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 Commission Only
|_| Definitive proxy statement
|_| Definitive additional materials (as permitted by Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The California Muni Fund
(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:
<PAGE>
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
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _______, 1998
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
Advisor requests that Shareholders call for a meeting of Shareholders of the
Funds to be held at ________ (Eastern time) at _______________, on ______ ___,
1998 (the "Meeting").
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 a special meeting of Shareholders.
Pursuant to those rights, the Advisor requests that Shareholders call a special
meeting of Shareholders for the purpose indicated below:
For New York Muni Fund only:
1. Amend the Articles of Incorporation as may be necessary, so that
Directors may be removed and replaced by a majority of the
shareholders,
For all Funds:
2. Replacement of Board Members.
In addition, to transact such other business as may properly come before
the Meeting or any adjournment thereof.
Shareholders of record as of the close of business on March 31, 1998 are
entitled to vote at the Meeting and any and all adjournments thereof. Your
attention is called to the accompanying Proxy Statement.
<PAGE>
By Order of Fundamental Portfolio Advisors,
Inc.
Vincent J. Malanga
President
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
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 ________ (Eastern time) at _______________, on ______
___, 1998 (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.
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, notice of meeting 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 a special meeting of shareholders.
Pursuant to those rights, the Advisor requests that Shareholders call a special
meeting of Shareholders for the purpose indicated below (the "Proposals"):
<PAGE>
For New York Muni Fund only:
1. Amend the Articles of Incorporation and replaced as may be
necessary, so that Directors may be removed by a majority of the
shareholders,
For all Funds:
2. Replacement of Board Members.
In addition, to transact such other business as may properly come before
the meeting or any adjournment thereof.
Information about the Advisor is provided below in the section entitled
"About the Advisor".
DESCRIPTION OF VOTING
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 1940, as amended (the "1940 Act") of each Fund. The term "majority of the
outstanding voting securities" is defined under the 1940 Act to mean: (a) 67% or
more of the outstanding Shares present at the Meeting, if the holders of 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 March 31, 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. Shareholders holding a majority
(one-third, with respect to The California Muni Fund) of the outstanding Shares
of a Fund at the close of business on the Record Date present in person or by
proxy will constitute a quorum for the transaction of business with respect to
the Fund at the Meeting. For purposes of determining the presence of a quorum
and counting votes on the matters presented, Shares represented by abstentions
and "broker non-votes" will be counted as present, but not as votes cast, at the
Meeting. 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
<PAGE>
instructions, such proxy will be voted against 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/Declarations of Trust
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.
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 assist with proxy solicitations, at
an estimated cost of $12,000.
REPLACEMENT OF BOARD MEMBERS
The current independent Board members James C. Armstrong and L. Greg
Ferrone have called a meeting of shareholders on May 19, 1998 for the purpose
of:
With respect to each Fund, approving 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 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.
In addition, to transact such other business as may properly come before
the meeting or any adjournment thereof.
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.
ON JULY 15, 1997 THE BOARDS UNANIMOUSLY APPROVED THE PLANS. HOWEVER, BASED ON
SUBSEQUENT OCCURRENCES DESCRIBED BELOW UNDER "RECENT EVENTS", TWO FORMER
INDEPENDENT BOARD MEMBERS AND THE INTERESTED BOARD MEMBER HAVE CONCLUDED THAT
THE PLANS ARE NOT IN THE BEST INTERESTS OF THE FUNDS AND THEIR SHAREHOLDERS. THE
PLANS MIGHT PROCEED BASED SOLELY ON THE VIEWS OF THE REMAINING TWO INDEPENDENT
BOARD MEMBERS.
In a separate Proxy, the Advisor urged you to vote against the Plans. 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 and FOR the election of new Board Members.
<PAGE>
RECENT EVENTS
Since January, 1995, the Advisor and the Funds' Board members have
cooperated in an investigation conducted by the Securities and Exchange
Commission (the "Commission") concerning the Fundamental US Government Strategic
Income Fund (the "US Fund") , its trustees, the Advisor and certain associated
persons and affiliated entities of the Advisor.
On or about October 24, 1997, the Commission issued 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 of 1940, 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 Fundamental Service
Corporation ("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, and still is, the
investment advisor to the US Fund and the other Funds.
The Division of Enforcement alleges 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. government bond fund, to changes in interest rates; and
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 losses; and
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 Drs. 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.
<PAGE>
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 another FSC officer that imposed
a total of $125,000 in fines and other stipulated sanctions on FSC, Dr. Malanga,
and another FSC officer for distributing advertising materials for the US Fund
that the NASD deemed to be false and misleading. 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.
In addition, Dr. Malanga agreed to requalify, by examination, for the series 6
and 26 registrations before acting again in those capacities, and not to apply
for registration as a general securities principal for three years.
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.
Also relating to the same allegations, but seperately, in 1994 the Advisor
and FSC, without admitting or denying that they had violated any law, entered
into an Assurance of Discontinuance and Undertaking (the "Undertaking") with the
Attorney General of the State of New York (the "New York Attorney General"). In
the Undertaking, the New York Attorney General made certain findings, including
that he "believes that the sales materials have the capacity to mislead, and
omit to state that the [US Fund] may pursue, and at the present time does
pursue, aggressive portfolio strategies to obtain income and capital
appreciation from investments in municipal bonds." Pursuant to the Undertaking,
the Advisor and FSC jointly and severally agreed to pay $37,500.00 to the State
of New York. Additionally, the US Fund, the Advisor and FSC agreed, among other
things, to prefile all sales material for the US Fund with the New York Attorney
General's Office for three years. At no time has the New York Attorney General's
Office indicated that the Advisor, FSC or the US Fund did not fully comply with
this settlement.
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 Fundamental New York Muni Fund (the "Fundamental New York 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.
<PAGE>
In each of these occasions Fundamental New York 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 Fundamental New York Fund bore unnecessary expense. Based upon a report
initiated by Tocqueville Securities and prepared by Fundamental New York 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 Fundamental New York Fund for all of its
losses, Tocqueville Securities, on September 15, 1997, voluntarily paid $260,000
to Fundamental New York 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 NASD have been informed
of these events by Tocqueville Securities.
Mr. Culp has told the Commission that he engaged in other similar
transactions on behalf of Tocqueville Government Fund. The Advisor is aware that
Mr. Culp has commenced an arbitration proceeding against Tocqueville, and
believes that Tocqueville would deny the statements made by Culp. The 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 THE ADVISOR
The Advisor believes that the Plans are not in the best interests of the
Shareholders, and that the current Boards should be replaced.
Regarding the eight transactions executed by Mr. Culp discussed above, the
Advisor believes that the transactions executed by Mr. Culp would have been
appropriate without the involvement of Tocqueville Securities as an unnecessary
intermediary. If the Plans were to be approved, the Advisor believes that
Tocqueville may engage in the same kind of inappropriate transactions as those
conducted by Mr. Culp, which would benefit Tocqueville to the detriment of the
Shareholders.
The Advisor also believes that since the departure of Mr. Culp, Tocqueville
does not possess the sophisticated expertise required to manage fixed-income
mutual funds as complex as the Funds. Moreover, the shareholder service and
other characteristics of the Tocqueville Trust are, in the view of the Advisor,
incompatible with the Funds.
DESCRIPTION OF THE PROPOSED BOARD MEMBERS
Robert Brandt, Ph.D.
Consultant to Centre Investment Services Limited, a division of Centre
Reinsurance Holdings Limited, with regard to fixed income asset management.
Consulting Psychologist engaged in management consulting and organizational
development with Vision Action Associates, a management consulting firm. Robert
Brandt is the son of the late Stanley Brandt who served with distinction as a
Board Member of the Fundamental Funds. Robert Brandt's address is 100 King
Street, Suite 202, Northampton, Ma. 01060.
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
<PAGE>
York, N.Y. 10013-4310. His age is 74.
Steven D. Germain
Managing Director and General Counsel Zurich Centre Group LLC ("ZCG") and
wholly owned subsidiaries, including the Centre Reinsurance Group of Companies.
ZCG has combined equity of more than $1.2 billion and total Assets in excess of
$7 billion. Mr. Germain is a director of National Insurance Group, Inc. of Los
Angeles, California, and a member of its Compensation Committee. He is also a
director of: Risk Enterprise Management, Home Holdings, Inc, Gruntal Financial
Corp., (a registered broker dealer) and is member of the American Bar
Association, and the New York Bar Association. He has a JD from Rutgers Law
School and a BA degree from Hampshire College. His address is Zurich Centre
Group LLC, One Chase Manhattan Plaza, New York, NY 10005.
Robert H. Parks, Ph.D.
Professor of Finance, Lubin (Graduate) School of Business, Pace University,
Managing Director and Chief Economist at Robert H. Parks & Associates, Inc. an
Economic and Investment Research Firm, formerly Vice President, Chief Economist
at Advest Institutional Service, Blyth Eastman Dillion (now Paine Webber), and
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.
Wiliam 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 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, 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
Fundamental Portfolio Advisors, Inc. 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
<PAGE>
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 Fundamental Portfolio Advisors, Inc. 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.
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.
<TABLE>
<CAPTION>
NAME NY Muni Fund Money Fund Hi-Yield Cal Muni US Govt
- ---- ------------ ----------- -------- -------- -------
<S> <C> <C> <C> <C>
Robert Brandt 11,303.932(1)
Hon. Alfred Toker 2,366.096
Steven Germain 1,566,759.173(2)
Vincent Malanga(3) 564,986.687 57,772.6 1,154.51 61,256.887
Totals 13,438,043.956 57,772.6 1,154.51 61,256.887
</TABLE>
1. Includes 10,243,370.024 shares held by Centre Reinsurance Limited for which
Dr. Brandt acts as a consultant regarding the active investment of mutual funds,
also includes 930,751.293 shares held by family members
2. Includes 235,759.808 held in a trust, but does not include the 10,243,370.024
shares held by Centre Reinsurance Limited note above in footnote 1
3. 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.
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
<PAGE>
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".
<TABLE>
<CAPTION>
NAME NY Muni Fund Money Fund Hi-Yield Cal Muni US Govt
- ---- ------------ ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Lance Brofman(1) 20,683.066 551.830 38.884.918 .800 82,451.475
Advisor 25,749.91(2) 787.147
</TABLE>
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
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 Notice of Meeting. 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:
Fundamental New York Fund
Number of Shares Percentage of
Names & Address Owned Outstanding Shares
- --------------- ----- ------------------
Centre Reinsurance Limited 10,243,370.024 6.05%
Fundamental California Fund
Number of Shares Percentage of
Names & Address 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
<PAGE>
Fundamental Money Market Fund
Number of Shares Percentage of
Names & Address 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
Number of Shares Percentage of
Names & Address 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
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' Declaration 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.
<PAGE>
_________ , 1998
BY ORDER OF FUNDAMENTAL PORTFOLIO ADVISORS, INC.
Vincent J. Malanga
President
<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
FUNDAMENTAL U.S. GOVERNMENT STRATEGIC INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS --May 19, 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 DR. ROBERT BRANDT,
THE HON. ALFRED TOKER, STEVEN GERMAIN, 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 SHAREHOLDERS INTENDING TO REPLACE THE BOARDS OF THE FUNDS.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. 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 Robert Brandt, Steven Germain, Robert Parks, The. Hon. Alfred Toker,
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.
<PAGE>
- -----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
<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
HIGH-YIELD MUNICIPAL BOND SERIES
SPECIAL MEETING OF SHAREHOLDERS -- May 19, 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 DR. ROBERT BRANDT, THE HON. ALFRED
TOKER, STEVEN GERMAIN, 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
SHAREHOLDERS INTENDING TO REPLACE THE BOARDS OF THE FUNDS.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. 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 Robert Brandt, Steven Germain, Robert Parks, The. Hon. Alfred Toker,
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.
<PAGE>
- ------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
<PAGE>
FUNDAMENTAL FIXED-INCOME FUND
TAX-FREE MONEY MARKET SERIES
SPECIAL MEETING OF SHAREHOLDERS -- May 19, 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 DR. ROBERT BRANDT, THE HON. ALFRED TOKER,
STEVEN GERMAIN, 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
SHAREHOLDERS INTENDING TO REPLACE THE BOARDS OF THE FUNDS.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. 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 Robert Brandt, Steven Germain, Robert Parks, The. Hon. Alfred Toker,
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.
<PAGE>
- ------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
<PAGE>
THE CALIFORNIA MUNI FUND
SPECIAL MEETING OF SHAREHOLDERS --May 19, 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 DR.
ROBERT BRANDT, THE HON. ALFRED TOKER, STEVEN GERMAIN, 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 SHAREHOLDERS INTENDING TO REPLACE THE BOARDS OF THE
FUNDS.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. 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 Robert Brandt, Steven Germain, Robert Parks, The. Hon. Alfred Toker,
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.
<PAGE>
- ------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
<PAGE>
FUNDAMENTAL FUNDS, INC.
NEW YORK MUNI FUND
SPECIAL MEETING OF SHAREHOLDERS --May 19, 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 DR. ROBERT BRANDT, THE HON. ALFRED TOKER, STEVEN GERMAIN, 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 SHAREHOLDERS INTENDING TO REPLACE
THE BOARDS OF THE FUNDS.
- ------Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on the Proposal to Amend the Articles of Incorporation to allow a
majority of shareholders to remove and replace directors:
FOR AGAINST ABSTAIN
|_| |_| |_|
2. 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 Robert Brandt, Steven Germain, Robert Parks, The. Hon. Alfred Toker,
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.
<PAGE>
- ------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____________________________
x____________________________
Dated:___________________, 1998
