As filed with the Securities and Exchange Commission on July 17, 1997
File No. 33-91498
File No. 811-9034
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 5
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 7
THE CRM FUNDS
Two Portland Square,
Portland, Maine 04101
(207)879-1900
Max Berueffy, Esq.
Forum Financial Services, Inc.
Two Portland Square,
Portland, Maine 04101
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Copies 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 Rule485, 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)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering Investor Shares of Small Cap Value Fund, Mid Cap Value
Fund, Large Cap Value Fund and Value Fund)
PART A
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FORM N-1A ITEM LOCATION IN PROSPECTUS
NO
Item 1 Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Fund
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Prospectus Summary; Investment Risks and
Practices; Other Information
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Dividends and Tax Matters; Other Information;
Purchases and Redemptions of Shares
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Other
Information; Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering Institutional Shares of Small Cap Value Fund, Mid Cap Value
Fund, Large Cap Value Fund and Value Fund)
PART A
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FORM N-1A LOCATION IN PROSPECTUS
ITEM NO
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses of Investing in the Fund
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Prospectus Summary; Investment Risks and Practices;
Other Information
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Dividends and Tax Matters; Other Information;
Purchases and Redemptions of Shares
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Other
Information; Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Statements of Additional Information offering Shares of Small Cap Value Fund,
Mid Cap Value Fund, Large Cap Value Fund and Value Fund)
PART B
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FORM N-1A LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NO.
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Other Matters
Item 13. Investment Objectives and Policies Investment Policies; Investment Limitations
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Holders of Management; Other Matters
Securities
Item 16. Investment Advisory and Other Services Management
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities Determination of Net Asset Value
Item 19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Additional
Securities Being Offered Purchase and Redemption Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Data Performance Data and Advertising
Item 23. Financial Statements Financial Statements
</TABLE>
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SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
VALUE FUND
INVESTOR SHARES
PROSPECTUS
JANUARY 2, 1998 AS AMENDED XXXXX, 1998
EACH OF THESE FUNDS SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES, USING A VALUE-ORIENTED APPROACH.
INVESTMENT ADVISER:
CRAMER ROSENTHAL MCGLYNN, LLC
1-800-CRM-2883
TABLE OF CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
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SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
VALUE FUND
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Shareholder Services, LLC
Two Portland Square P.O. Box 446
Portland, Maine 04101 Portland, Maine 04112
800-CRM-2883 800-844-8258
800-276-2883
INVESTMENT ADVISER:
Cramer Rosenthal McGlynn, LLC
707 Westchester Avenue
White Plains, New York 10604
PROSPECTUS
JANUARY 2, 1998 AS AMENDED XXXXXX, 1998
This Prospectus offers investor shares ("Investor Shares") of the Small
Cap Value Fund, Mid Cap Value Fund, Large Cap Value Fund and 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. Investor 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.
To learn more about the Funds and the Trust, you may obtain a copy of the Funds'
Statement of Additional Information, dated XXXXXXX, 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.
<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 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.
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. Cramer Rosenthal McGlynn, LLC (the
"Adviser") is each Fund's investment adviser and makes investment decisions for
the Funds. Forum Administrative Services, LLC serves as the Funds' administrator
and Forum Financial Services, Inc. is the 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."
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 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. The Funds 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.
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.
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- ------------------------------------------ --------
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Maximum sales load imposed on None
purchases
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Maximum sales load imposed on None
reinvested dividend
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Deferred sales load None
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Redemption Fees None
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Exchange Fees None
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SMALL CAP VALUE FUND
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Advisory Fees 0.75%
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12b-1 Fees None
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Other Expenses
Shareholder Servicing Fees 0.25%
Miscellaneous Expenses 0.50%
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Total Fund Operating Expenses
(after waivers or reimbursements)2 1.50%
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MID CAP VALUE FUND
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Advisory Fees 0.75%
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12b-1 Fees None
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- ----------------------------------------- ---------
Other Expenses
Shareholder Servicing Fees 0.25%
Miscellaneous Expenses 0.50%
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Total Fund Operating Expenses 1.50%
(after waivers or reimbursements)3
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<PAGE>
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LARGE CAP VALUE FUND
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ADVISORY FEES 0.75%
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12B-1 FEES NONE
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- ----------------------------------------- ---------
OTHER EXPENSES
SHAREHOLDER SERVICING FEES 0.25%
MISCELLANEOUS EXPENSES 0.50%
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TOTAL FUND OPERATING EXPENSES
(AFTER WAIVERS OR REIMBURSEMENTS)3 1.50%
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VALUE FUND
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Advisory Fees 0.75%
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12b-1 Fees None
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- ----------------------------------------- ---------
Other Expenses
Shareholder Servicing Fees 0.25%
Miscellaneous Expenses 0.50%
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- ----------------------------------------- ---------
Total Fund Operating Expenses
(after waivers or reimbursements)3 1.50%
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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. SEE "Management," for a more detailed description of the
various costs and expenses incurred in the Small Cap Value Fund's operation.
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 and Value
Fund. The Adviser has voluntarily undertaken to waive a portion of its fees and
assume certain expenses of the Mid CapValue Fund, Large Cap Value Fund and Value
Fund to the extent that total expenses exceed 1.50%. See "Management" for
further explanation of these fees. Expense reimbursements and fee waivers are
voluntary and may be reduced or eliminated at any time.
EXAMPLE
The following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Investor Shares of 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 Value Fund's first year of operation.
- ---------------------------- ---------------- -----------------
- ---------------------------- ---------------- -----------------
- ---------------------------- ---------------- -----------------
After 1 Year $15 $15
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After 3 Years $47 $47
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After 5 Years $81 N/A
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After 10 Years $178 N/A
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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 Funds' 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 Investor
Share for both the Small Cap Value Fund and the Value Fund for the period shown.
The financial information for the fiscal years ended September 30, 1996 and
September 30, 1997 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.
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- --------------------------------------------- ----------- ----------- ----------
- --------------------------------------------- ----------- ----------- ----------
BEGINNING NET ASSET VALUE PER SHARE $10.00 $13.71 $17.68
- --------------------------------------------- ----------- ----------- ----------
- --------------------------------------------- ----------- ----------- ----------
Investment Operations
- --------------------------------------------- ----------- ----------- ----------
- --------------------------------------------- ----------- ----------- ----------
Net investment loss (0.02) (0.06) (0.05)
- --------------------------------------------- ----------- ----------- ----------
- --------------------------------------------- ----------- ----------- ----------
Net realized and unrealized gain on 3.73 4.89 1.88
securities
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Distributions from
- --------------------------------------------- ----------- ----------- ----------
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Net investment income --(a) -- ---
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- --------------------------------------------- ----------- ----------- ----------
Net realized gain on investments -- (0.86) (0.86)
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Total Distributions -- (0.86) (0.86)
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ENDING NET ASSET VALUE PER SHARE $13.71 $17.68 $18.65
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RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------- ----------- ----------- ----------
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Expenses, including reimbursement/waiver 1.49% 1.50% 1.46% (d)
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Expenses, excluding reimbursement/waiver 1.98% 1.50% 1.46% (d)
- --------------------------------------------- ----------- ----------- ----------
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Net investment loss, including (0.40)% (0.56)% (0.64)%(d)
reimbursement/waiver
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TOTAL RETURN 37.15% 37.14% 11.26% (c)
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PORTFOLIO TURNOVER RATE 111.18% 98.91% 29.16%
- --------------------------------------------- ----------- ----------- ----------
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AVERAGE BROKERAGE COMMISSION RATE (b) $0.0374 $0.0560 $0.0531
- --------------------------------------------- ----------- ----------- ----------
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NET ASSETS AT THE END OF PERIOD (000's $45,385 $144,001 $190,408
omitted)
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BEGINNING NET ASSET VALUE PER SHARE $10.00
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Investment Operations
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Net investment income 0.01
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Net realized and unrealized gain on 1.47
securities
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Distributions from
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Net investment income --
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Net realized gain on investments --
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Total Distributions --
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ENDING NET ASSET VALUE PER SHARE $11.48
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RATIOS TO AVERAGE NET ASSETS:
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- --------------------------------------------- -------------
Expenses, including reimbursement/waiver 1.50% (d)
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Expenses, excluding reimbursement/waiver 5.12% (d)
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- --------------------------------------------- -------------
Net investment income including 0.58% (d)
reimbursement/waiver
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- --------------------------------------------- -------------
TOTAL RETURN 14.80% (c)
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PORTFOLIO TURNOVER RATE 19.39%
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AVERAGE BROKERAGE COMMISSION RATE (b) $0.0551
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NET ASSETS AT THE END OF PERIOD (000's $6,548
omitted)
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(a) Less than $0.01 per share.
(b) Amount represents the average commission per share, paid to brokers, on the
purchase and sale of portfolio securities.
(c) Not annualized
(d) Annualized
(e) Unaudited
Financial highlights information is not included for the Mid Cap Value Fund as
Investor Shares for this Fund are currently not offered for sale and for the
Large Cap Value Fund because this Fund commenced operations on XXXXXXX, 1998.
Further information will be contained in the Semi-Annual Report, which will be
sent to shareholders after these Funds have been in operation for three months.
PERFORMANCE
The Funds may, from time to time, include quotations of their respective 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 performance of the Investor Share class of Small Cap Value Fund 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
--------------------------- ---------------
--------------------------- ---------------
--------------------------- ---------------
Small Cap Value Fund 37.14%
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S&P 500 40.45%
--------------------------- ---------------
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Russell 2000 Index 32.99%
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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(R) 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(R) 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.
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.
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.
The Funds will be managed in accordance with the investment disciplines
that Cramer, Rosenthal, McGlynn, Inc., the predecessor of the Adviser, 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 securities the
Adviser believes undervalued are 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.
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 the owner the
right to vote on measures affecting the company's organization and
operations, the Funds do not intend to exercise control over the management
of companies in which each 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.
The Funds 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.
AMERICAN DEPOSITORY RECEIPTS ("ADRS"). The Funds 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. The Funds 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 the 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. Under such circumstances, the
Fund would treat such holdings as illiquid.
----------------
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 the Fund's total
assets would be invested in the securities of a single issuer, or (b) the
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 the Fund's total assets. As a
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 (1) short-term obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities ("U.S.
Government Securities"), (2) 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., (3) commercial
paper rated P-1 by Moody's Investors Service, Inc. or A-1 by Standard &
Poor's Corporation, (4) repurchase agreements covering any of the
securities in which a Fund may invest directly, and (5) 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.
CORE AND GATEWAY (R). 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.
The portfolio turnover rate for each of Mid Cap Value Fund and Value Fund
is not expected to exceed 100%. Small Cap Value Fund's portfolio turnover
rate is reported under "Financial Highlights."
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 the 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 the
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
Cramer Rosenthal McGlynn, LLC,, 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 Delaware on September 23, 1997, and is a registered investment
adviser under the Investment Advisers Act of 1940. The Adviser succeeds CRM
Advisors, LLC, the investment adviser to the CRM Small Cap Value Fund,
through December 31, 1997. The Adviser is 76% owned by Cramer, Rosenthal,
McGlynn, Inc. ("CRM") and its shareholders.
The Adviser and its predecessors have managed investments in small and
medium capitalization companies for over twenty-four years. As of the date
of this prospectus, the Adviser has over $3.6 billion of assets under
management. The following data relates to historical performance of the
portfolios of all private accounts managed by the Adviser, and CRM, its
predecessor, that have an investment objective, policies and strategies
substantially similar to Mid Cap Value Fund's. This data compares the
performance of these portfolios against the Russell Midcap(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 investors should not consider this performance
data as an indication of future performance of the Fund or of the Adviser.
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
20 Years: 1977 - 1996 1976 - 19917.5% N/A
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
15 Years: 1982 - 1996 1981 - 19917.8% N/A
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
10 Years: 1987 - 1996 1986 - 19916.2% 14.7%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
5 Years: 1992 - 1996 19.1% 15.8%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
3 Years: 1994 - 1996 16.4% 16.1%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
1 Year: 1997 22.3% 29.0%
- ------------------------------ ------------ ----------------
(1) These results are a dollar weighted composite of tax-exempt, fully
discretionary, separately managed accounts that are over $1 million in size
and under the Adviser's and its predecessor's management for at least 3
months. These accounts have investment objectives, policies and strategies
substantially similar to the Mid Cap Value Fund. The composite consists of
61 accounts with $1,497 million in assets (75% of tax-exempt equity assets
and 45% of all equity assets). 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); returns will differ from return results computed in
accordance with the method set by the SEC. The composite does not reflect
all of the assets under the Adviser's management and may not accurately
reflect the performance of all accounts it manages. The separately managed
accounts in the composite are not subject to the same types of expenses to
which the Fund is subject nor to the diversification requirements, specific
tax restrictions and investment limitations imposed by the 1940 Act or
Subchapter M of the Internal Revenue Code of 1986, as amended.
Consequently, the performance results for the accounts could have been
adversely affected if the accounts included in the composite had been
regulated as an investment company under the federal securities laws.
(2) The Russell MidcapTM Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 35% of
the total market capitalization of the Russell 1000 Index. As of the latest
reconstitution, the average market capitalization was approximately $2.9
billion; the median market capitalization was approximately $2.3 billion.
The largest company in the index had an approximate market capitalization
of $8.0 billion.
All returns reflect the deduction of investment advisory fees, brokerage
commissions and execution costs paid by the investment adviser's private
accounts, without provision for federal or state income taxes. 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 Tables" above.
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 the Adviser stand on a solid base of more than 165 years of
collective investment experience. The principal portfolio managers of the
Adviser are:
Gerald B. Cramer, Chairman of the Adviser, 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 the Adviser, is the
Adviser's Co-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 the Adviser, 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 each Fund's portfolio.
Fred M. Filoon, Senior Vice President of the Adviser, is President of the Trust.
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 each 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 each Fund, the Trust has entered into an Administration Agreement
with Forum Administrative Services, LLC ("FAS"). As provided in this agreement,
FAS 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, FAS
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of each Fund for the first $50 million in assets, 0.10%
for the next $50 million in assets and 0.05% thereafter, subject to an annual
minimum of $25,000. Like the Adviser, FAS, in its sole discretion, may waive all
or any portion of its fees.
FAS is located at Two Portland Square, Portland, Maine 04101. As of the date
hereof, FAS manages and administers registered investment companies and
collective investment funds with assets of approximately $30 billion.
Forum Accounting Services, LLC ("FAcS"), an affiliate of FAS, provides fund
accounting services to each Fund pursuant to a Fund Accounting Agreement with
the Trust. For its services, FAcS receives a fee at an annual rate of $36,000
for each Fund plus $12,000 for each additional class and certain surcharges
based upon the amount and type of a Fund's portfolio transactions and positions.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Forum Financial Services,
Inc. ("FFSI") acts as distributor of the Funds' shares. FFSI acts as the agent
of the Trust in connection with the offering of shares of the Funds. FFSI
receives no compensation for its services under the Distribution Agreement. FFSI
may enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares. FFSI 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.
FFSI, located at Two Portland Square, Portland, Maine 04101, is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
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 FAS 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.
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 Investor
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 Shareholder
Services, LLC ("FSS") pursuant to which FSS acts as the Funds' transfer agent
and dividend disbursing agent. FSS 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.
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 the Fund, the Trust pays for all of its expenses.
The Adviser, FAS and FSS, 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 Funds
(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% of the average daily net assets of the
Funds.
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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Thanksgiving and Christmas. Each
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.
Each 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 FSS of
the redemption order in proper form (and any supporting documentation which FSS
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 FSS 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.
SHARECERTIFICATES. FSS 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 FSS.
BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FSS 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 Shareholder Services,
LLC
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 the
Fund's procedures, may have the 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 of the specified Fund at the
net asset value per share next determined after payment is received by the
Trust.
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 FSS 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
the Fund's shares.
REDEMPTION BY MAIL. You may redeem all or any number of your shares by sending a
written request to FSS 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 FSS 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 FSS will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FSS 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 FSS
may employ other procedures such as recording certain transactions. If such
procedures are followed, neither FSS 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 FSS by telephone, you may mail or
hand-deliver your request to FSS at Two Portland Square, Portland, Maine 04101.
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 FSS 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 FSS 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 the 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 FSS at (800) 844-8258. The Trust and FSS are not
responsible for the authenticity of telephone instructions or losses, if any,
resulting from unauthorized telephone exchange requests. The Trust employs
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.
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 FSS 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 VALUE FUND Dividends
representing the net investment income, if any, are declared and paid annually
by each Fund. 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 (including any
realized net short-term capital gain) are taxable to shareholders as ordinary
income. Two different tax rates apply to net capital gain -- that is, the excess
of net gain from capital assets held for more than one year over net losses from
capital assets held for not more than one year. One rate (generally 28%) applies
to net gain on capital assets held for more than one year but not more than 18
months and a second rate (generally 20%) applies to the balance of such net
capital gains. Distributions of net capital gain will be taxable to shareholders
as such, regardless of how long a shareholder has held shares in the Fund.
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.
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 the 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 $0.001 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 FSS for
more information on either share class. Sales personnel of broker-dealers and
other financial institutions selling the Funds' shares may receive different
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 matters that affect the
particular class of shares. 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.
<PAGE>
---------------------------------------------------
---------------------------------------------------
SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
VALUE FUND
INSTITUTIONAL SHARES
PROSPECTUS
JANUARY 2, 1998 AS AMENDED XXXX, 1998
EACH OF THESE FUNDS SEEKS LONG-TERM
CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES ,
USING A VALUE-ORIENTED APPROACH.
INVESTMENT ADVISER:
CRAMER ROSENTHAL MCGLYNN, LLC,
1-800-CRM-2883
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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
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
</TABLE>
<PAGE>
- -----------------------------------------------------
- -----------------------------------------------------
SMALL CAP VALUE FUND
MID CAP VALUE FUND
LARGE CAP VALUE FUND
VALUE FUND
FUND INFORMATION: SHAREHOLDER ACCOUNT INFORMATION:
Forum Financial Services, Inc. Forum Shareholder Services, LLC
Two Portland Square P.O. Box 446
Portland, Maine 04101 Portland, Maine 04112
800-CRM-2883 800-844-8258
800-276-2883
INVESTMENT ADVISER:
Cramer Rosenthal McGlynn, LLC
707 Westchester Avenue
White Plains, New York 10604
PROSPECTUS
JANUARY 2, 1998 AS AMENDED XXXXX, 1998
This Prospectus offers institutional shares ("Institutional Shares") of
the Small Cap Value Fund, Mid Cap Value Fund, Large Cap Value Fund and 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.
To learn more about the Funds and the Trust, you may obtain a copy of the Funds'
Statement of Additional Information, dated XXXXXXXXX, 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.
<PAGE>
8
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 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.
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. Cramer Rosenthal McGlynn, LLC (the "Adviser") is each Fund's
investment adviser and makes investment decisions for the Funds. Forum
Administrative Services, LLC serves as the Funds' administrator and Forum
Financial Services, Inc. is the 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 initial minimum investment
for each Fund is $1,000,000. There is no minimum for subsequent investments in
Institutional Shares of a Fund. SEE "Investment in the Funds" for more detailed
information.
DIVIDENDS. FOR THE SMALL CAP VALUE FUND, MID CAP VALUE FUND AND VALUE FUND,
Dividends representing the net investment income are declared and paid at least
annually by each Fund. 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. The Funds 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.
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.
- ------------------------------------------ --------
- ------------------------------------------ --------
- ------------------------------------------ --------
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
- ------------------------------------------ --------
- ----------------------------------------- ---------
- ----------------------------------------- ---------
- ----------------------------------------- ---------
SMALL CAP VALUE FUND
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Advisory Fees 0.75%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
12b-1 Fees None
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses 0.40%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Total Fund Operating Expenses
(after waivers or reimbursements)2 1.15%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
- ----------------------------------------- ---------
MID CAP VALUE FUND
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Advisory Fees 0.75%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
12b-1 Fees None
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses 0.40%
- ----------------------------------------- ---------
Total Fund Operating Expenses
(after waivers or reimbursements)3 1.15%
- ----------------------------------------- ---------
<PAGE>
- ----------------------------------------- ---------
- ----------------------------------------- ---------
- ----------------------------------------- ---------
- ----------------------------------------- ---------
LARGE CAP VALUE FUND
- ----------------------------------------- ---------
- ----------------------------------------- ---------
ADVISORY FEES 0.75%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
12B-1 FEES NONE
- ----------------------------------------- ---------
- ----------------------------------------- ---------
OTHER EXPENSES
SHAREHOLDER SERVICING FEES NONE
MISCELLANEOUS EXPENSES 0.40%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
TOTAL FUND OPERATING EXPENSES
(AFTER WAIVERS OR REIMBURSEMENTS)3 1.15%
- ----------------------------------------- ---------
VALUE FUND
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Advisory Fees 0.75%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
12b-1 Fees None
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Other Expenses
Shareholder Servicing Fees None
Miscellaneous Expenses 0.40%
- ----------------------------------------- ---------
- ----------------------------------------- ---------
Total Fund Operating Expenses 1.15%
(after waivers or reimbursements)3
- ----------------------------------------- ---------
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 upon amounts incurred by the
Investor Shares class of Small Cap Value Fund for the fiscal year ended
September 30, 1997, less shareholder servicing and transfer agent fees that
apply to the Investor Shares class. The Adviser has voluntarily undertaken to
waive a portion of its fees and assume certain expenses of each fund to the
extent that total expenses exceed 1.15%. Expense reimbursements and fee waivers
are voluntary and may be reduced or eliminated at any time. SEE "Management" for
a further explanation of these fees.
3 The amounts of fees and expenses are based upon projected annual operating
expenses for the upcoming year for the Institutional Share class of each Fund.
The Adviser has voluntarily undertaken to waive a portion of its fees and assume
certain expenses of each Fund to the extent that total expenses exceed 1.15%.
Expense reimbursements and fee waivers are voluntary and may be reduced or
eliminated at any time. See "Management" for a further explanation of these
fees.
<PAGE>
EXAMPLE
The following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Institutional Shares of 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 for the first year of operation of each
Fund's Institutional Share class.
- --------------------- ---------------
- --------------------- ---------------
- --------------------- ---------------
After 1 Year $12
- --------------------- ---------------
- --------------------- ---------------
After 3 Years $37
- --------------------- ---------------
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 Funds' 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.
<PAGE>
FINANCIAL HIGHLIGHTS
Prior to the January 2, 1998, Institutional Shares were not offered. The
following table represents selected data for a single outstanding Investor Share
of the Small Cap Value Fund as well as data for a single Institutional Share of
the Small Cap Value Fund and the Mid Cap Value Fund for the period of January 2,
1998 through March 31, 1998. The Investor Share class was the first class
offered by the Small Cap Value Fund and, accordingly, represents data since the
Fund's inception. The financial information for the fiscal years ended September
30, 1996 and September 30, 1997 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.
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
BEGINNING NET ASSET VALUE PER SHARE $10.00 $13.71
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Investment Operations
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Net investment loss (0.02) (0.06)
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Net realized and unrealized gain on 3.73 4.89
securities
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Distributions from
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Net investment income --(a) --
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Net realized gain on investments -- (0.86)
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Total distributions -- (0.86)
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
ENDING NET ASSET VALUE PER SHARE $13.71 $17.68
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Expenses, including reimbursement/waiver 1.49% 1.50%
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Expenses, excluding reimbursement/waiver 1.98% 1.50%
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
Net investment loss, including (0.40)% (0.56)%
reimbursement/waiver
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
TOTAL RETURN 37.15% 37.14%
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
PORTFOLIO TURNOVER RATE 111.18% 98.91%
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
AVERAGE BROKERAGE COMMISSION RATE (b) $0.0374 $0.0560
- --------------------------------------------- ---------- ----------
- --------------------------------------------- ---------- ----------
NET ASSETS AT THE END OF PERIOD (000's $45,385 $144,001
omitted)
- --------------------------------------------- ---------- ----------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
BEGINNING NET ASSET VALUE PER SHARE $15.99
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Investment Operations
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment loss (0.01)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net realized and unrealized gain on 2.80
securities
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Distributions from
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment income --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net realized gain on investments --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Total distributions --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
ENDING NET ASSET VALUE PER SHARE $18.78
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Expenses, including reimbursement/waiver 1.05% (d)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Expenses, excluding reimbursement/waiver 1.40% (d)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment loss, including (0.31)% (d)
reimbursement/waiver
- --------------------------------------------- --------------
- --------------------------------------------- --------------
TOTAL RETURN 16.07% (c)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
PORTFOLIO TURNOVER RATE 29.16%
- --------------------------------------------- --------------
- --------------------------------------------- --------------
AVERAGE BROKERAGE COMMISSION RATE (b) $0.0531
- --------------------------------------------- --------------
- --------------------------------------------- --------------
NET ASSETS AT THE END OF PERIOD (000's $25,079
omitted)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
BEGINNING NET ASSET VALUE PER SHARE $10.00
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Investment Operations
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment income 0.01
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net realized and unrealized gain on 1.46
securities
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Distributions from
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment income --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net realized gain on investments --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Total distributions --
- --------------------------------------------- --------------
- --------------------------------------------- --------------
ENDING NET ASSET VALUE PER SHARE $11.47
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
- --------------------------------------------- --------------
RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Expenses, including reimbursement/waiver 1.15% (d)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Expenses, excluding reimbursement/waiver 8.18% (d)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
Net investment income, including 1.01% (d)
reimbursement/waiver
- --------------------------------------------- --------------
- --------------------------------------------- --------------
TOTAL RETURN 14.70% (c)
- --------------------------------------------- --------------
- --------------------------------------------- --------------
PORTFOLIO TURNOVER RATE 16.83%
- --------------------------------------------- --------------
- --------------------------------------------- --------------
AVERAGE BROKERAGE COMMISSION RATE (b) $0.0570
- --------------------------------------------- --------------
- --------------------------------------------- --------------
NET ASSETS AT THE END OF PERIOD (000's $5,279
omitted)
- --------------------------------------------- --------------
(a) Less than $0.01 per share.
(b) Amount represents the average commission per share, paid to brokers, on the
purchase and sale of portfolio securities.
(c) Not annualized.
(d) Annualized.
(e) Unaudited.
Financial highlights information is not included for the Mid Cap Value Fund as
Investor Shares for this Fund are not currently offered for sale and for the
Large Cap Value Fund because this Fund commenced operations on XXXXXXX, 1998.
Further information will be contained in the Semi-Annual Report, which will be
sent to shareholders after these Funds have been in operation for three months.
PERFORMANCE
The Funds may, from time to time, include quotations of their respective 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 performance of the Investor Share class of 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
-------------------------- ----------
-------------------------- ----------
-------------------------- ----------
Small Cap 37.14%
Value Fund
-------------------------- ----------
-------------------------- ----------
S&P 500 40.45%
-------------------------- ----------
-------------------------- ----------
Russell 2000 Index 32.99%
-------------------------- ----------
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(R) 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(R) 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.
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.
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.
The Funds will be managed in accordance with the investment disciplines
that Cramer, Rosenthal, McGlynn, Inc., the predecessor of the Adviser, 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 securities the
Adviser believes undervalued are 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.
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 the owner the
right to vote on measures affecting the company's organization and
operations, the Funds do not intend to exercise control over the management
of companies in which each 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.
The Funds 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.
AMERICAN DEPOSITORY RECEIPTS ("ADRS"). The Funds 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. The Funds 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 the 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. Under such circumstances, the
Fund would treat such holdings as illiquid.
----------------
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 the Fund's total
assets would be invested in the securities of a single issuer, or (b) the
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 the Fund's total assets. As a
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 (1) short-term obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities ("U.S.
Government Securities"), (2) 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., (3) commercial
paper rated P-1 by Moody's Investors Service, Inc. or A-1 by Standard &
Poor's Corporation, (4) repurchase agreements covering any of the
securities in which a Fund may invest directly, and (5) 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.
CORE AND GATEWAY (R). 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.
The portfolio turnover rate for each of Mid Cap Value Fund and Value Fund
is not expected to exceed 100%. Small Cap Value Fund's portfolio turnover
rate is reported under "Financial Highlights."
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 the 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 the
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
Cramer Rosenthal McGlynn, 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 Delaware on September 23, 1997,
and is a registered investment adviser under the Investment Advisers Act of
1940. The Adviser succeeds CRM Advisors, LLC, the investment adviser to the
CRM Small Cap Value Fund, through December 31, 1997. The Adviser is 76%
owned by Cramer, Rosenthal, McGlynn, Inc. ("CRM") and its shareholders.
The Adviser and its predecessors have managed investments in small and
medium capitalization companies for over twenty-four years. As of the date
of this prospectus, the Adviser has over $3.6 billion of assets under
management. The following data relates to historical performance of the
portfolios of all private accounts managed by the Adviser, and CRM, its
predecessor, that have an investment objective, policies and strategies
substantially similar to Mid Cap Value Fund's. This data compares the
performance of these portfolios against the Russell Midcap(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 investors should not consider this performance
data as an indication of future performance of the Fund or of the Adviser.
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
20 Years: 1977 - 1996 1976 - 19917.5% N/A
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
15 Years: 1982 - 1996 1981 - 19917.8% N/A
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
10 Years: 1987 - 1996 1986 - 19916.2% 14.7%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
5 Years: 1992 - 1996 19.1% 15.8%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
3 Years: 1994 - 1996 16.4% 16.1%
- ------------------------------ ------------ ----------------
- ------------------------------ ------------ ----------------
1 Year: 1997 22.3% 29.0%
- ------------------------------ ------------ ----------------
(1) These results are a dollar weighted composite of tax-exempt, fully
discretionary, separately managed accounts that are over $1 million in size
and under the Adviser's and its predecessor's management for at least 3
months. These accounts have investment objectives, policies and strategies
substantially similar to the Mid Cap Value Fund. The composite consists of
61 accounts with $1,497 million in assets (75% of tax-exempt equity assets
and 45% of all equity assets). 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); returns will differ from return results computed in
accordance with the method set by the SEC. The composite does not reflect
all of the assets under the Adviser's management and may not accurately
reflect the performance of all accounts it manages. The separately managed
accounts in the composite are not subject to the same types of expenses to
which the Fund is subject nor to the diversification requirements, specific
tax restrictions and investment limitations imposed by the 1940 Act or
Subchapter M of the Internal Revenue Code of 1986, as amended.
Consequently, the performance results for the accounts could have been
adversely affected if the accounts included in the composite had been
regulated as an investment company under the federal securities laws.
(2)
The Russell MidcapTM Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 35% of
the total market capitalization of the Russell 1000 Index. As of the latest
reconstitution, the average market capitalization was approximately $2.9
billion; the median market capitalization was approximately $2.3 billion.
The largest company in the index had an approximate market capitalization
of $8.0 billion
All returns reflect the deduction of investment advisory fees, brokerage
commissions and execution costs paid by the investment adviser's private
accounts, without provision for federal or state income taxes. 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 Tables" above.
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 the Adviser stand on a solid base of more than 165 years of
collective investment experience. The principal portfolio managers of the
Adviser are:
Gerald B. Cramer, Chairman of the Adviser, 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 the Adviser, is the
Adviser's Co-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 the Adviser, 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 each Fund's portfolio. Fred M. Filoon, Senior Vice President
of the Adviser, is President of the Trust. Mr. Filoon has over 30 years of
investmen 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 each 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 each Fund, the Trust has entered into an Administration Agreement
with Forum Administrative Services, Inc. ("FAS"). As provided in this agreement,
FAS 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, FAS
receives a fee computed and paid monthly at an annual rate of 0.15% of the
average daily net assets of each Fund for the first $50 million in assets, 0.10%
for the next $50 million in assets and 0.05% thereafter, subject to an annual
minimum of $25,000. Like the Adviser, FAS, in its sole discretion, may waive all
or any portion of its fees.
FAS is located at Two Portland Square, Portland, Maine 04101. As of the date
hereof, FAS manages and administers registered investment companies and
collective investment funds with assets of approximately $30 billion.
Forum Accounting Services, LLC ("FAcS"), an affiliate of FAS, provides fund
accounting services to each Fund pursuant to a Fund Accounting Agreement with
the Trust. For its services, FAcS receives a fee at an annual rate of $36,000
for each Fund plus $12,000 for each additional class and certain surcharges
based upon the amount and type of a Fund's portfolio transactions and positions.
DISTRIBUTOR
Pursuant to a Distribution Agreement with the Trust, Forum Financial Services,
Inc. ("FFSI") acts as distributor of the Funds' shares. FFSI acts as the agent
of the Trust in connection with the offering of shares of the Funds. FFSI
receives no compensation for its services under the Distribution Agreement. FFSI
may enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares. FFSI 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.
FFSI, located at Two Portland Square, Portland, Maine 04101, is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
TRANSFER AGENT
The Trust has entered into a Transfer Agency Agreement with Forum Shareholder
Services, LLC ("FSS") pursuant to which FSS acts as the Funds' transfer agent
and dividend disbursing agent. FSS 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, FSS 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 the Fund, the Trust pays for all of its expenses.
The Adviser, FAS and FSS, 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 Funds
(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% of the average daily net assets of the
Funds.
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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Thanksgiving and Christmas. Each
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.
Each 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 FSS of
the redemption order in proper form (and any supporting documentation which FSS
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 FSS 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 $1,000,000 minimum for initial investments in a
Fund. There is no minimum for subsequent investments. 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. FSS 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 FSS.
BANK WIRE. To make an initial investment in a Fund using the fedwire system for
transmittal of money between banks, you should first telephone FSS 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 Shareholder Services,
LLC
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 the
Fund's procedures, may have the 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 $1,000,000 and there
is no minimum subsequent automatic investment. 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 of the specified Fund at the
net asset value per share next determined after payment is received by the
Trust.
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 FSS 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. 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 FSS 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 FSS 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 FSS will employ reasonable procedures to confirm that
such instructions are genuine. Shareholders must provide FSS 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 FSS
may employ other procedures such as recording certain transactions. If such
procedures are followed, neither FSS 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 FSS by telephone, you may mail or
hand-deliver your request to FSS at Two Portland Square, Portland, Maine 04101.
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 FSS 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 FSS 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 the 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 FSS at (800) 844-8258. The Trust and FSS are not
responsible for the authenticity of telephone instructions or losses, if any,
resulting from unauthorized telephone exchange requests. The Trust employs
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.
DIVIDENDS AND TAX MATTERS
DIVIDENDS
FOR THE SMALL CAP VALUE FUND, MID CAP VALUE FUND AND VALUE FUND, Dividends
representing the net investment income, if any, are declared and paid annually
by each Fund. 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 the Fund out of its net investment income (including any
realized net short-term capital gain) are taxable to shareholders as ordinary
income. Two different tax rates apply to net capital gain -- that is, the excess
of net gain from capital assets held for more than one year over net losses from
capital assets held for not more than one year. One rate (generally 28%) applies
to net gain on capital assets held for more than one year but not more than 18
months and a second rate (generally 20%) applies to the balance of such net
capital gains. Distributions of net capital gain will be taxable to shareholders
as such, regardless of how long a shareholder has held shares in the Fund.
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.
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 the 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 $0.001 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 FSS for
more information on either share class. Sales personnel of broker-dealers and
other financial institutions selling the Funds' shares may receive different
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 matters that affect the
particular class of shares. 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.
<PAGE>
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SMALL CAP VALUE FUND
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MID CAP VALUE FUND
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LARGE CAP VALUE FUND
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VALUE FUND
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- ----------------------------------------------------------- --------------------
Fund Information: Account Information and
Two Portland Square Shareholder Services:
Portland, Maine 04101
(800) CRM-2883 Forum Shareholder Services, LLC
P.O. Box 446
Investment Adviser: Portland, Maine 04112
Cramer Rosenthal McGlynn, LLC (207) 879-8910
707 Westchester Avenue (800) 844-8258
White Plains, New York 10604
- ----------------------------------------------------------- -------------------
STATEMENT OF ADDITIONAL INFORMATION
XXXXXXXXX, 1998
The CRM Funds (the "Trust") is a registered open-end investment
company. This Statement of Additional Information ("SAI") supplements the
Prospectuses dated XXXXXXX, 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 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
<TABLE>
<S> <C> <C>
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
</TABLE>
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 Cramer Rosenthal McGlynn,
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.
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
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.
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 (1) more
than 50% of the outstanding shares of a Fund or (2) 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.
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.
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(R) Index, the Russell 2000(R) Index,
the Russell 2500(R) 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.
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)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 37.14%. The Small Cap Value Fund
commenced operations on October 3, 1995. The Fund's average annual total return
for the period since inception is 37.09%.
OTHER INFORMATION
A Fund may include other information in its advertisements including,
but not limited to, (1) 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; (2) 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; (3) 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; (4) information regarding the
background, experience or areas of expertise of a Fund's trustees; (5) 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,
(6) 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 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.
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, Vice President, 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.
Sara Morris, Assistant Treasurer
Managing Director, Forum Administrative Services, LLC (and its
predecessors in interest) with which she has been associated since
1994. Prior thereto, from 1991 to 1994 Ms. Clark was Controller of
Wright Express Corporation (a national credit card company) and for six
years prior thereto was employed at Deloitte & Touche LLP as an
accountant. Ms. Clark is also an officer of various registered
investment companies for which Forum Financial Services, Inc. serves as
manager, administrator and/or distributor. She is 33 years older. Her
address is Two Portland Square, Portland, Maine 04101.
Pamela J. Wheaton, Assistant Treasurer.
Senior Manager, Tax and Compliance, Forum Administrative Services, LLC (and its
predecessors in interest). Prior to serving as a Senior Manager with FAS,
Ms. Wheaton was a Fund Accounting Manager at Forum Financial Corp. with
which she has been associated since 1989. She is 38 years older. Her
address is Two Portland Square, Portland, Maine 04101.
Max Berueffy, Assistant Secretary.
Counsel, Forum Administrative Services, LLC (and its predecssors in interest)
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 46 years old. His address
is Two Portland Square, Portland, Maine 04101.
Rebecca Hackmann, Assistant Secretary.
Fund Administrator, Forum Administrative Services, LLC, with which she has been
associated since October 1997. Prior to that Ms. Hackmann was the Central
Services Coordinator for Edward D. Jones & Company in Mississauga, Ontario.
From September 1992 through August 1996 Ms. Hackmann was employed by Edward
D. Jones & Company in St. Louis, Missouri as a Team Leader. Ms. Hackmann is
an officer of various registered investment companies for which Forum
Administrative Services, LLC serves as manager or administrator. She is 28
years old. Her address is Two Portland Square, Portland, Maine 04101.
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.
<TABLE>
<S> <C> <C> <C> <C>
Name of Person Aggregate Pension or Estimated Annual Total Compensation
Compensationfrom Retirement Benefits Benefits upon from Trust and
TrustExpenses Accrued as Retirement Fund Complex
Part of Fund to Trustees
- ------------------------------- -------------------- --------------------- -------------------- ---------------------
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
</TABLE>
THE INVESTMENT ADVISER
The Funds' investment adviser, Cramer Rosenthal McGlynn, 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, the Adviser
may also act and be compensated as investment manager for its clients with
respect to assets which are invested in 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 the Trust and the Adviser, the amount of the fee waived by the
Adviser and the actual fee received by the Adviser, respectively, for the fiscal
years ended September 30, 1996 and 1997, were as follows:
FEE PAYABLE FEE WAIVED BY ADVISER FEE RECEIVED BY ADVISER
1996 $173,105 $39,802 $132,303
1997 $635,864 $0 $635,864
ADMINISTRATOR
Forum Administrative Services, LLC ("FAS") acts as administrator to the
Trust pursuant to an Administration Agreement with the Trust. As administrator,
FAS 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 FAS 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 FAS's duties or by reason of
reckless disregard of its obligations and duties under the Administration
Agreement.
At the request of the Board, FAS 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 FAS, the Adviser, or their affiliates.
Prior to December 17, 1997, Forum Financial Services, Inc. ("FFSI"), an
affiliate of FAS provided administrative services to the Trust pursuant to an
administration agreement, the material terms of which were the same as the
current Administration Agreement. The dollar amount of the fees payable under
the Administration Agreement between the Trust and FFSI, the amount of the fee
waived by FFSI and the actual fee received by FFSI, respectively, for the fiscal
years ended September 30, 1996 and 1997, were as follows:
FEE PAYABLE FEE WAIVED BY FFSI FEE RECEIVED BY FFSI
1996 $40,000 $15,579 $24,421
1997 $127,173 $0 $127,173
DISTRIBUTOR
Forum Financial Services, Inc. is 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 (1) are not parties to the Distribution Agreement, (2) are
not interested persons of any such party or of the Trust and (3) 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 FFSI are
directed to the Trust for acceptance and are not binding on the Trust until
accepted by it. FFSI 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 FFSI 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 FFSI'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 FFSI on
60 days' written notice. The Distribution Agreement will automatically terminate
in the event of its assignment.
FFSI 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.
TRANSFER AGENT
Forum Shareholder Services, LLC (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 $24,000 plus $12,000 per additional class and (1) with
respect to Institutional Shares, $120 per account or (2) with respect to
Investor Shares 0.10% of the average net assets attributable to Investor Shares
and $30.00 per account.
The dollar amount of the fees payable under the Transfer Agency
Agreement between the Trust 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 years ended September 30, 1996 and 1997, were as follows:
FEES PAYABLE FEES WAIVED FEES RECEIVED
OR REIMBURSED
1996 $20,413 0 $20,413
1997 $39,437 $0 $39,437
FUND ACCOUNTANT
Pursuant to a Fund Accounting Agreement between the Trust and Forum
Accounting Services, LLC ("FAcS"), FAcS provides each Fund with portfolio
accounting, including the calculation of a Fund's net asset value. FAcS receives
a fee at an annual rate of $36,000 per Fund plus $12,000 for each additional
class and certain surcharges based upon the amount and type of a Fund's
portfolio transactions and positions. Prior to January 2, 1998, the Transfer
Agent provided each Fund with portfolio accounting services. For these services,
the Transfer Agent received 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 Fund Accounting
Agreement, the amount of the fees waived and the actual fees received for the
fiscal years ended September 30, 1996 and 1997, were as follows:
FEES PAYABLE FEES WAIVED FEES RECEIVED
OR REIMBURSED
1996 $39,000 0 $39,000
1997 $41,500 0 $41,500
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 employees who are not employees of the
Adviser, FAS 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 (1) to a Fund
or (2) 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,
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.
The Funds contemplate 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 FFSI. 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 FSS'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 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 (1) 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, (2) 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 (3)
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 (1) are not restricted as to transfer either by
law or liquidity of market and (2) 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 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 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.
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.
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.
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 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 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"), BankBoston (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.
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. FAS
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;
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 FUNDS
As of June 30, 1998, the amount of shares owned by all officers and trustees of
the Trust, as a group, was less than 1.00% of the Funds' outstanding shares.
Also as of that date, the shareholders listed below owned or owned of record
more than 5% of the Funds. From time to time, certain shareholders may own a
large percentage of the shares of a Fund. Accordingly, those shareholders may
be able to greatly affect (if not determine) the outcome of a shareholder vote.
PERCENTAGE OF FUND
SHARES OWNED
SHAREHOLDER
SMALL CAP VALUE FUND
Church Farm School, Inc. 15.89%
P.O. Box 2000
Paoli, PA 19301
LaSalle University 8.58%
1900 West Olney Avenue
Philadelphia, PA 19141
The Cemala Foundation, Inc. 8.04%
122 North Elm Street
Ste. 816
Greensboro, NC 27401-2842
Rosewood Ventures LTD. 6.94%
c/o Chase Manhattan Bank
1211 Avenue of the Americas
H.A.M. Division 35th Floor
New York, NY 10036
The Jacob & Hilda Blaustein Foundation, Inc. 6.03%
Blaustein Building
P.O. Box 238
Baltimore, MD 21203
Northern Trust Co. 5.73%
P.O. Box 92956
Chicago, IL 60675
Long Island University 5.05%
700 Northern Blvd.
Brookville, NY 11548
Texas A&M University 5.46%
P.O. Drawer L-1
College Station, TX 77844
American Express Trust Company 5.13%
P.O. Box 534
Minneapolis, MN 55440-0534
Donaldson, Lufkin & Jenrette Sec. Corp. 6.36%
Mutual Funds Department, 5th Floor
P.O. Box 2052
Jersey City, NJ 07303
MID CAP VALUE FUND
Pell Rudman Trust Co. 64.89%
100 Federal Street, 37th Floor
Boston, MA 02110
Gerald B. Cramer 9.32%
1330 Journeys End Road
Croton-on-Hudson, NY 10520
Ronald McGlynn 9.32%
120 Whitehall Blvd.
Garden City, NY 11530
VALUE FUND
Robert & Lois Pergament Foundation 6.68%
10 Old Country Road
Carle Place, NY 11514
Gerald B.Cramer 5.61%
1330 Journeys End Road
Croton-on-Hudson, NY 10520
Ronald McGlynn 5.61%
120 Whitehall Blvd.
Garden City, NY 11530
Syracuse University 5.01%
Skytop Office Building
Syracuse, NY 13244-5300
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.
<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.
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.
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.
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.
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.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Prospectus: Financial Highlights
Statement of Additional Information: Audited financial
statements for the year ended September 30, 1997 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 were filed with the Securities
and Exchange Commission via EDGAR for Small Cap Value Fund on November
21, 1997, accession number 0001047469-97-005751 pursuant to Rule 30b2-1
under the Investment Company Act of 1940, as amended, and incorporated
herein by reference.
(b) Exhibits
(1) Copy of Trust Instrument (see Note 1).
(2) Copy of Bylaws (see Note 1).
(3) Not Applicable.
(4) Not Applicable.
(5) Investment Advisory Agreement between Registrant and Cramer
Rosenthal McGlynn, LLC dated as of January 1, 1998 (filed
herewith).
(6) Distribution Agreement between Registrant and Forum Financial
Services, Inc. (see Note 3).
(7) Not Applicable.
(8) Custodian Agreement (see Note 3).
(9) (a) Administration Agreement between Registrant and
Forum Administrative Services, LLC dated as of
January 1, 1998 (filed herewith).
(b) Transfer Agency Agreement between Registrant and
Forum Financial Services, LLC dated
as of January 1, 1998 (filed herewith).
(c) Fund Accounting Agreement to be between Registrant
and Forum Accounting Services, LLC dated as of
January 1, 1998 (filed herewith).
(10) (a) Opinion of Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel (see Note 3).
(b) Opinion of Morris, Nichols, Arsht & Tunnell (see Note
3).
(11) Consent of Independent Auditors (to be filed by Amendment)
(12) Not Applicable.
(13) Form of Investment Representation Letter (see Note 3).
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
(17) Financial Data Schedules (to be filed by amendment).
(18) Multiclass (Rule 18f-3) adopted by the Trust (filed herewith).
Other Exhibits:
(A) Power of Attorney of Fred M. Filoon (see note 3).
(B) Power of Attorney of John E. Appelt (see note 3).
(C) Power of Attorney of Louis Klein Jr. (see note 3).
(D) Power of Attorney of Clement C. Moore, II(see note 3).
(E) Power of Attorney of Eugene A. Trainor, III (see note 3).
- --------------
Notes:
(1) Exhibit incorporated by reference as filed on PEA No. 1 via
EDGAR on April 30, 1996, accession
number 0000912057-96-007562.
(2) Exhibit incorporated by reference as filed on PEA No. 4
via EDGAR on December 31, 1997,
accession number 0001004402-97-000285.
(3) Exhibit incorporated by reference as filed on PEA No. 3
via EDGAR on October 17, 1997,
accession number 0001047469-97-001104
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF JULY 1, 1998.
<TABLE>
<S> <C>
------------------------------------------------------------------------- --------------------------------
Title of Class Number of Recordholders
as of July 1, 1998
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
The CRM Small Cap Value Fund 1,311
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
The CRM Mid Cap Value Fund 30
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
The CRM Large Cap Value Fund 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
The CRM Value Fund 104
------------------------------------------------------------------------- --------------------------------
</TABLE>
<PAGE>
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.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
The description of Cramer Rosenthal McGlynn, 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 Cramer Rosenthal McGlynn, LLC, is 707 Westchester
Avenue, White Plains, New York 10604. The following are the partners and
executive officers of Cramer Rosenthal McGlynn, LLC, including any business
connections of a substantial nature which they have had in the past two years.
Unless otherwise indicated, the address of any other business connection is also
707 Westchester Avenue, White Plains, New York 10604.
<TABLE>
<S> <C> <C>
- --------------------------------------- --------------------------------------- -------------------------------------
Name Title Business Connection
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Gerald Bertram Cramer Chairman Cramer Rosenthal McGlynn, LLC.
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Edward John Rosenthal Vice Chairman and Treasurer Cramer Rosenthal McGlynn, LLC.
--------------------------------------- -------------------------------------
Executive Vice President CRM Management, Inc.
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Ronald Howard McGlynn President Cramer Rosenthal McGlynn, LLC.
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Jay Brian Abramson Executive Vice President Cramer Rosenthal McGlynn, LLC
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Fred Marden Filoon Senior Vice President Cramer Rosenthal McGlynn,LLC.
--------------------------------------- -------------------------------------
President The CRM Funds
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Arthur Jay Pergament Senior Vice President Cramer Rosenthal McGlynn, LLC.
- --------------------------------------- --------------------------------------- -------------------------------------
- --------------------------------------- --------------------------------------- -------------------------------------
Eugene Anthony Trainor, III Treasurer and Assistant Secretary Cramer Rosenthal McGlynn,LLC.
--------------------------------------- -------------------------------------
Treasurer, Vice President, Secretary The CRM Funds
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
Chief Financial Officer and Controller Grotech Capital Group, Inc.
Timonium, MD
- --------------------------------------- --------------------------------------- -------------------------------------
</TABLE>
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
Administrative Services, LLC, 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 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 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 July, 1998.
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 July, 1998.
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
-4-
INDEX TO EXHIBITS
EXHIBIT
(5) Investment Advisory Agreement between Registrant and Cramer Rosenthal
McGlynn, LLC dated as of January 1, 1998
(9)(a) Administration Agreement between Registrant and Forum Administrative
Services, LLC dated as of January 1, 1998
(9)(b) Transfer Agency Agreement between Registrant and Forum Financial
Services, LLC dated as of January 1, 1998
(9)(c) Fund Accounting Agreement to be between Registrant and Forum Accounting
Services, LLC dated as of January 1, 1998
(18) Multiclass (Rule 18f-3) Plan adopted by the Trust
<PAGE>
EXHIBIT (5)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE CRM FUNDS
AND
CRAMER ROSENTHAL MCGLYNN, LLC
THIS AGREEMENT is made as of the 1st day of January, 1998, 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 each of the
funds listed in Exhibit A (individually a "Fund" and collectively the "Funds"),
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 Funds, 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 Funds
and, subject to the supervision of the Trust's Board of Trustees, to direct the
investments of the Funds in accordance with the investment objectives, policies,
and limitations provided in each 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 Funds
and approving this Agreement;
(b) The Trust's Trust Instrument and all amendments thereto;
<PAGE>
(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, .001
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) Each Fund's most recent prospectus and statement of
additional information and all amendments and supplements thereto (the
"Prospectuses").
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 each Fund, the
Adviser is authorized, in its discretion and without prior consultation with the
Trust, 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 each 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 Fund 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 each 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 Funds
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 Funds 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 a 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 Funds to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to each Fund.
- 24 -
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Trust or the Funds.
SECTION 4. COMPENSATION. As compensation for the services which the
Adviser is to provide or cause to be provided pursuant to Paragraph 3, each Fund
shall pay to the Adviser out of Fund assets an annual fee equal to the amount
opposite its name in Exhibit A of the average daily net asset value of such 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 a
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 a Fund to an extent which would result in the Fund'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. Each 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 a 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 Trustees of the Trust; (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 Fund; (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 each
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 Trust for providing additional
services to the Funds and the Trust which are not covered by this Agreement, and
to receive additional compensation for such services.
SECTION 8. STANDARD OF CARE. 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 Funds or the Trust or to any shareholder of a 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 9. TERM OF AGREEMENT.
(a) The Trust represents that this Agreement as it pertains to
each 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 each 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 each 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 a 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 a 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 a 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 a Fund on sixty days'
written notice to the Trust.
(b) 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.
SECTION 10. 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 11. NOTICES. All notices and other communications, including
Written Instructions (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 12. 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 Funds' 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 13. FURTHER ACTIONS. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
SECTION 14. 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 15. 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 16. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York.
SECTION 17. 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 Fund, 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,
each of the Funds listed in Exhibit A LLC
By:/s/ Fred M. Filoon By:/s/ Eugene A Trainor III
Name:Fred M. Filoon Name:Eugene A. Trainor
Title:President Title:SVP, CFO
<PAGE>
EXHIBIT A
FEE AS A % OF AVERAGE
NAME OF FUND DAILY NET ASSET VALUE
Small Cap Value Fund 0.75%
Large Cap Value Fund 0.75%
Mid Cap Value Fund 0.75%
Value Fund 0.75%
<PAGE>
EXHIBIT (9)(A)
THE CRM FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made the 1st day of January, 1998, 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
Administrative Services, LLC (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.
(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;
(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.
(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 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 Exchane
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 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.
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 ADMINISTRATIVE SERVICES, LLC
/s/ John Y. Keffer
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF JANUARY 2, 1998
The CRM Small Cap Value Fund
The CRM Mid Cap Value Fund
The CRM Value Fund
SCHEDULE B
ADMINISTRATION FEES
Fee as a % of the
Annual Average Daily
NET ASSETS OF EACH PORTFOLIO
0.15% first $50 million
0.10% next $50 million
0.05% thereafter subject to $25,000 annual minimum
<PAGE>
EXHIBIT (9)(B)
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
AGREEMENT made the 1st day of January, 1998 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 Shareholder Services, LLC ("FSS"), 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 FSS 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 FSS 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 FSS do hereby agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints FSS as its transfer agent and FSS 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 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 FSS or any
successor thereto that is responsible for calculating a Series' 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 FSS in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed in good faith by
FSS 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 FSS 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 at the request of a person
or persons reasonably believed in good faith by FSS 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 FSS a supply of blank Share Certificates of
each Class of each Series and, from time to time, will renew such supply upon
FSS'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 FSS, shall bear the Trust's seal or a facsimile
thereof.
SECTION 4. ISSUANCE OF SHARES.
FSS 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 FSS
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 FSS. In registering transfers of Shares,
FSS may rely upon the Uniform Commercial Code or any other statutes that, in the
opinion of FSS's counsel, protect FSS 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, FSS 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 FSS upon surrender of outstanding Share Certificates in the form
deemed by FSS to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. FSS shall forward Share Certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means FSS deems equally reliable
and expeditious. While in transit to the addressee, all deliveries of Share
Certificates shall be insured as FSS deems appropriate. FSS shall not mail Share
Certificates in "negotiable" form unless requested in writing by the Trust and
fully indemnified by the Trust to FSS's satisfaction. FSS may issue new Share
Certificates in place of those lost, destroyed or stolen, upon receiving
indemnity satisfactory to FSS, and may issue new Share Certificates in exchange
for, and upon surrender of, mutilated Share Certificates as FSS deems
appropriate. Unless otherwise directed by the Trust, FSS 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 FSS approval, adoption or ratification of such action as may be
required by law or FSS. All share certificates submitted for transfer or
replacement shall be marked "canceled" or destroyed by FSS 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.
FSS 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. FSS 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.
FSS 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.
FSS shall issue Share Certificates for Shares only upon receipt of a
written request from a Shareholder. If Shares are purchased without such
request, FSS 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, FSS 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 FSS.
In performing its duties hereunder, FSS 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
FSS. FSS 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 FSS. The Trust agrees to indemnify and hold harmless FSS from and
against any and 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.
FSS shall notify the Trust of any request or demand for the inspection
of the Trust's share records. FSS shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that FSS may grant the
inspection without such instructions if it is advised by counsel to FSS that
failure to do so will result in liability to FSS.
SECTION 11. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Shares shall be issued to investors at the net asset value next
determined after FSS receives a completed purchase order.
(b) A purchase order shall be complete when FSS 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 FSS
receives the completed purchase order;
(ii) in the case of Series that are money market
funds, on the same Fund Business Day as FSS 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 FSS 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;
(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, FSS 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. FSS 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 FSS on that day
prior to the Valuation Time for the Series. FSS 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 FSS.
(b) As necessary but no more frequently than once daily (unless a more
frequent basis is agreed to by FSS), FSS shall issue the proper number of Shares
to be purchased pursuant to subsection (a) above. Promptly thereafter FSS shall
send written confirmation of such purchase to the Custodian and the Trust or
Fund Accountant.
(c) FSS shall also credit each Shareholder's separate account with the
number of Shares purchased by such Shareholder. FSS 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, FSS 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, FSS 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 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, FSS 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 FSS by Written Instruction to effect any redemptions upon provision of
an indemnity satisfactory in form to FSS.
SECTION 14. REDEMPTION PROCEEDS.
The proceeds of redemption shall be remitted by FSS 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 FSS. 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 FSS with
Written Instructions concerning the time within which such requests may be
honored. The authority of FSS to perform its responsibilities under Sections 12
and 13 shall be suspended if FSS 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
FSS 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 FSS the total amount of the dividend or
distribution currently payable. FSS 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 FSS; provided, however, that if a Shareholder elects to receive
dividends and distributions in cash, FSS 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 FSS.
SECTION 16. BOOKS AND RECORDS.
(a) The Trust shall deliver or cause to be delivered over to FSS (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 FSS under this Agreement
(collectively referred to as the "Materials"). The Trust shall indemnify and
hold harmless FSS 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 FSS to knowledgeably perform its
functions.
(b) FSS 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 FSS 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 FSS'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 FSS's obligations hereunder, FSS 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 FSS under this Agreement.
SECTION 17. COOPERATION WITH INDEPENDENT ACCOUNTANTS.
FSS 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, FSS 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. FSS shall answer certain Shareholder inquiries related to their share
accounts and other correspondence requiring an answer from the Trust.
SECTION 19. SERVICE DAYS.
Nothing contained in this Agreement is intended to or shall require
FSS, 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 FSS 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 FSS 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) FSS 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; FSS; or Forum Financial Services,
Inc. The Trust shall reimburse FSS 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, FSS 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 FSS
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) FSS 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 FSS 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
FSS's expenses incurred in connection with the services contemplated by this
Agreement, and FSS shall be entitled to no additional expense reimbursement or
other payments of any nature.
SECTION 21. TAXES.
FSS 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 FSS for
compensation received by it hereunder.
SECTION 22. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) FSS shall use its best judgment and efforts in rendering the
services described in this agreement. FSS shall not be liable to the Trust for
any action or inaction of FSS 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 FSS by an officer of the Trust duly authorized.
FSS 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 FSS, 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 FSS's actions or omissions that are consistent with the standard
of care set forth in paragraph (a) of this section.
(c) FSS 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 FSS'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, FSS 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 FSS 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 FSS.
SECTION 24. ADOPTION OF PROCEDURES.
The parties hereto may adopt procedures as may be appropriate or
practical under the circumstances, and FSS 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 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 FSS 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, FSS 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 FSS shall be given as follows until further notice:
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101
SECTION 28. REPRESENTATIONS AND WARRANTIES.
The Trust represents and warrants to FSS 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. FSS represents and warrants
to the Trust that the execution and delivery of this Agreement by the
undersigned officer of FSS 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.
(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 FSS or (ii) by FSS 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 FSS,
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 FSS of all
fees owed through the effective termination date, and reimbursement for
reasonable charges and disbursements (as described in Section 20), FSS shall
promptly transfer to the successor transfer agent the original or copies of all
books and records maintained by FSS 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 FSS
continues to perform any of the services contemplated by this Agreement after
termination of this Agreement (as agreed to by the Trust and FSS), the
provisions of Sections 20 and 21 hereof shall continue in full force and effect.
SECTION 30. CONFIDENTIALITY
FSS 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 FSS 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 FSS 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.
(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 FSS, or by FSS, 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 SHAREHOLDER SERVICES, LLC
/s/ John Y. Keffer
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF JANUARY 2, 1998
The CRM Small Cap Value Fund
The CRM Mid Cap Value Fund
The CRM Value Fund
THE CRM FUNDS
TRANSFER AGENCY AGREEMENT
SCHEDULE B
FEES
For its services hereunder, FSS will receive fees calculated as
follows: (i) a fee of $24,000 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 Investor Class account or $120 per Institutional
Class account; such fees to be paid monthly and computed as of the last business
day of the prior month; (iii) a fee of 0.10% of average net assets attributable
to Investor shares (iv) for series with multiple share classes, an additional
fee of $12,000 per additional class per year; and (v) reasonable out-of-pocket
expenses billed at cost.
The rates set forth above shall remain fixed through December 31, 1998.
On January 1, 1999, 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 as of the 1st day of January, 1998, by and between The
CRM Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Accounting Services, Limited Liability Company, a Delaware limited liability
company with its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
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 offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum 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 Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and
(iv) all procedures adopted by the Trust with respect to the Funds (i.e.,
repurchase agreement procedures), and shall promptly furnish Forum with all
amendments of or supplements to the foregoing. The Trust shall deliver to Forum
a certified copy of the resolution of the Board of Trustees of the Trust (the
"Board") appointing Forum and authorizing the execution and delivery of this
Agreement.
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's administrator, Forum Administrative
Services, Inc. (the "Administrator"),may from time to time adopt such
procedures as they agree upon to implement the terms of this Section. With
respect to each Fund, Forum shall perform the following services:
(i) calculate the net asset value per share with the
frequency prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security 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;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (unless otherwise specified in or
in accordance with this Agreement, based upon the use of outside
services normally used and contracted for this purpose by Forum 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 the Trust's instructions in the case of all other
assets) or (B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of those
assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) 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;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser, as applicable, and maintain individual ledgers and historical
tax lots for each security; and
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof,
pursuant to Rule 31a-1 under the 1940 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;
(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 those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum 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 Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(c)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to
the Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(d) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Portfolio to act in contravention of a Portfolio's
Offering Document or any provision of the 1940 Act. Except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references to any law in this Agreement
shall be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) 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. Should the Trust exercise
its right to terminate this Agreement, the Trust, on behalf of the applicable
Fund, shall reimburse Forum for all out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that 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 Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust 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.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY. Forum 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 Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(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
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons 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.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum 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 Fund to which
Forum'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 Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, 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.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) 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.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) 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.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
THE CRM FUNDS
By: /s/ Fred M. Filoon
Fred M. Filoon
President
FORUM ACCOUNTING SERVICES, LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
John Y. Keffer
President
<PAGE>
THE CRM FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
AS OF JANUARY 2, 1998
The CRM Small Cap Value Fund
The CRM Mid Cap Value Fund
The CRM Value Fund
CLASSES OF THE TRUST
AS OF JANUARY 2, 1998
Institutional
Investor
<PAGE>
THE CRM FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
<TABLE>
<S> <C>
(I) BASE FEE
A. Standard Fee
Fee per Fund................................................................... $3,000/month
Fee for each additional Class of the Fund above one............................ $1,000/month
B. Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million................... $500/month
Portfolios with asset levels exceeding $250 million................... $1000/month
Portfolios with asset levels exceeding $500 million................... $1,500/month
Portfolios with asset levels exceeding $1,000 million................. $2,000/month
(ii) Portfolios requiring international custody............................ $1,000/month
(iii) Portfolios with more than 30 international positions ................. $1,000/month
(iv) Tax free money market Funds........................................... $1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities............................................... $1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities............................................... $2,000/month
(vii) Portfolios with more than 100 security positions...................... $1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater............................................................ $1,000/month
C. Standard Fee per Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund.......................................................... $1,000/month
Standard Fee per Fund that invests inone or more instruments
in addition to the fund in which it invests.................................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Additional surcharges listed above do not apply
D. Standard Fee per Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(G) of the 1940 Act or in a similar structure)
Standard Fee per Fund.......................................................... $1,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Plus additional surcharges listed above if the Fund invests in
securities other than investment companies (calculated as if
the securities were the Fund's only assets)
</TABLE>
Note 1: Surcharges are determined based upon the total assets,
security positions or other factors 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 SEC
Form N-1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1998. On January 1, 1999, and on each successive January 1, the
rates may be adjusted automatically by Forum without action of the
Trust 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. Forum shall notify the Trust each year of the new
rates, if applicable.
(II) START-UP FEE
Fund Start-Up Fee ...............................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
TAX SERVICES. Preparation of Federal income and excise tax
returns and preparation, execution and filing of state income
tax returns, including any extensions or amendments
Standard Fee............... $3,000/fiscal period
Fee per Gateway Fund (a Fund described
in (i)(C) or (D) above).... $1,500/fiscal period
Fee per Gateway Fund (a Fund described in (i)(C) or (D) above)
that invests in more than one instrument in addition to the
fund(s) in which
it invests................. $3,000/fiscal period
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable
Fund.
<PAGE>
EXHIBIT (18)
THE CRM FUNDS
MULTICLASS (RULE 18F-3) PLAN
December 17, 1997
This Plan is adopted by The CRM Funds (the "Trust") pursuant to Rule
18f-3 under the Investment Company Act of 1940 (the "Act") in order to document
the separate arrangements and expense allocations of each class of shares of
beneficial interest (the "Classes") of each of the investment portfolios of the
Trust (the "Funds") and the related exchange privileges.
SECTION 1. CLASS DESIGNATIONS
The types of Classes of the Funds are: "Investor Shares" and
"Institutional Shares." Each Class has a different arrangement for shareholder
services or distribution or both, as follows:
(a) INVESTOR SHARES. Are offered with no sales charges or distribution
expenses, but pay shareholder servicing fees. The investment minimum is $10,000
subject to reduction by Forum Administrative Services, LLC ("Forum"), the
Trust's administrator.
(b) INSTITUTIONAL SHARES. Are offered to large institutional investors
with no sales charges or distribution expenses. The investment minimum for all
purchases is $1,000,000, subject to reduction by Forum.
SECTION 2. VOTING
Each Class shall have exclusive voting rights on any matter submitted
to a shareholder vote that relates solely to the Class' arrangement for
shareholder services or distribution and each Class shall have separate voting
rights with respect to any matter submitted to a shareholder vote in which the
interests of one Class differ from the interests of another Class.
SECTION 3. EXPENSES
(a) SHAREHOLDER SERVICE EXPENSES. All expenses incurred under a
Class's shareholder service plan shall be allocated to that Class.
(b) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b) "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:
(i) Administration and transfer agent fees and expenses; (ii)
Litigation, legal and audit fees; (iii) State and foreign securities
registration fees; (iv) Shareholder report expenses; (v) Trustee fees
and expenses; (vi) Preparation, printing and related fees and expenses
for proxy statements and, with respect tO current shareholders,
prospectuses and statements of additional information; (vii)
Expenses incurred in connection with shareholder meetings; and
(viii) Subject to approval by the Trustees, such other fees and
expenses as Forum, pursuant to Rule 18f-3, deems to be allocable to
specified Classes.
(c) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely by
the Class to which they relate. Item (i) of Section 3(c) in its entirety is
incurred by the Funds on a Class by Class basis and, accordingly, is wholly
allocated to specific Classes. All fees of a Fund's investment adviser AND
custodian [and manager] and all portfolio based fees of a Fund's fund accountant
are incurred by a Fund and not the individual Classes of the Fund. All other
items in Section 3(c) are allocated to a specific Class to the extent they are
attributable to the Classes in different amounts.
SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS
(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than
Class Expenses) incurred by the Trust on behalf of a Fund shall be allocated to
that Fund and expenses (other than Class Expenses) incurred by the Trust on
behalf of more than one Fund shall be allocated among the Funds that incurred
the expenses based on the net asset values of the Funds in relation to the net
asset value of all Funds to which the expense relates.
(b) OTHER ALLOCATIONS. Income, realized and unrealized capital gains
and losses and expenses other than Class Expenses related to a Fund shall be
allocated to each class of the Fund based on the net asset value of the Class
(excluding the value of subscriptions receivable) in relation to the net asset
value of the Fund.
(c) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's various service agreements.
SECTION 5. EXCHANGES
Shareholders of a Class may exchange their shares for shares of the
same Class of any other Fund in accordance with Section 11(a) of the Act, the
rules thereunder and the requirements of the applicable prospectuses.
<PAGE>
SECTION 6. AMENDMENTS AND BOARD REVIEW
(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan
may be made at any time by Forum.
(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes affected by
the amendment and of the Fund and the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.
(c) BOARD REVIEW. The Board, including a majority of those trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically (i) this Plan for its continuing appropriateness and (ii) any fee
waivers and expense reimbursements to determine that the Funds are in compliance
with Section 4(c).
<PAGE>
