SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant | |
Filed by a party other than the registrant |X|
Check the appropriate box:
|X| Preliminary proxy statement |_| Confidential, for Use of the
|_| Definitive proxy statement Commission Only |_|
|_| Definitive additional materials (as permitted by Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Fundamental Funds, Inc.
(Name of Registrant as Specified in Its Charter)
Fundamental Portfolio Advisors, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY
FUNDAMENTAL FIXED-INCOME FUND
(Fundamental U.S. Government Strategic Income Fund)
(High-Yield Municipal Bond Series)
(Tax-Free Money Market Series)
THE CALIFORNIA MUNI FUND
FUNDAMENTAL FUNDS, INC.
(New York Muni Fund)
90 Washington Street
New York, New York 10006
PROXY STATEMENT
The enclosed proxy is being solicited on behalf of Fundamental Portfolio
Advisors, Inc. (the "Advisor"), which acts as advisor to (i) the Board of
Trustees of the Fundamental U.S. Government Strategic Income Fund, High-Yield
Municipal Bond Series and Tax-Free Money Market Series of Fundamental
Fixed-Income Fund, (ii) the Board of Trustees of The California Muni Fund, and
(iii) the Board of Directors of Fundamental Funds, Inc. on behalf of its New
York Muni Fund series (each, a "Fund" and, collectively, the "Funds"). The Funds
are each registered open-end investment companies having their executive office
at 90 Washington Street, New York, New York 10006.
The Advisor requests that Shareholders call for a meeting of Shareholders
of the Funds to be held at the earliest possible time as permitted by law as
further described below (the "Meeting"). The proxy is revocable at any time
before it is voted by sending written notice of the revocation to the Funds or
by appearing personally at the Meeting. The Advisor seeks this Proxy to remove
all current independent Board Members and elect the new Board Members identified
below.
A copy of each Fund's Annual Report for the year ended December 31, 1996
and semi-annual report for the six months ended June 30, 1997 (which contain
information pertaining to the Fund) may be obtained, without charge, by calling
the Fund's transfer agent, Firstar Trust Co. at 1-800-225-6864.
This combined Proxy Statement and proxy card are first being mailed to
Shareholders on or about _____ __, 1998.
INTRODUCTION
The Articles of Incorporation, Declarations of Trust, Prospectuses and
undertakings of and by the Funds give Shareholders holding 10% or more of the
Fund's outstanding shares the right to call for a special meeting of
shareholders for any reason, except that the California Muni Fund requires
one-third of the outstanding shares to call a special meeting for all matters
other than the removal of Board Members. Pursuant to those rights, the Advisor
requests that Shareholders vote FOR the proposals indicated below (the
"Proposals"):
For New York Muni Fund only:
1. Amend the Articles of Incorporation so that Board Members may be
removed
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by a majority of votes cast by Shareholders.
For all Funds:
2. Ask the Boards to call a Special Meeting of Shareholders, and to
take all action necessary to cause such Special Meeting to take place;
3. Terminate all plans formed under Rule 12b-1 of the Investment
Company Act of 1940 (the "12b-1 Plans");
4. Remove all current Board Members; and
5. Elect new Board Members.
In addition, to transact such other business as may properly come before
the meeting or any adjournment thereof.
Information about the 12b-1 Plans is provided below in the section entitled
"The 12b-1 Plans".
The Advisor will immediately petition for a special meeting with respect to
each Fund upon receipt of sufficient proxies to make the petition. With respect
to each Fund, in the event that (a) the Advisor holds sufficient Shares and/or
Proxies for Shares and requests a Meeting and (b) the Fund, or any appropriate
officer or director of the Fund, for whatever reason fails to call the Meeting,
then the Advisor, as holder of this proxy, is further empowered to take any such
action as, in the view of the Advisor, may be appropriate under applicable state
law to compel the Fund, or any appropriate officer or director of the Fund, to
cause the Meeting to occur. The cost of any such action, including legal fees,
initially shall be borne by the Advisor, provided, however, that the Advisor
reserves the right to petition the Fund or its Shareholders to reimburse the
Advisor for such costs, including legal fees.
The Advisor has a financial interest in the outcome of the voting. The
Advisor's contract to manage the Funds expires on May 31, 1998, and the Advisor
intends to request any new Board of Directors to allow the Advisor to continue
managing the Funds so long as the Advisor is legally able to do so, or in the
event the Shareholders vote for a new advisor.
Information about the Advisor is provided below in the section entitled
"About the Advisor".
DESCRIPTION OF VOTING
The New York Muni Fund
The New York Muni Fund is governed by its Articles of Incorporation,
Bylaws, Prospectuses and undertakings of and by the Fund, and applicable federal
and state law. Holders of 10% of the outstanding voting shares of the Fund have
the right to call for a special meeting of shareholders for any reason. Such
holders request the Secretary to call a meeting, and the Secretary shall call
such meeting after informing the requesting Shareholders of the estimated cost
of giving notice of such meeting, and receiving such amount from the requesting
Shareholders. The Secretary then gives Shareholders written or printed notice of
meeting not less than ten nor more than 90 days before the meeting date. Should
the Secretary refuse or otherwise be unable to call the requested meeting, the
requesting Shareholders may commence a civil action to compel the occurrence of
the meeting.
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In addition to Shareholders, the President or the Board of Directors may
call a special meeting of shareholders.
A director may serve until removed. Shareholders may only fill vacancies
resulting from the removal of a director; thus, Shareholders must first vote to
remove present directors and then vote in their replacements. A plurality of the
votes cast at a meeting at which a quorum is present is sufficient to elect a
director.
The present Articles of Incorporation only allow a Board Member to be
removed for cause. The Advisor is soliciting this Proxy to, among other things,
amend the Articles of Incorporation so that Board Members may be removed by a
vote of the majority of voting shares.
The Articles of Incorporation and Bylaws allow nine directors. That number
may be increased, up to 15 directors, by the act of a majority of existing
directors. A majority of existing directors may also decrease the number of
directors to a number not less than two, but such decrease shall not affect the
term of office of any director.
The California Muni Fund
The California Muni Fund is governed by its Declaration of Trust, Bylaws,
Prospectuses and undertakings of and by the Fund, and applicable federal and
state law. The holders of one-third of all shares entitled to vote may call a
meeting for any reason. With respect to removing Trustees, however, a meeting
may be called by holders of 10% of the outstanding voting shares. The
Shareholders shall request the Secretary to call the meeting. The Secretary then
gives Shareholders a written or printed notice of meeting not less than ten nor
more than 90 days before the meeting date. Should the Secretary refuse or
otherwise be unable to call the requested meeting, the requesting Shareholders
may commence a civil action to compel the occurrence of the meeting.
In addition, whenever ten or more Shareholders meeting the qualifications
set forth in section 16(c) of the Investment Company Act of 1940, as amended
(the "Investment Company Act") seek the opportunity of furnishing materials to
other Shareholders with a view to obtaining signatures on such a request for a
meeting, the Trustees shall comply with the provisions of section 16(c) with
respect to providing such Shareholders access to the list of the Shareholders of
record or the mailing of such materials to such Shareholders of record.
In addition to Shareholders, the Chairman of the Board of Trustees, the
President, or the Trustees may call a special meeting of shareholders.
There shall be no more than 15 nor less than three Trustees. Within these
limits, the existing Trustees may vote to change the actual number of Trustees.
A Trustee may be removed, with or without cause, by the affirmative vote of
a majority of the outstanding shares present in person or by proxy at the
special meeting, provided that a quorum is present. In addition, a Trustee may
be removed for cause by the vote of two-thirds of the Trustees whose removal is
not proposed.
The power of Trustees to appoint successor Trustees is subject to section
16(a) of the Investment Company Act, which provides that no person may serve as
a Trustee of a Fund unless elected to that office by the holders of the
outstanding voting securities of the Fund. Vacancies occurring between such
meetings may be filled by the Trustees as described above if immediately after
filling such vacancies at least two-thirds of the Trustees then holding office
shall have been elected to such office by the holders of the outstanding shares
of the
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Fund at such special meeting. In the event that at any time less than a majority
of the Trustees were so elected, the Trustees or the Secretary shall forthwith
cause to be held as promptly as possible and in any event within 60 days a
meeting of such holders for the purpose of electing Trustees to fill the
existing vacancies unless the Securities and Exchange Commission (the
"Commission") by order extends such period.
The Fixed-Income Funds
The Fundamental U.S. Government Strategic Income Fund, the High-Yield
Municipal Bond Series and the Tax-Free Money Market Funds (together, the
"Fixed-Income Funds"), are governed by its Declaration of Trust, Bylaws,
Prospectuses and undertakings of and by the Fixed-Income Funds, and applicable
federal and state law. The holders of 10% of the outstanding voting shares or
the Trustees may request the Secretary to call a special meeting of
shareholders. The Secretary then gives Shareholders a written or printed notice
of meeting not less than 15 days before the meeting date. If the Secretary
refuses or neglects for more than two days to call such a special meeting, the
Trustees or the Shareholders so requesting may, in the name of the Secretary,
call the meeting by giving a notice of meeting. In addition to Shareholders, the
Fixed-Income Funds allow the Trustees to call a special meeting.
In addition, whenever ten or more Shareholders meeting the qualifications
set forth in section 16(c) of the Investment Company Act seek the opportunity of
furnishing materials to other Shareholders with a view to obtaining signatures
on such a request for a meeting, the Trustees shall comply with the provisions
of section 16(c) with respect to providing such Shareholders access to the list
of the Shareholders of record or the mailing of such materials to such
Shareholders of record.
There shall be no more than nine nor less than two Trustees. The existing
Trustees determine the actual number of Trustees.
A Trustee may be removed by the action of two-thirds of the remaining
Trustees. A vacancy on the Board of Trustees may be filled by the appointment of
the remaining Trustees.
The power of Trustees to appoint successor Trustees is subject to section
16(a) of the Investment Company Act, which provides that no person may serve as
a Trustee of a Fund unless elected to that office by the holders of the
outstanding voting securities of the Fund. Vacancies occurring between such
meetings may be filled by the Trustees if immediately after filling such
vacancies at least two-thirds of the Trustees then holding office shall have
been elected to such office by the holders of the outstanding shares of the Fund
at such special meeting. In the event that at any time less than a majority of
the Trustees were so elected, the Trustees or the Secretary shall forthwith
cause to be held as promptly as possible and in any event within 60 days a
meeting of such holders for the purpose of electing Trustees to fill the
existing vacancies unless the Commission by order extends such period.
All Funds
Anyone may solicit a proxy for any Fund. Approval of the Proposals requires
the affirmative vote of (i) with respect to the California Muni Fund and New
York Muni Fund, a majority of each Fund's outstanding shares of beneficial
interest/common stock ("Shares"), (ii) with respect to Fundamental U.S.
Government Strategic Income Fund, High-Yield Municipal Bond Series and Tax-Free
Money Market Series, a "majority of the outstanding voting securities," within
the meaning of the Investment Company Act of each Fund. The term "majority of
the outstanding voting securities" is defined under the Investment Company Act
to mean: (a) 67% or more of the outstanding Shares present at the Meeting, if
the holders of
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more than 50% of the outstanding Shares are present or represented by proxy, or
(b) more than 50% of the outstanding Shares of a Fund, whichever is less.
Shareholders of record at the close of business on _______________, 1998
(the "Record Date"), will be entitled to notice of, and to vote at, the Meeting,
including any adjournment thereof. As of the Record Date, the Funds had the
number of Shares outstanding set forth below, each Share being entitled to one
vote:
Total Shares
Fund Outstanding
---- ------------
Fundamental U.S. Government Strategic Income Fund 6,901,124.342
High-Yield Municipal Bond Series 339,007.758
Tax-Free Money Market Series 3,615,765.240
The California Muni Fund 1,807,344.209
New York Muni Fund 169,256,355.553
Each Shareholder will be entitled to one vote for each share and a
fractional vote for each fractional share held. The issued and outstanding
shares of the New York Muni Fund series constitute all of the issued and
outstanding shares of Fundamental Funds, Inc.
Any proxy which is properly executed and returned in time to be voted at
the Meeting will be counted in determining whether a quorum is present with
respect to a Fund and will be voted as marked. In the absence of any
instructions, such proxy will be voted for the Proposals. If a quorum is not
present at the Meeting with respect to a Fund, or if a quorum is present but
sufficient votes to approve the Proposals are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the nature of the Proposals that are the
subject of the Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to Shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority of
those shares of a Fund represented at the Meeting in person or by proxy. A
Shareholder vote to change the Articles of Incorporation of the New York Muni
Fund, to terminate all 12b-1 Plans, and to elect new Board Members may be taken
prior to any adjournment if sufficient votes have been received for approval. If
a Shareholder abstains from voting as to any matter, then the shares held by
such Shareholder shall be deemed present at the Meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
such matter, but shall not be deemed to have been voted in favor of such matter.
A Shareholder may revoke his or her proxy at any time prior to its exercise by
delivering written notice of revocation or by executing and delivering a later
dated proxy to the address set forth on the cover page of this Proxy Statement,
or by attending and voting at the Meeting.
The Advisor will vote the proxy at any adjourned meeting in a manner
consistent with the proxy, unless such proxy is revoked at or prior to the
adjourned meeting.
If sufficient votes are not cast to terminate the 12b-1 Plans, the present
Board Members cannot be replaced. If sufficient votes are not cast to amend the
Articles of Incorporation of the New York Muni Fund to remove directors by a
majority of the Shareholders, such directors may not be removed without cause.
Solicitations will be made primarily by mail, but may also be made by
telephone, facsimile, electronic mail, or personal interview conducted by
certain officers or employees of the Funds or the Advisor. The Advisor has
engaged Shareholder Communications, Inc. to
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assist with proxy solicitations, at an estimated cost of $12,000. The Advisor
will pay for the initial cost of solicitations, but may petition the Funds to
reimburse the Advisor for such costs.
MATTERS TO BE VOTED ON
By signing the enclosed Proxy and Ballot card you are voting FOR a special
meeting of shareholders, FOR amending the Articles of Incorporation of the New
York Muni Fund, FOR terminating all existing 12b-1 Plans, FOR removing all
current Board Members and FOR electing new Board Members.
AMENDING THE NEW YORK MUNI FUND ARTICLES OF INCORPORATION
The current Articles of Incorporation of the New York Muni Fund only allows
shareholders to remove a director for cause by the vote of a majority of
outstanding voting shares. Our proposed amendment seeks to allow directors to be
removed, with or without cause, by the vote of a majority of outstanding voting
shares. Such amendment requires the vote of a majority of the shares entitled to
vote for the election of directors.
THE 12B-1 PLANS
The 12b-1 Plans are plans of distribution pursuant to Rule 12b-1 of the
Investment Company Act. The Plans allow the Funds to pay certain promotional and
advertising expenses and to compensate certain registered securities dealers and
financial institutions for services provided in connection with the processing
of orders for purchase or redemption of the shares of the Funds and furnishing
other shareholder services. Payments by each Fund shall not exceed 1/2 of 1% of
daily net assets of such Fund, and such amount may not be increased without
Shareholder approval. The Plans provide that the Funds' management (currently
the Advisor) shall provide quarterly reports on expenditures pursuant to the
12b-1 Plans.
Each Fund's 12b-1 Plan will terminate on May 31, 1998, unless continued by
the Fund's Board of Directors and the affirmative vote of a majority of the
Fund's Independent Directors. In approving the Plans, the then directors have
determined, in the exercise of their business judgment and in light of their
fiduciary duties as directors of the Funds, that there was a reasonable
likelihood that the Plans would benefit the Funds and the Shareholders. Each
Fund's Plan may only be renewed if the directors of such Fund make a similar
determination for each subsequent year.
While the 12b-1 Plans are in effect, only the current independent Board
Members may nominate their successors. Therefore, the current independent Board
Members may not be removed unless Shareholders vote FOR the termination of the
12b-1 Plans.
If the 12b-1 Plan for any Fund is terminated, the new Board of such Fund
(or the current Board if a new Board is not elected) could vote to reinstate the
12b-1 Plan or to adopt a similar plan. Any such action would require the
approval of the majority of Shareholders of such Fund.
REPLACING BOARD MEMBERS
On July 15, 1997, the Boards unanimously approved, with respect to each
Fund, an Agreement and Plan of Reorganization (each, a "Plan", and as referring
to all Funds, the "Plans"), and the transactions contemplated thereby, providing
for (i) the transfer of all the assets of the Fund into a separate newly-created
series of the Tocqueville Trust (the "New
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Series") in exchange for shares in the New Series; (ii) the pro rata
distribution of the shares of the New Series to the Shareholders of the Fund:
and (iii) the dissolution of the Fund.
Each Plan provides for the transfer of the assets of a Fund to a separate
newly-created series of the Tocqueville Trust (the "Tocqueville Trust"). The
reorganization would also include approval of an entirely new board comprised of
persons who are currently trustees of the Tocqueville Trust.
BASED ON SUBSEQUENT OCCURRENCES DESCRIBED BELOW IN "RECENT EVENTS", TWO
FORMER INDEPENDENT BOARD MEMBERS HAVE CONCLUDED THAT THE PLANS ARE NOT IN THE
BEST INTEREST OF THE FUNDS AND THEIR SHAREHOLDERS. BASED ON TESTIMONY GIVEN TO
THE COMMISSION BY MR. CHRISTOPHER P. CULP, MORE FULLY SET FORTH BELOW, THE
INTERESTED BOARD MEMBER, FOR REASONS OTHER THAN THOSE STATED BY THE FORMER
INDEPENDENT BOARD MEMBERS, HAS ALSO CONCLUDED THAT THE PLANS ARE NOT IN THE BEST
INTEREST OF THE FUNDS AND THEIR SHAREHOLDERS.
In spite of these occurrences, the current independent Board members James
C. Armstrong and L. Greg Ferrone have failed to withdraw their votes in favor of
the Plans based on the testimony of Mr. Culp. The Advisor believes that the
independent Board Members should be removed because of their failure to withdraw
their votes in favor of the Plans based on the testimony of Mr. Culp.
RECENT EVENTS
Administrative Proceedings
Since January, 1995, the Advisor and the Funds' Board Members have
cooperated in an investigation conducted by the Commission concerning the
Fundamental US Government Strategic Income Fund (the "US Fund") , its Trustees,
the Advisor, Dr. Vincent J. Malanga, Dr. Lance Brofman and Fundamental Service
Corporation ("FSC").
On or about October 24, 1997, the Commission filed a corrected order
instituting public proceedings pursuant to Section 8A of the Securities Act of
1933, Sections 15(b), 19(h), and 21C of the Securities Exchange Act of 1934,
Sections (b) and (f) of the Investment Company Act, and Sections 203(e), (f) and
(k) of the Investment Advisers Act of 1940 (the "Advisors' Act") against the
Advisor, Dr. Vincent J. Malanga, Dr. Lance Brofman and FSC (the "Administrative
Proceeding").
The Administrative Proceeding relates to the activities of the Advisor,
which is registered with the Commission pursuant to Section 203(c) of the
Advisors' Act since October 17, 1986. The Advisor was the investment advisor to
the US Fund and the other Funds.
The Division of Enforcement allege that false and misleading statements
were made in the prospectus and sales literature of the US Fund. The Division of
Enforcement further alleges that the fund was marketed as a relatively safe and
conservative investment, designed to provide "high current income with minimum
risk of principal and relative stability of net asset value; that as a U.S.
government bond fund, interest rate risk posed the greatest risk to the Fund's
net asset value ("NAV"); that according to the Fund's prospectus and sales
materials, the fund sought to limit that risk, and thus to maximize stability of
NAV, by limiting the fund's "duration" to three years or less; that the term
"duration" generally refers to the sensitivity of the value of a security or a
portfolio of securities to changes in interest rates (although measured in
years, an instrument's duration is not necessarily the same as its term to
maturity); that duration is a measure of the price sensitivity of a fixed income
fund, such as a U.S.
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government bond fund, to changes in interest rates; that a portfolio with a low
duration will be less sensitive to changes in interest rates than a high
duration portfolio.
The Division of Enforcement further alleges that certain antifraud
provisions of the federal securities laws were violated because the US Fund was
marketed as a safe investment, offering relative stability of NAV ("low
volatility"), when it was not; that contrary to the representations in the US
Fund's prospectus and sales literature, the US fund had a heightened sensitivity
to changes in interest rates, due in large part to its substantial investment in
inverse floating collateralized mortgage obligations ("inverse floaters"); that
further, the US Fund's duration was not limited to three years or less; that
when interest rates rose in 1994, the US fund incurred substantial loses; that
in 1994, the US Funds's NAV declined approximately 32%, significantly more than
almost all other U.S. government bond funds.
The Division of Enforcement further alleges that this proceeding also
involves Malanga's and Brofman's failure to disclose the Advisor's soft dollar
arrangements to the board of the US Fund and other funds managed by the Advisor.
The term "soft dollars" generally describes an arrangement whereby an
investment advisor uses commission dollars generated by securities trades
executed in advisory client accounts to pay for research, brokerage, or other
products, services, or expenses, including soft dollar credits generated by
syndicate designations.
The Respondents in the Administrative Proceeding have filed a joint answer
denying the Commission's allegations to the extent that they allege any
wrongdoing or that they have violated antifraud provisions of the Federal
Securities Laws by marketing the US Fund as a safe investment, offering relative
stability of NAV and further denying that the US Fund's investment in inverse
floaters gave it a heightened sensitivity to changes in interest rates as
opposed to other securities in which the US Fund could have appropriately
invested. The Respondents further deny that the US Fund's duration ever exceeded
three years. The Respondents further deny that their conduct with respect to
soft dollars violated any law or regulation to warrant the proceedings initiated
against them.
The Respondents and the Division of Enforcement are engaged in discovery
and expect the Administrative Proceeding to be tried in June 1998. If tried, the
Advisor believes a decision will be made in or after July 1998.
In the event the Commission prevails in the Administrative Proceeding, the
Commission could, among other things, (i) bar the Advisor from acting as advisor
to the Funds, which, in turn, could cause the Commission to appoint a receiver
for the Funds, and (ii) bar Dr. Malanga from serving as a Director of any of the
Funds.
Relating to the same allegations, but separately, NASD Regulation, Inc.
(the "NASD") entered into a Letter of Acceptance, Waiver and Consent with FSC,
the distributor of the US Fund, Dr . Malanga and David P. Wieder that imposed a
total of $125,000 in fines and other stipulated sanctions on FSC, Dr. Malanga,
and Wieder for distributing advertising materials for the US Fund that the NASD
deemed to be false and misleading. All fines have been paid.
As a stipulated non-monetary sanction FSC agreed that, for a period of
three years, FSC will prefile all advertising and sales literature with the
NASD's Advertising Department before use, and will retain an outside consultant
to report on FSC's compliance policies with respect to advertising and sales
literature and other compliance policies. Dr. Malanga has also agreed to a 30
day suspension from associating, in any capacity, with any NASD member firm,
which suspension has been completed.
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FSC, Dr. Malanga and the other FSC officer neither admitted nor denied the
allegations and filed a Mitigation Statement in response to the Letter of
Acceptance, Waiver and Consent.
The Tocqueville Plans
From February 18, 1997 until August 27, 1997, Mr. Christopher P. Culp, an
employee of Tocqueville, served on the Advisor's Investment Advisory Committee
as the principal portfolio manager of the Funds. He did so in his capacity as an
employee of Fundamental, representing to the Boards that he was working without
salary or other compensation from the Advisor. At the same time, he continued to
be employed by Tocqueville.
On eight separate occasions between April 17, 1997 and July 24, 1997, Mr.
Culp engaged Tocqueville Securities L.P. ("Tocqueville Securities"), an
affiliate of Tocqueville Trust, as agent to purchase bonds over-the-counter on
behalf of the New York Muni Fund. The normal practice is for mutual funds to buy
or sell bonds directly from dealers, without paying a commission. In contrast,
institutional investors such as mutual funds normally do pay commissions on
common stock transactions executed on stock exchanges or through the NASDAQ
system where an exchange member or broker is involved.
In the instances above, Tocqueville Securities interposed between the New
York Muni Fund and the dealer selling the bonds to the Fund. The seller of the
bonds was willing and able to sell the securities directly to the Fund (and had
done so on prior occasions). Tocqueville Securities arranged to have the
securities first sold to Tocqueville Securities, which simultaneously sold the
securities to the Fund and at higher price. Tocqueville Securities performed no
service or function in the transactions except to collect the difference between
the price the dealer was willing to sell the securities for and the price the
Fund paid. The difference was a mark-up or a commission.
In each of these occasions the New York Muni Fund's Board has concluded
that the commissions paid to Tocqueville Securities in connection with these
transactions (a portion of which was paid to Mr. Culp) were not justified and
that the New York Muni Fund bore unnecessary expense. Based upon a report
initiated by Tocqueville Securities and prepared by the New York Muni Fund's
independent auditors, and upon the Board's own analysis, the Board directed that
the Advisor terminate Mr. Culp's services as a portfolio manager. At the Board's
request and in order to reimburse the New York Muni Fund for all of its losses,
Tocqueville Securities, on September 15, 1997, voluntarily paid $260,000 to the
New York Muni Fund, an amount which significantly exceeds the total commissions
($184,920.60) received by Tocqueville Securities in connection with these
transactions. The staff of the Commission and the Department of NASD Regulation
have been informed of these events by Tocqueville Securities.
On January 14, 1998 Mr. Culp testified before the Commission in in re:
Christopher Payne Culp, File No. MNY-2777 that
. . . I was following the policies of the firm [by getting]
commissions that Tocqueville Securities charged for the
Tocqueville Government Fund. . . and I was doing as directed
by the president of the firm, Robert Kleinschmidt, who had
full knowledge and was indeed in attendance and led and
initiated the request to do commissions.
in re: Christopher Payne Culp, Transcript at 181-82.
The Advisor believes that Tocqueville would deny the statements made by
Culp. The
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Advisor has no knowledge of any proceeding or investigation commenced or planned
by the Commission against any Tocqueville entity relating to such activities.
Views of Former Board Members and the Interested Board Member
View of Former Board Members
After consideration, Messrs. James A. Bowers and Clark L. Bullock, then
Independent Board Members, determined, for the reasons set forth below, that
proceeding with the Plans were not in the best interests of the Funds and their
Shareholders.
A. Lack of Experienced Portfolio Manager. Messrs. Bowers and Bullock's
original determination to vote in favor of the Plans was greatly dependent on
the confidence they had in Mr. Culp's ability to manage the portfolio of the New
York Muni Fund and the California Muni Fund. During the six month period ending
August 27, 1997, Mr. Culp had been managing the portfolios of these Funds and
made regular presentations to the Boards at which he described his investment
approach and detailed his trading discipline. Messrs. Bowers and Bullock
believed that Mr. Culp managed the portfolios well and that, because of his
presence, Tocqueville--which otherwise had no experience managing investment
companies investing in municipal obligations ("Municipal Bond Funds")-- could
properly perform its investment advisory duties on behalf of these Funds after
the Plans became effective. Mr. Culp is no longer employed by Tocqueville.
Messrs. Bowers and Bullock believe that Tocqueville had not demonstrated that it
now has investment professionals with sufficient experience managing Municipal
Bond Funds to warrant proceeding with the Plans, although representatives of
Tocqueville have indicated their intention to seek to hire such person or
persons.
B. Excessive Fees. In connection with the Board Members' approval of the
Plans at the July 15, 1997 meeting, representatives of Tocqueville and the
advisor advised the Boards that Tocqueville intended to engage the Advisor to
perform consulting services in connection with the Funds' existing Shareholders
and to pay the Advisor a fee at the rate of .25% annually of the assets of Fund
Shareholders remaining after the Plans became effective. Tocqueville advised the
Boards in writing that these fees would be paid only for bona fide services
rendered.
Messrs. Bowers and Bullock believed, at the time of the July 15, 1997
approval, that the Advisor intended to maintain its organization with staff to
service Fund Shareholders. The Advisor told the Board that the Advisor intended
only to retain the services of its principal shareholders, Drs. Malanga and
Brofman (the Board having determined in December 1996 that Dr. Brofman should
have nothing to do with the Funds' operations) and two other employees to
perform these functions.
Messrs. Bowers and Bullock believed it inappropriate for Tocqueville to pay
Brofman, Malanga and two other employees an annual fee of approximately $450,000
based on current asset levels for consulting services and that some portion of
that amount should be retained by Shareholders in the form of lower management
or other fees. The other Board Members disagreed.
C. Failure to Consider Alternatives. In light of the foregoing, Messrs.
Bowers and Bullock requested that the Boards attempt to determine whether
representatives of another mutual funds complex that had proposed, on or about
July 15, 1997, to enter into a transaction with the Funds similar to the Plan,
were interested in pursuing a transaction. The other Board Members determined
not to do so. Messrs. Bowers and Bullock believe it would have been in the best
interests of Shareholders to make this inquiry and seek alternatives to
Tocqueville.
-10-
<PAGE>
Because of the Board Members' failure to act in a manner which Messrs.
Bullock and Bowers believe is consistent with Shareholders' interests, Messrs.
Bullock and Bowers have tendered their resignations as Board Members and their
resignations have been accepted effective November 2 and 3, 1997, respectively.
View of the Interested Board Member
After reviewing the testimony of Mr. Culp, described above, the Interested
Board Member has concluded that (i) the Plans are not in the best interests of
the Shareholders, (ii) the independent Board Members should have withdrawn their
votes based on Mr. Culp's testimony, and (iii ) as a result the current Boards
should be replaced.
DESCRIPTION OF THE PROPOSED BOARD MEMBERS
The Hon. Alfred Toker
Presently a Judge (Judicial Hearing Officer) of the Supreme Court, New York
County. Retired as a Justice of Supreme Court of the State of New York - 1994.
Past Member of the Board of Directors of Village View Housing Corporation.
Previously Chief litigating Partner of the law firm of Gwertzman, Pfeffer, Toker
and Lefkowitz 1980- 1988. Senior Trial Counsel with the office of the
Corporation Counsel of the City of New York, 1954 - 1979. His address is 71
Thomas St., New York, N.Y. 10013-4310. His age is 74.
Robert H. Parks, Ph.D.
Professor of Finance, Lubin (Graduate) School of Business, Pace University,
New York, formerly Professor of Finance at Wharton Business School, Managing
Director and Chief Economist of Robert H. Parks & Associates, Inc., an Economic
and Investment Research Firm for Institutional Investors, formerly Executive
Vice President, Chief Economist at Advest Institutional Service, First Vice
President and Chief Economist, Blyth Eastman Dillion (now Paine Webber), and
Vice President and Chief Economist, duPont Glore Forgan. Dr. Parks is author of:
Unlocking the Secrets of Wall Street (August 1998 publication date) and The
Witch Doctor of Wall Street, published in 1996. His address is 65 North
Rockledge Road, Suite 2F, Bronxville, New York 10708.
Christian Dan Jensen
Principal of the Dan Group, an association of independent consultants
specializing in corporate strategy, management and sales skill development.
Former member board of directors of Alpha Mineral, Inc. Formerly, a product
manager for Becton-Dickinson Corporation. Formerly New England Regional Director
of Silva International, Inc., Vice President Learning Dynamics, Inc. He is a
member of the American Seminar Leaders Association having achieved the
designation CSL, Certified Seminar Leader, and is an instructor in the
GNYADA-Hofstra University Management Program. He has a degree in management from
Clark University. His address is 18 Old Castle Drive, Newtown, Ct 06470.
William M. Taliaferro
Industrial Specialist Westcord Commercial Group, which specializes in the
sale and leasing of industrial and commercial real estate. He also conducts
seminars as a consultant to the Broward County, Florida Public Defenders Office.
From 1981 to 1995 he was Pastor and President of the Board of Trustees of the
Church of Religious Science in Ft. Lauderdale,
-11-
<PAGE>
Florida. He attended four years of classes at Religious Science in Canoga Park,
Ca. leading to licensure and ordination. He served as a member of the Board of
Trustees as well as the Board of Education of Religious Science International
and earned a Doctorate for his contributions to the educational curriculum and
service on the Board of Trustees. His age is 65. His address is 320 Camino
Manzanas, Thousand Oaks, Ca. 91360.
Vincent J. Malanga, Ph.D.
Chairman of the Board, Chief Executive Officer, President and Treasurer of
all of the Funds. Mr. Malanga is President, Treasurer and a Director of the
Advisor, Executive Vice President, Secretary and a Director of Fundamental
Service Corporation and President, LaSalle Economics Inc. an economic consulting
firm. He previously was a Vice President and Senior Economist at A. Gary
Shilling & Co., an economic consulting and brokerage firm. He previously served
as an economist at White, Weld & Co. and so served from 1976 to 1978. Prior
thereto, Mr. Malanga, who holds a Ph.D. in Economics from Fordham University,
was an Economist at the Federal Reserve Bank of New York. He is an "interested
person" as defined by the 1940 Act by virtue of his affiliation with the Advisor
and is one of the Parties to the Administrative Proceedings discussed above.
(See "Recent Events"). His address is 19th Floor, 90 Washington Street, New
York, N.Y. 10006. His age is 50. He is the only interested proposed Director.
Stock Ownership of the Proposed Board Members
The number of shares of Common Stock beneficially owned by each proposed
Board Member as of March 31, 1998 is determined under the rules of the
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership included
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days after March 31, 1998. Unless otherwise indicated each
person has sole investment and voting power (or shares such power with his
spouse) with respect to the shares set forth in the following table. The
inclusion herein of any shares deemed beneficially owned does not constitute an
admission of beneficial ownership of those shares.
NAME NY Muni Fund Money Fund Hi-Yield Cal Muni US Govt
- ---- ------------ ----------- -------- -------- -------
Hon. Alfred Toker 2,366.096
Vincent Malanga(1) 564,986.687 57,772.6 1,154.51 61,256.887
Totals 567,352.783 57,772.6 1,154.51 61,256.887
1. Includes shares held by family members: NY 564,986.687, MM 5,491.130,
HI-Yield 1,154.414, U.S. Govt 52,877.018; and shares held by LaSalle Economics,
Inc.: MM 39,858.730 and U.S. Govt 8,379.872; and shares held by Gable Group
Ltd.: MM 12,422.74. Does not include shares of Advisor, detailed below
ABOUT THE ADVISOR
The Advisor is a privately held Delaware corporation. Its principal
shareholders are Dr. Vincent J. Malanga and Dr. Lance Brofman. Mr. Malanga is
President, Treasurer and a Director of the Advisor, and Chairman of the Board,
Chief Executive Officer, President and Treasurer of the Funds.
-12-
<PAGE>
Stock Ownership of the Advisor
The number of shares of Common Stock beneficially owned by the Advisor and
its principals as of March 31, 1998 is determined under the rules of the
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership included
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days after March 31, 1998. Unless otherwise indicated each
person has sole investment and voting power (or shares such power with his
spouse) with respect to the shares set forth in the following table. The
inclusion herein of any shares deemed beneficially owned does not constitute an
admission of beneficial ownership of those shares. Stock ownership of Dr.
Malanga has already been disclosed above in "Stock Ownership of the Proposed
Board Members".
NAME NY Muni Fund Money Fund Hi-Yield Cal Muni US Govt
- ---- ------------ ----------- -------- -------- -------
Lance Brofman(1) 20,683.066 551.830 38.884.918 .800 82,451.475
Advisor 25,749.91(2) 787.147
1.Includes shares held by family members: NY 4,938.348, MM 551.83, Hi-Yield
38,884.918, Cal .385, U.S. Govt 72,866.719
2. Includes 22,881.33 shares held by an affiliate. Does not include shares of
Vincent Malanga, detailed above
Certain Additional Information about the Advisor
The Advisor and FSC, on behalf of certain of their directors, officers,
shareholders, employees and control persons (the "Indemnitees") received
payments during the fiscal year ended December 31, 1997 from three of the Funds
for attorneys' fees incurred by them in defending the above proceedings. These
payments were as follows: US Fund--approximately $232,500.00; New York Muni
Fund--approximately $50,000.00; California Muni Fund--approximately $4,000.00.
The Independent Board Members have directed that the Indemnitees return all of
the payments to the Funds or place them in escrow pending their receipt of an
opinion of independent legal counsel that the Indemnitees are entitled to
receive such attorneys' fee reimbursements. In addition, in the same period, the
Advisor and FSC did not take certain fees due to them from the Funds in the
aggregate amount of $166,637.00 in 1997 and an additional $51,200.00 in 1998.
VOTING INFORMATION ON AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
While the Meeting is called to act upon any other business that may
properly come before it, at the date of this Proxy Statement the only business
which the management intends to present or knows that others will present is the
business mentioned in the Proposals. If any other matters lawfully come before
the Meeting, and in all procedural matters at the Meeting, it is the intention
that the enclosed proxy shall be voted in accordance with the best judgment of
the attorneys named therein, or their substitutes, present and acting at the
Meeting.
As of the Record Date, the Fundamental Funds believed that the following
persons beneficially owned more than 5% of Shares of the Funds:
-13-
<PAGE>
Fundamental New York Fund
Names & Address Number of Shares Percentage of
Owned Outstanding Shares
- --------------- ---------------- ------------------
Centre Reinsurance Limited 10,243,370.024 6.05%
Fundamental California Fund
Names & Address Number of Shares Percentage of
Owned Outstanding Shares
- --------------- ---------------- ------------------
Eugene L Lessner TR 100,519,349 5.56%
Lessner Revocable Living Trust
U/A DTD Nov 17 86
3244 San Amedeo Unit 3A
Laguna Hills, Ca 9263-3076
Fundamental Money Market Fund
Names & Address Number of Shares Percentage of
Owned Outstanding Shares
- --------------- ---------------- ------------------
Liberty Zeiger Fund LP 1,011,332.820 27.97%
7818 Orlando Ave
Lubbock TX 79425-1942
Leon Pfeffer & 258,672.320 7.15%
Jack Pfeffer JT Ten
444 Neptune Ave. Apt 4H
Brooklyn, NY 11224-4408
Fundamental High Yield Fund
Names & Address Number of Shares Percentage of
Owned Outstanding Shares
- --------------- ---------------- ------------------
Vivian Kaufman (Trustee)* 38,884,918 11.47%
Vivian Kaufman Revocable Trust
UA DTD 10-06-93
1900 South Ocean Blvd., #5-S
Pompano Beach, FL 33062
Louis J & Frances M. Russo 18,062.316 5.33%
(Trustees) Louis J Russo
Grantor Rev. Trust
U/A DTD 04/15/95
3961 Dafilee Circle
West Palm Beach, FL 33417
-14-
<PAGE>
Kenneth S.& Heidi G. Widelitz 67,697.336 19.97%
(Trustees)
The Widelitz Family Trust
U/A DTD 04/15/94
10519 Lauriston Avenue
Los Angeles, CA 90064
* Vivian Kaufman is the mother of Dr. Lance Brofman.
SUBMISSION OF PROPOSALS FOR THE NEXT MEETING OF SHAREHOLDERS
Under the Funds' Declarations of Trust/Articles of Incorporation and
By-Laws, annual meetings of shareholders are not required to be held unless
necessary under the 1940 Act (for example, when fewer than a majority of the
Board Members have been elected by Shareholders). Therefore, the Funds do not
hold Shareholder meetings on an annual basis. A shareholder proposal intended to
be presented at any meeting hereafter called should be sent to the Funds at 90
Washington Street, New York, New York 10016, and must be received by the Funds
within a reasonable time before the solicitation relating thereto is made in
order to be included in the notice or proxy statement related to such meeting.
The submission by a Shareholder of a proposal for inclusion in a proxy statement
does not guarantee that it will be included. Shareholder proposals are subject
to certain regulations under federal securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY.
_________ , 1998
FUNDAMENTAL PORTFOLIO ADVISORS, INC.
Vincent J. Malanga
President, Fundamental Portfolio Advisors, Inc.
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<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS ---____________, 1998
Please refer to the Proxy Statement for a discussion of the matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE FUNDAMENTAL U.S.
GOVERNMENT STRATEGIC INCOME FUND SERIES OF FUNDAMENTAL FIXED-INCOME FUND HEREBY
VOTES TO CALL A SPECIAL MEETING AND CONSTITUTES AND APPOINTS THE HON. ALFRED
TOKER, ROBERT PARKS, CHRISTIAN DAN JENSEN, WILLIAM M. TALIAFERRO, DR. VINCENT J.
MALANGA, OR ANY OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL
POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY
REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on the proxy
card below. THIS PROXY IS SOLICITED ON BEHALF OF THE ADVISOR TO REPLACE THE
BOARDS OF THE FUNDS.
- -----Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to request the Board to call a special meeting of
shareholders, and to take all action necessary to cause such special meeting to
take place:
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Vote on the Proposal to terminate all plans formed under Rule 12b-1 of
the Investment Company Act of 1940:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Removal of Current Board Members. The Advisor seeks to remove the
following individuals as Board Members. If no direction is given this Proxy will
be voted in favor of the removal of these individuals:
To remove James Armstrong and L. Greg Ferrone as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
4. Election of Board Members. The following individuals seeking election as
Board Members solicit this Proxy. If no direction is given this Proxy will be
voted in favor of the
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<PAGE>
election of these individuals:
To elect The Hon. Alfred Toker, Robert Parks, Christian Dan Jensen, William M.
Taliaferro and Vincent J. Malanga as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
- -----Detach card at perforation and mail in postage paid envelope provided-----
FUNDAMENTAL FIXED-INCOME FUND
FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REPLACEMENT OF BOARD MEMBERS.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x
----------------------------
x
----------------------------
Dated: , 1998
-------------------
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<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES
SPECIAL MEETING OF SHAREHOLDERS -- -____________, 1998
Please refer to the Proxy Statement for a discussion of the matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE HIGH-YIELD
MUNICIPAL BOND SERIES OF FUNDAMENTAL FIXED-INCOME FUND HEREBY VOTES TO CALL A
SPECIAL MEETING AND CONSTITUTES AND APPOINTS THE HON. ALFRED TOKER, ROBERT
PARKS, CHRISTIAN DAN JENSEN, WILLIAM M. TALIAFERRO, DR. VINCENT J. MALANGA, OR
ANY OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF
SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY REVOKES
ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on the proxy card
below. THIS PROXY IS SOLICITED ON BEHALF OF THE ADVISOR TO REPLACE THE BOARDS OF
THE FUNDS.
- -----Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to request the Board to call a special meeting of
shareholders, and to take all action necessary to cause such special meeting to
take place:
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Vote on the Proposal to terminate all plans formed under Rule 12b-1
of the Investment Company Act of 1940:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Removal of Current Board Members. The Advisor seeks to remove the
following individuals as Board Members. If no direction is given this Proxy will
be voted in favor of the removal of these individuals:
To remove James Armstrong and L. Greg Ferrone as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
4. Election of Board Members. The following individuals seeking election as
Board Members solicit this Proxy. If no direction is given this Proxy will be
voted in favor of the election of these individuals:
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<PAGE>
To elect The Hon. Alfred Toker, Robert Parks, Christian Dan Jensen, William M.
Taliaferro and Vincent J. Malanga as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
- -----Detach card at perforation and mail in postage paid envelope provided-----
FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REPLACEMENT OF BOARD MEMBERS.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x
----------------------------
x
----------------------------
Dated: , 1998
-------------------
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<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES
SPECIAL MEETING OF SHAREHOLDERS -- -____________, 1998
Please refer to the Proxy Statement for a discussion of the matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE TAX-FREE MONEY
MARKET SERIES OF FUNDAMENTAL FIXED-INCOME FUND HEREBY VOTES TO CALL A SPECIAL
MEETING AND CONSTITUTES AND APPOINTS ALFRED TOKER, ROBERT PARKS, CHRISTIAN DAN
JENSEN, WILLIAM M. TALIAFERRO, DR. VINCENT J. MALANGA, OR ANY OF THEM, THE
ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO
VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY REVOKES ANY PRIOR PROXIES.
To vote, mark an X in blue or black ink on the proxy card below. THIS PROXY IS
SOLICITED ON BEHALF OF THE ADVISOR TO REPLACE THE BOARDS OF THE FUNDS.
- -----Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to request the Board to call a special meeting of
shareholders, and to take all action necessary to cause such special meeting to
take place:
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Vote on the Proposal to terminate all plans formed under Rule 12b-1 of
the Investment Company Act of 1940:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Removal of Current Board Members. The Advisor seeks to remove the
following individuals as Board Members. If no direction is given this Proxy will
be voted in favor of the removal of these individuals:
To remove James Armstrong and L. Greg Ferrone as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
4. Election of Board Members. The following individuals seeking election as
Board Members solicit this Proxy. If no direction is given this Proxy will be
voted in favor of the
-20-
<PAGE>
election of these individuals:
To elect The Hon. Alfred Toker, Robert Parks, Christian Dan Jensen, William M.
Taliaferro and Vincent J. Malanga as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
- -----Detach card at perforation and mail in postage paid envelope provided-----
FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REPLACEMENT OF BOARD MEMBERS.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x
----------------------------
x
----------------------------
Dated: , 1998
-------------------
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<PAGE>
THE CALIFORNIA MUNI FUND
SPECIAL MEETING OF SHAREHOLDERS ---____________, 1998
Please refer to the Proxy Statement for a discussion of the matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE CALIFORNIA MUNI
FUND HEREBY VOTES TO CALL A SPECIAL MEETING AND CONSTITUTES AND APPOINTS ALFRED
TOKER, ROBERT PARKS, CHRISTIAN DAN JENSEN, WILLIAM M. TALIAFERRO, DR. VINCENT J.
MALANGA, OR ANY OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL
POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY
REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on the proxy
card below. THIS PROXY IS SOLICITED ON BEHALF OF THE ADVISOR TO REPLACE THE
BOARDS OF THE FUNDS.
- -----Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to request the Board to call a special meeting of
shareholders, and to take all action necessary to cause such special meeting to
take place:
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Vote on the Proposal to terminate all plans formed under Rule 12b-1 of
the Investment Company Act of 1940:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Removal of Current Board Members. The Advisor seeks to remove the
following individuals as Board Members. If no direction is given this Proxy will
be voted in favor of the removal of these individuals:
To remove James Armstrong and L. Greg Ferrone as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
4. Election of Board Members. The following individuals seeking election as
Board Members solicit this Proxy. If no direction is given this Proxy will be
voted in favor of the election of these individuals:
To elect The Hon. Alfred Toker, Robert Parks, Christian Dan Jensen, William M.
Taliaferro
22
<PAGE>
and Vincent J. Malanga as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
- -----Detach card at perforation and mail in postage paid envelope provided------
THE CALIFORNIA MUNI FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REPLACEMENT OF BOARD MEMBERS.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x
----------------------------
x
----------------------------
Dated: , 1998
-------------------
-23-
<PAGE>
FUNDAMENTAL FUNDS, INC.
NEW YORK MUNI FUND
SPECIAL MEETING OF SHAREHOLDERS ---____________, 1998
Please refer to the Proxy Statement for a discussion of the matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF BENEFICIAL INTEREST OF THE FUNDAMENTAL NEW
YORK MUNI FUND HEREBY VOTES TO CALL A SPECIAL MEETING AND CONSTITUTES AND
APPOINTS ALFRED TOKER, ROBERT PARKS, CHRISTIAN DAN JENSEN, WILLIAM M.
TALIAFERRO, DR. VINCENT J. MALANGA, OR ANY OF THEM, THE ATTORNEYS AND PROXIES OF
THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED
BELOW AS DIRECTED, AND HEREBY REVOKES ANY PRIOR PROXIES . To vote, mark an X in
blue or black ink on the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF
THE ADVISOR TO REPLACE THE BOARDS OF THE FUNDS.
- -----Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to request the Board to call a special meeting of
shareholders, and to take all action necessary to cause such special meeting to
take place:
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Vote on the Proposal to Amend the Articles of Incorporation to allow a
vote of a majority of voting shares to remove and replace directors:
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Vote on the Proposal to terminate all plans formed under Rule 12b-1 of
the Investment Company Act of 1940:
FOR AGAINST ABSTAIN
[_] [_] [_]
4. Removal of Current Board Members. The Advisor seeks to remove the
following individuals as Board Members. If no direction is given this Proxy will
be voted in favor of the removal of these individuals:
To remove James Armstrong and L. Greg Ferrone as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
5. Election of Board Members. The following individuals seeking election as
Board Members solicit this Proxy. If no direction is given this Proxy will be
voted in favor of the
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election of these individuals:
To elect The Hon. Alfred Toker, Robert Parks, Christian Dan Jensen, William M.
Taliaferro and Vincent J. Malanga as Board Members
FOR AGAINST ABSTAIN
[_] [_] [_]
WITHHOLD AUTHORITY TO VOTE FOR ALL EXCEPT
[_] [_]
To withhold authority to vote, mark "For all except" and write the individual's
name(s) on the line below.
- ----------------------------------------------
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
- -----Detach card at perforation and mail in postage paid envelope provided-----
FUNDAMENTAL FUNDS, INC.
NEW YORK MUNI FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REPLACEMENT OF BOARD MEMBERS.
Please sign exactly as name appears on this card. When account is joint tenants,
all should sign. When signing as administrator, trustee or guardian, please give
title. If a corporation or partnership, sign in entity's name and by authorized
person.
x
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x
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Dated: , 1998
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