As filed with the Securities and Exchange Commission on February 1, 1999
File No: 333-_______
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
FREMONT MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
(415) 284-8733
(Registrant's Telephone Number, Including Area Code)
333 Market Street, Suite 2600
San Francisco, California 94105
(Address of Principal Executive Offices)
Tina Thomas, Secretary
Fremont Mutual Funds, Inc.
333 Market Street, Suite 2600
San Francisco, CA 94105
(Name and Address of Agent for Service)
Copy to:
Julie Allecta
David Hearth
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective. The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until the registration statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.
No filing fee is required under the Securities Act of 1933, as amended, because
an indefinite number of shares of beneficial interest, with par value $0.01 per
share, has previously been registered pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended.
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CROSS REFERENCE SHEET
Form N-14 Part A, Item Location in Prospectus/Proxy Statement
- ---------------------- --------------------------------------
1 Front Cover; Cross Reference
2 Table of Contents
3 Introduction; Description of the Proposed
Reorganization; Comparison of the Funds; Risk
Factors
4 Introduction, The Transaction, The Proposal,
Description of the Proposed Reorganization
5, 6 The Transaction, Comparison of the Funds; Risk
Factors; Further Information About the Select
Fund and the Global Fund
7 Shares and Voting; Vote Required
8 Not Applicable
9 Not Applicable
Form N-14 Part B, Item Location in Statement of Additional Information
- ---------------------- -----------------------------------------------
10 Cover Page
11 Table of Contents
12 Incorporation of Documents by Reference in
Statement of Additional Information
13 Not Applicable
14 Incorporation of Documents by Reference in
Statement of Additional Information
Form N-14 Part C
- ----------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of Form N-14.
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THE FOLLOWING ITEMS ARE HEREBY INCORPORATED BY REFERENCE:
From Post-Effective Amendment No. 32 of Fremont Mutual Funds, Inc., filed April
16, 1998 (SEC File No. 811-5632) and subsequent filings under Rule 497(e):
Combined Prospectus for the Fremont Global Fund and the Fremont Select Fund
(with other funds of Fremont Mutual Funds, Inc.), dated March 1, 1998, as
supplemented June 29, 1998.
Combined Statement of Additional Information for the Fremont Global Fund
and the Fremont Select Fund (with other funds of Fremont Mutual Funds,
Inc.), dated March 1, 1998, as supplemented June 29, 1998.
As previously sent to shareholders of the Fremont Global Fund and the Fremont
Select Fund, and as filed with the SEC pursuant to Rule 30b2-1:
Annual Report for the Fremont Global Fund and the Fremont Select Fund for
the fiscal year ended October 31, 1998, as contained in the Annual Report
for Fremont Mutual Funds, Inc. dated as of and for the periods ended
October 31, 1998.
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-----------------------------------------
PART A
COMBINED PROXY STATEMENT AND PROSPECTUS
FOR THE REORGANIZATION OF
FREMONT SELECT FUND
INTO
FREMONT GLOBAL FUND
-----------------------------------------
<PAGE>
[LETTERHEAD OF FREMONT MUTUAL FUNDS, INC.]
IMPORTANT PROXY VOTE FOR FREMONT SELECT FUND SHAREHOLDERS
PLEASE READ AND RESPOND PROMPTLY
March __, 1999
Dear Fremont Select Fund Shareholder:
PLEASE READ THIS LETTER...IMPORTANT DOCUMENTS ENCLOSED.
I am writing to inform you of a Special Meeting of Fremont Select Fund
Shareholders that will be held on April 16, 1999. The purpose of this meeting is
to vote on a proposal to reorganize the Select Fund and merge its assets into
the Fremont Global Fund. Please read the enclosed materials and vote on the
proxy card or by Internet, telephone or mail (see instructions below).
PROPOSED FUND MERGER: After completing a careful analysis of the
Fremont Select Fund's performance and holdings the Advisor recommends that the
Select Fund reorganize and merge all of its assets into the Fremont Global Fund.
The Global Fund was chosen because both funds invest in mid-cap U.S. equities.
The Advisor believes that the Global Fund's portfolio management team can do a
more efficient and effective job managing the mid-cap investment of both Funds.
Another reason why the Global Fund was selected is that it enjoys a lower
overall risk profile than the Select Fund. Of course, should you wish to choose
a greater or lesser degree of risk than the Global Fund you may liquidate prior
to the merger and transfer your proceeds to any one of a number of Fremont
Funds. Fremont has agreed to pay all expenses associated with the merger.
This proxy is your opportunity to vote `for' or `against' the proposed
merger of these two funds. THE FREMONT FUNDS BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF THE MERGER. It is important that all
Fremont Select Fund shareholders exercise their right to vote on these
significant issues concerning their investments.
How to vote on this resolution
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 Friday, April
16, 1999, in the main conference room on the 26th floor of 333 Market Street, in
San Francisco.
IF YOU DO NOT PLAN TO ATTEND THE SPECIAL MEETING OF FREMONT SELECT FUND
SHAREHOLDERS, IT IS VERY IMPORTANT THAT YOU VOTE ON THIS PROPOSAL BY MAIL:
TO VOTE BY MAIL
- --------------------------------------------------------------------------------
1. Read the PROXY STATEMENT.
2. Complete the PROXY CARD.
3. Return the Proxy Card in the enclosed postage-paid envelope.
- --------------------------------------------------------------------------------
Over, please
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Please Note: IT IS IMPORTANT THAT YOU VOTE BY APRIL 7, 1999, TO SAVE THE EXPENSE
OF ADDITIONAL SOLICITATIONS.
If you have any questions about any of these materials, please call us at
800-548-4539 (PRESS 2).
Sincerely,
Michael H. Kosich
President
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FREMONT MUTUAL FUNDS, INC.
333 Market Street, 26th Floor
San Francisco, California 94105
(800) 548-4539 (press 2)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
FREMONT SELECT FUND
TO BE HELD APRIL 16, 1999
To the Shareholders of the Select Fund:
Your Fund will host a special meeting of shareholders at the offices of
Fremont Mutual Funds, 333 Market Street, 26th Floor, San Francisco, California
94105 on April 16, 1999, at 9:00 a.m., local time. At the meeting, we will ask
you to vote on:
1. A proposal to reorganize the Select Fund into another Fremont Fund, the
Global Fund.
2. Any other business that properly comes before the meeting.
Only shareholders of record at the close of business on January 22, 1999
(the Record Date), will be entitled to receive this notice and to vote at the
meeting.
By Order of the Board of Directors
Tina Thomas
Secretary
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
-------------------
PLEASE VOTE ON THE ENCLOSED PROXY FORM, DATE AND SIGN IT, AND RETURN IT IN THE
PRE-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID THE ADDITIONAL EXPENSE AND DISRUPTION OF FURTHER
SOLICITATION, WE REQUEST YOUR COOPERATION BY VOTING PROMPTLY.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
333 MARKET STREET, 26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94105
(800) 548-4539 (PRESS 2)
FREMONT SELECT FUND
AND
FREMONT GLOBAL FUND
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated: March ___, 1999
WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
The Board of Directors approved a plan to reorganize the Fremont Select
Fund (the "Select Fund") into the Fremont Global Fund (the "Global Fund") (that
transaction is referred to as the "Merger"). Shareholder approval is needed to
proceed with the Merger. The shareholder meeting will be held on April 16, 1999
(the "Shareholder Meeting"). We are sending this document to you for your use in
deciding whether to approve the Merger at the Shareholder Meeting.
This document includes a Notice of Special Meeting of Shareholders, a
Combined Proxy Statement and Prospectus and a form of Proxy.
As a technical matter, the Merger will have three steps:
+ the transfer of the assets and liabilities of the Select Fund to
the Global Fund in exchange for shares of the Global Fund (the
"Global Fund Shares") of equivalent value to the net assets
transferred,
+ the pro rata distribution of those Global Fund Shares to
shareholders of record of the Select Fund as of the effective
date of the Merger (the "Effective Date") in full redemption of
those shareholders' shares in the Select Fund, and
+ the immediate liquidation and termination of the Select Fund.
As a result of the Merger, each shareholder of the Select Fund would
instead hold Global Fund Shares having the same total value as the shares of the
Select Fund held immediately before the Merger. Lawyers for the Select Fund and
the Global Fund will issue an opinion to the effect that, for federal income tax
purposes, the Merger will be treated as a tax-free reorganization that will not
cause the Select Fund's shareholders to recognize a gain or loss for federal
income tax purposes. See Section II.A.3 below.
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The investment objective of the Select Fund is to seek long-term
capital appreciation by investing primarily in equity securities of established
medium capitalization U.S.-based companies. The Global Fund's investment
objective is to maximize total return (including income and capital gains) while
reducing risk. The Global Fund may invest in U.S. stocks and bonds, foreign
stocks and bonds, real estate securities, precious metals and cash equivalents.
This Combined Proxy Statement and Prospectus sets forth the basic
information that you should know before voting on the proposal. You should read
it and keep it for future reference.
WHAT OTHER IMPORTANT DOCUMENTS SHOULD I KNOW ABOUT?
The Select Fund and Global Fund (together, the "Funds") are series of
Fremont Mutual Funds, Inc. (the "Company"), an open-end management investment
company. The following documents are on file with the Securities and Exchange
Commission (the "SEC") and are deemed to be legally part of this document:
+ Combined Prospectus for the Global Fund and the Select Fund (as
well as other Fremont Funds) dated March 1, 1998, as amended June
29, 1998
+ Combined Statement of Additional Information relating to the
Select Fund and the Global Fund (as well as other Fremont Funds)
dated March 1, 1998, as amended June 29, 1998
+ Statement of Additional Information relating to this Combined
Proxy Statement and Prospectus
Those documents are available without charge by writing to the Company
at 333 Market Street, 26th Floor, San Francisco, California 94105, or by calling
(800) 548-4539 (press 2).
The Annual Report to Shareholders of the Select Fund and the Global
Fund for the fiscal year ended October 31, 1998, containing audited financial
statements of the Select Fund and the Global Fund, have been previously mailed
to shareholders. If you do not have a copy, additional copies of that Annual
Report are available without charge by writing or calling the Company at its
address and telephone number listed above. It is expected that this Combined
Proxy Statement and Prospectus will be mailed to shareholders on or about March
___, 1999.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED ON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
3
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TABLE OF CONTENTS
I. INTRODUCTION.............................................................. 5
A. GENERAL.............................................................. 6
B. THE PROPOSAL ........................................................ 6
C. COMPARISON OF EXPENSES............................................... 7
D. SHARES AND VOTING.................................................... 8
II. THE PROPOSAL............................................................. 10
A. DESCRIPTION OF THE PROPOSED MERGER................................... 10
1. THE MERGER........................................................ 10
2. EFFECT OF THE MERGER.............................................. 11
3. FEDERAL INCOME TAX CONSEQUENCES................................... 11
4. DESCRIPTION OF THE GLOBAL FUND SHARES............................. 12
5. CAPITALIZATION.................................................... 12
B. COMPARISON OF THE FUNDS.............................................. 13
1. INVESTMENT OBJECTIVES AND POLICIES................................ 13
2. INVESTMENT RESTRICTIONS........................................... 13
3. COMPARATIVE PERFORMANCE INFORMATION............................... 17
4. ADVISORY FEES AND OTHER EXPENSES.................................. 18
5. PORTFOLIO ADVISORS................................................ 18
6. DISTRIBUTION AND SHAREHOLDER SERVICES............................. 19
7. REDEMPTION AND EXCHANGE PROCEDURES................................ 19
8. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES........... 20
9. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS.................. 20
10. SHAREHOLDERS'RIGHTS.............................................. 21
C. RISK FACTORS......................................................... 21
D. RECOMMENDATION OF THE BOARD OF DIRECTORS............................. 22
E. DISSENTERS'RIGHTS OF APPRAISAL....................................... 22
F. FURTHER INFORMATION ABOUT THE FUND AND THE ACQUIRING FUND............ 22
G. VOTE REQUIRED........................................................ 23
H. FINANCIAL HIGHLIGHTS................................................. 23
III. MISCELLANEOUS ISSUES.................................................... 26
A. OTHER BUSINESS....................................................... 26
B. NEXT MEETING OF SHAREHOLDERS......................................... 26
C. LEGAL MATTERS........................................................ 26
D. EXPERTS.............................................................. 26
4
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I. INTRODUCTION
A. GENERAL
The Board of Directors called this shareholder meeting to allow
shareholders to consider and vote on the proposed Merger of the Select Fund into
the Global Fund. The Board of Directors (including a majority of the independent
directors, meaning those directors who are not "interested" persons under the
Investment Company Act) voted on December 11, 1998, to approve the Merger
subject to the approval by the Select Fund's shareholders.
Fremont Investment Advisors, Inc. (the "Advisor") serves as the
investment advisor for each Fund. The Advisor recommends that you approve the
Merger because it believes that it can increase the managerial efficiencies of
these two funds if they are merged. This is possible since both funds maintain
an exposure to mid-cap U.S. equities. The Select Fund maintains a concentrated
exposure, while the Global Fund may invest a portion of its assets in mid-cap
U.S. stocks in an effort to enhance returns. The Global Fund also takes
advantage of diversification by investing in multiple categories of U.S. and
foreign securities.
B. THE PROPOSAL
At the Shareholder Meeting, the shareholders of the Select Fund will be
asked to approve the proposed Merger of the Select Fund into the Global Fund.
The Merger will include the transfer of substantially all of the assets and
liabilities of the Select Fund to the Global Fund. All Select Fund shareholders
will receive Global Fund Shares in exchange. The Select Fund will then be
terminated and liquidated.
The investment objective of the Select Fund is to seek long-term
capital appreciation by investing primarily in U. S. equity securities with
medium-sized capitalizations. The Global Fund's investment objective seeks to
maximize total return while seeking to reduce risk by investing in multiple
categories of U. S. and foreign securities. The Global Fund's domestic exposure
includes large, mid, small and micro-cap securities. Although the securities in
the Select Fund and the mid-cap securities in the Global Fund are subject to
substantially similar risks, the Global Fund is more diversified with different
categories of U.S. and foreign securities. For those reasons, the Advisor
believes that the Global Fund, over the long-term, presents lower overall risk
of loss.
The Select Fund may hold up to 10% of its assets in securities of
companies domiciled outside of the United States and, for defensive purposes,
may also invest a portion of its assets in high quality debt securities. The
Global Fund allocates its assets among domestic, foreign and short-term
securities that the Advisor believes have the most favorable return outlook. The
Select Fund shareholders will be able to take advantage of a fund that has more
investment flexibility at a global level. Because of its smaller size, the
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Select Fund was unable to take full advantage of investment opportunities in
U.S. mid-cap securities or in these other investment areas available to the
Global Fund.
The purchase, redemption and exchange arrangement of the Funds are
identical, which are discussed in Section II.B below. The Select Fund sells its
shares directly to the public at net asset value. The Select Funds' shares are
subject to a 0.25% Rule 12b-1 distribution fee. The Global Fund currently offers
its shares directly to the public at net asset value, without any sales load or
Rule 12b-1 fee. If the Merger is completed, all holders of shares of the Select
Fund on the Effective Date would receive shares of the Global Fund.
The Advisor and the Board of Directors believe that the proposed Merger
is in the best interest of the Select Fund shareholders, and that the interests
of existing shareholders of the Global Fund will not be diluted as a result of
the proposed Merger. See Section II.D below.
The Advisor will pay the costs of the Merger, the Shareholder Meeting
and solicitation of proxies, including the cost of copying, printing and mailing
proxy materials. In addition to solicitations by mail, the Advisor and the Board
of Directors also may solicit proxies, without special compensation, by
telephone, facsimile or otherwise.
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C. COMPARISON OF EXPENSES
The following table shows the comparative fees and expenses you may pay
if you buy and hold shares of these Funds. The Funds do not impose any front-end
or deferred sales loads and they do not charge shareholders for exchanging
shares or reinvesting dividends.
Fees and Expenses of the Funds (as of October 31, 1998)
Fremont Fremont
Global Global
Fremont Fund Fund
Select Fund (Current) (Pro Forma)
----------- --------- -----------
SHAREHOLDER FEES (fees paid
directly from your investment)
Redemption Fee 0.00% 0.00% 0.00%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted
from Fund assets)
Management Fee 1.00% 0.75% 0.75%
Distribution/Service
(12b-1) Fee 0.25% 0.00% 0.00%
Other Expenses 1.15% 0.10% 0.10%
---- ---- ----
TOTAL ANNUAL FUND OPERATING
EXPENSES 2.40% 0.85% 0.85%
==== ==== ====
Fee Reduction and/or
Expense Reimbursement 1.00% 0.00%
---- ----
NET EXPENSES 1.40%+ 0.85%
==== ====
+ Fremont Investment Advisors, Inc. has contractually agreed to reduce its fees
and/or absorb expenses to limit total annual operating expenses (excluding Rule
12b-1 fees, interest and tax expenses) to 1.40%. See Section II.B.4. for a
discussion of fees.
EXAMPLE OF FUND EXPENSES: This example is intended to help you compare the cost
of investing in each Fund with the cost of investing in other mutual funds. The
table below shows what you would pay in expenses over time, whether or not you
sold your shares at the end of each period. It assumes a $10,000 initial
investment, 5% total return each year and the changes specified above. This
example is for comparison purposes only. It does not necessarily represent a
Fund's actual expenses or returns.
Fund 1 Year 3 Years 5 Years 10 Years
- ---- ------ ------- ------- --------
Select Fund $142 $651 $1,186 $2,647
Global Fund $86 $271 $470 $1,046
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D. SHARES AND VOTING
The Company is a Maryland corporation and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. The Company currently has thirteen operating series, or funds,
including the Funds. Each series has its own investment objective and policies
and operates independently for purposes of investments, dividends, other
distributions and redemptions. The Select Fund and the Global Fund have their
own fee and expense structure. Both Funds have shares that have been issued and
sold to the public.
The Select Fund's shareholders will receive shares of the Global Fund
in exchange for their shares if the Merger is approved and completed. Further
information about the shares of the Global Fund is contained in the Funds'
Combined Statement of Additional Information.
Each whole or fractional share of the Select Fund is entitled to one
vote or corresponding fraction at the Shareholder Meeting. At the close of
business on January 22, 1999, the record date for the determination of
shareholders entitled to vote at the Shareholder Meeting (the "Record Date"),
there were XXXXXXX shares outstanding held by XX record holders (including
omnibus accounts representing multiple underlying beneficial owners such as
those in the names of brokers).
All shares represented by each properly signed proxy received before
the Shareholder Meeting will be voted. If a shareholder specifies how the proxy
is to be voted on any business properly to come before the Shareholder Meeting,
it will be voted in accordance with instruction given. If no choice is indicated
on the proxy, it will be voted FOR approval of the Merger, as more fully
described in this Combined Proxy Statement and Prospectus. A proxy may be
revoked by a shareholder at any time before its use by written notice to the
Company, by submission of a later-dated proxy or by voting in person at the
Shareholder Meeting. If any other matters come before the Shareholder Meeting,
proxies will be voted by the persons named as proxies in accordance with their
best judgment.
The presence in person or by proxy of shareholders entitled to cast a
majority of the votes entitled to be cast at the Shareholder Meeting will
constitute a quorum. When a quorum is present, a majority of the shares voted
shall decide the proposal. The Shareholder Meeting may be adjourned from time to
time by a majority of the votes properly voting on the question of adjourning a
meeting to another date and time, whether or not a quorum is present, and the
Shareholder Meeting may be held as adjourned within a reasonable time after the
date set for the original meeting without further notice. The persons named in
the proxy will vote those shares that they are entitled to vote in favor of
adjournment if adjournment is necessary to obtain a quorum or to obtain a
favorable vote on any proposal. If the adjournment requires setting a new record
date or the adjournment is for more than 60 days from the date set for the
original meeting (in which case the Board of Directors will set a new record
date), the Company will give notice of the adjourned meeting to the
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shareholders. Business may be conducted once a quorum is present and may
continue until adjournment of the meeting.
Proxies may be voted by mail. All proxies voted, including abstentions
and broker non-votes (where the underlying holder has not voted and the broker
does not have discretionary authority to vote the shares), will be counted
toward establishing a quorum. Approval of the Merger will occur only if a
sufficient number of votes are cast FOR that proposal. Abstentions do not
constitute a vote "for" and effectively result in a vote "against." Broker
non-votes do not represent vote "for" or "against" and are disregarded in
determining whether the proposal has received enough votes.
As of the Record Date, the Select Fund's and the Global Fund's
shareholders of record and (to the Company's knowledge) beneficial owners who
owned more than five percent of each Fund's shares are as follows:
Percentage of the Select Fund's
Select Fund Shareholder Outstanding Shares
- ----------------------- ------------------
Fremont Investors, Inc..
50 Fremont Street, Ste 3600
San Francisco, CA 94105 86.00%
Percentage of the Global Fund's
Global Fund Shareholders Outstanding Shares
- ------------------------ ------------------
Bechtel Master Trust for
Qualified Employees
100 Plaza One Mailstop 3048
Jersey City, NJ 07311-3901 49.00%
The Officers and Directors of the Company, as a group, owned of record
and beneficially less than one percent of the outstanding voting securities of
the Select Fund or Global Fund as of the Record Date.
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II. THE PROPOSAL
A. DESCRIPTION OF THE PROPOSED MERGER
1. THE MERGER
If the Merger is approved, on the Effective Date the Global Fund will
acquire substantially all of the assets and liabilities of the Select Fund. At
that time, the Global Fund will issue to the Select Fund the number of Global
Fund Shares determined by dividing the value of the Select Fund's net assets so
transferred by the net asset value of one Global Fund Share. The net asset value
of the Global Fund and the net asset value of the Select Fund will be calculated
at the close of business on the date immediately preceding the Effective Date
(the "Valuation Date") in accordance with the Funds' valuation procedures
described in Fremont Mutual Funds, Inc.'s Combined Prospectus dated March 1,
1998, as amended June 29, 1998.
At the same time as that asset transfer, the Select Fund will
distribute the Global Fund Shares it receives pro rata to each remaining
shareholder of the Select Fund based on the percentage of the outstanding shares
of the Select Fund held of record by that shareholder on the Valuation Date. For
example, on October 31, 1998, the value of the aggregate net assets of the
Select Fund was approximately $4,610,395. The Select Fund Shares were valued at
$7.95 per share. The net asset value of each Global Fund Share was $14.13.
Therefore, if the Effective Date had been October 31, 1998, the Select Fund
would then have redeemed each of its then outstanding shares in exchange for
.563 Global Fund Shares.
This distribution of the Global Fund Shares to the Select Fund's
shareholders will be accomplished by the establishment of accounts on the Global
Fund's share records in the names of those shareholders, representing the
respective pro rata number of Global Fund Shares deliverable to them. Fractional
shares will be carried to the third decimal place. Certificates evidencing the
Global Fund Shares will not be issued to the Select Fund's shareholders.
Immediately following the Select Fund's pro rata liquidating
distribution of the Global Fund Shares to the Select Fund shareholders, the
Select Fund will liquidate and terminate.
Completion of the Merger is subject to approval by the shareholders of
the Select Fund. The Merger may be abandoned at any time before the Effective
Date by a majority of the Company's Board of Directors.
The Advisor will pay all costs and expenses of the Merger, including
those associated with the Shareholder Meeting, the copying, printing and
distribution of this Combined Proxy Statement and Prospectus, and the
solicitation of proxies for the Shareholder Meeting.
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The above is a summary of the Merger. The summary is not a complete
description of the terms of the Merger, which are set forth in the Agreement and
Plan of Merger attached as Exhibit A to this document.
2. EFFECT OF THE MERGER
If the Merger is approved by the Select Fund's shareholders and
completed, shareholders of the Select Fund as of the Effective Date will become
shareholders of the Global Fund. The total net asset value of the Global Fund
Shares held by each Shareholder of the Select Fund immediately after completion
of the Merger will be equivalent to the total net asset value of the Select Fund
Shares held by that same shareholder immediately before completion of the
Merger.
On or before the Effective Date the Select Fund intends to distribute
all of its then-remaining net investment income and realized capital gains.
After the Merger, the investment adviser for the Global Fund will
continue to be Fremont Investment Advisors, Inc. First Fund Distributors, Inc.
will continue to be the Global Fund's Distributor. The Global Fund will continue
to be managed in accordance with its existing investment objective and policies.
3. FEDERAL INCOME TAX CONSEQUENCES
As a condition to closing the Merger, the Select Fund and the Global
Fund must receive a favorable opinion from Paul, Hastings, Janofsky & Walker
LLP, counsel to the Global Fund, substantially to the effect that, for federal
income tax purposes: (a) the transfer by the Select Fund of substantially all of
its assets and liabilities to the Global Fund solely in exchange for the Global
Fund Shares, as described above, is a reorganization within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"); (b) no gain or loss will be recognized by the Select Fund upon the
transfer of substantially all of its assets to the Global Fund in exchange
solely for shares of the Global Fund Shares; (c) no gain or loss will be
recognized by the Global Fund on receipt of the Select Fund's assets in exchange
for the Global Fund Shares; (d) the aggregate tax basis of the assets of the
Select Fund in the hands of the Global Fund is, in each instance, the same as
the basis of those assets in the hands of the Select Fund immediately before the
transaction; (e) the holding period of the Select Fund's assets in the hands of
the Global Fund includes the period during which the assets were held by the
Select Fund; (f) no gain or loss is recognized to the shareholders of the Select
Fund upon the receipt of the Global Fund Shares solely in exchange for the
Fund's shares; (g) the basis of the Global Fund Shares received by the Select
Fund shareholders is, in each instance, the same as the basis of the Select Fund
shares surrendered in exchange therefor; and (h) the holding period of the
Global Fund Shares received by the Select Fund shareholders includes the holding
period during which shares of the Select Fund were held, provided that those
shares were held as a capital asset in the hands of the Select Fund shareholders
on the date of the exchange. The Company does not intend to seek a private
11
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letter ruling from the Internal Revenue Service with respect to the tax effects
of the Merger, and one is not required.
4. DESCRIPTION OF THE GLOBAL FUND SHARES
Each Global Fund Share issued to Select Fund shareholders pursuant to
the Merger will be duly authorized, validly issued, fully paid and nonassessable
when issued, will be transferable without restriction and will have no
preemptive or conversion rights. Each Global Fund Share will represent an equal
interest in the assets of the Global Fund. The Global Fund Shares will be sold
and redeemed based upon the net asset value of the Global Fund next determined
after receipt of the purchase or redemption request, as described in the Global
Fund's Prospectus.
5. CAPITALIZATION
The capitalization of the Funds as of October 31, 1998, and their pro
forma combined capitalization as of that date after giving effect to the
proposed Merger, are as follows:
Global Select Pro Forma
Fund Fund Combined
------------ ---------- ------------
Aggregate net assets $631,165,114 $4,610,395 $635,775,509
Shares outstanding* 44,669,207 580,222 44,995,872
Net asset value per share:
Shares $ 14.13 $ 7.95 $ 14.13
- ----------
* Fremont Mutual Funds, Inc. is authorized to issue ten billion shares for
all of its series.
12
<PAGE>
B. COMPARISON OF THE FUNDS
A brief comparison of the Funds is set forth below. See Section II.F.
for more information.
1. INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Select Fund is to seek long-term
capital appreciation by investing primarily in U.S. equity securities with
medium-sized capitalizations. The Advisor defines medium market capitalization
companies as those companies whose market capitalization falls within the
capitalization range of the Russell MidCap Index. This index measures the
performance of the 800 smallest securities in the Russell 1000 Index. The
Russell 1000 Index is composed of the 1000 largest U.S. securities as determined
by total market capitalization. As of April 30, 1998, 92% of the companies in
the Russell MidCap Index had market capitalizations of between $1 billion and
$11 billion. These companies represent approximately 35% of the capitalization
of the total market. Under normal market conditions, the Select Fund expects to
hold not more than 30 common stocks representing at least 80% of its total
assets.
In selecting investments for the Select Fund, its portfolio advisors
generally seek companies that they believe exhibit characteristics of financial
soundness and are undervalued by the market relative to their growth potential.
In seeking to identify financially sound companies, the Fund's portfolio
advisors rigorously analyze all prospective holdings by subjecting them to the
following three steps of their investment process: (1) identify companies with
improving business fundamentals; (2) conduct an in-depth analysis of each
company's current business and future prospects; and (3) analyze each company's
price to determine whether its growth prospects have been discovered by the
market. The Fund's portfolio advisor will often select investments for the
Select Fund that are considered to be unattractive by other investors or are
unpopular with the financial press.
The Global Fund seeks to maximize total return (including income and
capital gains) while reducing risk. The Global Fund also invests a portion of
its assets in U.S. medium capitalization companies. The Advisor determines the
allocation of assets based on its evaluation of projections of risk, market
conditions, asset value and expected return. The Global Fund seeks to provide a
systematic, disciplined approach to reduce overall portfolio risk through asset
diversification and to weight the portfolio toward asset categories which, at
the time of evaluation, appear to have the best expected return potential.
2. INVESTMENT RESTRICTIONS
The Global Fund is a diversified fund and it is limited in its
investment to item (1) below. The Select Fund is a non-diversified fund and is
not limited by the 1940 Act in the portion of its assets that may be invested in
the securities of a single issuer. Therefore, the Select Fund may invest a
greater portion of its assets in the securities of a smaller number of issuers
13
<PAGE>
and will be subject to a greater risk with respect to each portfolio security.
Except for the above difference in investment restrictions, both the Global Fund
and the Select Fund have identical fundamental investment restrictions, which
cannot be changed without the affirmative vote of a majority of each Fund's
outstanding voting securities as defined in the Investment Company Act.
Neither the Global Fund nor the Select Fund may:
(1) Invest 25% or more of the value of its total assets in the
securities or issuers conducting their principal business activities in the same
industry, except that this limitation shall not apply to securities issued or
guaranteed as to principal and interest by the U.S. Government or any of its
agencies or instrumentalities, to tax exempt securities issued by state
governments or political subdivisions thereof, or to investments by the Money
Market Fund in securities of domestic banks, of foreign branches of domestic
banks where the domestic bank is unconditionally liable for the security, and
domestic branches of foreign banks subject to the same regulation of domestic
banks.
(2) Buy and sell real estate (including real estate limited
partnerships) or commodities or commodity contracts; however, the Funds may
invest in securities secured by real estate, or issued by companies which invest
in real estate or interests therein, including real estate investment trusts,
and may purchase and sell currencies (including forward currency exchange
contracts), gold, bullion, futures contracts, and related options generally as
described in the Combined Prospectus and Combined Statement of Additional
Information.
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may technically
cause it to be considered an underwriter as the term is defined under the
Securities Act of 1933.
(4) Make loans, except that a Fund may purchase debt securities, enter
into repurchase agreements, and make loans of portfolio securities amounting to
not more than 33 1/3% of its net assets calculated at the time of the securities
lending.
(5) Borrow money, except from banks for temporary or emergency purposes
not in excess of 30% of the value of the Fund's total assets. A Fund will not
purchase securities while such borrowings are outstanding.
(6) Change its status as either a diversified or a non-diversified
investment company.
(7) Issue senior securities, except as permitted under the 1940 Act,
and except that the Company and the Funds may issue shares of common stock in
multiple series or classes.
(8) Notwithstanding any other fundamental investment restriction or
policy, each Fund may invest all of its assets in the securities of a single
open-end investment company with substantially the same fundamental investment
objectives, restrictions, and policies as that Fund.
14
<PAGE>
Other current investment policies of the Funds, which are not
fundamental and which may be changed by action of the Board of Directors without
shareholder approval, are as follows: A Fund may not:
(1) Invest in companies for the purpose of exercising control or
management.
(2) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing.
(3) Invest in interests in oil, gas, or other mineral exploration or
development programs or leases.
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years'
continuous operation.
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in connection
with futures contracts.
(6) Enter into a futures contract if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering into
the contract) would be committed to margin on such futures contract.
(7) Acquire securities or assets for which there is no readily
available market or which are illiquid, if, immediately after and as a result of
the acquisition, the value of such securities would exceed, in the aggregate,
15% of the Fund's net assets.
(8) Make short sales of securities or maintain a short position, except
that a Fund may sell short "against the box."
(9) Invest in securities of an issuer if the investment would cause a
Fund to own more than 10% of any class of securities of any one issuer.
(10) Acquire more than 3% of the outstanding voting securities of any
one investment company.
To the extent these restrictions reflect matters of operating policy
which may be changed without shareholder vote, these restrictions may be amended
upon approval by the Board and notice to shareholders.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.
15
<PAGE>
3. COMPARATIVE PERFORMANCE INFORMATION
The chart below shows the risks of investing in each Fund and how each
Fund's total return has varied from year-to-year. The table compares each Fund's
performance (for the year ended December 31st) to the most commonly used index
for its market segment. Of course, past performance is no guarantee of future
results.
[BAR CHARTS]
Select Fund* Global Fund**
------------ -------------
1998 -15.81% 1994 -4.17%
19.28%
13.97%
9.93%
10.01%
* During the one-year period described above in the bar chart, the Select Fund's
best quarter was Q4 1998 (+11.47%) and its worst quarter was Q3 1998 (-22.12%).
** During the five-year period described above in the bar chart, the Global
Fund's best quarter was Q4 1998 (+18.82%) and its worst quarter was Q3 1998
(-8.93%).
AVERAGE ANNUAL RETURNS THROUGH 12/31/98
Inception Inception
1 Year (12/31/97) (11/18/88)
------ ---------- ----------
Select Fund - 15.81% -15.81% N/A
Global Fund 10.01% N/A 10.36%
Russell Mid-Cap Index+ 10.10% 10.10% N/A
S&P 500 Index+ 28.58% 28.58% 19.48%
MCSI EAFE Index+ 20.00% 20.00% 5.70%
Solomon Non-U.S. Gov't Bond Index
(currency hedged)+ 11.53% 11.53% 8.65%
Lehman Bros. Intermediate Gov't/Corp.
Bond Index+ 8.42% 8.42% 8.38%
+ [Description of Indexes To Come.]
16
<PAGE>
4. ADVISORY FEES AND OTHER EXPENSES
The Advisor serves as investment adviser to both Funds pursuant to an
Investment Advisory and Administration Agreement between the Advisor and Fremont
Mutual Funds, Inc. The agreement on behalf of the Global Fund was dated November
15, 1988 and the agreement on behalf of the Select Fund was dated December 31,
1997. The Global Fund pays the Advisor a management fee calculated at an
annualized rate of 0.60% and an administrative fee of 0.15% of the average daily
net assets of the Global Fund. The Select Fund pays the Advisor a management fee
calculated at an annualized rate of 1.00% of the average daily net assets of the
Select Fund. The total annual expense ratio of the Global Fund currently is
lower than that of the Select Fund (0.85% to 1.40% respectively. )
For the fiscal year ended October 31, 1998, the Advisor received
management fees of approximately $5,061,675 from the Global Fund. The Advisor
accrued management fees of approximately $42,433 from the Select Fund. Of these
fees, the Advisor reduced its fee or reimbursed expenses of the Select Fund
equal to approximately $42,142.
5. PORTFOLIO ADVISORS
The investment advisor of the both Funds is Fremont Investment
Advisors, Inc. As of October 31, 1998, the Advisor managed approximately $2.2
billion on behalf of some 27,000 investors in the Fremont Funds. The Advisor's
Asset Allocation Committee, whose members manage the Global Fund, are:
ROBERT J. HADDICK, CFA, is Senior Vice President of the Advisor and a
member of its Investment and U.S. Equity Committees. His primary
responsibilities include developing global asset allocation and investment
management strategies. Mr. Haddick earned his B.A. and M.B.A. from the
University of Illinois.
ALEXANDRA KINCHEN is Vice President of the Advisor and a member of its
Investment and Fixed Income Committees. Ms. Kinchen earned her B.A. and M.B.A.
from Golden Gate University, San Francisco, California.
ALBERT W. KIRSCHBAUM is Managing Director of the Advisor. He is also
Chairman of the Advisor's Asset Allocation Committee and the Fixed Income
Committee and a member of its Investment Committee. Mr. Kirschbaum received an
undergraduate degree from Washington University and has done course work at
Princeton and Wharton.
PETER F. LANDINI is a Managing Director and Chief Operating Officer of
the Advisor and a member of its Investment Committee. He is also Chairman of the
Advisor's U.S. Equity and Asset Allocation Committees. Mr. Landini graduated
17
<PAGE>
from the University of Santa Clara with a degree in Accounting and received an
M.B.A. from Golden Gate University, San Francisco, California.
DAVID L. REDO is a Director of Fremont Mutual Funds and President, CEO
and Chief Investment Officer for the Advisor. He has overall responsibility for
the management of approximately $5 billion of marketable securities portfolios
by the Advisor, including the Fremont Mutual Funds. Mr. Redo received a B.S. in
Electrical Engineering from the University of California, Berkeley and an M.B.A.
from the University of Santa Clara.
6. DISTRIBUTION AND SHAREHOLDER SERVICES
First Fund Distributors, Inc. (the "Distributor"), 4455 E. Camelback
Road, Suite 261E, Phoenix, AZ 85018 serves as the Funds' Distributor and
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor does not impose any sales charge on purchases of shares. The Company
has adopted a Share Marketing Plan (the "Plan") under Rule 12b-1 with respect to
the Select Fund's shares. The Share Marketing Plan does not apply to the Global
Fund's shares.
The shares of the Global Fund to be issued in the Merger will not be
subject to any sales charge. No sales charge is imposed by either Fund on
reinvestment of dividends or capital gains distributions.
The Funds generally require a minimum initial investment of $2,000
($1,000 for various types of retirement accounts) and subsequent investments of
$100 or more. Both Funds have automatic investment plans under which selected
amounts are electronically withdrawn from shareholders' accounts with banks and
are applied to purchase shares of the Funds.
7. REDEMPTION AND EXCHANGE PROCEDURES
Shareholders of both Funds may redeem their shares at the net asset
value next determined after receipt of a written redemption request or a
telephone redemption order without the imposition of any fee or other charge.
The Funds may redeem a shareholder's shares if the combined aggregate
net asset value of the shares in a shareholder's account is less than $1,500
(based on original investment value) due to redemptions. If the shareholder's
account balance is not brought up to the minimum or the shareholder does not
send the Funds other instructions, the Funds may redeem the shares and send the
shareholder the proceeds.
Fremont shareholders may exchange shares in one Fund for shares in
another Fund with the same shareholder account registration, taxpayer
identification number and address without the imposition of any sales charges or
exchange fees. There is a $100 minimum to exchange into a Fund the shareholder
currently owns and a $2,000 minimum for investing in a new Fund. An exchange may
18
<PAGE>
result in a realized gain or loss for tax purposes. However, because excessive
exchanges can harm a Fund's performance, the Company reserves the right to
terminate, either temporarily or permanently, the exchange privileges of any
shareholder. Shares can be exchanged by telephone at (800) 548-4539 (press 2).
Other restrictions may apply. Refer to the Combined Prospectus and the
Combined Statement of Additional Information for other exchange policies.
8. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Each Fund distributes substantially all of its net investment income
and net capital gains to shareholders each year, if any. The Global Fund intends
to distribute substantially all of its net investment income four time a year,
at the end of March, June, September and on or about December 15. The Fund will
also distribute short-term net realized capital gains, if any, once each year in
October.
Each Fund has elected and qualified as a separate "regulated investment
company" under Subchapter M of the Code for federal income tax purposes and
meets all other requirements that are necessary for it (but not its
shareholders) to pay no federal taxes on income and capital gains paid to
shareholders in the form of dividends. In order to accomplish this goal, each
Fund must, among other things, distribute substantially all of its ordinary
income and net capital gains on a current basis and maintain a portfolio of
investments which satisfies certain diversification criteria.
9. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Advisor is responsible for decisions to buy and sell securities for
each Fund, broker-dealer selection, and negotiation of commission rates. In
placing orders for the Funds' portfolio transactions, the Advisor's primary
consideration is to obtain the most favorable price and execution available,
although the Advisor also may consider research and brokerage services provided
by the securities broker-dealer, as factors in considering through whom
portfolio transactions will be effected. The Funds may pay to those securities
broker-dealers who provide brokerage and research service to the Advisor a
higher commission than that charged by other securities broker-dealers if the
Advisor determines in good faith that the amount of the commission is reasonable
in relation to the value of those services in terms either of the particular
transaction, or in terms of the overall responsibility of the Advisor and to any
other accounts over which the Advisor exercises investment discretion.
10. SHAREHOLDERS' RIGHTS
The Company is a Maryland corporation. Because each Fund is a series of
the Company, its operations are governed by the Company's By-laws and applicable
Maryland law.
19
<PAGE>
The Funds normally will not hold meetings of shareholders except as
required under the Investment Company Act and Maryland law. However,
shareholders holding 10% or more of the outstanding shares of a Fund may call
meetings for the purpose of voting on the removal of one or more of the
Directors.
Shareholders of each Fund have no preemptive, conversion or
subscription rights. The shares of each Fund have non-cumulative voting rights,
with each shareholder of the Funds entitled to one vote for each full share of
the Funds (and a fractional vote for each fractional share) held in the
shareholder's name on the books of the Funds as of the record date for the
action in question. On any matter submitted to a vote of shareholders, shares of
each Fund will be voted by that Fund's shareholders individually when the matter
affects the specific interest of that Fund only, such as approval of that Fund's
investment management arrangements. The shares of all the Funds will be voted in
the aggregate on other matters, such as the election of Directors and
ratification of the Board of Directors' selection of the Funds' independent
accountants.
C. RISK FACTORS
The Select Fund's portfolio is subject to the general risks and
considerations associated with equity investing. Investing in medium
capitalization stocks may involve greater risk than investing in large
capitalization stocks because they can be subject to more abrupt or erratic
price movement. Along with the risk of the domestic stock market, the Global
Fund involves risks inherent in investments in foreign securities and securities
denominated in various currencies. The Global Fund's investments denominated in
foreign currencies would become worth less if the value of those currencies goes
down compared to the U.S. dollar. There may be less publicly available
information about foreign issuers or securities, and foreign issuers may not be
subject to accounting, auditing and financial reporting standards and
requirements comparable to those of U. S. entities. The Global Fund's
investments in bonds may go down if interest rates increases. Unlike the Global
Fund, the Select Fund does not invest a material amount of its assets in bonds.
In addition, the performance of the Global Fund depends on the
Advisor's allocation of assets among various types of investments. The Advisor
may allocate the Global Fund's investments to types of investments that do not
perform as well as (or lose money compared to) the Select Fund, which focuses on
one type of investment. See the Combined Prospectus and Combined Statement of
Additional Information for more information on the risks of the Global Fund.
20
<PAGE>
D. RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company (including a majority of the
noninterested Directors), after due consideration, has unanimously determined
that the Merger is in the best interests of the shareholders of the Select Fund
and that the interests of the shareholders of the Select and Global Funds would
not be diluted. The Board specifically considered the following factors:
1. That the Advisor's Asset Allocation Committee could better serve
shareholders by increasing the managerial efficiencies of these Funds.
This is possible because both Funds maintain an exposure to mid-cap
U.S. equities.
2. That the Select Fund is too inefficient and uneconomical to continue
indefinitely and this situation is not likely to change.
3. The expected absence of adverse effects on the Global Fund by adding
the Select Fund's assets to it.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ADOPTION OF THE PROPOSAL.
E. DISSENTERS' RIGHTS OF APPRAISAL
Shareholders of the Select Fund who object to the proposed Merger will
not be entitled to any "dissenters' rights" under Maryland law. However, those
shareholders have the right at any time up to when the Merger occurs to redeem
shares of the Select Fund at net asset value or to exchange their shares for
shares of the other funds offered by the Company (including the Global Fund)
without charge. After the Merger, shareholders of the Select Fund will hold
shares of the Global Fund, which may also be redeemed at net asset value in
accordance with the procedures described in the Global Fund's Prospectus dated
March 1, 1998, as amended June 29, 1998, subject to applicable redemption
procedures.
F. FURTHER INFORMATION ABOUT THE ACQUIRED FUND AND THE ACQUIRING FUND
Further information about the Select Fund and the Global Fund is
contained in the following documents:
+ Combined Prospectus dated March 1, 1998, as amended June 29, 1998.
+ Combined Statement of Additional Information also dated March 1, 1998,
as amended June 29, 1998.
21
<PAGE>
+ Documents that relate to the Funds are available, without charge, by
writing to the Fremont Funds at 333 Market Street, 26th Floor, San
Francisco, California 94105 or by calling (800) 548-4539 (press 2).
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and the Investment Company Act, and it files
reports, proxy materials and other information with the SEC. These reports,
proxy materials and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of these materials can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information Services, of
the SEC, Washington, D.C. 20549.
G. VOTE REQUIRED
Approval of the proposed Merger requires the affirmative vote of the
holders of a majority of the shares of the Select Fund present or voting by
proxy at the Shareholder Meeting. If the shareholders of the Select Fund do not
approve the proposed Merger, or if the Merger is not consummated for any other
reason, then the Board of Directors will take any further action as it deems to
be in the best interest of the Select Fund and its shareholders, including
liquidation, subject to approval by the shareholders of the Select Fund if
required by applicable law.
H. FINANCIAL HIGHLIGHTS
The following selected per-share data and ratios for the period ended
October 31, 1998, were audited by PricewaterhouseCoopers LLP. Their report
appears in the 1998 Annual Report of the Funds.
22
<PAGE>
SELECT FUND
-----------
SELECTED PER-SHARE DATA FOR
THE YEAR OR PERIOD ENDED OCTOBER 31 1998(a)
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.93
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.01)
Net realized and unrealized (loss) (1.97)
------
Total investment operations (1.98)
LESS DISTRIBUTIONS:
From net investment income --
From net realized gains --
Total Distributions --
NET ASSET VALUE - END OF PERIOD $ 7.95
======
TOTAL RETURN (1) -19.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $4,610
Ratio of net expenses to average net assets(2) 1.40%*
Ratio of gross expenses to average net assets(2) 2.40%*
Ratio of net investment loss to average net assets -0.20%*
Portfolio turnover rate 98%
(a) The Select Fund's shares commenced operations on December 31, 1997.
(1) Total return would have been lower had the Advisor not reduced its fees and
reimbursed expenses.
(2) Net expenses reflects expenses after fee reductions and expense waivers by
the Advisor to limit total annual operating expenses. Gross expenses do not
reflect those reductions and waivers.
* Annualized
23
<PAGE>
<TABLE>
<CAPTION>
GLOBAL FUND
----------------------------------------------------
SELECTED PER-SHARE DATA FOR
THE YEAR OR PERIOD ENDED OCTOBER 31: 1998 1997 1996 1995 1994
- ------------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 14.16 $ 15.11 $ 14.24 $ 13.13 $ 13.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income .34 .45 .39 .40 .26
Net realized and unrealized gain/(loss) .17 1.31 1.49 1.24 (.03)
-------- -------- -------- -------- --------
Total investment operations .51 1.76 1.88 1.64 .23
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income (.25) (.52) (.44) (.50) (.14)
From net realized gains (.29) (2.19) (.57) (.03) (.13)
-------- -------- -------- -------- --------
Total distributions (.54) (2.71) (1.01) (.53) (.27)
-------- -------- -------- -------- --------
NET ASSET VALUE - END OF PERIOD $ 14.13 $ 14.16 $ 15.11 $ 14.24 $ 13.13
======== ======== ======== ======== ========
TOTAL RETURN 3.62% 13.01% 13.72% 12.78% 1.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $631,165 $665,747 $572,150 $482,355 $453,623
Ratio of expenses to average net assets .85% .85% .87% .88% .95%
Ratio of net investment income to
average net assets 2.80% 2.66% 2.66% 2.98% 2.47%
Portfolio turnover rate 75% 48% 71% 83% 52%
</TABLE>
24
<PAGE>
III. MISCELLANEOUS ISSUES
A. OTHER BUSINESS
The Board of Directors of the Company knows of no other business to be
brought before the Shareholder Meeting. If any other matters come before the
Shareholder Meeting, it is the Board's intention that proxies containing
specific restrictions to the contrary will be voted on those matters in
accordance with the judgment of the persons named in the enclosed form of proxy.
B. NEXT MEETING OF SHAREHOLDERS
The Company is not required and does not intend to hold annual or other
periodic meetings of shareholders except as required by the Investment Company
Act. If the Merger is not completed, the next meeting of the shareholders of the
Select Fund will be held at such time as the Board of Directors may determine or
at such time as may be legally required. Any shareholder proposal intended to be
presented at such meeting must be received by the Company at its office at a
reasonable time before the meeting, as determined by the Board of Directors, to
be included in the Company's proxy statement and form of proxy relating to that
meeting, and must satisfy all other legal requirements.
C. LEGAL MATTERS
Certain legal matters in connection with the issuance of the Global
Fund Shares have been be passed upon for the Company by Paul, Hastings, Janofsky
& Walker LLP.
D. EXPERTS
The financial statements of the Fremont Select Fund for the year ended
October 31, 1998, contained in the Company's 1998 Annual Report to Shareholders,
and the financial statements of the Fremont Global Fund for the year ended
October 31, 1998, contained in the Company's 1998 Annual Report to Shareholders,
have been audited by PricewaterhouseCoopers LLP, independent auditors, as stated
in their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given their authority as
experts in accounting and auditing.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
25
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of this 25th day of January, 1999, by Fremont Mutual Funds, Inc., a Maryland
corporation, for itself and on behalf of the Fremont Global Fund (the "Acquiring
Fund"), a series of Fremont Mutual Funds, Inc. (the "Corporation"), and on
behalf of the Fremont Select Fund (the "Acquired Fund"), also a series of the
Corporation.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the assets of the Acquired Fund be
transferred to the Acquiring Fund, and that the Acquiring Fund assume the Stated
Liabilities (as defined in paragraph 1.3) of the Acquired Fund, in exchange for
shares of the Acquiring Fund ("Acquiring Fund Shares"), and that these Acquiring
Fund Shares be distributed immediately after the Closing, as defined in this
Agreement, by the Acquired Fund to its shareholders in liquidation of the
Acquired Fund. This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth, and on the
basis of the representations and warranties contained herein, the Acquired Fund
shall assign, deliver and otherwise transfer its assets as set forth in
paragraph 1.2 (the "Fund Assets") to the Acquiring Fund and the Acquiring Fund
shall assume the Acquired Fund's Stated Liabilities. The Acquiring Fund shall,
as consideration therefor, on the Closing Date (as defined in paragraph 3.1),
deliver to the Acquired Fund full and fractional Acquiring Fund Shares, the
number of which shall be determined by dividing (a) the value of the Acquired
Fund Assets, net of the Acquired Fund's Stated Liabilities, computed in the
manner and as of the time and date set forth in paragraph 2.1, by (b) the net
asset value of one share of the Acquiring Fund computed in the manner and as of
the time and date set forth in paragraph 2.2. Such transfer, delivery and
assumption shall take place at the closing provided for in paragraph 3.1
(hereinafter sometimes referred to as the "Closing"). Immediately following the
Closing, the Acquired Fund shall distribute the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided in paragraph 1.4 hereof. Such transactions are hereinafter sometimes
collectively referred to as the "Reorganization."
1.2 (a) With respect to the Acquired Fund, the Fund Assets
shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities,
instruments, claims and receivables (including dividend and interest
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receivables) owned by the Acquired Fund, and any prepaid expenses
shown as an asset on the Acquired Fund's books on the Closing Date.
(b) Before the Closing Date, the Acquired Fund will provide
the Acquiring Fund with a schedule of its assets and its known
liabilities, and the Acquiring Fund will provide the Acquired Fund
with a copy of the current investment objective and policies
applicable to the Acquiring Fund. The Acquired Fund reserves the right
to sell or otherwise dispose of any of the securities or other assets
shown on the list of the Acquired Fund's Assets before the Closing
Date but will not, without the prior approval of the Acquiring Fund,
acquire any additional securities other than securities which the
Acquiring Fund is permitted to purchase in accordance with its stated
investment objective and policies. Before the Closing Date, the
Acquiring Fund will advise the Acquired Fund of any investments of the
Acquired Fund shown on such schedule which the Acquiring Fund would
not be permitted to hold, pursuant to its stated investment objective
and policies or otherwise. If the Acquired Fund holds any investments
that the Acquiring Fund would not be permitted to hold under its
stated investment objective or policies, the Acquired Fund, if
requested by the Acquiring Fund, will dispose of those securities
prior to the Closing Date to the extent practicable. In addition, if
it is determined that the portfolios of the Acquired Fund and the
Acquiring Fund, when aggregated, would contain investments exceeding
certain percentage limitations to which the Acquiring Fund is or will
be subject with respect to such investments, the Acquired Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Date.
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations before to the Closing Date. The Acquiring Fund will
assume all liabilities and obligations reflected on an unaudited statement of
assets and liabilities of the Acquired Fund prepared by the administrator of the
Corporation as of the Applicable Valuation Date (as defined in paragraph 2.1),
in accordance with generally accepted accounting principles consistently applied
from the prior audited period ("Stated Liabilities"). The Acquiring Fund shall
assume only the Stated Liabilities of the Acquired Fund, and no other
liabilities or obligations, whether absolute or contingent, known or unknown,
accrued or unaccrued.
1.4 Immediately following the Closing, the Acquired Fund will
distribute the Acquiring Fund Shares received by the Acquired Fund pursuant to
paragraph 1.1 pro rata to its shareholders of record determined as of the close
of business on the Closing Date ("Acquired Fund Investors") in complete
liquidation of the Acquired Fund. That distribution will be accomplished by an
instruction, signed by an appropriate officer of the Corporation, to transfer
the Acquiring Fund Shares then credited to the Acquired Fund's account on the
books of the Acquiring Fund to open accounts on the books of the Acquiring Fund
established and maintained by the Acquiring Fund's transfer agent in the names
of record of the Acquired Fund Investors and representing the respective pro
rata number of shares of the Acquiring Fund due such Acquired Fund Investor
based on the respective net asset values per share of the shares of the Acquired
Fund. All issued and outstanding shares of the Acquired Fund will be cancelled
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simultaneously therewith on the Acquired Fund's books, and any outstanding share
certificates representing interests in the Acquired Fund will represent only the
right to receive such number of Acquiring Fund Shares after the Closing as
determined in accordance with paragraph 1.l.
1.5 If any request shall be made for a change of the registration of
shares of the Acquiring Fund to another person from the account of the
stockholder in which name the shares are registered in the records of the
Acquired Fund, it shall be a condition of such registration of shares that there
be furnished to the Acquiring Fund an instrument of transfer properly endorsed,
accompanied by appropriate signature guarantees and otherwise in proper form for
transfer and that the person requesting such registration shall pay to the
Acquiring Fund any transfer or other taxes required by reason of such
registration or establish to the reasonable satisfaction of the Acquiring Fund
that such tax has been paid or is not applicable.
1.6 Following the transfer of assets by the Acquired Fund to the
Acquiring Fund, the assumption of the Acquired Fund's Stated Liabilities by the
Acquiring Fund, and the distribution by the Acquired Fund of the Acquiring Fund
Shares received by it pursuant to paragraph 1.4, the Corporation shall terminate
the qualification, classification and registration of the Acquired Fund with all
appropriate federal and state agencies. Any reporting or other responsibility of
the Corporation is and shall remain the responsibility of the Corporation up to
and including the date on which the Acquired Fund is terminated and
deregistered, subject to any reporting or other obligations described in
paragraph 4.8.
2. VALUATION
2.1 The value of the Acquired Fund's Fund Assets shall be the value of
those assets computed as of the time at which its net asset value is calculated
pursuant to the valuation procedures set forth in the Acquiring Fund's
then-current Prospectus and Statement of Additional Information on the business
day immediately preceding the Closing Date, or at such time on such earlier or
later date as may mutually be agreed upon in writing among the parties hereto
(such time and date being herein called the "Applicable Valuation Date").
2.2 The net asset value of each share of the Acquiring Fund shall be
the net asset value per share computed on the Applicable Valuation Date, using
the market valuation procedures set forth in the Acquiring Fund's then-current
Prospectus and Statement of Additional Information.
2.3 All computations of value contemplated by this Article 2 shall be
made by the Acquiring Fund's administrator in accordance with its regular
practice as pricing agent. The Acquiring Fund shall cause its administrator to
deliver a copy of its valuation report to the Corporation and to the Acquired
Fund at the Closing.
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3. CLOSING(S) AND CLOSING DATE
3.l The Closing for the Reorganization shall occur on April 19, 1999,
and/or on such other date(s) as may be mutually agreed upon in writing by the
parties hereto (each, a "Closing Date"). The Closing(s) shall be held at the
offices of Paul, Hastings, Janofsky & Walker LLP, 345 California Street, San
Francisco, California 94104 or at such other location as is mutually agreeable
to the parties hereto. All acts taking place at the Closing(s) shall be deemed
to take place simultaneously as of 10:00 a.m., local time on the Closing Date
unless otherwise provided.
3.2 The Acquiring Fund's custodian shall deliver at the Closing a
certificate of an authorized officer stating that: (a) the Fund Assets have been
delivered in proper form to the Acquiring Fund on the Closing Date and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment shall have been made,
by the Acquired Fund in conjunction with the delivery of portfolio securities.
3.3 Notwithstanding anything herein to the contrary, if on the
Applicable Valuation Date (a) the New York Stock Exchange shall be closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere shall be disrupted so that, in the
judgment of the Corporation, accurate appraisal of the value of the net assets
of the Acquiring Fund or the Acquired Fund is impracticable, the Applicable
Valuation Date shall be postponed until the first business day after the day
when trading shall have been fully resumed without restriction or disruption and
reporting shall have been restored.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUND AND THE ACQUIRED FUND
4.1 With respect to the Acquired Fund, the Corporation has called or
will call a meeting of Acquired Fund shareholders to consider and act upon this
Agreement and to take all other actions reasonably necessary to obtain the
approval of the transactions contemplated herein, including approval for the
Acquired Fund's liquidating distribution of Acquiring Fund Shares contemplated
hereby, and for the Corporation to terminate the Acquired Fund's qualification,
classification and registration if requisite approvals are obtained with respect
to the Acquired Fund. The Corporation, on behalf of the Acquired Fund, shall
prepare the notice of meeting, form of proxy and proxy statement (collectively,
"Proxy Materials") to be used in connection with that meeting.
4.2 The Corporation, on behalf of the Acquired Fund, covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in accordance with the
terms of this Agreement.
4.3 The Corporation, on behalf of the Acquired Fund, will assist the
Acquiring Fund in obtaining such information as the Acquiring Fund reasonably
requests concerning the beneficial ownership of shares of the Acquired Fund.
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4.4 Subject to the provisions hereof, the Corporation, on its own
behalf and on behalf of the Acquiring Fund and the Acquired Fund, will take, or
cause to be taken, all actions, and do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated herein.
4.5 The Corporation, on behalf of the Acquired Fund, shall furnish to
the Acquiring Fund on the Closing Date, a final statement of the total amount of
the Acquired Fund's assets and liabilities as of the Closing Date.
4.6 The Corporation, on behalf of the Acquiring Fund, has prepared and
filed, or will prepare and file, with the Securities and Exchange Commission
(the "SEC") a registration statement on Form N-14 under the Securities Act of
1933, as amended (the "1933 Act"), relating to the Acquiring Fund Shares (the
"Registration Statement"). the Corporation, on behalf of the Acquired Fund, has
provided or will provide the Acquiring Fund with the Proxy Materials for
inclusion in the Registration Statement, prepared in accordance with paragraph
4.1, and with such other information and documents relating to the Acquired Fund
as are requested by the Acquiring Fund and as are reasonably necessary for the
preparation of the Registration Statement.
4.7 As soon after the Closing Date as is reasonably practicable, the
Corporation, on behalf of the Acquired Fund: (a) shall prepare and file all
federal and other tax returns and reports of the Acquired Fund required by law
to be filed with respect to all periods ending on/or before the Closing Date but
not theretofore filed and (b) shall pay all federal and other taxes shown as due
thereon and/or all federal and other taxes that were unpaid as of the Closing
Date.
4.8 Following the transfer of Fund Assets by the Acquired Fund to the
Acquiring Fund and the assumption of the Stated Liabilities of the Acquired Fund
in exchange for Acquiring Fund Shares as contemplated herein, the Corporation
will file any final regulatory reports, including but not limited to any Form
N-SAR and Rule 24f-2 filings with respect to the Acquired Fund, promptly after
the Closing Date and also will take all other steps as are necessary and proper
to effect the termination or declassification of the Acquired Fund in accordance
with the laws of the State of Maryland and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Corporation, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Fund as follows:
(a) The Corporation was duly incorporated pursuant to its
Articles of Incorporation, as amended, restated and supplemented (the
"Articles"), by the Directors for the purpose of acting as a
management investment company under the Investment Company Act of 1940
(the "1940 Act") and is validly existing under the laws of the State
of Maryland, and the Articles direct the Directors to manage the
affairs of the Corporation and grants them all powers necessary or
desirable to carry out such responsibility, including administering
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the Corporation's business as currently conducted by the Corporation
and as described in the current prospectuses of the Corporation. the
Corporation is registered as an investment company classified as an
open-end management company, under the 1940 Act and its registration
with the SEC as an investment company is in full force and effect;
(b) The Registration Statement, including the current
prospectus and statement of additional information of the Acquiring
Fund, conforms or will conform, at all times up to and including the
Closing Date, in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the regulations thereunder and do
not include or will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(c) The Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement by the
Corporation for itself and on behalf of the Acquiring Fund does not
and will not (i) violate the Corporation's Articles or By-Laws, or
(ii) result in a breach or violation of, or constitute a default
under, any material agreement or material instrument, to which the
Corporation is a party or by which its properties or assets are bound;
(d) Except as previously disclosed in writing to the
Acquired Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to the Corporation's knowledge, threatened against the
Corporation or its business, the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect the Corporation or the Acquiring Fund's financial
condition or the conduct of their business. the Corporation knows of
no facts that might form the basis for the institution of any such
proceeding or investigation, and the Acquiring Fund is not a party to
or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects, or
is reasonably likely to materially and adversely affect, its business
or its ability to consummate the transactions contemplated herein;
(e) All issued and outstanding shares, including shares to
be issued in connection with the Reorganization, of the Acquiring Fund
will, as of the Closing Date, be duly authorized and validly issued
and outstanding, fully paid and nonassessable, the shares of each
class of the Acquiring Fund issued and outstanding before the Closing
Date were offered and sold in compliance with the applicable
registration requirements, or exemptions therefrom, of the 1933 Act,
and all applicable state securities laws, and the regulations
thereunder, and the Acquiring Fund does not have outstanding any
option, warrants or other rights to subscribe for or purchase any of
its shares nor is there outstanding any security convertible into any
of its shares;
(f) The execution, delivery and performance of this
Agreement on behalf of the Acquiring Fund will have been duly
authorized prior to the Closing Date by all necessary action on the
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part of the Corporation, the Directors and the Acquiring Fund, and
this Agreement will constitute a valid and binding obligation of the
Corporation and the Acquiring Fund enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors, rights and
to general equity principles;
(g) On the effective date of the Registration Statement, at
the time of the meeting of the Acquired Fund shareholders and on the
Closing Date, any written information furnished by the Corporation
with respect to the Acquiring Fund for use in the Proxy Materials, the
Registration Statement or any other materials provided in connection
with the Reorganization does not and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
(h) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities Exchange Act
of 1934 (the "1934 Act"), the 1940 Act or Maryland law for the
execution of this Agreement by the Corporation, for itself and on
behalf of the Acquiring Fund, or the performance of the Agreement by
the Corporation for itself and on behalf of the Acquiring Fund, except
for such consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals,
authorizations and filings as may be required after the Closing Date;
(i) The Statement of Assets and Liabilities, Statement of
Operations and Statements of Changes in Net Assets of the Acquiring
Fund as of and for the year ended October 31, 1998, audited by
PricewaterhouseCoopers LLP (copies of which have been or will be
furnished to the Acquired Fund) fairly present, in all material
respects, the Acquiring Fund's financial condition as of such date and
its results of operations for such period in accordance with generally
accepted accounting principles consistently applied, and as of such
dates there were no liabilities of the Acquiring Fund (contingent or
otherwise) known to the Corporation that were not disclosed therein
but that would be required to be disclosed therein in accordance with
generally accepted accounting principles;
(j) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business; or
any incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and accepted by the Acquired Fund,
prior to the Closing Date (for the purposes of this subparagraph (j),
neither a decline in the Acquiring Fund's net asset value per share
nor a decrease in the Acquiring Fund's size due to redemptions shall
be deemed to constitute a material adverse change);
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(k) For each full and partial taxable year from its
inception through the Closing Date, the Acquiring Fund has qualified
as a separate regulated investment company under the Code and has
taken all necessary and required actions to maintain such status; and
(1) All federal and other tax returns and reports of the
Corporation and the Acquiring Fund required by law to be filed on or
before the Closing Date shall have been filed, and all taxes owed by
the Corporation or the Acquiring Fund shall have been paid so far as
due, and to the best of the Corporation's knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to any such return.
5.2 The Corporation, on behalf of the Acquired Fund, represents and
warrants to the Acquiring Fund as follows:
(a) The Corporation was duly incorporated pursuant to its
Articles of Incorporation, as amended, restated and supplemented (the
"Articles") by the Directors for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under
the laws of the State of Maryland, and the Articles direct the
Directors to manage the affairs of the Corporation and grants them all
powers necessary or desirable to carry out such responsibility,
including administering the Corporation's business as currently
conducted by the Corporation and as described in the current
prospectuses of the Corporation. The Corporation is registered as an
investment company classified as an open-end management company, under
the 1940 Act and its registration with the SEC as an investment
company is in full force and effect;
(b) All of the issued and outstanding shares of the Acquired
Fund have been offered and sold in compliance in all material respects
with applicable registration or notice requirements of the 1933 Act
and state securities laws; all issued and outstanding shares of each
class of the Acquired Fund are, and on the Closing Date will be, duly
authorized and validly issued and outstanding, and fully paid and
non-assessable, and the Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of
its shares, nor is there outstanding any security convertible into any
of its shares;
(c) The Acquired Fund is not in violation of, and the
execution, delivery and performance of this Agreement by the
Corporation for itself and on behalf of the Acquired Fund does not and
will not (i) violate the Corporation's Articles or By-Laws, or (ii)
result in a breach or violation of, or constitute a default under, any
material agreement or material instrument to which the Corporation is
a party or by its properties or assets are bound;
(d) Except as previously disclosed in writing to the
Acquiring Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to the Corporation's knowledge, threatened against the
Acquired Fund or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Acquired Fund's
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financial condition or the conduct of its business, the Corporation
knows of no facts that might form the basis for the institution of any
such proceeding or investigation, and the Acquired Fund is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely affects,
or is reasonably likely to materially and adversely affect, its
business or its ability to consummate the transactions contemplated
herein;
(e) The Statement of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Acquired
Fund as of and for the period ended October 31, 1998, audited by
PricewaterhouseCoopers LLP (copies of which have been or will be
furnished to the Acquiring Fund) fairly present, in all material
respects, the Acquired Fund's financial condition as of such date and
its results of operations for such period in accordance with generally
accepted accounting principles consistently applied, and as of such
date there were no liabilities of the Acquired Fund (contingent or
otherwise) known to the Corporation that were not disclosed therein
but that would be required to be disclosed therein in accordance with
generally accepted accounting principles;
(f) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Acquired Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and accepted by the Acquiring Fund,
prior to the Closing Date (for the purposes of this subparagraph (f),
neither a decline in the Acquired Fund's net asset value per share nor
a decrease in the Acquired Fund's size due to redemptions shall be
deemed to constitute a material adverse change);
(g) All federal and other tax returns and reports of the
Corporation and the Acquired Fund required by law to be filed on or
before the Closing Date shall have been filed, and all taxes owed by
the Corporation or the Acquired Fund shall have been paid so far as
due, and to the best of the Corporation's knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to any such return;
(h) For each full and partial taxable year from its
inception through the Closing Date, the Acquired Fund has qualified as
a separate regulated investment company under the Code and has taken
all necessary and required actions to maintain such status;
(i) At the Closing Date, the Acquired Fund will have good
and marketable title to the Fund Assets and full right, power and
authority to assign, deliver and otherwise transfer such Fund Assets
hereunder, and upon delivery and payment for such Fund Assets as
contemplated herein, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the ownership
or transfer thereof other than such restrictions as might arise under
the 1933 Act;
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(j) The execution, delivery and performance of this
Agreement on behalf of the Acquired Fund will have been duly
authorized prior to the Closing Date by all necessary action on the
part of the Corporation, the Directors and the Acquired Fund, and this
Agreement will constitute a valid and binding obligation the
Corporation and the Acquired Fund enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors, rights and
to general equity principles;
(k) From the effective date of the Registration Statement,
through the time of the meeting of the Acquired Fund Investors, and on
the Closing Date, the Proxy Materials (exclusive of the portions of
the Acquiring Fund's Prospectus contained or incorporated by reference
therein, and exclusive of any written information furnished by the
Corporation with respect to the Acquiring Fund): (i) will comply in
all material respects with the applicable provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the regulations thereunder and (ii)
do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and as of such dates and
times, any written information furnished by the Corporation, on behalf
of the Acquired Fund, for use in the Registration Statement or in any
other manner that may be necessary in connection with the transactions
contemplated hereby does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
information provided not misleading; and
(1) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act, the 1940 Act or
Maryland law for the execution of this Agreement by the Corporation,
for itself and on behalf of the Acquired Fund, or the performance of
the Agreement by the Corporation for itself and on behalf of the
Acquired Fund, except for such consents, approvals, authorizations and
filings as have been made or received, and except for such consents,
approvals, authorizations and filings as may be required subsequent to
the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUND
The obligations of the Corporation to consummate the Reorganization
with respect to the Acquired Fund shall be subject to the performance by the
Corporation, for itself and on behalf of the Acquiring Fund, of all the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following conditions with respect to the Acquiring
Fund:
6.1 All representations and warranties of the Corporation with respect
to the Acquiring Fund contained herein shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
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transactions contemplated herein, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The Corporation, on behalf of the Acquiring Fund, shall have
delivered to the Acquired Fund at the Closing a certificate executed on behalf
of the Acquiring Fund by the Corporation's President, Vice President, Assistant
Vice President, Secretary or Assistant Secretary in a form reasonably
satisfactory to the Acquired Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Corporation with respect
to the Acquiring Fund made herein are true and correct at and as of the Closing
Date, except as they may be affected by the transactions contemplated herein,
and as to such other matters as the Acquired Fund shall reasonably request.
6.3 Unless waived by the Acquired Fund, the Acquired Fund shall have
received at the Closing a favorable opinion of Paul, Hastings, Janofsky & Walker
LLP, counsel to the Corporation, dated as of the Closing Date, in a form
reasonably satisfactory to the Acquired Fund, substantially to the effect that:
(a) the Corporation is a duly registered, open-end,
management investment company, and its registration with the SEC as an
investment company under the 1940 Act is in full force and effect; (b)
the Acquiring Fund is a separate portfolio of the Corporation, which
is a corporation duly incorporated pursuant to its Articles of
Incorporation, is legally existing and in good standing under the laws
of the State of Maryland, and the Articles direct the Directors to
manage the affairs of the Corporation and grants them all powers
necessary or desirable to carry out such responsibility, including
administering the Corporation's business as described in the current
prospectuses of the Corporation; (c) this Agreement has been duly
authorized, executed and delivered by the Corporation on behalf of the
Corporation and the Acquiring Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquired
Fund, is a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors, rights and to
general equity principles; (d) the Acquiring Fund Shares to be issued
to the Acquired Fund and then distributed to the Acquired Fund
Investors pursuant to this Agreement are duly registered under the
1933 Act on the appropriate form, and are duly authorized and upon
such issuance will be validly issued and outstanding and fully paid
and non-assessable, and no shareholder of the Acquiring Fund has any
preemptive rights to subscription or purchase in respect thereof; (e)
the Registration Statement has become effective with the SEC and, to
the best of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or threatened; (f) no
consent, approval, authorization, filing or order of any court or
governmental authority of the United States or any state is required
for the consummation of the Reorganization with respect to the
Acquiring Fund, except for such consents, approvals, authorizations
and filings as have been made or received, and except for such
consents, approvals, authorizations and filings as may be required
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after the Closing Date; and (g) to the best knowledge of such counsel,
no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened as to the Corporation or the Acquiring Fund or any of their
properties or assets and neither the Corporation nor the Acquiring
Fund is a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body that materially and
adversely affects its business.
6.4 As of the Closing Date, there shall have been no material change in
the investment objective, policies and restrictions nor any material change in
the investment management fees, fee levels payable pursuant to any 12b-1 plan of
distribution, other fees payable for services provided to the Acquiring Fund,
fee waiver or expense reimbursement undertakings, or sales loads of the
Acquiring Fund from those fee amounts, undertakings and sales load amounts
described in the prospectus of the Acquiring Fund delivered to the Acquired Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.5 With respect to the Acquiring Fund, the Board of Directors of the
Corporation shall have determined that the Reorganization is in the best
interests of the Acquiring Fund and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of the
Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The obligations of the Corporation to consummate the Reorganization
with respect to the Acquiring Fund shall be subject to the performance by the
Corporation of all the obligations to be performed by it hereunder, with respect
to the Acquired Fund, on or before the Closing Date and, in addition thereto,
the following conditions:
7.1 All representations and warranties of the Corporation with respect
to the Acquired Fund contained herein shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date.
7.2 the Corporation, on behalf of the Acquired Fund, shall have
delivered to the Acquiring Fund at the Closing a certificate executed on behalf
of the Acquired Fund, by the Corporation's President, Vice President, Assistant
Vice President, Secretary or Assistant Secretary, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Corporation with respect
to the Acquired Fund made herein are true and correct at and as of the Closing
Date, except as they may be affected by the transactions contemplated herein and
as to such other matters as the Acquiring Fund shall reasonably request.
7.3 Unless waived by the Acquiring Fund, the Acquiring Fund shall have
received at the Closing a favorable opinion from Paul, Hastings, Janofsky &
-12-
<PAGE>
Walker LLP, counsel to the Corporation, dated as of the Closing Date, in a form
reasonably satisfactory to the Acquiring Fund, substantially to the effect that:
(a) The Corporation is a duly registered, open-end,
management investment company, and its registration with the SEC as an
investment company under the 1940 Act is in full force and effect; (b)
the Acquired Fund is a separate portfolio of the Corporation, which is
a corporation duly incorporated pursuant to its Articles of
Incorporation, is validly existing and in good standing under the laws
of the State of Maryland, and the Articles direct the Directors to
manage the affairs of the Corporation and grants them all powers
necessary or desirable to carry out such responsibility, including
administering the Corporation's business as described in the current
prospectuses of the Corporation; (c) this Agreement has been duly
authorized, executed and delivered by the Corporation on behalf of the
Corporation and the Acquired Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquiring
Fund, is a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors, rights and to
general equity principles; (d) no consent, approval, authorization,
filing or order of any court or governmental authority of the United
Sates or any state is required for the consummation of the
Reorganization with respect to the Acquired Fund, except for such
consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date; and (e) to
the best knowledge of such counsel, no litigation or administrative
proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Corporation or the
Acquired Fund or any of their properties or assets and neither the
Corporation nor the Acquired Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely effects its business.
7.4 With respect to the Acquired Fund, the Board of Directors of the
Corporation shall have determined that the Reorganization is in the best
interests of the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
The obligations of the Acquiring Fund and of the Acquired Fund herein
are each subject to the further conditions that on or before the Closing Date
with respect to the Acquiring Fund and the Acquired Fund:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Corporation's
Articles and the requirements of the 1940 Act, and certified copies of the
-13-
<PAGE>
resolutions evidencing such approval shall have been delivered to the Acquiring
Fund.
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or any of the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders,
approvals and permits of federal, state and local regulatory authorities
(including, without limitation, those of the SEC and of state securities
authorities) deemed necessary by the Corporation, on behalf of the Acquiring
Fund or the Acquired Fund, to permit consummation, in all material respects, of
the transactions contemplated herein shall have been obtained, except where
failure to obtain any such consent, order or permit would not, in the opinion of
the party asserting that the condition to closing has not been satisfied,
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund.
8.4 The Registration Statement shall have become effective under the
1933 Act, no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Acquired Fund shall have declared and paid a dividend or
dividends which, together with all previous such dividends, shall have the
effect of distributing to the Acquired Fund's shareholders substantially all of
the Acquired Fund's investment company taxable income for all taxable years
ending on or prior to the Closing Date (computed without regard to any deduction
for dividends paid) and substantially all of its net capital gain realized in
all taxable years ending on or prior to the Closing Date (after reduction for
any capital loss carryover).
8.6 The Corporation shall have received the opinion of Paul, Hastings,
Janofsky & Walker LLP addressed to both the Acquiring Fund and the Acquired Fund
(and based on customary representation certificates from the Corporation, the
Acquiring Fund and the Acquired Fund) substantially to the effect that, for
federal income tax purposes:
(a) the transfer by the Acquired Fund of the Fund Assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
the Stated Liabilities will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code and the Acquiring Fund and the
Acquired Fund each are a "party to a reorganization" within the meaning of
Section 368(b) of the Code; (b) no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the Fund Assets solely in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Stated Liabilities; (c) no gain or loss will be recognized by the Acquired
Fund upon the transfer of the Fund Assets to the Acquiring Fund and the
assumption by the Acquiring Fund of the Stated Liabilities in exchange for
the Acquiring Fund Shares or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to the Acquired Fund
-14-
<PAGE>
shareholders in exchange for their shares of the Acquired Fund; (d) no gain
or loss will be recognized by the Acquired Fund Investors upon the exchange
of their Acquired Fund Shares for the Acquiring Fund Shares; (e) the
aggregate tax basis for the Acquiring Fund Shares received by each of the
Acquired Fund Investors pursuant to the Reorganization will be the same as
the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period
of the Acquiring Fund Shares to be received by each Acquired Fund Investors
will include the period during which the Acquired Fund shares exchanged
therefor were held by such shareholder (provided the Acquired Fund shares
were held as capital assets on the date of the Reorganization); and (f) the
tax basis of the Acquired Fund assets acquired by the Acquiring Fund will
be same as the tax basis of such assets to the Acquired Fund immediately
prior to the Reorganization, and the holding period of the assets of the
Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor
the Acquired Fund may waive the condition set forth in this paragraph 8.6.
9. EXPENSES
9.1 Except as may be otherwise provided herein, each of the Acquired
Fund and the Acquiring Fund shall be liable for its respective expenses incurred
in connection with entering into and carrying out the provisions of this
Agreement, whether or not the transactions contemplated hereby are consummated.
The expenses payable by the Acquired Fund hereunder shall include (i) fees and
expenses of its counsel and independent auditors incurred in connection with the
Reorganization; (ii) expenses associated with printing and mailing the
Prospectus/Proxy Statement and soliciting proxies in connection with the meeting
of shareholders of the Acquired Fund referred to in paragraph 4.1 hereof; (iii)
all fees and expenses related to the liquidation of the Acquired Fund; (iv) fees
and expenses of the Acquired Fund's custodian and transfer agent(s) incurred in
connection with the Reorganization; and (v) any special pricing fees associated
with the valuation of the Acquired Fund's portfolio on the Applicable Valuation
Date. Fremont Investment Advisors, Inc., has agreed to reimburse the Acquired
Fund for the expenses listed in items (i), (ii), (iii) (iv) and (v) above. The
expenses payable by the Acquiring Fund hereunder shall include (i) fees and
expenses of its counsel and independent auditors incurred in connection with the
Reorganization; (ii) expenses associated with preparing this Agreement and
preparing and filing the Registration Statement under the 1933 Act covering the
Acquiring Fund Shares to be issued in the Reorganization; (iii) registration or
qualification fees and expenses of preparing and filing such forms, if any, as
are necessary under applicable state securities laws to qualify the Acquiring
Fund Shares to be issued in connection with the Reorganization; (iv) any fees
and expenses of the Acquiring Fund's custodian and transfer agent(s) incurred in
connection with the Reorganization; and (v) any special pricing fees associated
with the valuation of the Acquiring Fund's portfolio on the Applicable Valuation
Date. Fremont Investment Advisors, Inc., has agreed to reimburse the Acquiring
Fund for the expenses listed in items (i), (ii), (iii), (iv) and (v) above.
-15-
<PAGE>
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the
parties and supersedes any prior or contemporaneous understanding or arrangement
with respect to the subject matter hereof.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing by the mutual written
consent of the Acquiring Fund and the Acquired Fund.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Corporation, acting on behalf of the Acquired Fund and the Acquiring Fund;
provided, however, that following the meeting of the shareholders of the
Acquired Fund, no such amendment may have the effect of changing the provisions
for determining the number of shares of the Acquiring Fund to be to the Acquired
Fund Investors under this Agreement to the detriment of such Acquired Fund
Investors, or otherwise materially and adversely affecting the Acquired Fund,
without the Acquired Fund obtaining the Acquired Fund Investors' further
approval except that nothing in this paragraph 12 shall be construed to prohibit
the Acquiring Fund and the Acquired Fund from amending this Agreement to change
the Closing Date or Applicable Valuation Date by mutual agreement.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, certified mail or overnight express courier addressed to:
For the Corporation, on behalf of itself and the
Acquiring Fund and/or Acquired Fund:
Fremont Mutual Funds
333 Market Street, Suite 2600
San Francisco, California 94105
Attention: Michael H. Kosich
President
-16-
<PAGE>
With a copy to:
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California St., 29th Floor
San Francisco, California 94104
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to Articles, paragraphs,
subparagraphs or Exhibits shall be construed as referring to Articles,
paragraphs or subparagraphs hereof or Exhibits hereto, respectively. Whenever
the terms "hereto", "hereunder", "herein" or "hereof" are used in this
Agreement, they shall be construed as referring to this entire Agreement, rather
than to any individual Article, paragraph, subparagraph or sentence.
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other
parties. Nothing herein expressed or implied is intended or shall be construed
to confer upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
-17-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed by its authorized officer.
Fremont Mutual Funds, Inc.
for itself and on behalf of
the Fremont Global Fund
By: /s/ Michael H. Kosich
---------------------------
Michael H. Kosich
President
Fremont Mutual Funds, Inc.
for itself and on behalf of
the Fremont Select Fund
By: /s/ Michael H. Kosich
---------------------------
Michael H. Kosich
President
-18-
<PAGE>
PROXY
FOR SPECIAL MEETING OF SHAREHOLDERS OF
FREMONT SELECT FUND
ON APRIL 16, 1999
THE UNDERSIGNED HEREBY APPOINTS MICHAEL H. KOSICH AND TINA THOMAS, AND
EACH OF THEM, PROXIES FOR THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO
REPRESENT THE UNDERSIGNED AND TO VOTE ALL OF THE SHARES OF FREMONT SELECT FUND
(THE "SELECT FUND") OF FREMONT MUTUAL FUNDS, INC. (THE "COMPANY"), WHICH THE
UNDERSIGNED IS ENTITLED TO VOTE AT THE SPECIAL MEETING OF SHAREHOLDERS OF THE
SELECT FUND TO BE HELD ON APRIL 16, 1999 AND AT ANY ADJOURNMENT THEREOF.
+ PROPOSAL TO APPROVE OR DISAPPROVE A MERGER OF THE SELECT FUND
PROVIDING FOR (I) THE TRANSFER OF SUBSTANTIALLY ALL OF THE ASSETS AND
LIABILITIES OF THE SELECT FUND TO THE FREMONT GLOBAL FUND (THE "GLOBAL
FUND"), A SEPARATE SERIES OF THE COMPANY, IN EXCHANGE FOR SHARES OF
THE GLOBAL FUND (THE "GLOBAL FUND SHARES") OF EQUIVALENT VALUE, (II)
THE PRO RATA DISTRIBUTION OF THOSE GLOBAL FUND SHARES TO THE
SHAREHOLDERS OF THE SELECT FUND IN FULL REDEMPTION OF THOSE
SHAREHOLDERS' SHARES IN THE SELECT FUND, AND (III) THE IMMEDIATE
LIQUIDATION AND TERMINATION OF THE SELECT FUND, ALL AS DESCRIBED IN
THE ACCOMPANYING COMBINED PROXY STATEMENT AND PROSPECTUS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
AND, IN THEIR DISCRETION, TO TRANSACT ANY OTHER BUSINESS THAT MAY LAWFULLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS YOU DIRECT ON THIS FORM. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.
Dated: , 1999
----------------------------
----------------------------------
Signature of Shareholder
----------------------------------
Signature of Shareholder
When shares are registered jointly in the names of two or
more persons, ALL must sign. Signature(s) must correspond
exactly with the name(s) shown. Please sign, date and return
promptly in the enclosed envelope.
<PAGE>
-----------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
FOR THE REORGANIZATION OF
FREMONT SELECT FUND
INTO
FREMONT GLOBAL FUND
-----------------------------------------
<PAGE>
FREMONT MUTUAL FUNDS, INC.
------------------------------
50 Beale Street, Suite 100
San Francisco, California 94105
(800) 548-4539
-----------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH ___, 1999
FOR REGISTRATION STATEMENT ON FORM N-14
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Combined Proxy Statement and Prospectus dated
March ___, 1999, which has been filed by Fremont Mutual Funds, Inc. (the
"Company") in connection with a Special Meeting of Shareholders of Fremont
Select Fund (the "Select Fund") of the Company that has been called to vote on
an Agreement and Plan of Reorganization (and the transactions contemplated
thereby). Copies of the Combined Proxy Statement and Prospectus may be obtained
at no charge by writing to Fremont Mutual Funds, Inc. at the address indicated
above or by calling toll-free (800) 548-4539.
Unless otherwise stated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement and Prospectus.
Further information about the Company, the Select Fund, and Fremont
Global Fund (the "Global Fund" and, together, the "Funds") is contained in the
Funds' Combined Prospectus (including other Fremont Funds) dated March 1, 1998,
as amended June 29, 1998, and the Annual Report of the Funds for the fiscal year
ended October 31, 1998. The Funds' Statement of Additional Information
(including other Fremont Funds), dated March 1, 1998, amended June 29, 1998, is
incorporated by reference in this Statement of Additional Information and is
available without charge by calling Fremont Mutual Funds toll-free at (800)
548-4539.
TABLE OF CONTENTS
Page
----
General Information ................................................. B-2
<PAGE>
GENERAL INFORMATION
The shareholders of the Select Fund are being asked to approve a form
of Agreement and Plan of Reorganization (the "Plan") combining the Select Fund
into the Global Fund (and the transactions contemplated thereby). The Plan
contemplates the transfer of all substantially all of the assets and liabilities
of the Select Fund as of the Effective Date to the Global Fund, and the
assumption by the Global Fund of the liabilities of the Select Fund, in exchange
for shares of the Global Fund. Immediately after the Effective Date, the Select
Fund will distribute to its shareholders of record as of the close of business
on the Effective Date the shares of the Global Fund received. The shares of the
Global Fund that will be issued for distribution to the Select Fund's
shareholders will have an aggregate net asset value equal to the aggregate net
asset value of the shares of the Select Fund held as of the Closing Date. The
Company will then take all necessary steps to terminate the qualification,
registration and classification of the Select Fund. All issued and outstanding
shares of the Select Fund will be canceled on the Select Fund's books. Shares of
the Global Fund will be represented only by book entries; no share certificates
will be issued.
A Special Meeting of the Select Fund's shareholders to consider the
transaction will be held at the offices of the Company, 333 Market Street, Suite
2600, San Francisco, California 94105 on April 16, 1999 at 9:00 a.m., local
time.
For further information about the transaction, see the Combined Proxy
Statement and Prospectus. For further information about the Company, the Select
Fund and the Global Fund, see the Funds' Combined Statement of Additional
Information, dated March 1, 1998, as amended June 29, 1998, which is available
without charge by calling the Company at (800) 548-4539.
B-2
<PAGE>
-----------------------------------------
PART C
FREMONT MUTUAL FUNDS, INC.
OTHER INFORMATION
-----------------------------------------
<PAGE>
FREMONT MUTUAL FUNDS, INC.
-------------------------------
FORM N-14
-------------------------------
PART C
-------------------------------
<PAGE>
ITEM 15. INDEMNIFICATION
Article VII(g) of the Articles of Incorporation, filed as Exhibit (1),
Item 16, provides for indemnification of certain persons acting on behalf of the
Funds.
The Funds and the Advisor are jointly insured under an errors and
omissions policy issued by American International Specialty Lines Insurance
Company.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons by
the Registrant's Articles and Bylaws, or otherwise, the Registrant has been
advised that in opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in said Act, and is,
therefore, unenforceable. In particular, the Articles of the Company provide
certain limitations on liability of officers and directors. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Series of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.
ITEM 16. EXHIBITS
(1) Articles of Incorporation, as amended and supplemented, are
incorporated by reference to Post-Effective Amendment No. 31
filed with the Commission on March 2, 1998 ("Post-Effective
Amendment No. 31") under File Nos. 33-23453 and 811-5632.
(2) By-Laws are incorporated by reference to Post-Effective
Amendment No. 21 filed with the Commission on January 20,
1996.
(3) Voting Trust Agreement - Not applicable.
(4) Form of Agreement and Plan of Reorganization is included in
Part A.
(5) Specimen Share Certificate - Not applicable.
(6) Amended and Restated Investment Advisory and Administrative
Securities Agreement for the Global Fund and Investment
Advisory and Administrative Services Agreement for the
Select Fund are incorporated by reference to Post-Effective
Amendment No. 31.
C-1
<PAGE>
(7)(A) Distribution Agreement with First Fund Distributors, Inc. is
incorporated by reference to Post-Effective Amendment No. 28
filed with the Commission on October 17, 1997.
(7)(B) Form of Selling Group Agreement - Not applicable.
(8) Benefit Plan(s) - Not applicable.
(9) Custody Agreement is incorporated by reference to
Post-Effective Amendment No. 33 filed with the Commission on
December 15, 1998.
(10) Form of Shareholder Services Plan - Not applicable.
(12) Consent and Opinion of Counsel as to legality of shares is
incorporated by reference to Post-Effective Amendment No.
31.
(13) Opinion and Consent as to Tax Matters to be filed by
post-effective amendment to this Registration Statement.
(13)(A) Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement with Fremont Investment Advisors, Inc.
incorporated by reference to Post-Effective Amendment No. 23
filed with the Commission on February 28, 1997.
(13)(B) Sub-Transfer Agency Agreement with Countrywide Fund
Services, Inc. incorporated by reference to Post-Effective
Amendment No. 23.
(13)(C) Administration Agreement with Investment Company
Administration Corporation incorporated by reference to
Post-Effective Amendment No. 28 filed with the Commission on
October 17, 1997.
(13)(D) Investment Accounting Agreement between Investors Fiduciary
Trust Company and Fremont Mutual Funds, Inc. incorporated by
reference to Post-Effective Amendment No. 17 filed with the
Commission on March 1, 1994.
(13)(E) Sub-Transfer Agency Agreement with National Financial Data
Services, Inc. incorporated by reference to Post Effective
Amendment No. 31.
(14) Independent Auditors' Consent.
(15) Not Applicable.
(16) Power of Attorney.
(17) Not Applicable.
C-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(1) Registrant agrees that, before any public reoffering of the
securities registered through the use of a prospectus which is part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, the reoffering prospectus will contain the information called for
by the applicable registration form for the reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other items of the applicable.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (a) above will be filed as part of an amendment to
the Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial
bona fide offering of them.
C-3
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the Registrant, in the City of San Francisco and
State of California, on the 28th day of January, 1999.
FREMONT MUTUAL FUNDS, INC.
David L. Redo*
--------------------------------------
David L. Redo
Chairman of the Board of Directors
and Chief Executive Officer
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated:.
SIGNATURE TITLE DATE
- --------- ----- ----
David L. Redo* Chairman of the Board January 28, 1999
- ----------------------- of Directors and
David L. Redo Chief Executive Officer
(Principal Executive Officer)
Jack Gee* Vice President and January 28, 1999
- ----------------------- Controller (Principal
Jack Gee Financial and Accounting Officer)
Richard E. Holmes* Director January 28, 1999
- -----------------------
Richard E. Holmes
- ----------------------- Director January __, 1999
Donald C. Luchessa
David L. Egan* Director January 28, 1999
- -----------------------
David L. Egan
Peter F. Landini* Director January 28, 1999
- -----------------------
Peter F. Landini
Michael F. Kosich* Director January 28, 1999
- -----------------------
Michael F. Kosich
*By: /s/ Julie Allecta
-----------------------
Julie Allecta, Attorney-in-Fact
Pursuant to Power of Attorney
filed herewith as Item 16(16).
C-4
<PAGE>
SEC File No. 333-_____
FREMONT MUTUAL FUNDS, INC.
FORM N-14
EXHIBIT INDEX
Number Exhibit
- ------ -------
14 Independent Auditors' Consent - PricewaterhouseCoopers LLP
16 Power of Attorney
C-5
Consent of Independent Accountants
We consent to the incorporation by reference in this registration statement of
Fremont Mutual Funds, Inc. on Form N-14 of our report dated December 9, 1998, on
our audit of the financial statements and financial highlights of each of the
funds constituting Fremont Mutual Funds, Inc., appearing in the October 31, 1998
Annual Report filed with the Securities and Exchange Commission pursuant to
section 30(d) of the Investment Company Act of 1940. We also consent to the
references to our firm under the captions "Financial Highlights" and "experts."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Francisco, California
January 29, 1999
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
----------------------------------------
The undersigned directors and officers of FREMONT MUTUAL FUNDS, INC., a
Maryland corporation (the "Corporation"), each hereby appoint DAVID L. REDO,
TINA THOMAS, JULIE ALLECTA and DAVID A. HEARTH (with full power to each of them
to act alone), his attorney-in-fact and agent, in all capacities, to execute and
to file any documents relating to the Registration Statement on Form N-14 under
the Investment Company Act of 1940, as amended, and under the Securities Act of
1933, as amended, and under the laws of all states and other domestic and
foreign jurisdictions, including any and all amendments thereto, covering the
registration and the sale of shares by the Corporation related to the
REORGANIZATION OF THE FREMONT SELECT FUND INTO THE FREMONT GLOBAL FUND,
including all exhibits and any and all documents required to be filed with
respect thereto with any regulatory authority, including applications for
exemptive orders, rulings or filings of proxy materials. The undersigned grants
to each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he could
do if personally present, thereby ratifying all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
The undersigned directors and officers hereby execute this Power of
Attorney on the date indicated below.
/s/ David L. Redo Dated: December 31, 1998
- --------------------------------------
David L. Redo
Chairman of the Board and
Chief Executive Officer
/s/ Michael H. Kosich Dated: December 31, 1998
- --------------------------------------
Michael H. Kosich
President and Director
/s/ Peter F. Landini Dated: December 31, 1998
- --------------------------------------
Peter F. Landini
Executive Vice President, Treasurer
and Director
/s/ Jack Gee Dated: December 31, 1998
- --------------------------------------
Jack Gee
Vice President and Controller
(Principal Financial and Accounting
Officer)
/s/ David L. Egan Dated: December 31, 1998
- --------------------------------------
David L. Egan
Director
/s/ Richard E. Holmes Dated: December 31, 1998
- --------------------------------------
Richard E. Holmes
Director
- -------------------------------------- Dated: December __, 1998
Donald C. Luchessa
Director
