purchases or sales of the same security for the Fund and for
other investment companies and accounts managed by Current Advisor occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
The Fund contemplates that, consistent with the policy of obtaining
best net results, brokerage transactions may be conducted through Current
Advisor's affiliates, affiliates of those persons or Forum Financial Services,
Inc. The Advisory Agreement authorizes the Current Advisor 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.
It is anticipated that New Advisor's practices with respect to the
Fund's portfolio transactions will be substantially the same as Current
Advisor's practices.
For the fiscal year ended September 30, 1997 the Fund paid aggregate
brokerage commissions of $_____ and no brokerage commissions were paid to any
affiliate of the Fund.
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS.
It is anticipated that, following the Meeting, the Fund will not hold
any meetings of shareholders except as required by Federal or Delaware state
law. Shareholders wishing to submit proposals for inclusion in a proxy statement
for a subsequent shareholder meeting should send proposals to the Assistant
Secretary of the Trust, Max Berueffy , in care of Forum Administrative Services,
LLC, Two Portland Square, Portland, Maine 04101.
YOU ARE URGED TO FILL IN, DATE AND SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY
By Order of the Board of Trustees,
Eugene A. Trainor III
Secretary
<PAGE>
EXHIBIT A
<PAGE>
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE CRM FUNDS
AND
CRAMER ROSENTHAL MCGLYNN, LLC
THIS AGREEMENT is made as of the __ day of ___________, 199_, 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 Cramer Rosenthal McGlynn, 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 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;
<PAGE>
(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 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
<PAGE>
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 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 expenses of
<PAGE>
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 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.
<PAGE>
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.
(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 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.
<PAGE>
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. his 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.
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 CRAMER ROSENTHAL McGLYNN, LLC
The CRM Small Cap Value Fund
By: _________________________ By:__________________________
Name: Fred M. Filoon Name: Ronald H. McGlynn
Title: President Title: President
<PAGE>
THE CRM FUNDS
SMALL CAP VALUE FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints Max Berueffy and
David I. Goldstein (or, if only one shall act, that one) proxies with the power
of substitution to vote all of the shares of Small Cap Value Fund (the "Fund"),
a series of The CRM Funds (the "Trust"), registered in the name of the
undersigned at the Special Meeting of Shareholders of the Fund to be held at the
offices of Forum Financial Services, Inc., Two Portland Square, Portland, Maine
04101, on __________ at 10:00 a.m. Eastern Time, and at any adjournment or
adjournments thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. If no
instructions are given, such shares will be voted FOR the Proposals set forth
below. The Board of Trustees recommends voting FOR the Proposals.
PROPOSAL ONE: To approve a new Investment Advisory Agreement between
the Trust and Cramer Rosenthal McGlynn, LLC, a newly-formed Delaware
Limited Liability Company
FOR ____ AGAINST ____ ABSTAIN ____
PROPOSAL TWO: To approve or disapprove the selection by the Board of
Trustees of Ernst & Young LLP as independent accountants to the Trust
FOR ____ AGAINST ____ ABSTAIN ____
PROPOSAL THREE: To approve amendments to certain fundamental
investment policies of the Fund to permit the Fund to invest all of
its investable assets in another investment company
FOR ____ AGAINST ____ ABSTAIN ____
Receipt is acknowledged of the Notice Proxy Statement for the Special Meeting of
Shareholders to be held on _______. (NOTE: Checking the box labeled ABSTAIN will
result in the shares covered by the Proxy being treated as if they were voted
AGAINST the proposal.) PLEASE SIGN AND DATE THIS PROXY IN THE SPACE PROVIDED.
Execution by shareholders who are not individuals must be made by an authorized
signatory. Executors, administrators, trustees, guardians and others signing in
a representative capacity should give their full title as such.
____________________________________________ ________________
Authorized Signature Date
____________________________________________ ________________
Printed Name (and Title if Applicable) Date
____________________________________________ ________________
Authorized Signature (Joint Investor) Date
____________________________________________ ________________
Printed Name (and Title if Applicable) Date
Please Sign And Date This Proxy and Return It In The Enclosed Envelope.
