SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
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 ss.240.14a-11(c) or ss.240.14a-12
Fremont Funds, Inc.
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(Name of Registrant as Specified in Its Charter)
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(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
Fremont
Funds [LOGO]
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Important Proxy Vote for Fremont Bond Fund Shareholders
Please Read and Respond Promptly
November 13, 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
Bond Fund that will be held on December 15, 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 Bond 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 Fremont Funds. Currently the Advisor may employ,
terminate, or change sub-advisors for the Fremont Bond Fund only after obtaining
shareholder approval. The Advisor is requesting shareholder approval of a
proposal to amend the Fund's investment advisory agreement. This amended
agreement 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 December 4, 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 9:00 a.m. on December 15, 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 2). Thank
you for your participation and for investing with Fremont Mutual Funds.
Sincerely,
/s/ Michael H. Kosich
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 December 4 response deadline.
Fremont Mutual Funds, Inc.
50 Beale Street, Suite 100, San Francisco, CA 94105 o www.fremontfunds.com
P.O. Box 193663, San Francisco, CA 94119-3663 o Telephone 800-548-4539
Distributed by First Fund Distributors, Inc., San Francisco, CA 94105
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT BOND FUND
333 Market Street
26th Floor
San Francisco, CA 94105
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on December 15, 1998
A Special Meeting of Shareholders (the "Meeting") of the FREMONT BOND FUND
(the "Fund") will be held at the Fund's offices at 333 Market Street, 26th
Floor, San Francisco, California 94105, on December 15, 1998 at 9:00 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 October 26, 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
/s/ Tina Thomas
Tina Thomas, Secretary
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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.
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San Francisco, California
October 27, 1998
1
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT BOND 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 December 15, 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 Bond 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 December 15,
1998 at 9:00 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 by 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.
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. 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
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of business on October 26, 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 21,808,480.799 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 November
13, 1998.
As of the Record Date, Bechtel Mast Trust for Qualified Employees owned 76% and
Sequoia Ventures, Inc. owned 5% 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.
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
Pacific Investment Management Company, 840 Newport Center Drive, Suite 360,
Newport Beach, California, 92660, serves as sub-advisor for the Fund pursuant to
a Portfolio Management Agreement (as defined above, the "Current Agreement")
with the Advisor and the Company. The Advisor provides direct portfolio
management services to the extent that the sub-advisor does not provide those
services. In the future, the Advisor may propose to the Company that different
or additional sub-advisor(s) be engaged to provide investment advisory or
portfolio management services to the Fund. 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.
As compensation for its services, the Advisor (not the Fund) pays the
sub-advisor an annual fee equal to 0.25% of the Fund's assets managed by the
sub-advisor. The Portfolio Management Agreement with the 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.
(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
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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.
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.
4
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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 duties at the Advisor, is the same as the Advisor.
Name Position with the Advisor Position with the Company
- ---- ------------------------- -------------------------
David L. Redo President and Director Chairman, Chief Executive
Officer and Director
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
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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 2600, 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,
/s/ Tina Thomas
Tina Thomas
Secretary
5
<PAGE>
FREMONT MUTUAL FUNDS, INC. PROXY
333 MARKET STREET, 26TH FLOOR
SAN FRANCISCO, CA 94105 Fremont Bond Fund
SPECIAL MEETING OF SHAREHOLDERS
December 15, 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 Money Market
Fund (the "Fund"), a series of Fremont
Mutual Funds, Inc. (the "Company"), to
be held on December 15, 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 October 26, 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 OCTOBER
26, 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.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X FREBON
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FREMONT BOND FUND
Vote On Proposal
1. Approval to permit the Advisor to
hire and terminate sub-advisors or
modify subadvisory agreements
without shareholder approval: FOR [ ] AGAINST [ ] ABSTAIN [ ]
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 must sign.
|--------------------------|-------| |--------------------------|-------|
|--------------------------|-------| |--------------------------|-------|
Signature Date Signature (Joint Owners) Date
(PLEASE SIGN WITHIN BOX)
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<PAGE>
Fremont
Funds [LOGO]
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Important Proxy Vote for Fremont Global Fund Shareholders
Please Read and Respond Promptly
November 13, 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
Global Fund that will be held on December 15, 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 Global 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 Fremont Funds. Currently the Advisor may employ,
terminate, or change sub-advisors for the Fremont Global Fund only after
obtaining shareholder approval. The Advisor is requesting shareholder approval
of a proposal to amend the Fund's investment advisory agreement. This amended
agreement 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 December 4, 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 9:15 a.m. on December 15, 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 2). Thank
you for your participation and for investing with Fremont Mutual Funds.
Sincerely,
/s/ Michael H. Kosich
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 December 4 response deadline.
Fremont Mutual Funds, Inc.
50 Beale Street, Suite 100, San Francisco, CA 94105 o www.fremontfunds.com
P.O. Box 193663, San Francisco, CA 94119-3663 o Telephone 800-548-4539
Distributed by First Fund Distributors, Inc., San Francisco, CA 94105
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT GLOBAL FUND
333 Market Street
26th Floor
San Francisco, CA 94105
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on December 15, 1998
A Special Meeting of Shareholders (the "Meeting") of the FREMONT GLOBAL
FUND (the "Fund") will be held at the Fund's offices at 333 Market Street, 26th
Floor, San Francisco, California 94105, on December 15, 1998 at 9:15 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 October 26, 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
/s/ Tina Thomas
Tina Thomas, Secretary
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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
October 27, 1998
1
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT GLOBAL 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 December 15, 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 Global 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 December 15,
1998 at 9:15 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 by 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.
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. 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
2
<PAGE>
of business on October 26, 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 45,012,086.954 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 November
13, 1998.
As of the Record Date, Bechtel Mast Trust for Qualified Employees owned 43% and
BF Fund Limited 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.
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 0.60% 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.
(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
3
<PAGE>
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.
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.
4
<PAGE>
- --------------------------------------------------------------------------------
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 duties at the Advisor, is the same as the Advisor.
Name Position with the Advisor Position with the Company
- ---- ------------------------- -------------------------
David L. Redo President and Director Chairman, Chief Executive
Officer and Director
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
- --------------------------------------------------------------------------------
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 2600, 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,
/s/ Tina Thomas
Tina Thomas
Secretary
5
<PAGE>
FREMONT MUTUAL FUNDS, INC. PROXY
333 MARKET STREET, 26TH FLOOR
SAN FRANCISCO, CA 94105 Fremont Global Fund
SPECIAL MEETING OF SHAREHOLDERS
December 15, 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 Money Market
Fund (the "Fund"), a series of Fremont
Mutual Funds, Inc. (the "Company"), to
be held on December 15, 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 October 26, 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 OCTOBER
26, 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.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X FREGLO
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FREMONT GLOBAL FUND
Vote On Proposal
1. Approval to permit the Advisor to
hire and terminate sub-advisors or
modify subadvisory agreements
without shareholder approval: FOR [ ] AGAINST [ ] ABSTAIN [ ]
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 must sign.
|--------------------------|-------| |--------------------------|-------|
|--------------------------|-------| |--------------------------|-------|
Signature Date Signature (Joint Owners) Date
(PLEASE SIGN WITHIN BOX)
- --------------------------------------------------------------------------------
<PAGE>
Fremont
Funds [LOGO]
- --------------------------------------------------------------------------------
Important Proxy Vote for Fremont Growth Fund Shareholders
Please Read and Respond Promptly
November 13, 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
Growth Fund that will be held on December 15, 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 Growth 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 Fremont Funds. Currently the Advisor may employ,
terminate, or change sub-advisors for the Fremont Growth Fund only after
obtaining shareholder approval. The Advisor is requesting shareholder approval
of a proposal to amend the Fund's investment advisory agreement. This amended
agreement 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 December 4, 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 9:30 a.m. on December 15, 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 2). Thank
you for your participation and for investing with Fremont Mutual Funds.
Sincerely,
/s/ Michael H. Kosich
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 December 4 response deadline.
Fremont Mutual Funds, Inc.
50 Beale Street, Suite 100, San Francisco, CA 94105 o www.fremontfunds.com
P.O. Box 193663, San Francisco, CA 94119-3663 o Telephone 800-548-4539
Distributed by First Fund Distributors, Inc., San Francisco, CA 94105
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT GROWTH FUND
333 Market Street
26th Floor
San Francisco, CA 94105
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on December 15, 1998
A Special Meeting of Shareholders (the "Meeting") of the FREMONT GROWTH
FUND (the "Fund") will be held at the Fund's offices at 333 Market Street, 26th
Floor, San Francisco, California 94105, on December 15, 1998 at 9:30 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 October 26, 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
/s/ Tina Thomas
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
October 27, 1998
1
<PAGE>
FREMONT GROWTH 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 December 15, 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 Growth 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 December 15,
1998 at 9:30 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 by 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.
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. 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
2
<PAGE>
of business on October 26, 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 10,471,401.983 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 November
13, 1998.
As of the Record Date, BF Fund Limited owned 54% 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.
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 0.50% 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.
(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 objec-
3
<PAGE>
tives, 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.
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.
4
<PAGE>
- --------------------------------------------------------------------------------
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 duties at the Advisor, is the same as the Advisor.
Name Position with the Advisor Position with the Company
- ---- ------------------------- -------------------------
David L. Redo President and Director Chairman, Chief Executive
Officer and Director
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
- --------------------------------------------------------------------------------
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 2600, 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,
/s/ Tina Thomas
Tina Thomas
Secretary
5
<PAGE>
FREMONT MUTUAL FUNDS, INC. PROXY
333 MARKET STREET, 26TH FLOOR
SAN FRANCISCO, CA 94105 Fremont Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
December 15, 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 Money Market
Fund (the "Fund"), a series of Fremont
Mutual Funds, Inc. (the "Company"), to
be held on December 15, 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 October 26, 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 OCTOBER
26, 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.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X FREGRO
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FREMONT GROWTH FUND
Vote On Proposal
1. Approval to permit the Advisor to
hire and terminate sub-advisors or
modify subadvisory agreements
without shareholder approval: FOR [ ] AGAINST [ ] ABSTAIN [ ]
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 must sign.
|--------------------------|-------| |--------------------------|-------|
|--------------------------|-------| |--------------------------|-------|
Signature Date Signature (Joint Owners) Date
(PLEASE SIGN WITHIN BOX)
- --------------------------------------------------------------------------------
<PAGE>
Fremont
Funds [LOGO]
- --------------------------------------------------------------------------------
Important Proxy Vote for Fremont Money Market Fund Shareholders
Please Read and Respond Promptly
November 13, 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
Money Market Fund that will be held on December 15, 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 Money Market 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 Fremont Funds. Currently the Advisor may employ,
terminate, or change sub-advisors for the Fremont Money Market Fund only after
obtaining shareholder approval. The Advisor is requesting shareholder approval
of a proposal to amend the Fund's investment advisory agreement. This amended
agreement 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 December 4, 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 9:45 a.m. on December 15, 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 2). Thank
you for your participation and for investing with Fremont Mutual Funds.
Sincerely,
/s/ Michael H. Kosich
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 December 4 response deadline.
Fremont Mutual Funds, Inc.
50 Beale Street, Suite 100, San Francisco, CA 94105 o www.fremontfunds.com
P.O. Box 193663, San Francisco, CA 94119-3663 o Telephone 800-548-4539
Distributed by First Fund Distributors, Inc., San Francisco, CA 94105
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT MONEY MARKET FUND
333 Market Street
26th Floor
San Francisco, CA 94105
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on December 15, 1998
A Special Meeting of Shareholders (the "Meeting") of the FREMONT MONEY
MARKET FUND (the "Fund") will be held at the Fund's offices at 333 Market
Street, 26th Floor, San Francisco, California 94105, on December 15, 1998 at
9:45 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 October 26, 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
/s/ Tina Thomas
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
October 27, 1998
1
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FREMONT MONEY MARKET 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 December 15, 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 Money Market 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
December 15, 1998 at 9:45 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 by 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.
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. 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
2
<PAGE>
of business on October 26, 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 704,813,963.919 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 November
13, 1998.
As of the Record Date, Bechtel Mast Trust for Qualified Employees owned 52% and
Sequoia Ventures, Inc. owned 12% 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.
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.
(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
3
<PAGE>
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.
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.
4
<PAGE>
- --------------------------------------------------------------------------------
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 duties at the Advisor, is the same as the Advisor.
Name Position with the Advisor Position with the Company
- ---- ------------------------- -------------------------
David L. Redo President and Director Chairman, Chief Executive
Officer and Director
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
- --------------------------------------------------------------------------------
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 2600, 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,
/s/ Tina Thomas
Tina Thomas
Secretary
5
<PAGE>
FREMONT MUTUAL FUNDS, INC. PROXY
333 MARKET STREET, 26TH FLOOR
SAN FRANCISCO, CA 94105 Fremont Money Market Fund
SPECIAL MEETING OF SHAREHOLDERS
December 15, 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 Money Market
Fund (the "Fund"), a series of Fremont
Mutual Funds, Inc. (the "Company"), to
be held on December 15, 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 October 26, 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 OCTOBER
26, 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.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X FREMON
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
FREMONT MONEY MARKET FUND
Vote On Proposal
1. Approval to permit the Advisor to
hire and terminate sub-advisors or
modify subadvisory agreements
without shareholder approval: FOR [ ] AGAINST [ ] ABSTAIN [ ]
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 must sign.
|--------------------------|-------| |--------------------------|-------|
|--------------------------|-------| |--------------------------|-------|
Signature Date Signature (Joint Owners) Date
(PLEASE SIGN WITHIN BOX)
- --------------------------------------------------------------------------------
