Shareholder Resources / CRM Distributions / FAQs

FAQs

Here are some commonly asked questions concerning CRM Funds distributions. However, the list is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation. Neither CRM Funds nor any of its representatives may give tax or legal advice.

Why may the net asset value of a share decline when a distribution is made?
Throughout the year, securities are sold from the portfolio, some at a profit and some at a loss. The net profit or loss is included in the Net Asset Value (NAV) of a share. When a CRM Fund pays a distribution to its shareholders, the cash used to pay the dividend is withdrawn from the Fund’s assets so that the Fund’s NAV is reduced accordingly.
Does this decline in the net asset value mean my account is worth less?
A distribution does not decrease the value of your account if distributions are reinvested. By reinvesting your distributions, you buy additional shares on the day of the distribution. Because the total number of shares in your account increases in proportion to the value of the distribution, the additional shares compensate for the decline in the price per share resulting from the distribution. If you elected to have distributions paid to you in cash, you would upon receipt of the distribution have the same total value as you did immediately before the distribution; however it’s now in two places, the account and the cash you received.

Here’s an example: Fund ABC has an NAV of $10. The Fund has realized a profit of $0.50 a share during the year from the sale of securities. When the $0.50 profit is paid to shareholders as a distribution, the NAV will decline to $9.50.

You either have more shares that were purchased with the $0.50 distribution, at $9.50 a share, or $0.50 per share paid out directly to you if you did not elect reinvestment of distributions. Look at the two tables that follow showing the before and after value of an account that reinvests distributions and one that has them paid out.
Are fund distributions taxable?
In general, CRM Fund distributions are taxable for most non-retirement accounts and are not currently taxable for retirement accounts (IRAs, etc.). Reinvested dividends and dividends paid in cash are treated similarly. Consult your tax advisor or accountant to determine if your distributions are taxable.
When will I receive my IRS Form 1099-DIV?
IRS Form 1099-DIV is mailed in January and confirms taxable distributions for the previous year. Information on 2006 distributions will be on the Form 1099-DIV mailed in January 2007. A Form 1099-DIV is not generated for some accounts, such as IRA accounts.
I want to invest in one of the CRM Funds, how do I avoid receiving distributions from the CRM Funds?
Only shares you own as of the market close on the Record Date receive the distributions on the Payment Date. In 2005, the Record Date was December 14, 2005, with a Payment Date on December 16, 2003. Any investor owning shares at the close of business on December 14, 2005, was then entitled to the distributions that were paid on December 16, 2003.
When are distributions paid?
Dividends and capital gains are declared and distributed annually. To avoid confusion, all CRM Funds will pay their distributions at the same time. For specific dates, see the previous question.
Why are some of the CRM Funds’ distributions larger than others?
The gains distributed reflect the buying and selling activity of the CRM Funds and valuations of the securities sold during the 12-month period. Depending on market conditions, different capitalization and investment styles may experience varying profit levels from security sales.
Do the funds generally pay dividends, i.e. ordinary income?
Generally they do. The most common income that funds receive includes dividend or interest income. Any net short-term capital gain distributed by The CRM Funds is also taxed to shareholders as ordinary income.
What help can I receive from the IRS?
Many of your tax questions can be answered by a visit to the Internal Revenue Service website or a phone call. To download forms, instructions and publications, you can access the IRS website at www.irs.ustreas.gov. To receive recorded tax information, 24 hours a day, on a variety of federal tax topics, you can call 800.829.4477.

You should consider the investment objectives, risks, charges and expenses of the Funds before investing. You may obtain the prospectus here or by calling 800.276.2883. The Funds are subject to risks, which are described in the prospectus. In particular, when compared to mutual funds that focus on larger capitalization companies, shares of the Funds may be more volatile because of the focus on smaller capitalization companies, which may have more limited product lines and fewer capital resources. The Funds’ value investing strategy also involves risks. Value stocks can perform differently from the market as a whole and can be undervalued by the market for long periods of time. You should read the prospectus carefully before investing.