FREMONT MUTUAL FUNDS
FREMONT INTERNATIONAL GROWTH FUND
Supplement dated March 1, 1998 to prospectus dated March 1, 1998
The Board of Directors and the shareholders of the Fremont International
Growth Fund (the "Fund") have approved a new sub-advisor for Fremont
International Growth Fund. The new sub-advisor is Capital Guardian Trust Company
("Capital Guardian"), located at 333 South Hope Street, Los Angeles, California.
Capital Guardian is a wholly-owned subsidiary of The Capital Group
Companies, Inc., a non-operating holding company for a group of companies
involved in providing investment management for institutions around the world.
The Capital organization is one of the oldest major financial service firms in
the United States, dating back to 1931. Capital Guardian was chartered in 1968
under the California state banking laws as a non-depository trust company. Its
principal business is providing investment management services, including
international investment management services to a limited number of large
institutional clients such as employee benefit funds, public funds, foundations,
and endowment funds. Capital Guardian has been managing domestic equity assets
since its founding in 1968, and as of December 31, 1997, managed over $65
billion for institutional investors, including over $28 billion in non-U.S.
equity assets. The Capital organization's commitment to international research
and investing dates back to 1955 when its sister company, Capital Research and
Management Company, established an international investment capability. The
Capital organization's first non-U.S. office was established in Geneva in 1962.
The Capital organization currently spends over $100 million annually on
research. Capital Guardian has managed international portfolios since 1978. The
day-to-day responsibility for managing the Fund's portfolio will be the
responsibility of a group of Capital Guardian portfolio mangers, each of whom
will have investment discretion over a portion of the Fund's portfolio.
Capital Guardian utilizes a value-oriented investment philosophy. The
investment approach is research driven and "bottom-up" in that investment
decisions are based on extensive field research and direct company contact to
help identify differences between the underlying value of a company and the
market price of its securities. In analyzing potential and current investments,
Capital Guardian evaluates a company's management, financial strength,
resources, products, services, the business climate, future earnings and
dividends, and weighs there factors in the context of identifying potential
risks.
Capital Guardian will assume responsibility for the investment portfolio of
Fremont International Growth Fund as of March 2, 1998. The annual sub-advisory
fee paid to Capital Guardian will be 0.75% of the first $25 million of Fund's
average daily net assets, 0.60% of the next $25 million, 0.425% of the next $200
million and 0.375% of such assets in excess of $250 million.
Capital Guardian's sub-advisory fees are paid by Fremont Investment
Advisors, Inc. (the "Advisor") out of its advisory fee under a new fee
structure. The new fee structure (which includes a distribution on 12b-1 fee as
described below) is made up of the following components, each based on average
annual assets.
Advisory fee to Fremont Investment Advisors
(includes sub-advisory fee) 1.00%
Administrative fee to Fremont Investment Advisors 0.15%
12b-1 fee 0.25%
Other expenses (under cap) 0.10%
Total expenses (capped until October 31, 1999) 1.50%*
The Board of Directors and shareholders of the Fund have also approved the
implementation of a 12b-1 plan under which the Fund may directly compensate the
Advisor, paying for certain distribution-related expenses, including payments to
securities dealers and others (including the Underwriter) who are engaged in
promoting the sale of shares of the Fund and who may be advising investors
regarding the purchase, sale, or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services; expenses of formulating and implementing
marketing and promotional activities, including direct mail promotions and mass
media advertising; expenses of preparing, printing, and distributing sales
literature, prospectuses, statements of additional information, and reports for
recipients other than existing shareholders of the Fund; expenses of obtaining
such information, analyses, and reports with respect to marketing and
promotional activities as the Advisor may, from time to time, deem advisable;
and other expenses related to the distribution of the Fund's shares.
The annual limitation for compensation to the Advisor pursuant to the Plan
is .25% of the Fund's average daily net assets. All payments will be reviewed by
the Fund's Board of Directors. However, it is possible that in certain periods,
the amount of the Advisor's compensation could exceed the Advisor's distribution
expenses resulting in a profit to the Advisor.
The changes in the fee structure and the rule 12b-1 plan will be
implemented on March 2, 1998.
Fremont Funds and the Advisor have received from the Securities and
Exchange Commission an order (the "SEC Order") exempting the Fund in the future
from the provisions of the 1940 Act that require the shareholders of the Fund to
approve the Fund's sub-advisory agreement(s) and any amendments thereto. The SEC
Order permits the Advisor to hire new sub-advisors, terminate sub-advisors,
rehire existing sub-advisors whose agreements have been assigned (and thus,
automatically terminated), and modify sub-advisory agreements without he prior
approval of shareholders. By eliminating shareholder approval in these matters,
the Advisor would have greater flexi-
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FREMONT MUTUAL FUNDS
bility in managing sub-advisors, and shareholders would save the considerable
expense involved in holding shareholder meetings and soliciting proxies. The
Advisor may in its discretion manage all or a portion of the Fund's portfolio
directly with or without the use of a sub-advisor.
ADDITIONAL INFORMATION ON CAPITAL GUARDIAN
Capital Guardian's principal executive officers and directors are shown
below. The address of each as it relates to his/her duties of Capital Guardian
is the same as that of Capital Guardian.
NAME POSITION WITH COMPANY
David I. Fisher Chairman and Director
Robert Ronus President and Director
John H. Seiter Vice President-Client Relations
and Marketing and Director
Eugene P. Stein Executive Vice President and Director
Andrew F. Barth Director
Michael D. Beckman Director
Larry P. Clemmensen Director
Roberta A. Conroy Director
William H. Hurt Director
Nancy J. Kyle Director
Karin L. Larson Director
D. James Martin Director
John McIlwraith Director
James R. Mulally Director
Jason M. Pilalas Director
Theodore R. Samuels Director
* The Advisor anticipates waiving fees and reimbursing the Fund for other
expenses in order to limit total operating expenses of the Fund to 1.50% of
average daily net assets through the end of the Fund's fiscal year ending
October 31, 1999. Absent such reduction, actual total fund operating expenses is
estimated to be at 1.78% of average daily net assets. To the extent management
fees are waived and/or other expenses are reimbursed by the Advisor, the Advisor
may elect to recapture such amounts subject to the following conditions: the
Advisor must request reimbursement within three years from the year in which the
initial waiver and/or reimbursement is made, and the Board of Directors must
approve the reimbursement, and the Fund must be able to make the reimbursement
and still stay within the then current operating expense limitation.
