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 : [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
Fremont Mutual Funds, Inc.
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
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 -11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
<PAGE>
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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 no.:
Schedule 14A; 33-23453; 811-05632
- --------------------------------------------------------------------------------
(3) Filing Party: Fremont Mutual Funds, Inc.
- --------------------------------------------------------------------------------
(4) Date Filed: July 6, 1998
- --------------------------------------------------------------------------------
<PAGE>
INDEX OF FILING
I. Documents for Fremont California Intermediate Tax-Free Fund
1. Shareholder Letter for Fremont California Intermediate Tax-
Free Fund
2. Fremont California Intermediate Tax-Free Fund Proxy Statement
3. Proxy Voting Card
<PAGE>
IMPORTANT PROXY VOTE
FOR FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND SHAREHOLDERS.
PLEASE READ AND RESPOND PROMPTLY
June 6, 1998
Dear Shareholder:
PLEASE READ THIS LETTER . . . IMPORTANT DOCUMENTS ENCLOSED.
I am writing to inform you of a Special Meeting of Shareholders of the Fremont
California Intermediate Tax-Free Fund shareholders that will be held on July 24,
1998. The purpose of the meeting is to vote on one important proposal concerning
the Fund. As a shareholder, you have the opportunity to voice your opinion on
this matter that affects your Fund. Please read the enclosed materials and cast
your vote on the proxy card.
The Fremont Board of Directors has recommended that the proxy resolution
presented below be approved and adopted by the Fremont California Intermediate
Tax-Free Fund shareholders. For your convenience we have briefly outlined the
proxy proposal you are being asked to vote on:
Multi-Manager Exemption: Fremont Investment Advisors, Inc. (the "Advisor"),
is responsible to the shareholders for the selection and oversight of
portfolio managers and sub-advisors for the Fremont Funds. Currently the
Advisor may employ, terminate, or change portfolio managers for the Fremont
California Intermediate Tax-Free Fund only after obtaining shareholder
approval. The Advisor is requesting shareholder approval of a proposal to
amend the Fund's investment advisory agreement, which will permit the
Advisor to hire sub-advisors for the Fund or modify subadvisory agreements
without a shareholder vote. Implementing this policy could benefit
shareholders by reducing Fund expenses, allowing for more timely
sub-advisor changes when warranted, and improving operational efficiencies.
In this packet you will find two items:
o The proxy statement - this explains more about the proposal outlined
above, and provides the background and purpose of this resolution.
o The proxy card - to use as a ballot.
Voting by mail is quick and easy. Everything you need is enclosed. We encourage
you to exercise your rights as a shareholder and vote promptly. To cast your
vote, simply complete and sign the proxy card and return it in the enclosed
postage-paid envelope no later than July 20, 1998. Or, if you would like to cast
your vote in person, you may do so at the special shareholder meeting that will
take place at July 24, 1998 in the main conference room on the 26th floor of 333
Market Street, San Francisco. If you have any questions about any of these
materials, please call us at 800-548-4539 (press 1). Thank you for your
participation and for investing with Fremont Mutual Funds.
Sincerely,
Michael H. Kosich
President
P.S. Your vote is important, so please make sure you complete and sign the
enclosed proxy card and mail it back to us in the postage-paid envelope before
the July 20th response deadline.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
333 Market Street
26th Floor
San Francisco, CA 94105
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on July 24, 1998
A Special Meeting of Shareholders (the "Meeting") of the FREMONT
CALIFORNIA INTERMEDIATE TAX-FREE FUND (the "Fund") will be held at the Fund's
offices at 333 Market Street, 26th Floor, San Francisco, California 94105, on
July 24, 1998 at 10:00 a.m. for the following purposes:
1. To consider and act upon the approval of a proposal to permit
Fremont Investment Advisors, Inc. to hire and terminate
sub-advisors or modify subadvisory agreements without shareholder
approval.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The stock transfer books will not be closed but, in lieu thereof, the
Board of Directors has fixed the close of business on July 1, 1998 as the record
date for the determination of shareholders of the Fund entitled to notice of,
and to vote at, the Meeting.
By order of the Board of Directors
Tina Thomas, Secretary
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN
PERSON OR BY PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE APPROPRIATE ENCLOSED PROXY OR PROXIES IN THE
ACCOMPANYING ENVELOPE PROVIDED FOR YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
San Francisco, California
July 6, 1998
1
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
333 Market Street
26th Floor
San Francisco, CA 94105
(800) 548-4539
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
To Be Held On July 24, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Fremont Mutual Funds, Inc. (the
"Company"), on behalf of the Fremont California Intermediate Tax-Free Fund (the
"Fund") of proxies to be voted at a Special Meeting of Shareholders of the Fund
to be held at the Fund's offices at 333 Market Street, 26th Floor, San
Francisco, California 94105, on July 24, 1998 at 10:00 a.m. (the "Meeting") and
at any adjournment thereof, for the purposes set forth in the accompanying
Notice of Special Meeting of Shareholders.
The costs of preparing, printing, mailing and soliciting the proxies
will be borne Fremont Investment Advisors, Inc. (the "Advisor"). In addition,
certain officers, directors and employees of the Advisor and officers and
directors of the Fund (none of whom will receive additional compensation
therefor) may solicit proxies in person or by telephone, telegraph or mail. ADP
Investor Communication Services has been retained at its customary rates to
solicit proxies on behalf of the omnibus accounts. Investment Company
Administration Corporation will solicit proxies from all other accounts at no
cost, except for out-of-pocket expenses.
All properly executed proxies received prior to the Meeting will be
voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein. Unless instructions to the contrary are marked,
shares represented by the proxies will be voted "FOR" all the proposals. All
shares in Fund-sponsored IRA accounts not voted by the account owner will be
voted by the IRA trustee in the same proportion (for, against and abstain) as
all other votes cast whether in person or by proxy. For purposes of determining
the presence of a quorum for transacting business at the Meeting, abstentions
and broker "non-votes" (that is, proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owner or
other persons entitled to vote shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will be treated
as shares that are present. However, broker non-votes are disregarded in
determining "votes cast" when the voting requirement is based on achieving a
percentage of the voting securities entitled to vote present in person or by
proxy at the Meeting. Any proxy may be revoked at any time prior to the exercise
thereof by submitting another proxy bearing a later date or by giving written
notice to the Secretary of the Company at the address indicated above or by
voting in person at the Meeting. Any proxy may be revoked at any time prior to
the exercise
2
<PAGE>
thereof by submitting another proxy bearing a later date or by giving written
notice to the Secretary of the Company at the address indicated above or by
voting in person at the Meeting. The affirmative vote of a majority of the
shares as defined under the Investment Company Act of 1940 as amended (the "1940
Act") (a "Majority Vote") (either 67% of the shares present at the Meeting, if
holders of more than 50% of the outstanding shares are present in person or by
proxy, or more than 50% of the outstanding shares, whichever is less) of the
Fund is necessary to approve an arrangement to permit the Advisor to hire and
terminate sub-advisors or modify subadvisory agreements without shareholder
approval (Proposal I).
In the event that insufficient votes in favor of any of the items to be
considered at the Meeting are received by the time scheduled for the Meeting,
the Meeting may be held for the purpose of voting on those proposals for which
sufficient votes have been received, and the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of the proxies with respect to any proposals for which sufficient votes had not
been received. Any such adjournment will require the affirmative vote of a
majority of votes cast on the question in person or by proxy at the Meeting. The
persons named as proxies will vote against such adjournment only with respect to
those proxies that they are required to vote against such proposal.
The Board of Directors of the Company knows of no business other than
that specifically mentioned in the Notice of Meeting which will be presented for
consideration at the Meeting. If any other matters are properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.
The Board of Directors of the Company has fixed the close of business
on July 1, 1998 as the record date (the "Record Date") for the determination of
shareholders of the Fund entitled to notice of and to vote at the Meeting or any
adjournment thereof. Shareholders of the Fund on that date will be entitled to
one vote on each matter on which they are entitled to vote for each share held
and a fractional vote with respect to fractional shares, and shareholders will
not have cumulative voting rights. At the close of business on the Record Date,
the Fund had 6,102,482.763 outstanding shares, each with a par value of $0.0001
per share.
The principal executive offices of the Company are located at 333
Market Street, 26th Floor, San Francisco, California 94105. The enclosed proxy
and this proxy statement are first being sent to the Fund's shareholders on or
about July 1, 1998.
As of the Record Date, BF Fund Limited owned 70% and Willis Slusser &
Marion Slusser owned 6% of the outstanding shares of the Fund. As of the Record
Date, to the best knowledge of the Fund, no other person owned of record or
beneficially more than 5% of the outstanding shares of the Fund.
3
<PAGE>
BACKGROUND
The Advisor is seeking shareholder approval to make certain changes to
the Fund's operations. The proposed change would allow the Advisor to change
sub-advisors and modify subadvisory agreements without approval of the Fund's
shareholders.
PROPOSAL I
APPROVAL OR DISAPPROVAL OF A PROPOSAL TO PERMIT THE INVESTMENT
MANAGER TO HIRE AND TERMINATE SUB-ADVISORS OR MODIFY
SUBADVISORY AGREEMENTS WITHOUT SHAREHOLDER APPROVAL
The Advisor currently serves as investment advisor to the Fund pursuant
to an Investment Advisory and Administrative Services Agreement (as defined
above, the "Current Agreement") with the Company. The Advisor currently does not
employ any sub-advisor with respect to the Fund. However, the Advisor may engage
sub-advisors in the future. The Company is proposing to permit the Advisor to
enter into, terminate, or modify subadvisory agreements on behalf of the Fund
with sub-advisors without obtaining the prior approval of a majority of the
outstanding voting securities of the Fund, as is otherwise required by Section
15 of the 1940 Act.
The Fund currently pays the Advisor an annual management fee equal to
0.30% of the Fund's total net assets. If the Advisor engages a sub-advisor in
the future, the Advisor (not the Fund) will pay the sub-advisor. Any Portfolio
Management Agreement with a sub-advisor may be terminated by the Advisor or the
Investment Company upon 30 days' written notice. The Advisor has day-to-day
authority to increase or decrease the amount of the Fund's assets managed by the
sub-advisor.
Section 15 of the 1940 Act requires that the shareholders of the Fund
approve the Fund's subadvisory agreement(s) and any amendments thereto. On
December 16, 1996, the Company and the Advisor received from the Securities and
Exchange Commission an order (the "SEC Order") exempting the Fund from these
provisions. 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 subadvisory
agreements without the prior approval of shareholders. By eliminating
shareholder approval in these matters, the Advisor would have greater
flexibility in managing sub-advisors, and shareholders would save the
considerable expenses involved in holding shareholder meetings and soliciting
proxies. Pursuant to the SEC Order, the Company and the Advisor have agreed to
the imposition of the following conditions:
(1) The Advisor will not enter into a subadvisory agreement with a
sub-advisor that is an "affiliated person," as defined in the 1940 Act,
of the Company or the Advisor (an "Affiliated Manager"), other than by
reason of serving as a sub-advisor to the Fund, without such agreement,
including the compensation to be paid thereunder, being approved by the
shareholders of the Fund.
4
<PAGE>
(2) At all times, a majority of the Company's directors will be persons
each of whom is not an "interested person" of the Company as defined in
the 1940 Act (as defined above, "Independent Directors"), and the
nomination of new or additional Independent Directors will be placed
with the discretion of the then existing Independent Directors.
(3) When a sub-advisor change is proposed for the Fund with an
Affiliated Manager, the Company's directors, including a majority of
the Independent Directors, will make a separate finding, reflected in
the Company's board minutes, that such change is in the best interests
of the Fund and its shareholders and does not involve a conflict of
interest from which the Advisor or the Affiliated Manager derives an
inappropriate advantage.
(4) The Advisor will provide general management services to the Company
and the Fund and, subject to review and approval by the Company's Board
of Directors, will (i) set the Fund's overall investment strategies;
(ii) select sub-advisor(s); (iii) allocate and, when appropriate,
reallocate the Fund's assets among the Advisor and one or more
sub-advisors; (iv) monitor and evaluate the performance of
sub-advisors; and (v) seek to ensure that the sub-advisors comply with
the Fund's investment objectives, policies and restrictions.
(5) Within 60 days of the hiring of any new sub-advisor or the
implementation of any proposed material change in a subadvisory
agreement, the Advisor will furnish shareholders all information about
the new sub-advisor or subadvisory agreement that would be included in
a proxy statement. Such information will include the fees paid by the
Advisor to the sub-advisor and any change in such disclosure caused by
the addition of a new sub-advisor or any proposed material change in a
subadvisory agreement. The Advisor will meet this condition by
providing shareholders with an information statement which meets the
requirements of the proxy rules under applicable federal securities
laws.
(6) The Fund will disclose in its Prospectus the existence, substance
and effect of the SEC Order.
(7) Before the Fund may rely on the SEC Order, the operations of the
Fund in the manner described therein will be approved by a majority of
the Fund's outstanding voting securities, as defined in the 1940 Act.
(8) No director or officer of the Company or the Advisor will own
directly or indirectly (other than through a pooled investment vehicle
that is not controlled by any such director or officer) any interest in
a sub-advisor except for (i) ownership of interests in the Advisor or
any entity that controls, is controlled by or is under common control
with the Advisor; (ii) ownership of less than 1% of the outstanding
securities of any class of equity or debt of a publicly-traded company
that is either a sub-advisor or an entity that controls, is controlled
by or is under common control with a sub-advisor.
5
<PAGE>
In accordance with condition (7), shareholder approval of this proposed new
arrangement is being sought. Even if the Fund's shareholders approve this
arrangement, any new sub-advisors engaged or terminated or any change in a
subadvisory agreement will still require approval of the Board of Directors. In
order to approve new sub-advisors, the Board will analyze the factors they deem
relevant, including the nature, quality and scope of services provided by
sub-advisors to investment companies comparable to the Fund. The Board will
review the ability of the sub-advisor to provide its services to the Fund, as
well as its personnel, operation, financial condition or any other factor which
would affect the provision of these services. The Board will examine the
performance of the sub-advisor with respect to compliance and regulatory matters
over the past fiscal year. The Board will review the sub-advisor's investment
performance with respect to accounts deemed comparable. Finally, the Board will
consider other factors deemed relevant to the sub-advisor's performance as an
investment advisor. The Board believes that this review provides adequate
shareholder protection in the selection of sub-advisors.
The Board of Directors has approved this proposal because they believe
that it is in the best interest of the Fund's shareholders that the Advisor have
the ability to engage the best possible portfolio management talent in an
efficient manner. At the same time, the fact that the Board retains the
responsibility of evaluating and approving any potential sub-advisor, ensures
that the best interests of the shareholders are considered.
In adopting this proposal, the Advisor gains the ability to engage the
best possible portfolio management talent in an efficient manner. This does not
lead to any changes in the Fund's investment objective. It is possible that in
hiring a sub-advisor, there could be a change in the investment strategy used to
pursue the investment objective. Should a change in investment strategy occur,
the shareholders would be given the required notification within 60 days of the
change.
The Board of Directors recommends that shareholders vote "FOR" the
proposal to permit the Advisor to hire and terminate sub-advisors or modify
subadvisory agreements without shareholder approval. If the shareholders of the
Fund do not approve this Proposal, the Advisory Agreement will continue and the
terms and conditions of the SEC Order will not be applicable to the Fund.
GENERAL INFORMATION
Officers and Directors of the Advisor
The Advisor's principal executive officers are set forth below. The
address of each as it relates to his/her duties at the Advisor, is the same as
the Advisor.
<TABLE>
Name Position with the Advisor Position with the Company
- ---- ------------------------- -------------------------
<S> <C> <C>
David L. Redo President and Director Chairman, Chief Executive
Officer and Director
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
Michael H. Kosich Managing Director President and Director
Albert W. Kirschbaum Managing Director Senior Vice President
Peter F. Landini Managing Director Executive Vice President and
Director
</TABLE>
Other Matters to Come Before the Meeting
Management of the Company knows of no other matters which are to be
brought before the Meeting. However, if any other matters not now known or
determined properly come before the Meeting, it is the intention of the persons
named in the enclosed form of Proxy to vote such Proxy in accordance with their
best judgment on such matters.
All Proxies received will be voted in favor of all the proposals,
unless otherwise directed therein.
Shareholder Proposals
The Meeting is a special meeting of shareholders. The Fund is not
required to, nor does it intend to, hold regular annual meetings of its
shareholders. If such a meeting is called, any shareholder who wishes to submit
a proposal for consideration at the meeting should submit the proposal promptly
to the Company.
Reports to Shareholders
The Company will furnish, without charge, a copy of the most recent
Annual Report to Shareholders of the Company on request. Request for such report
should be directed to the Company c/o Fremont Investment Advisors, Inc., 333
Market Street, Suite 2900, San Francisco, California 94105-4022, or to (800)
548-4539.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Very truly yours,
Tina Thomas
Secretary
7
<PAGE>
PROXY
Fremont California Intermediate Tax-Free Fund
SPECIAL MEETING OF SHAREHOLDERS
July 24, 1998
SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
FREMONT MUTUAL FUNDS, INC.
The undersigned hereby appoints Michael H. Kosich and Tina Thomas, and
each of them, as proxies of the undersigned, each with the power to appoint his
substitute, for the Special Meeting of Shareholders of Fremont California
Intermediate Tax-Free Fund (the "Fund"), a series of Fremont Mutual Funds, Inc.
(the Company), to be held on July 24, 1998 at the offices of Fremont Mutual
Funds, Inc., 333 Market Street, 26th Floor, San Francisco, California, 94105, or
at any and all adjournments thereof (the "Meeting"), to vote, as designated
below, all shares of the Fund, held by the undersigned at the close of business
on July 1, 1998. Capitalized terms used without definition have the meanings
given to them in the accompanying Proxy Statement.
A SIGNED PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL LISTED BELOW UNLESS YOU
HAVE SPECIFIED OTHERWISE. PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY. YOU
MAY VOTE ONLY IF YOU HELD SHARES IN THE FUND AT THE CLOSE OF BUSINESS ON JULY 1,
1998. YOUR SIGNATURE AUTHORIZES THE PROXIES TO VOTE IN THEIR DISCRETION UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING WITHOUT
LIMITATION ALL MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
1. Approval to permit the Advisor to hire and terminate sub-advisors or
modify subadvisory agreements without shareholder approval:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: ______________, 1998
-----------------------------------
Signature
-----------------------------------
Title (if applicable)
-----------------------------------
Signature (if held jointly)
-----------------------------------
Title (if applicable)
Please sign exactly as name or names appear on your shareholder account
statement. When signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title. If shares are
held jointly, each shareholder should sign.
