-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CFjF8AtQSmSXOmDqy9Gkx77rMV91zU71u1ZwFeOz45Ggc4Ir1zfvFA7av/CRTdWE hBkPYjAY7IxKjDkq5GHM7Q== 0000950147-00-500277.txt : 20001220 0000950147-00-500277.hdr.sgml : 20001220 ACCESSION NUMBER: 0000950147-00-500277 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20001219 EFFECTIVENESS DATE: 20001219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FREMONT MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000837389 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-23453 FILM NUMBER: 791949 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05632 FILM NUMBER: 791950 BUSINESS ADDRESS: STREET 1: 50 BEALE STREET SUITE 100 CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 8005484539 MAIL ADDRESS: STREET 1: 50 BEALE STREET SUITE 100 CITY: SAN FRANCISCO STATE: CA ZIP: 45202 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA MUTUAL FUNDS INC DATE OF NAME CHANGE: 19881113 485BPOS 1 e-5919.txt POST-EFFECTIVE AMENDMENT 38 TO FORM N-1A As filed with the Securities and Exchange Commission on December 19, 2000 File Nos. 33-23453 811-5632 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Post-Effective Amendment No. 38 [X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 41 [X] FREMONT MUTUAL FUNDS, INC. (Exact Name of Registration as Specified in Charter) 333 Market Street, Suite 2600 SAN FRANCISCO, CALIFORNIA 94105 (Address of Principal Executive Offices) (Zip Code) (415) 284-8733 (Registrant's Telephone Number, including Area Code) Tina Thomas, Secretary Fremont Mutual Funds, Inc. 333 Market Street, Suite 2600 SAN FRANCISCO, CALIFORNIA 94105 (Name and Address of Agent for Service) copy to: Julie Allecta Paul, Hastings, Janofsky & Walker, LLP 345 California Street, 29th floor SAN FRANCISCO, CA 94104-2635 It is proposed that this filing will become effective (check appropriate box): [X] Immediately upon filing pursuant to paragraph (b) [ ] On ____________, pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] On __(date)____, pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] On __(date)____, pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously file post-effective amendment. ================================================================================ As filed with the Securities and Exchange Commission on December 19, 2000 Registration No. 33-23453 File No. 811-5632 ================================================================================ Part A of Form N-1A REGISTRATION STATEMENT FREMONT MUTUAL FUNDS, INC. -------------------------- Fremont New Era Value Fund ================================================================================ December 28, 2000 FREMONT MUTUAL FUNDS, INC. PROSPECTUS FREMONT NEW ERA VALUE FUND Like all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities, nor has it passed on the accuracy or adequacy of this prospectus. It is a criminal offense to represent otherwise. TABLE OF CONTENTS OBJECTIVE AND STRATEGY.........................................................3 MAIN RISKS.....................................................................3 PERFORMANCE....................................................................4 FEES AND EXPENSES..............................................................4 EXAMPLE........................................................................5 PORTFOLIO MANAGEMENT...........................................................5 GENERAL RISKS..................................................................5 ABOUT THE ADVISOR..............................................................7 TYPES OF ACCOUNTS AVAILABLE....................................................8 HOW TO INVEST..................................................................9 HOW TO SELL YOUR SHARES.......................................................11 DIVIDENDS, DISTRIBUTIONS, AND TAXES...........................................16 INVESTMENT TERMS..............................................................19 2 OBJECTIVE AND PRINCIPAL STRATEGY The Fremont New Era Value Fund seeks long-term capital appreciation by investing in value stocks of large U.S. corporations. The Fund's investment process incorporates a modernized investment methodology called Relative Value Discipline to introduce a "new era" in value investing. Unlike traditional value investing, this new discipline screens all large cap stocks - including those that do not pay dividends - to identify those that are relatively undervalued. Normally, the Fund will invest at least 65% of the its total assets in these large cap stocks. Fund management follows their Relative Value Discipline to select stocks for the portfolio: * Fund management looks at a stock's dividend yield or price-to-sales ratio compared to the market and its own price history. * Stocks identified as undervalued are then examined to compare the strength of their business models and key financial indicators. This research may also include communication with corporate executives regarding the firm's plans, strategies and future outlook. Stocks are normally purchased when prices are low and the valuation discipline indicates value while sales occur when the valuation discipline demonstrates overvaluation. MAIN RISKS The Fund is designed for investors who understand the risk of investing in stocks and realize that the value of the Fund's investments and its shares may decline due to a drop in the stock markets. These changes may occur over long or short periods of time, and may cause the Fund's shares to be worth more or less than they were at the time of purchase. Because the Fund's portfolio managers actively buy and sell securities of the Fund, investors are subject to the risk that the investment decisions may increase the potential for a loss, especially over short periods. As a non-diversified fund, the Fund may make larger investments in individual companies. Therefore, the Fund's share price may fluctuate more than the share price of a diversified fund. Also, the value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. There is the risk that you may lose money on your investment. For more information on this and other investment risks, please turn to page XX. 3 PERFORMANCE The Fund's total return bar chart and performance table will be provided once the Fund has completed a full calendar year of operations. FEES AND EXPENSES The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES+ None ANNUAL FUND OPERATING EXPENSES DEDUCTED FROM FUND ASSETS Management Fees 0.75% Distribution (12b-1) Fees None Other Expenses+++ 0.88% Total Annual Fund Operating Expenses 1.63% Less: Fees waived and Reimbursed+++ 0.43% Net Operating Expenses 1.20% + The Transfer Agent charges a $10 service fee on wire redemptions. +++ Based on estimated amounts for the current fiscal year. +++ The Advisor is indefinitely obligated by contract to limit the Fund's expenses to 1.20%. However, this limit may be changed with the approval of the Board of Directors. EXAMPLE The example below is intended to help you compare the cost of investing in this fund with the cost of investing in other mutual funds. Your actual costs may be higher or lower. FREMONT VALUE FUND 1 YEAR 3 YEARS ------ ------- $122 $381 This example assumes: * That you invest $10,000 in the Fund for the time periods indicated, and then redeem all of your shares at the end of those periods. * That your investment has a 5% return each year and all dividends are reinvested. * That the Fund's operating expenses remain the same. 4 PORTFOLIO MANAGEMENT The Fremont New Era Value Fund is managed by Fremont Investment Advisors, Inc. Nancy Tengler, President and Chief Investment Officer, is the portfolio manager of the Fund. The Fund is co-managed by Noel DeDora, Managing Director and Senior Portfolio Manager. Prior to joining Fremont Investment Advisors, Inc in October, 2000, Ms. Tengler founded Global Alliance Value Investors, Ltd. in 1997 and served as the President and Chief Investment Officer. From 1994 to 1997, she was Managing Director and Head of the Value Equities Group of UBS Asset Management (NY) Inc. in San Francisco. Mr. DeDora was Executive Vice President and Senior Portfolio Manager of Global Alliance Value Investors, Ltd., from 1997 to October 2000. From 1994 to 1997, Mr. DeDora was Managing Director and Senior Portfolio Manager at UBS Asset Management (NY) Inc. in San Francisco What is a stock's "dividend yield"? A dividend yield is the annual dividend that a stock pays, shown as a percentage of its current share price. The dividend yield percentage is one measure that a fund manager may use to determine whether a stock is undervalued. UNDERSTANDING INVESTMENT RISK GENERAL RISKS OF INVESTING The following are general risk associated with investing. These risk should be taken into consideration in addition to the Principal Risk discussed on page XX before making an investment decision. * Liquidity Risk: From time-to-time, certain Fund investments may be illiquid, or difficult to sell, and this could affect performance. If, for example, the Fund is not able to sell certain stocks or bonds at the desired time and price, this may limit its ability to buy other securities. * Portfolio Turnover: The Fund generally intends to purchase securities for long-term investment rather than short-term gains. However, a security may be held for a shorter than expected period of time if, among other things, the manager needs to raise cash or feels that the investment has served its purpose. Also, stocks or bonds may be sold sooner than anticipated due to unexpected changes in the markets, or in the company that issued the securities. Portfolio turnover rates are generally not a factor in making buy and sell decisions. A high portfolio turnover rate may result in higher costs relating to brokerage commissions, dealer mark-ups and other transaction costs, which may adversely affect Fund performance. The sale of securities may also create taxable capital gains. * Temporary Defensive Measures: From time-to-time, the Fund may invest a portion of its assets in money market securities as a temporary defensive measure. Of course, the Fund cannot pursue its stated investment objective while taking defensive measures. 5 ABOUT THE ADVISOR Fremont Investment Advisors, Inc. (referred to in this prospectus as the "Advisor"), located at 333 Market Street, Suite 2600, San Francisco, California, provides the Fremont New Era Value Fund with investment management and administrative services. The Advisor was formed in 1986 by a group of investment professionals that served as the in-house investment management team for Bechtel Group, Inc., the global engineering firm. These professionals have provided investment management services to the Bechtel Retirement Plan and the Bechtel Foundation since 1978. The Advisor now manages investments for institutions and individuals, in addition to continuing to service the Bechtel Group. For its services, the Fund pays the Advisor a monthly management fee based upon its average daily net assets at the annual rate of 0.75%. In 1996, Fremont Mutual Funds and the Advisor obtained from the Securities and Exchange Commission an order that permits the Advisor to hire and terminate sub-advisors, and modify sub-advisory agreements without the prior approval of shareholders. Fremont Mutual Funds' Board of Directors reviews and approves the hiring of new sub-advisors. If the Advisor hires a new sub-advisor or materially changes a sub-advisory agreement, the Advisor will notify shareholders of all changes including sub-advisory fees. 6 TYPES OF ACCOUNTS AVAILABLE Once you choose the mutual funds that are right for you, you should choose the type of account you want to invest in. Fremont offers a variety of accounts designed for your investment needs. Review the types of accounts described below to find the account type that is best for you.
ACCOUNT TYPE PURPOSE DESCRIPTION - ------------ ------- ----------- INDIVIDUAL For your general investment needs. Individual accounts are owned by one person. JOINT TENANTS For the general investment needs of two or Joint tenant accounts are owned by more than more people. one person. GIFT TO MINOR To invest for a minor's education or other Gift or Transfer to Minor (UGMA/UTMA) future needs. custodial accounts provide a way to invest on behalf of a minor. TRUST For money being invested by a trust, employee The trust or plan must be established before benefit plan, or profit-sharing plan. an account can be opened. CORPORATION, PARTNERSHIP For investment needs of corporations, You will need to provide a certified OR OTHER ENTITY associations, partnerships, institutions, or corporate resolution with your application. other groups. RETIREMENT ACCOUNTS These accounts require a specific application. To order, call 800-548-4539 (press 1). TRADITIONAL IRA Allows you to make deductible or This type of retirement account allows anyone non-deductible contributions to your under age 70 1/2 with earned income to save retirement account, and defer paying taxes on up to $2,000 per tax year. If your spouse has your earnings until after you withdraw the less than $2,000 in earned income, he or she money from your account - usually after may still contribute up to $2,000 to an IRA, retirement. as long as you and your spouse's combined earned income is at least $4,000. ROTH IRA Allows you to make non-deductible Single taxpayers with Adjusted Gross Income contributions to your retirement account (AGI) up to $95,000 per year, and married today, and withdraw your earnings tax-free couples with AGI up to $150,000 per year, may after you are 59 1/2 and have had the account contribute up to $2,000 each, or $4,000 per for at least five years. couple, respectively, per tax year SIMPLIFIED EMPLOYEE Allows owners and employees of small SEP-IRAs allow small business owners or those PENSION PLAN (SEP-IRA) businesses with fewer than five employees to with self-employment income to make invest tax-deferred for retirement. tax-deductible contributions of up to 15% of the first $160,000 of compensation per year for themselves and any eligible employees. SIMPLE IRA Allows owners and employees of small This type of IRA must be established by an businesses with 5 to 99 participants to employer (including a self-employed person). invest tax-deferred for retirement. Simple IRAs enable all employees of the employer to invest up to $6,000 of pre-tax contribution for each employee who elects to income, deferring taxes until retirement. The contribute. employer is also generally required to make a OTHER RETIREMENT PLANS A Fremont Mutual Fund may be used as an investment in many other kinds of employer-sponsored retirement plans. All of these accounts need to be established by the trustee of the plan.
7 HOW TO INVEST There are a number of ways to invest with Fremont. THE MINIMUM INITIAL INVESTMENT IS $2,000 FOR A REGULAR ACCOUNT AND $1,000 FOR AN IRA. Establish an Automatic Investment Plan when opening an account and Fremont will waive the new account minimum.
INVESTMENT METHOD TO OPEN AN ACCOUNT TO ADD TO YOUR INVESTMENT - ----------------- ------------------ ------------------------- BY MAIL Mail in an Account Application with your Mail your check or money order payable to check or money order payable to FREMONT Fremont Mutual Funds for $100 or more MUTUAL FUNDS. Fremont will not accept third party checks. BY TELEPHONE Use the Telephone Exchange Privilege to move Use the Telephone Exchange Privilege to move (TELEPHONE EXCHANGE $2,000 or more ($1,000 for IRAs) from an your investment from one Fremont fund to PRIVILEGE) existing Fremont Fund account into a new, another. Please note that exchanges between identically registered account. To use the funds may be subject to capital gains taxes. Telephone Exchange Privilege, you must first sign up for the privilege by checking the appropriate box on your Account Application. After you sign up, please allow time for Fremont to open your account. BY TELEPHONE Transfer money from your bank to your Fremont (AUTOBUY PROGRAM) account by telephone. You must sign up for this privilege on your Account Application, and attach a voided check. BY WIRE Call 800-548-4539 (press 2) to request bank routing information for wiring your money to Fremont. Not available for IRA accounts. BY AUTOMATIC Use the Automatic Investment Plan to move INVESTMENT PLAN money ($50 minimum) from your financial institution (via Automated Clearing House) to your Fremont account once or twice each month. For more information about the Automatic Investment Plan, see the text immediately below. TO PARTICIPATE, CALL TO REQUEST AN AUTOMATIC INVESTMENT PLAN REQUEST FORM.
8 FREMONT MAKES IT EASY TO INVEST THE AUTOMATIC INVESTMENT PLAN This convenient service allows you to automatically transfer money once or twice a month from your pre-designated bank account to your Fremont account. * The amount of the monthly investment must be at least $50. * Open your account with the Automatic Investment Plan, and we will waive the new account minimum. * If your transfer date falls on a weekend or holiday, we will process the transaction on the previous business day. To change the amount or frequency of your automatic investments, or to stop future investments, you must notify us in writing or by calling 800-548-4539 (press 2). We must receive your request at least 5 days prior to your next scheduled investment date. WHAT YOU SHOULD KNOW WHEN MAKING AN INVESTMENT HOW A MUTUAL FUND IS PRICED The Fund's net asset value, or NAV, is the price of a single share. The NAV is computed by adding up the value of the Fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the total by the number of shares outstanding. The Fund's NAV is calculated after the close of trading on the New York Stock Exchange (NYSE), usually 4:00 p.m. Eastern time, on each day that the exchange is open for trading ("Closing Time"). The Fund values its portfolio securities and assets using price quotes from the primary market in which they are traded. If prices are not readily available, values will be determined using a method adopted by the Fund's Board of Directors. This value may be higher or lower than the securities' closing price in their relevant markets. WHEN AN ORDER TO BUY (OR SELL) IS CONSIDERED RECEIVED Your investment and your application must both be received by Closing Time in order for you to receive that day's price. All orders received after Closing Time will be processed with the next day's NAV. An order is considered received when the completed application (for a new account) or information identifying the account, plus any other required documents, and the investment are received by National Financial Data Services (NFDS), Fremont's transfer agent. 9 OTHER PURCHASING POLICIES All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. Fremont Mutual Funds does not accept third party checks, cash, credit cards, or credit card checks. If you purchase shares by check, and then you sell those shares, your payment may be delayed until your purchase check has cleared. If Fremont receives notice of insufficient funds for a purchase made by check or autobuy, the purchase will be canceled and you will be liable for any related losses or fees the Fund or its transfer agent incurs. During times of drastic economic or market conditions, it may be difficult to purchase shares by telephone. The transfer agent will do its best to accommodate all Fremont shareholders, but you should consider using overnight mail if you find that you are unable to get through on the telephone. ABUSIVE TRADING PRACTICES Fremont does not permit excessive short-term trading, market-timing, or other abusive trading practices in our Funds. These practices may disrupt portfolio management strategies and harm fund performance. To minimize harm to the Funds and their shareholders, we reserve the right to reject any purchase order (including exchanges) from any investor we believe has a history of abusive trading or whose trading, in our judgement, has been or may be disruptive to a fund. Fremont defines abusive trading practices as making six or more complete exchanges - into and out of - one fund within a 12-month period. We also reserve the right to revoke the transaction privileges of any shareholder at any time if he or she has used abusive language or misused the Internet or phone privileges when making purchases and exchange requests. Fremont may modify exchange privileges by giving 60 days' written notice to shareholders. INVESTING THROUGH OTHER INVESTMENT FIRMS You may purchase or redeem shares of the Fund through authorized broker-dealers, banks, or other financial institutions. These institutions may charge for their services or place limitations on the extent to which you may use the services offered by Fremont Mutual Funds. The Fund may compensate third-party service providers who perform shareholder servicing normally performed by the Fund. 10 HOW TO SELL YOUR SHARES You can arrange to take money out of your fund account at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next calculated NAV, or share price, after your request, along with all required completed documents and/or forms described below, are received by the transfer agent. When you sell your shares, you may choose one of the selling methods described in the table below, as well as how you would like to receive your money. Fremont has put several safeguards in place which are intended to protect the interests of our shareholders. By providing all the information requested when you sell your shares, you help us to complete your order in as timely a manner as possible.
SELLING METHOD FEATURES AND REQUIREMENTS BY MAIL Mail your instructions to: If you are using overnight mail: Fremont Mutual Funds, Inc. Fremont Mutual Funds, Inc. c/o c/o National Financial Data Services National Financial Data Services P.O. Box 219343 330 W. 9th Street Kansas City, MO 64121-6343 Kansas City, MO 64105 BY TELEPHONE (TELEPHONE The Telephone Redemption Privilege allows you to redeem your shares REDEMPTION PRIVILEGE) by phone. You must make your telephone redemptions by Closing Time to receive that day's price. You must provide written authorization to add this privilege to your account prior to making the request. BY AUTOMATIC The Automatic Withdrawal Plan (explained more fully below) lets WITHDRAWAL PLAN you set up automatic monthly, quarterly, or annual redemptions from your account in specified dollar amounts ($100 minimum). To establish this feature, complete an Automatic Withdrawal Request form which is available by calling 800-548-4539 (press 2).
HOW WOULD YOU LIKE TO RECEIVE YOUR MONEY? * By Check - Your check will be sent by regular mail to your address on file. * By Wire - There is a $10 service fee. * By Electronic Transfer - Please allow 3 business days. Before placing your order, check to make sure that your financial institution can receive electronic transfers made through the Automated Clearing House. 11 SPECIAL SERVICES AVAILABLE: AUTOMATIC WITHDRAWAL PLAN This convenient service allows you to arrange to receive as little as $100 from your Fremont account on either a monthly, quarterly, or annual basis. There is currently no charge for this service, but there are several policies you should be aware of: * Redemptions by check will be made on the 15th and/or the last business day of the month. * Redemptions made by electronic transfer will be made on the date you indicate on your Automatic Withdrawal Form. * If the withdrawal date falls on a weekend or holiday we will process the transaction on the prior business day. * You may also request automatic exchanges and transfers of a specified dollar amount. WIRE TRANSFER You may wish to wire the proceeds of a redemption from your Fremont account to another financial institution. If you wire money from your Fremont account, shares from your Fremont account are sold on the day we receive your instructions (if you call before the Closing Time). Generally, the wire transfer is processed the next business day. The money should arrive at your financial institution the same day the wire is sent. In order to use the wire redemption feature, bank account instructions must be established prior to the requests. You may authorize the wire privilege on your new account application, or by written instruction with a signature guarantee, and provide Fremont with bank account instructions. A $10 fee applies each time you wire money from your Fremont account. WHAT YOU SHOULD KNOW BEFORE REDEEMING SHARES: HOW WE DETERMINE THE REDEMPTION PRICE The price at which your shares will be redeemed is determined by the time of day National Financial Data Services (NFDS), Fremont's transfer agent, or another authorized agent, receives your redemption request. If a request is received before Closing Time, the redemption price will be the Fund's net asset value reported for that day. If a request is received after Closing Time, the redemption price will be the Fund's net asset value reported for the next day the market is open. HOW TO REDEEM AT TODAY'S PRICE If you have signed up for the Telephone Redemption Privilege, you may call in your redemption request before Closing Time to receive that day's share price. Or, you may arrange to have your written redemption request, with a signature guarantee, if required, and any supporting documents, delivered to NFDS before Closing Time. REDEMPTIONS IN KIND In extreme conditions, there is a possibility that Fremont may honor all or some of a redemption amount as a "redemption in kind." This means that you could receive some or all of your redemption in readily marketable securities held by the Fund. You would also be responsible for paying any broker commissions. 12 ABOUT REDEMPTION CHECKS Normally, redemption proceeds will be mailed within three days after your redemption request is received although it can take up to 10 days. The Fund may hold payment on redemptions until it is reasonably satisfied that it has received payment for a recent purchase. Redemption checks are made payable to the shareholder(s) of record; if you wish for the check to be made payable to someone other than the account owners, you must submit your request in writing, and the signatures of all shareholders of record must be guaranteed. For more information about a "signature guarantee" please see page XX. If your account balance falls below $2,000, the Fund has the right to redeem your shares after giving you 30 days' notice. WHEN YOU CAN'T REDEEM Redemptions may be suspended or payment dates postponed on days when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the Securities and Exchange Commission. During times of drastic economic or market conditions, it may be difficult to sell shares by telephone. Fremont will do its best to accommodate all shareholders, but you should consider using overnight mail if you find that you are unable to get through by telephone. REDEMPTION CHECKLIST: Fremont would like to fulfill your request to sell shares as quickly as possible. Here are reminders to help you avoid some of the common problems that can delay the sale process: X Include all your account information - your name, the fund's name, and your account number. X Provide your preferred redemption method - check, wire, or electronic transfer. X Specify the dollar amount or number of shares you are redeeming. For IRA accounts, specify the percent of your holdings that you would like withheld for taxes. X Have all account owners sign the letter of instruction - if you send us a letter of instruction, make sure that all account owners have signed the letter requesting the sale. X Have signature(s) guaranteed when needed - review the signature guarantee requirements on page XX. Be sure to obtain a signature guarantee if your sale meets those requirements. 13 OTHER POLICIES YOU SHOULD KNOW ABOUT (CON'T.) WHEN ADDITIONAL DOCUMENTATION IS REQUIRED Certain accounts (such as trust accounts, corporate accounts and custodial accounts) may require documentation in addition to the redemption request. For more information, please call 800-548-4539 (press 2). WHEN YOU NEED A SIGNATURE GUARANTEE Certain requests must include a signature guarantee, which is designed to protect you and Fremont from fraudulent activities. Your request must be made in writing and include a signature guarantee if any of the following situations applies: * You wish to redeem more than $50,000 worth of shares. * The check is being mailed to an address different from the one on your account (address of record). * The check is being made payable to someone other than the account owner. * You are instructing us to change your bank account information. HOW TO OBTAIN A SIGNATURE GUARANTEE You should be able to obtain a signature guarantee from a bank, broker-dealer, credit union (if authorized under state law), securities exchange or association, clearing agency, or savings association. A notary public cannot provide a signature guarantee. If you would like more information about the signature guarantee, or would like to sign up for the Telephone Redemption Privilege after you have already opened your account, please call 800-548-4539 (press 2). MONITORING YOUR INVESTMENT STATEMENTS & REPORTS There are a variety of ways to track your mutual fund investment. Most major newspapers carry daily mutual fund listings. You can check fund prices, your account balances, and process transactions by calling our 24-hour automated line at 800-548-4539 (press 3). 14 In addition, you will receive statements and reports regarding your account on a regular basis: * Confirmation statements will be sent when you make a transaction in your account or change your account registration. * Quarterly statements, with account information as of the end of March, June, September and December. * Annual and Semi-Annual Reports for shareholders. You can request duplicate statements or copies of your historical account information by calling 800-548-4539 (press 2). ACCOUNT ACCESS ON THE INTERNET Shareholders can use our secure Web site at www.fremontfunds.com to: * Check current account balances; * View a portfolio; * Buy, exchange, or sell shares (some restrictions may apply); * View previous transactions; and * Order duplicate statements. Our Web site also provides fund performance, distribution schedules, forms and other in-depth information to help shareholders. DIVIDENDS, DISTRIBUTIONS, AND TAXES DIVIDENDS AND DISTRIBUTIONS DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS HELP YOUR INVESTMENT GROW The Fund pays dividends based on the income that it has received from its investments. The dividends may be taxed as ordinary income. Capital gains distributions occur when a Fund pays out gains realized on the sale of investment securities. The Fund pays dividends and makes capital gains distributions annually. When you open a taxable account, you should specify on your application how you would like to receive your dividends and capital gain distributions. 15 As an investor, there are five different ways you can choose to receive dividends and distributions: * Automatically reinvest all dividends and capital gains distributions in additional shares. * Receive all distributions of income dividends and capital gains in cash. * Receive income dividends and short-term capital gains distributions in cash and accept long-term capital gains distributions in additional shares. * Automatically reinvest income and short-term capital gains distributions and receive long-term capital gains distributions in cash. * Invest all dividends and capital gains distributions in another Fremont Mutual Fund owned through an identically registered account. If circumstances change after you make your selection, you can always change your options by calling 800-548-4539 (press 2). POLICIES AND PROCEDURES If you are under age 59 1/2 , cash distributions from an IRA are subject to income taxes and penalties. Therefore, all distributions for IRA accounts are automatically reinvested. After age 59 1/2, you may request payment of distributions in cash. When you reinvest dividends and distributions, the reinvestment price is the Fund's NAV at the close of business on the payable date. YOUR TAX ID NUMBER IS REQUIRED If you have not provided a correct taxpayer identification number, usually a Social Security number, the Fund is required by the Internal Revenue Service (IRS) to withhold 31% from any dividend and/or redemption that you receive. TAX CONSIDERATIONS TAX PLANNING IS ESSENTIAL As with any investment, you should consider how your investment in the Fund will be taxed. If your account is tax-deferred or tax-exempt (for example, an IRA or an employee benefit plan account), the information on this page does not apply. If your account is not tax-deferred or tax-exempt, however, you should be aware of these tax rules. 16 DISTRIBUTIONS MAY BE TAXABLE A distribution is a payout of realized investment gains on securities in the Fund's portfolio. When, for example, the Fund sells a stock at a profit, that profit has to be recorded for tax purposes, combined with all the other profits made that year, and distributed to shareholders based on the number of shares held. Your capital gains distributions are taxed at different rates, depending on how long the Fund owned the security. Long-term capital gains are those from securities held more than 12 months, and short-term capital gains are from securities held less than 12 months. Distributions are subject to federal income tax, and may also be subject to state or local taxes. Distributions are taxable when they are paid, whether you take them in cash or reinvest them in additional shares. However, distributions declared in December and paid in January are taxable as if they were paid on December 31. CAPITAL GAINS ARE FEDERALLY TAXABLE For federal tax purposes, the Fund's: * Income and short-term capital gains distributions are taxed as dividends, meaning that you'll pay tax at your marginal tax rate on this amount; * Long-term capital gains distributions are taxed as long-term capital gains (currently at a maximum of 20%). TAX REPORTING Every year, Fremont will send you and the IRS a statement, called a Form 1099-DIV, showing the amount of each taxable distribution you received in the previous year. TAXES ON TRANSACTIONS A capital gain or loss is the difference between the cost of your shares and the price you receive when you sell them. Your redemptions-including exchanges between Funds-are subject to capital gains tax. 17 INVESTMENT TERMS Advisor - A firm that provides investment management and administrative services, in this case, Fremont Investment Advisors, Inc. Automated Clearing House (ACH) - An outside service provider for Fremont Mutual Funds that transfers money between Fremont and other participating financial institutions. Benchmark Index - A recognized measure of performance, of stock or bond markets. All mutual funds are required to have a relevant benchmark index, so that investors have a standard by which to judge fund performance over time. Broker-Dealer - A firm that is licensed to carry out a securities transaction. Examples would be Charles Schwab or E*Trade. Capital Gain - The sale price of an investment less the original purchase price. If the number is positive there is a gain. For example, if the Fund manager buys 10,000 shares of Stock A for $2,000,000 and later sells the same 10,000 shares for $3,000,000, the result is a capital gain of $1,000,000 ($3,000,000 - $2,000,000 = $1,000,000). * Short-Term Gains - Capital gains on securities held for less than 12 months. * Long-Term Gains - Capital gains on securities held for more than 12 months. Closing Time - When regular session trading closes on the New York Stock Exchange, usually 4:00 p.m. Eastern time, but sometimes earlier. Distribution - A payout of realized capital gains on the securities in a Fund's portfolio. Generally, once a year each Fremont Mutual Fund calculates the profits it has made that year on the sale of securities, adds all other profits, and distributes the profits to the Fund's investors based on the number of shares they hold. Dividend - The payout of income earned on an investment to a shareholder. Like other mutual funds, Fremont Mutual Funds periodically pay dividends to shareholders based on the income received from investments. Liquidity - the ability to buy or sell an investment quickly without affecting its price. Market Capitalization (Market Cap) - The market value of a corporation's stock, determined by multiplying the number of stock shares issued by the market price of a share of stock. Investment managers often use market capitalization as one investment criterion, requiring, for example, that a company have a market capitalization of $100 million or more to qualify as an investment. 18 Mutual Fund - An investment company that pools the money of many people to invest in any of a variety of different types of securities. A mutual fund offers investors the advantages of investment diversification and professional management. Net Asset Value (or NAV) - The price of a single fund share. Calculated by adding up the value of all the Fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the result by the number of shares outstanding. No-Load Mutual Fund - A type of mutual fund that does not impose a charge for purchasing or redeeming shares, so that all of your money goes to work for you. Portfolio - An investor's or a Fund's combined holdings. Portfolio Turnover - The percentage of the dollar value of the portfolio which is replaced each year. This is calculated by dividing the total purchases or sales for the year, whichever is less, by the average assets for the year. Price-to-Sales Ratio - The price of a stock divided by its sales dollar per share. Redemption - The act of selling shares of a mutual fund. Security - A type of investment whose authenticity is attested to by a legal document. Stocks, bonds, options and warrants are examples of a security. A stock certificate signifies partial ownership of a corporation. A bond demonstrates that the possessor is owed money by a corporation or government body. Signature Guarantee - A security measure that confirms your identity, required for certain transactions in order to reduce fraud. For these transactions, signatures must be guaranteed by an "eligible guarantor" - a bank, broker-dealer, credit union, national securities exchange, registered securities association, clearing agency or savings association. A notary public is not an acceptable guarantor. Stock - A share of ownership in a corporation. Sub-Advisor - A firm hired by the advisor of a fund to manage or co-manage that fund's investment portfolio. Transfer Agent - The service provider retained by a mutual fund company to keep shareholder records, manage the flow of shareholders' funds, and resolve administrative issues. Wire - A method of transferring money between your Fremont account and another financial institution using the Federal Reserve Wiring System. 19 FREMONT MUTUAL FUNDS FOR MORE INFORMATION In addition to the Fund information contained in this Prospectus, you may also request the following free publications from Fremont Mutual Funds: * Annual and Semi-Annual Reports Additional information about the Fund's investments is available in the Fund's Annual and Semi-Annual Reports to shareholders. In these reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during the last fiscal year. * Statement of Additional Information This publication gives you more information about the Fund's investment strategy. Legally it is "incorporated by reference," or considered part of this Prospectus. You can also review and copy these publications at the Public Reference Room of the Securities and Exchange Commission in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling 202-942-8090. Reports and other information about the Fund are also available: * Free of charge from the Commission's EDGAR database on the Commission's Internet website at http://www.sec.gov., or * For a fee, by writing to the Public Reference Room of the Commission, Washington, DC 20549-0102, or * For a fee, by electronic request at the following e-mail address: publicinfo@sec.gov. Fremont Funds [LOGO] For general information: 800-565-0254, or 415-284-8562 (outside U.S.) Please visit our web site at: www.fremontfunds.com SEC File No: 811-05632 Distributed by First Fund Distributors, Inc., San Francisco, CA 94105 Copyright 2000 Fremont Mutual Funds, Inc. All rights reserved. 20 As filed with the Securities and Exchange Commission on December 19, 2000 Registration No. 33-23453 File No. 811-5632 ================================================================================ Part B of Form N-1A COMBINED REGISTRATION STATEMENT FREMONT MUTUAL FUNDS, INC. -------------------------- Fremont New Era Value Fund ================================================================================ FREMONT MUTUAL FUNDS, INC. FREMONT NEW ERA VALUE FUND TOLL-FREE: 800-548-4539 PART B STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information concerning Fremont Mutual Funds, Inc. (the "Investment Company") is not a prospectus. This Statement of Additional Information supplements the Prospectus for the Fremont New Era Value Fund (the "Fund") dated December 28, 2000 and should be read in conjunction with the Prospectus. Copies of the Prospectus are available without charge by calling the Investment Company at the phone number printed above. The date of this Statement of Additional Information is December 28, 2000. B-1 TABLE OF CONTENTS THE CORPORATION..............................................................B-2 INVESTMENT OBJECTIVE, POLICIES, AND RISK CONSIDERATIONS......................B-3 GENERAL INVESTMENT POLICIES..................................................B-4 INVESTMENT RESTRICTIONS.....................................................B-14 INVESTMENT COMPANY DIRECTORS AND OFFICERS...................................B-16 INVESTMENT ADVISORY AND OTHER SERVICES......................................B-18 EXECUTION OF PORTFOLIO TRANSACTIONS.........................................B-21 HOW TO INVEST...............................................................B-22 OTHER INVESTMENT AND REDEMPTION SERVICES....................................B-23 TAXES - MUTUAL FUNDS........................................................B-24 ADDITIONAL INFORMATION......................................................B-27 INVESTMENT RESULTS..........................................................B-30 APPENDIX A: DESCRIPTION OF RATINGS..........................................B-38 THE CORPORATION The Investment Company, organized as a Maryland corporation on July 13, 1988, is a fully managed, open-end investment company. Currently, the Investment Company has authorized several series of capital stock with equal dividend and liquidation rights within each series. This Statement of Additional Information pertains to the Fremont New Era Value Fund (the "Fund"), a non-diversified Fund. Investment Company shares are entitled to one vote per share (with proportional voting for fractional shares) and are freely transferable. Shareholders have no preemptive or conversion rights. Shares may be voted in the election of directors and on other matters submitted to the vote of shareholders. As permitted by Maryland law, there normally will be no annual meeting of shareholders in any year, except as required under the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act requires that a meeting be held within 60 days in the event that less than a majority of the directors holding office has been elected by shareholders. Directors shall continue to hold office until their successors are elected and have qualified. Investment Company shares do not have cumulative voting rights, which means that the holders of a majority of the shares voting for the election of directors can elect all of the directors. Shareholders holding 10% of the outstanding shares may call a meeting of shareholders for any purpose, including that of removing any director. A director may be removed upon a majority vote of the shareholders qualified to vote in the election. The 1940 Act requires the Investment Company to assist shareholders in calling such a meeting. B-2 The management of the business and affairs of the Investment Company is the responsibility of the Board of Directors. Fremont Investment Advisors, Inc. (the "Advisor") provides the Fund with investment management and administrative services under an Investment Advisory and Administrative Agreement (the "Advisory Agreement") with the Investment Company. The Advisory Agreement provides that the Advisor shall furnish advice to the Fund with respect to its investments and shall, to the extent authorized by the Board of Directors, determine what securities shall be purchased or sold by the Fund. The Advisor's Investment Committee oversees the portfolio management of the Fund. The professional staff of the Advisor has offered professional investment management services regarding asset allocation in connection with securities portfolios to the Bechtel Group, Inc. Retirement Plan and the Bechtel Foundation since 1978 and to Fremont Investors, Inc. (formerly Fremont Group, Inc.) since 1987. The Advisor also provides investment advisory services regarding asset allocation, investment manager selection and portfolio diversification to a number of large Bechtel-related investors. The Investment Company is one of the Advisor's clients. The Advisor will provide direct portfolio management services to the extent that a sub-advisor does not provide those services. In the future, the Advisor may propose to the Investment Company that a sub-advisor(s) be engaged to provide investment advisory or portfolio management services to the Fund. Prior to such engagement, any agreement with a sub-advisor must be approved by the Board of Directors. The Advisor may in its discretion manage all or a portion of the Fund's portfolio directly with or without the use of a sub-advisor. On any matter submitted to a vote of shareholders, such matter shall be voted by the Fund's shareholders separately when the matter affects the specific interest of the Fund (such as approval of the Advisory Agreement with the Advisor) except in matters where a vote of all series in the aggregate is required by the 1940 Act or otherwise. Pursuant to the Articles of Incorporation, the Investment Company may issue ten billion shares. This amount may be increased or decreased from time-to-time at the discretion of the Board of Directors. Each share of a series represents an interest in that series only, has a par value of $0.0001 per share, represents an equal proportionate interest in that series with other shares of that series, and is entitled to such dividends and distributions out of the income earned on the assets belonging to that series as may be declared at the discretion of the Board of Directors. Shares of a series when issued are fully paid and are non-assessable. The Board of Directors may, at its discretion, establish and issue shares of additional series of the Investment Company. INVESTMENT OBJECTIVE, POLICIES, AND RISK CONSIDERATIONS The descriptions below are intended to supplement the material in the Prospectus. B-3 Although the Fund invests primarily in common stocks and securities convertible into common stock, for liquidity purposes it will normally invest a portion of its assets in high quality, short-term debt securities and money market instruments with remaining maturities of one year or less, including repurchase agreements. Whenever, in the judgment of the Advisor, market or economic conditions warrant, the Fund may, for temporary defensive purposes, invest without limitation in these instruments. Of course, during times that the Fund is investing defensively, the Fund will not be able to pursue its stated investment objective. The Fund may also hold other types of securities from time to time, including non-convertible bonds and preferred stocks, in an amount not exceeding 5% of its net assets. Preferred stocks and bonds will be, at the time of purchase, (i) rated in the top two categories of Moody's Investor Service, Inc. (Aaa or Aa) or Standard & Poor's Ratings Group, (AAA or AA), or (ii) have a comparable rating by another Nationally Recognized Statistical Rating Organization ("NRSRO), or (iii) be of comparable quality as determined by the Advisor. GENERAL INVESTMENT POLICIES MONEY MARKET INSTRUMENTS The Fund may invest in any of the following "money market" instruments: certificates of deposit, time deposits, commercial paper, bankers' acceptances and Eurodollar certificates of deposit; U.S. dollar-denominated money market instruments of foreign financial institutions, corporations and governments; U.S. government and agency securities; money market mutual funds; and other debt securities which are not specifically named but which meet the Fund's quality guidelines. The Fund also may enter into repurchase agreements as described below and may purchase variable and floating rate debt securities. At the time of purchase, short-term securities must be rated in the top rating category by at least two NRSROs or, in the case of a security rated by only one NRSRO, rated in the top rating category of that NRSRO, or if not rated by an NRSRO, must be determined to be of comparable quality by the Advisor. Generally, high quality short-term securities must be issued by an entity with an outstanding debt issue rated A or better by an NRSRO, or an entity of comparable quality as determined by the Advisor, using guidelines approved by the Board of Directors. Obligations of foreign banks, foreign corporations and foreign branches of domestic banks must be payable in U.S. dollars. See Appendix A to the Statement of Additional information for a description of rating categories. U.S. GOVERNMENT SECURITIES The Fund may invest in U.S. government securities, which are obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities. Some U.S. government securities, such as Treasury bills, notes and bonds and Government National Mortgage Association ("GNMA") certificates, are supported by the full faith and credit of the United States; those of the Federal Home Loan Mortgage Corporation ("FHLMC") are supported by the right of the issuer to borrow from the Treasury; those of the Federal National Mortgage Association ("FNMA"), are supported by the discretionary authority of the U.S. government to purchase the agency's obligations; and those of the Student Loan Marketing Association are supported only by the credit of the instrumentality. The U.S. government is not obligated by law to provide future financial support to the U.S. government agencies or instrumentalities named above. B-4 REPURCHASE AGREEMENTS As part of its cash reserve position, the Fund may enter into repurchase agreements through which the Fund acquires a security (the "underlying security") from the seller, a well-established securities dealer, or a bank that is a member of the Federal Reserve System. At that time, the bank or securities dealer agrees to repurchase the underlying security at the same price, plus a specified amount of interest. Repurchase agreements are generally for a period of less than one week. The seller must maintain with the Fund's custodian collateral equal to at least 100% of the repurchase price, including accrued interest, as monitored daily by the Advisor. The Fund will not enter into a repurchase agreement with a maturity of more than seven business days if, as a result, more than 15% of the value of its net assets would then be invested in such repurchase agreements. The Fund will only enter into repurchase agreements where (i) the underlying securities are issued or guaranteed by the U.S. government, (ii) the market value of the underlying security, including accrued interest, will be at all times equal to or in excess of the value of the repurchase agreement, and (iii) payment for the underlying securities is made only upon physical delivery or evidence of book-entry transfer to the account of the custodian or a bank acting as agent. In the event of a bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including: (i) a possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (ii) possible subnormal levels of income and lack of access to income during this period; and (iii) expenses of enforcing the Fund's rights. REVERSE REPURCHASE AGREEMENTS AND LEVERAGE The Fund may enter into reverse repurchase agreements which involve the sale of a security by the Fund and its agreement to repurchase the security at a specified time and price. The Fund will maintain in a segregated account with its custodian cash, cash equivalents, or liquid securities in an amount sufficient to cover its obligations under reverse repurchase agreements with broker-dealers (but not with banks). Under the 1940 Act, reverse repurchase agreements are considered borrowings by the Fund; accordingly, the Fund will limit its investments in these transactions, together with any other borrowings, to no more than one-third of its total assets. The use of reverse repurchase agreements by the Fund creates leverage which increases the Fund's investment risk. If the income and gains on securities purchased with the proceeds of these transactions exceed the cost, the Fund's earnings or net asset value will increase faster than otherwise would be the case; conversely, if the income and gains fail to exceed the costs, earnings or net asset value would decline faster than otherwise would be the case. If the 300% asset coverage required by the 1940 Act should decline as a result of market fluctuation or other reasons, the Fund may be required to sell some of its portfolio securities within three days to reduce the borrowings (including reverse repurchase agreements) and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time. The Fund intends to enter into reverse repurchase agreements only if the income from the investment of the proceeds is greater than the expense of the transaction, because the proceeds are invested for a period no longer than the term of the reverse repurchase agreement. B-5 FLOATING RATE AND VARIABLE RATE OBLIGATIONS AND PARTICIPATION INTERESTS The Fund may purchase floating rate and variable rate obligations, including participation interests therein. Floating rate or variable rate obligations provide that the rate of interest is set as a specific percentage of a designated base rate (such as the prime rate at a major commercial bank) or is reset on a regular basis by a bank or investment banking firm to a market rate. At specified times, the owner can demand payment of the obligation at par plus accrued interest. Variable rate obligations provide for a specified periodic adjustment in the interest rate, while floating rate obligations have an interest rate which changes whenever there is a change in the external interest rate. Frequently, banks provide letters of credit or other credit support or liquidity arrangements to secure these obligations. The quality of the underlying creditor or of the bank, as the case may be, must meet the minimum credit quality standards, as determined by the Advisor, prescribed for the Fund by the Board of Directors with respect to counterparties in repurchase agreements and similar transactions. The Fund may invest in participation interests purchased from banks in floating rate or variable rate obligations owned by banks. A participation interest gives the Fund an undivided interest in the obligation in the proportion that the Fund's participation interest bears to the total principal amount of the obligation, and provides a demand repayment feature. Each participation is backed by an irrevocable letter of credit or guarantee of a bank (which may be the bank issuing the participation interest or another bank). The bank letter of credit or guarantee must meet the prescribed investment quality standards for the Fund. The Fund has the right to sell the participation instrument back to the issuing bank or draw on the letter of credit on demand for all or any part of the Fund's participation interest in the underlying obligation, plus accrued interest. SWAP AGREEMENTS The Fund may enter into interest rate, index, and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding minimum or maximum levels. The "notional amount" of the swap agreement is only a fictive basis on which to calculate the obligations which the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by the Fund would calculate the obligations of the parties to the agreement on a "net basis." Consequently, the Fund's obligations (or rights) under a swap agreement will generally be equal B-6 only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The Fund's obligations under a swap agreement will be accrued daily (offset against amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the maintenance of a segregated account consisting of cash, U.S. Government securities, or high-grade debt obligations, to avoid any potential leveraging of the Fund's portfolio. The Fund will not enter into a swap agreement with any single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of the Fund's net assets. Whether the Fund's use of swap agreements will be successful in furthering its investment objective will depend on the Advisor's ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Because they are two-party contracts and because they may have terms of greater than seven days, swap agreements will be considered as illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Advisor will cause the Fund to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Fund's repurchase agreement guidelines. Certain restrictions imposed on the Fund by the Internal Revenue Code may limit the Fund's ability to use swap agreements. The swaps market is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund's ability to terminate existing swap agreements or to realize amounts to be received under such agreements. WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS The Fund may purchase securities on a delayed delivery or "when-issued" basis and enter into firm commitment agreements (transactions whereby the payment obligation and interest rate are fixed at the time of the transaction but the settlement is delayed). The Fund will not purchase securities the value of which is greater than 5% of its net assets on a when-issued or firm commitment basis. The Fund, as purchaser, assumes the risk of any decline in value of the security beginning on the date of the agreement or purchase, and no interest accrues to the Fund until it accepts delivery of the security. The Fund will not use such transactions for leveraging purposes and, accordingly, will segregate cash, cash equivalents, or liquid securities in an amount sufficient to meet its payment obligations thereunder. There is always a risk that the securities may not be delivered and that a Fund may incur a loss or will have lost the opportunity to invest the amount set aside for such transaction in the segregated asset account. Settlements in the ordinary course of business, which may take substantially more than three business days for non-U.S. securities, are not treated by the Funds as when-issued or forward commitment transactions and, accordingly, are not subject to the foregoing limitations, even though some of the risks described above may be present in such transactions. Although these transactions will not be entered into for leveraging purposes, to the extent the Fund's aggregate commitments under these transactions exceed its holdings of cash and securities that do not fluctuate in value (such as short-term money market instruments), the Fund temporarily will be in a leveraged position (i.e., it will have an amount greater than its net assets subject to market risk). Should market values of the Fund's portfolio securities decline while the Fund is in a leveraged position, greater depreciation of its net assets would likely occur than were it not in such a position. As the Fund's aggregate commitments B-7 under these transactions increase, the opportunity for leverage similarly increases. The Fund will not borrow money to settle these transactions and, therefore, will liquidate other portfolio securities in advance of settlement if necessary to generate additional cash to meet its obligations thereunder. COMMERCIAL BANK OBLIGATIONS For the purposes of the Fund's investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks may be general obligations of the parent bank in addition to the issuing bank, or may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks, and of foreign banks may subject the Fund to investment risks that are different in some respects from those of investments in obligations of domestic issuers. Although the Fund will typically acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase in excess of $1 billion, this $1 billion figure is not a fundamental investment policy or restriction of the Fund. For the purposes of calculating the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches. TEMPORARY DEFENSIVE POSTURE When a temporary defensive posture in the market is appropriate in the Advisor's opinion, the Fund may temporarily invest up to 100% of its assets in high quality, short-term debt securities and money market instruments, including repurchase agreements. The Fund may also hold other types of securities from time to time, including bonds. BORROWING The Fund may borrow from banks an amount not exceeding 30% of the value of its total assets for temporary or emergency purposes and may enter into reverse repurchase agreements. If the income and gains on securities purchased with the proceeds of borrowings or reverse repurchase agreements exceed the cost of such borrowings or agreements, the Fund's earnings or net asset value will increase faster than otherwise would be the case; conversely, if the income and gains fail to exceed the cost, earnings or net asset value would decline faster than otherwise would be the case. LENDING OF PORTFOLIO SECURITIES For the purpose of realizing additional income, the Fund may make secured loans of portfolio securities amounting to not more than 33-1/3% of its net assets. Securities loans are made to broker-dealers or institutional investors pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the value of the securities lent marked to market on a daily basis. The collateral received will consist of cash, short-term U.S. Government securities, bank letters of credit, or such other collateral as may be permitted under the Fund's investment program and by regulatory agencies and approved by the Board of Directors. While the securities are being lent, the Fund will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. The Fund has a right to call each loan and obtain the securities on five business days' notice. The Fund will not have the right to vote equity securities while they are being lent, but it will call a loan in anticipation of any vote in which it seeks to participate. B-8 PORTFOLIO TURNOVER The Fund may trade in securities for short-term gain whenever deemed advisable by the Advisor in order to take advantage of anomalies occurring in general market, economic or political conditions. Therefore, the Fund may have a higher portfolio turnover rate than that of some other investment companies, but it is anticipated that the annual portfolio turnover rate of the Fund will not exceed 200%. The portfolio turnover rate is calculated by dividing the lesser of sales or purchases of long-term portfolio securities by the Fund's average month-end long-term investments. High portfolio turnover involves correspondingly greater transaction costs in the form of dealer spreads or brokerage commissions and other costs that the Fund will bear directly, and may result in the realization of net capital gains, which are generally taxable whether or not distributed to shareholders. SHARES OF INVESTMENT COMPANIES The Fund may invest some portion of its assets in shares of other no-load, open-end investment companies and closed-end investment companies to the extent that they may facilitate achieving the objective of the Fund or to the extent that they afford the principal or most practical means of access to a particular market or markets or they represent attractive investments in their own right. The percentage of Fund assets which may be so invested is not limited, provided that the Fund and its affiliates do not acquire more than 3% of the shares of any such investment company. The provisions of the 1940 Act may also impose certain restrictions on redemption of the Fund's shares in other investment companies. The Fund's purchase of shares of investment companies may result in the payment by a shareholder of duplicative management fees. The Advisor will consider such fees in determining whether to invest in other mutual funds. The Fund will invest only in investment companies which do not charge a sales load; however, the Fund may invest in such companies with distribution plans and fees, and may pay customary brokerage commissions to buy and sell shares of closed-end investment companies. The return on the Fund's investments in investment companies will be reduced by the operating expenses, including investment advisory and administrative fees, of such companies. The Fund's investment in a closed-end investment company may require the payment of a premium above the net asset value of the investment company's shares, and the market price of the investment company thereafter may decline without any change in the value of the investment company's assets. The Fund, however, will not invest in any investment company or trust unless the potential benefits of such investment are sufficient to warrant the payment of any such premium. As an exception to the above, the Fund has the authority to 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 of the Fund. The Fund will notify its shareholders prior to initiating such an arrangement. B-9 ILLIQUID AND RESTRICTED SECURITIES The Fund may invest up to 15% of its net assets in all forms of "illiquid securities." An investment is generally deemed to be "illiquid" if it cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which such securities are valued by the Fund. "Restricted" securities are securities which were originally sold in private placements and which have not been registered under the Securities Act of 1933 (the "1933 Act"). However, a market exists for certain restricted securities (for example, securities qualifying for resale to certain "qualified institutional buyers" pursuant to Rule 144A under the 1933 Act). Additionally, the Advisor and the Fund believe that a similar market exists for commercial paper issued pursuant to the private placement exemption of Section 4(2) of the 1933 Act. The Fund may invest without limitation in these forms of restricted securities if such securities are determined by the Advisor to be liquid in accordance with standards established by the Investment Company's Board of Directors. Under these standards, the Advisor must consider (a) the frequency of trades and quotes for the security, (b) the number of dealers willing to purchase or sell the security and the number of other potential purchasers, (c) any dealer undertaking to make a market in the security, and (d) the nature of the security and the nature of the marketplace trades (for example, the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer). The Board, however, will retain sufficient oversight and will be ultimately responsible for the determination. It is not possible to predict with accuracy how the markets for certain restricted securities will develop. Investing in restricted securities could have the effect of increasing the level of the Fund's illiquidity to the extent that qualified institutional buyers become, for a time, uninterested in purchasing these securities. WARRANTS OR RIGHTS Warrants or rights may be acquired by a Fund in connection with other securities or separately and provide the Fund with the right to purchase other securities of the issuer at a later date. It is the present intention of each Fund to limit its investments in warrants or rights, valued at the lower of cost or market, to no more than 5% of the value of its net assets. Warrants or rights acquired by the Funds in units or attached to securities will be deemed to be without value for purposes of this restriction. WRITING COVERED CALL OPTIONS The Fund may write (sell) "covered" call options and purchase options to close out options previously written by the Fund. The purpose of writing covered call options is to generate additional premium income for the Fund. This premium income will serve to enhance the Fund's total return and will reduce the effect of any price decline of the security or currency involved in the option. Covered call options will generally be written on securities and currencies which, in the opinion of the Advisor, are not expected to make any major price moves in the near future but which, over the long term, are deemed to be attractive investments for the Fund. A call option gives the holder (buyer) the "right to purchase" a security or currency at a specified price (the exercise price) at any time until a certain date (the expiration date). So long as the obligation of the writer of a call option continues, he or she may be assigned an exercise notice by the B-10 broker-dealer through whom such option was sold, requiring him or her to deliver the underlying security or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which the writer effects a closing purchase transaction by purchasing an option identical to that previously sold. To secure his or her obligation to deliver the underlying security or currency in the case of a call option, a writer is required to deposit in escrow the underlying security or currency or other assets in accordance with the rules of the Options Clearing Corporation. The Fund will write only covered call options. This means that the Fund will only write a call option on a security, index, or currency which the Fund already effectively owns or has the right to acquire without additional cost. Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with the Fund's investment objective. The writing of covered call options is a conservative investment technique believed to involve relatively little risk (in contrast to the writing of naked or uncovered options, which the Fund will not do), but capable of enhancing the Fund's total return. When writing a covered call option, the Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security or currency above the exercise price, but conversely limits the risk of loss should the price of the security or currency decline. Unlike one who owns securities or currencies not subject to an option, the Fund has no control over when it may be required to sell the underlying securities or currencies, since it may be assigned an exercise notice at any time prior to the expiration of its obligation as a writer. If a call option which the Fund has written expires, the Fund will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security or currency during the option period. If the call option is exercised, the Fund will realize a gain or loss from the sale of the underlying security or currency. The Fund will identify assets for the purpose of segregation to cover the call. The Fund will consider a security or currency covered by a call to be "pledged" as that term is used in its policy which limits the pledging or mortgaging of its assets. The premium received is the market value of an option. The premium the Fund receives from writing a call option reflects, among other things, the current market price of the underlying security or currency, the relationship of the exercise price to such market price, the historical price volatility of the underlying security or currency, and the length of the option period. Once the decision to write a call option has been made, the Advisor, in determining whether a particular call option should be written on a particular security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options. The premium received by the Fund for writing covered call options will be recorded as a liability in the Fund's statement of assets and liabilities. This liability will be adjusted daily to the option's current market value, which will be the latest sales price at the time at which the net asset value per share of the Fund is computed (close of the regular trading session of the New York Stock Exchange), or, in the absence of such sale, the latest asked price. The liability will be extinguished upon expiration of the option, the purchase of an identical option in a closing transaction, or delivery of the underlying security or currency upon the exercise of the option. Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. B-11 Furthermore, effecting a closing transaction will permit the Fund to write another call option on the underlying security or currency with either a different exercise price or expiration date or both. If the Fund desires to sell a particular security or currency from its portfolio on which it has written a call option, it will seek to effect a closing transaction prior to, or concurrently with, the sale of the security or currency. There is, of course, no assurance that the Fund will be able to effect such closing transactions at a favorable price. If the Fund cannot enter into such a transaction, it may be required to hold a security or currency that it might otherwise have sold, in which case it would continue to be at market risk with respect to the security or currency. The Fund will pay transaction costs in connection with the purchasing of options to close out previously written options. Such transaction costs are normally higher than those applicable to purchases and sales of portfolio securities. Call options written by the Fund will normally have expiration dates of less than nine months from the date written. The exercise price of the options may be below, equal to, or above the current market values of the underlying securities or currencies at the time the options are written. From time to time, the Fund may purchase an underlying security or currency for delivery in accordance with an exercise notice of a call option assigned to it, rather than delivering such security or currency from its portfolio. In such cases, additional costs will be incurred. The Fund will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more than the premium received from the writing of the option. Because increases in the market price of a call option will generally reflect increases in the market price of the underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or currency owned by the Fund. WRITING COVERED PUT OPTIONS The Fund may write covered put options. With a put option, the purchaser of the option has the right to sell, and the writer (seller) may have the obligation to buy, the underlying security or currency at the exercise price during the option period. So long as the writer is short the put options, the writer may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring the writer to make payment of the exercise price against delivery of the underlying security or currency. The operation of put options in other respects, including their related risks and rewards, is substantially identical to that of call options. The Fund may write put options only on a covered basis, which means that the Fund would maintain in a segregated account cash and liquid securities in an amount not less than the exercise price at all times while the put option is outstanding. (The rules of the Options Clearing Corporation currently require that such assets be deposited in escrow to secure payment of the exercise price.) The Fund would generally write covered put options in circumstances where the Advisor wishes to purchase the underlying security or currency for the Fund's portfolio at a price lower than the current market price of the security or currency. In such event the Fund would write a put option at an exercise price which, reduced by the premium received on the option, reflects the lower price it is willing to pay. Since the Fund would also receive interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be used to enhance current return during periods of market B-12 uncertainty. The risk in such a transaction would be that the market price of the underlying security or currency would decline below the exercise price less the premiums received. PURCHASING PUT OPTIONS The Fund may purchase put options. As the holder of a put option, the Fund has the right to sell the underlying security or currency at the exercise price at any time during the option period. The Fund may enter into closing sale transactions with respect to such options, exercise them, or permit them to expire. The Fund may purchase put options for defensive purposes in order to protect against an anticipated decline in the value of its securities or currencies. An example of such use of put options is provided below. The Fund may purchase a put option on an underlying security or currency (a "protective put") owned as a defensive technique in order to protect against an anticipated decline in the value of the security or currency. Such hedge protection is provided only during the life of the put option when the Fund, as the holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security's market price or currency's exchange value. For example, a put option may be purchased in order to protect unrealized appreciation of a security or currency where the Advisor deems it desirable to continue to hold the security or currency because of tax considerations. The premium paid for the put option and any transaction costs would reduce any capital gain otherwise available for distribution when the security or currency is eventually sold. The Fund may also purchase put options at a time when the Fund does not own the underlying security or currency. By purchasing put options on a security or currency it does not own, the Fund seeks to benefit from a decline in the market price of the underlying security or currency. If the put option is not sold when it has remaining value, and if the market price of the underlying security or currency remains equal to or greater than the exercise price during the life of the put option, the Fund will lose its entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of the underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction. The Fund will commit no more than 5% of its assets to premiums when purchasing put options. The premium paid by the Fund when purchasing a put option will be recorded as an asset in the Fund's statement of assets and liabilities. This asset will be adjusted daily to the option's current market value, which will be the latest sale price at the time at which the Fund's net asset value per share is computed (close of trading on the New York Stock Exchange), or, in the absence of such sale, the latest bid price. The asset will be extinguished upon expiration of the option, the selling (writing) of an identical option in a closing transaction, or the delivery of the underlying security or currency upon the exercise of the option. PURCHASING CALL OPTIONS The Fund may purchase call options. As the holder of a call option, the Fund has the right to purchase the underlying security or currency at the exercise price at any time during the option period. The Fund may enter into closing sale transactions with respect to such options, exercise them, or permit them to B-13 expire. The Fund may purchase call options for the purpose of increasing its current return or avoiding tax consequences which could reduce its current return. The Fund may also purchase call options in order to acquire the underlying securities or currencies. Examples of such uses of call options are provided below. Call options may be purchased by the Fund for the purpose of acquiring the underlying securities or currencies for its portfolio. Utilized in this fashion, the purchase of call options enables the Fund involved to acquire the securities or currencies at the exercise price of the call option plus the premium paid. At times the net cost of acquiring securities or currencies in this manner may be less than the cost of acquiring the securities or currencies directly. This technique may also be useful to the Fund in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. So long as it holds such a call option rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security or currency and in such event could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. The Fund will commit no more than 5% of its assets to premiums when purchasing call options. The Fund may also purchase call options on underlying securities or currencies it owns in order to protect unrealized gains on call options previously written by it. A call option would be purchased for this purpose where tax considerations make it inadvisable to realize such gains through a closing purchase transaction. Call options may also be purchased at times to avoid realizing losses that would result in a reduction of the Fund's current return. For example, where the Fund has written a call option on an underlying security or currency having a current market value below the price at which such security or currency was purchased by the Fund, an increase in the market price could result in the exercise of the call option written by the Fund and the realization of a loss on the underlying security or currency with the same exercise price and expiration date as the option previously written. INVESTMENT RESTRICTIONS The Fund has adopted the following fundamental investment policies and restrictions in addition to the policies and restrictions discussed in its prospectus. The policies and restrictions listed below cannot be changed without approval by the holders of a "majority of the outstanding voting securities" of the Fund (which is defined in the 1940 Act to mean the lesser of (i) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares). These restrictions provide that the Fund may not: 1. Invest 25% or more of the value of its total assets in the securities of 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. B-14 2. Buy or sell real estate (including real estate limited partnerships) or commodities or commodity contracts; however, the Fund 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 Prospectus and 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 that term is defined under the Securities Act of 1933. 4. Make loans, except that the 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. The Fund will not purchase securities while such borrowings are outstanding. 6. Change its status as a non-diversified investment company. 7. Issue senior securities, except as permitted under the 1940 Act, and except that the Investment Company and the Fund may issue shares of common stock in multiple series or classes. 8. Notwithstanding any other fundamental investment restriction or policy, the 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 the Fund. Other current investment policies of the Fund, which are not fundamental and which may be changed by action of the Board of Directors without shareholder approval, are as follows. The Fund may not: 9. Invest in companies for the purpose of exercising control or management. 10. 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. 11. Invest in interests in oil, gas, or other mineral exploration or development programs or leases. B-15 12. 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. 13. 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. 14. 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. 15. 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. 16. Make short sales of securities or maintain a short position, except that the Fund may sell short "against the box." 17. Invest in securities of an issuer if the investment would cause the Fund to own more than 10% of any class of securities of any one issuer. 18. Acquire more than 3% of the outstanding voting securities of any one investment company. Certain market strategies and market definitions applicable to the Fund - such as the market capitalization ranges - may be adjusted from time to time to reflect changing market circumstances subject to review and approval by the Fund's Board of Directors. INVESTMENT COMPANY DIRECTORS AND OFFICERS The Bylaws of Fremont Mutual Funds, Inc. (the "Investment Company"), the Maryland investment company of which the Fund is a series, authorize a Board of Directors of between three and 15 persons, as fixed by the Board of Directors. A majority of directors may fill vacancies caused by the resignation or death of a director or the expansion of the Board of Directors. Any director may be removed by vote of the holders of a majority of all outstanding shares of the Investment Company qualified to vote at the meeting.
DATE PRINCIPAL OCCUPATIONS AND BUSINESS NAME AND ADDRESS OF BIRTH POSITIONS HELD EXPERIENCE FOR PAST FIVE YEARS - ---------------- -------- -------------- ------------------------------ David L. Redo(1)(2)(4) 9-1-37 Chairman and Director Chairman, CEO, and Director, Fremont Investment, Advisors, Inc. Fremont Investment, Advisors, Inc.; 333 Market Street, 26th Floor Managing Director, Fremont Group, San Francisco, CA 94105 LLC and Fremont Investors, Inc.; Director, Sequoia Ventures, Sit/Kim International Investment Associates, Kern Capital Management LLC and J.P. Morgan Securities Asia.
B-16
DATE PRINCIPAL OCCUPATIONS AND BUSINESS NAME AND ADDRESS OF BIRTH POSITIONS HELD EXPERIENCE FOR PAST FIVE YEARS - ---------------- -------- -------------- ------------------------------ Nancy Tengler(1)(2)(4) 2-26-58 President and Director 10/00 - Present, President, CIO and Fremont Investment Advisors, Inc Director, Fremont Investment 333 Market Street, 26th Floor Advisors, Inc.; 9/97 - 9/00, San Francisco, CA 94105 President and CIO, Global Alliance Value Investors, Ltd.; 12/94-9/97, Managing Director and Head of the Value Equities Group, UBS Asset Management (NY) Inc. Richard E. Holmes(3) 5-14-43 Director Vice President and Director, BelMar P.O. Box 479 Advisors, Inc. (marketing firm) Sanibel, FL 33957 Donald C. Luchessa(3) 2-18-30 Director Principal, DCL Advisory DCL Advisory (marketer for investment advisors). 4105 Shelter Bay Avenue Mill Valley, CA 94941 David L. Egan(3) 5-1-34 Director President, Fairfield Capital Fairfield Capital Associates, Inc. Associates, Inc. Founding Partner 1640 Sylvaner of China Epicure, LLC and Palisades St. Helena, CA 94574 Trading Company, LLC Kimun Lee (3) 6-17-46 Director Principal of Resources Consolidated Resources Consolidated (a consulting and investment 235 Montgomery Street, Ste 968 banking service group). San Francisco, CA 94104 Christine D. Timmerman (3) 6-29-46 Director Financial Consultant 71 DeBell Drive Atherton, CA 94027 Peter F. Landini(4) 5-10-51 Executive Vice President, Managing Director, Treasurer, and Fremont Investment Advisors, Inc. and Treasurer COO, Fremont Investment Advisors, 333 Market Street, 26th Floor Inc.; 1/94 - 7/98, Director, J.P. San Francisco, CA 94105 Morgan Securities, Asia
B-17
DATE PRINCIPAL OCCUPATIONS AND BUSINESS NAME AND ADDRESS OF BIRTH POSITIONS HELD EXPERIENCE FOR PAST FIVE YEARS - ---------------- -------- -------------- ------------------------------ Tina Thomas 8-7-49 Vice President, Secretary, 6/96 -Present Vice President, Fremont Investment Advisors, Inc. and Chief Compliance Secretary, and Chief Compliance 333 Market Street, 26th Floor Officer Officer, Fremont Investment San Francisco, CA 94105 Advisors, Inc., 9/88 - 5/96 Chief Compliance Officer and Vice President, Bailard, Biehl &Kaiser, Inc. (BB&K); Treasurer, BB&K International Fund Group, Inc. and BB&K Fund Group; Principal, BB&K Fund Services, Inc. Jack Gee 9-12-59 Vice President and Chief 10/97 - Present, Vice President and Fremont Investment Advisors, Inc. Financial Officer Chief Financial Officer, Fremont 333 Market Street, 26th Floor Investment Advisors, Inc.; San Francisco, CA 94105 11/95-10/97, Sife, Inc.;6/91-6/95, Controller, Concord General Corp
- ---------- (1) Director who is an "interested person" of the Company due to his affiliation with the Company's investment manager. (2) Member of the Executive Committee. (3) Member of the Audit Committee and the Contracts Committee. (4) Member of the Fremont Investment Committee. During the fiscal year ended October 31, 1999, Richard E. Holmes and David L. Egan each received $16,000, and Donald C. Luchessa and Kimun Lee each received $12,000 for serving as directors of the Investment Company. INVESTMENT ADVISORY AND OTHER SERVICES MANAGEMENT AGREEMENT The Advisor, in addition to providing investment management services, furnishes the services and pays the compensation and travel expenses of persons who perform the executive, administrative, clerical, and bookkeeping functions of the Investment Company, provides suitable office space, necessary small office equipment and utilities, and general purpose accounting forms, supplies, and postage used at the offices of the Investment Company. The Advisor is responsible to pay sub-transfer agency fees when such entities are engaged in connection with share holdings in the Fund acquired by certain retirement plans. For its services under the Investment Advisory and Administration Agreement (the "Advisory Agreement"), the Advisor is paid a monthly fee at the annual rate of 0.75% of the Fund's average net assets. The Fund will pay all of its own expenses not assumed by the Advisor, including, but not limited to, the following: custodian, stock transfer, and dividend disbursing fees and expenses; taxes and insurance; expenses of the issuance and redemption of shares of the Fund (including stock certificates, registration or qualification fees and expenses); legal and auditing expenses; and the costs of stationery and forms prepared exclusively for the Fund. B-18 The allocation of general Investment Company expenses among its series is made on a basis that the Directors deem fair and equitable, which may be based on the relative net assets of each series or the nature of the services performed and relative applicability to each series. As noted in the Prospectus, the Advisor has agreed to reduce some or all of its fees under the Advisory Agreement if necessary to keep total operating expenses, expressed on an annualized basis, at or below the rate of 1.20% of the Fund's average net assets. Any reductions made by the Advisor in its fees are subject to reimbursement by the Fund within the following three years provided the Fund is able to effect such reimbursement and remain in compliance with the foregoing expense limitation. In considering approval of the Fund's Advisory Agreement, the Board of Directors specifically considered and approved the provision which permits the Advisor to seek reimbursement of any reduction made to its fees within the three-year period. The Advisor's ability to request reimbursement is subject to various conditions. First, any reimbursement is subject to the Fund's ability to effect such reimbursement and remain in compliance with the 1.20% limitation on annual operating expenses. Second, the Advisor must specifically request the reimbursement from the Board of Directors. Third, the Board of Directors must approve such reimbursement as appropriate and not inconsistent with the best interests of the Fund and the shareholders at the time such reimbursement is requested. Because of these substantial contingencies, the potential reimbursements will be accounted for as contingent liabilities that are not recordable on the balance sheet of the Fund until collection is probable; but the full amount of the potential liability will appear in a footnote to the Fund's financial statements. At such time as it appears probable that the Fund is able to effect such reimbursement, that the Advisor intends to seek such reimbursement and that the Board of Directors has or is likely to approve the payment of such reimbursement, the amount of the reimbursement will be accrued as an expense of the Fund for that current period. The Advisory Agreement with respect to the Fund may be renewed annually, provided that any such renewal has been specifically approved by (i) the Board of Directors, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund, and (ii) the vote of a majority of directors who are not parties to the Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any such party, cast in person, at a meeting called for the purpose of voting on such approval. The Advisory Agreement also provides that either party thereto has the right with respect to the Fund to terminate it without penalty upon sixty (60) days' written notice to the other party, and that the Advisory Agreement terminates automatically in the event of its assignment (as defined in the 1940 Act). The Investment Company and the Advisor have adopted a Code of Ethics as required under the 1940 Act. Subject to certain conditions or restrictions, the Code of Ethics permits the trustees, directors, officers or employees of the Investment Company or the Advisor to buy or sell securities for their own accounts. This includes securities that may be purchased or held by the fundsThe Code of Ethics includes some broad prohibitions against fraudulent conduct, and also includes specific rules, restrictions, and reporting obligations with respect to personal securities transactions of the Advisor's employees. Generally, each employee is required to obtain prior approval of the Advisor's compliance officer in order B-19 to purchase or sell a security for the employee's own account. Purchases or sales of securities which are not eligible for purchase or sale by the Fund or any other client of the Advisor are exempted from the prior approval requirement, as are certain other transactions which the Advisor believes present no potential conflict of interest. The Advisor's employees are also required to file with the Advisor quarterly reports of their personal securities transactions. SUB-ADVISORS The Advisory Agreement authorizes the Advisor, at its option and at its sole expense, to appoint a Sub-Advisor, which may assume all or a portion of the responsibilities and obligations of the Advisor pursuant to the Advisory Agreement as shall be delegated to the Sub-Advisor. Any appointment of a Sub-Advisor and assumption of responsibilities and obligations of the Advisor by such Sub-Advisor is subject to approval by the Board of Directors and, if required by the law, the shareholders of the Fund. PRINCIPAL UNDERWRITER The Fund's principal underwriter is First Fund Distributors, Inc., 4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018 (the "Distributor"). The Distributor is engaged on a non-exclusive basis to assist in the distribution of shares in various jurisdictions. The Distributor receives compensation from the Advisor and is not paid either directly or indirectly by the Investment Company. The Distributor will receive compensation of $50,000 from the Advisor with respect to the fiscal year ended October 31, 2001 for services as Distributor. TRANSFER AGENT The Advisor has engaged State Street Bank and Trust Company, c/o NFDS, P.O. Box 419343, Kansas City, Missouri, 64141, to serve as Transfer and Dividend Disbursing Agent and shareholder service agent. The Transfer Agent is not involved in determining investment policies of the Fund or its portfolio securities transactions. Its services do not protect shareholders against possible depreciation of their assets. The fees of State Street Bank and Trust Company are paid by the Fund and thus borne by the Fund's shareholders. State Street Bank and Trust Company has contracted with National Financial Data Services to serve as shareholder servicing agent. A depository account has been established at United Missouri Bank of Kansas City through which all payments for the funds will be processed. The Fund may compensate third-party service providers who act as a shareholder servicing agent or who perform shareholder servicing normally performed by the Fund. ADMINISTRATOR The Advisor has retained Investment Company Administration, L.L.C. (the "Sub-Administrator"), with offices at 2020 East Financial Way, Suite 100, Glendora, California 91741. The Administration Agreement provides that the Sub-Administrator will prepare and coordinate reports and other materials supplied to the Directors; prepare and/or supervise the preparation and filing of securities filings, prospectuses, statements of additional information, marketing materials; prepare all required filings necessary to maintain the Funds' notice filings to sell shares in all states where the Funds currently do, or intends to do, business; and perform such additional services as may be B-20 agreed upon by the Advisor and the Sub-Administrator. For its services, the Advisor (not the Fund) pays the Sub-Administrator an annual fee equal to .02% of the first $1 billion of each Fund's average daily net assets, 0.015% thereafter, subject to a minimum annual fee of $20,000. In addition, the Sub-Administrator will prepare periodic financial reports, shareholder reports and other regulatory reports or filings required for the Funds; coordinate the preparation, printing and mailing of materials required to be sent to shareholders; and perform such additional services as may be agreed upon by the Advisor and the Sub-Administrator. For these additional services, the Advisor (not the Fund) will pay the Sub-Administrator an annual fee of $100,000 for the years 2001 and 2002. After the year 2002, the Sub-Administrator will receive from the Advisor (not the Fund) an annual fee, calculated on each Fund's average daily net assets, equal to 0.005% of the first $2 billion and 0.0025% thereafter. EXECUTION OF PORTFOLIO TRANSACTIONS There are occasions in which portfolio transactions for the Fund may be executed as part of concurrent authorizations to purchase or sell the same security for other accounts served by the Advisor including other series of the Investment Company. Although such concurrent authorizations potentially could be either advantageous or disadvantageous to the Fund, they will be effected only when the Advisor believes that to do so will be in the best interest of the Fund. When such concurrent authorizations occur, the objective will be to allocate the executions in a manner which is deemed equitable to the accounts involved, including the Fund and the other series of the Investment Company. The Fund contemplates purchasing foreign equity and/or fixed-income securities in over-the-counter markets or stock exchanges located in the countries in which the respective principal offices of the issuers of the various securities are located, if that is the best available market. Fixed commissions on foreign stock transactions and transaction costs with respect to foreign fixed-income securities are generally higher than negotiated commissions on United States transactions, although the Fund will endeavor to achieve the best net results on its portfolio transactions. There is generally less government supervision and regulation of foreign stock exchanges and brokers than in the United States. Foreign security settlements may in some instances be subject to delays and related administrative uncertainties. Foreign equity securities may be held by the Fund in the form of American Depository Receipts ("ADRs") or similar instruments. ADRs may be listed on stock exchanges or traded in the over-the-counter markets in the United States. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates. The government securities issued by the United States and other countries and money market securities in which the Fund may invest are generally traded in the over-the-counter markets. Subject to the requirement of seeking the best available prices and executions, the Advisor may, in circumstances in which two or more broker-dealers are in a position to offer comparable prices and executions, give preference to broker-dealers who have provided investment research, statistical, and other related services to the Advisor for the benefit of the Fund and/or other accounts served by the Advisor. Such preferences would only be afforded to a B-21 broker-dealer if the Advisor determines that the amount of the commission is reasonable in relation to the value of the brokerage and research services provided by that broker-dealer and only to a broker-dealer acting as agent and not as principal. The Advisor is of the opinion that, while such information is useful in varying degrees, it is of indeterminable value and does not reduce the expenses of the Advisor in managing the Fund's portfolio. Subject to the requirements of the 1940 Act and procedures adopted by the Board of Directors, the Fund may execute portfolio transactions through any broker or dealer and pay brokerage commissions to a broker which is an affiliated person of the Investment Company, the Advisor, or an affiliated person of such person. HOW TO INVEST PRICE OF SHARES The price to be paid by an investor for shares of the Fund, the public offering price, is based on the net asset value per share which is calculated once daily as of the close of trading (currently 4:00 p.m., Eastern time) each day the New York Stock Exchange is open as set forth below. The New York Stock Exchange is currently closed on weekends and on the following holidays: (i) New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving, and Christmas Day; and (ii) the preceding Friday when any one of those holidays falls on a Saturday or the subsequent Monday when any one of those holidays falls on a Sunday. The Fund will calculate its net asset value and complete orders to purchase, exchange, or redeem shares only on a Monday through Friday basis (excluding holidays on which the New York Stock Exchange is closed). The Fund's portfolio securities may from time to time be listed on foreign stock exchanges or otherwise traded on foreign markets which may trade on other days (such as Saturday). As a result, the net asset value of the Fund may be significantly affected by such trading on days when a shareholder has no access to the Fund. See also in the Prospectus at "General Investment Policies - Special Considerations in International Investing," "Calculation of Net Asset Value and Public Offering Price," "How to Invest," "How to Redeem Shares," and "Shareholder Account Services and Privileges - Exchanges Between Funds." 1. Fixed-income obligations with original or remaining maturities in excess of 60 days are valued at the mean of representative quoted bid and asked prices for such securities or, if such prices are not available, at prices for securities of comparable maturity, quality, and type. However, in circumstances where the Advisor deems it appropriate to do so, prices obtained for the day of valuation from a bond pricing service will be used. The Fund amortizes to maturity all securities with 60 days or less remaining to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60th day, based on the value determined on the 61st day. Options on currencies purchased by the Fund are valued at their last bid price in the case of listed options or at the average of the last bid prices obtained from dealers in the case of OTC options. Where market quotations are not readily available, securities are valued at fair value pursuant to methods approved by the Board of Directors. B-22 2. Equity securities, including ADRs, which are traded on stock exchanges, are valued at the last sale price on the exchange on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available mean price. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated by or under the authority of the Board of Directors as the primary market. Securities traded in the over-the-counter market are valued at the last available bid price in the over-the-counter market prior to the time of valuation. Securities and assets for which market quotations are not readily available (including restricted securities which are subject to limitations as to their sale) are valued at fair value as determined in good faith by or under the direction of the Board of Directors. 3. Trading in securities on European and Far Eastern securities exchanges and over-the-counter markets is normally completed well before the close of the business day in New York. In addition, European or Far Eastern securities trading may not take place on all business days in New York. Furthermore, trading takes place in Japanese markets on certain Saturdays and in various foreign markets on days which are not business days in New York and on which the Fund's net asset value is not calculated. The calculation of net asset value may not take place contemporaneously with the determination of the prices of securities held by the Fund used in such calculation. Events affecting the values of portfolio securities that occur between the time their prices are determined and the close of the New York Stock Exchange will not be reflected in the Fund's calculation of net asset value unless the Board of Directors deems that the particular event would materially affect net asset value, in which case an adjustment will be made. 4. The value of each security denominated in a currency other than U.S. dollars will be translated into U.S. dollars at the prevailing market rate as determined by the Advisor. 5. The Fund's liabilities, including proper accruals of taxes and other expense items, are deducted from total assets and a net asset figure is obtained. 6. The net assets so obtained are then divided by the total number of shares outstanding (excluding treasury shares), and the result, rounded to the nearest cent, is the net asset value per share. OTHER INVESTMENT AND REDEMPTION SERVICES THE OPEN ACCOUNT When an investor makes an initial investment in the Fund, a shareholder account is opened in accordance with the investor's registration instructions. Each time there is a transaction in a shareholder account, such as an additional investment, redemption, or distribution (dividend or capital gain), the shareholder will receive from the Sub-Transfer Agent a confirmation statement showing the current transaction in the shareholder account, along with a summary of the status of the account as of the transaction date. B-23 PAYMENT AND TERMS OF OFFERING Payment of shares purchased should accompany the purchase order, or funds should be wired to the Sub-Transfer Agent as described in the Prospectus. Payment, other than by wire transfer, must be made by check or money order drawn on a U.S. bank. Checks or money orders must be payable in U.S. dollars and made payable to Fremont Mutual Funds. Third party checks, credit cards, and cash will not be accepted. As a condition of this offering, if an order to purchase shares is cancelled due to nonpayment (for example, because of a check returned for "not sufficient funds"), the person who made the order will be responsible for reimbursing the Advisor for any loss incurred by reason of such cancellation. If such purchaser is a shareholder, the Fund shall have the authority as agent of the shareholder to redeem shares in the shareholder's account for the then-current net asset value per share to reimburse the Fund for the loss incurred. Such loss shall be the difference between the net asset value of the Fund on the date of purchase and the net asset value on the date of cancellation of the purchase. Investors whose purchase orders have been cancelled due to nonpayment may be prohibited from placing future orders. The Fund reserves the right at any time to waive or increase the minimum requirements applicable to initial or subsequent investments with respect to any person or class of persons. An order to purchase shares is not binding on the Fund until it has been confirmed in writing by the Sub-Transfer Agent (or other arrangements made with the Fund, in the case of orders utilizing wire transfer of funds) and payment has been received. To protect existing shareholders, the Fund reserves the right to reject any offer for a purchase of shares by any individual. REDEMPTION IN KIND A shareholder may request a redemption in kind, which the Fund will attempt to honor if at all practicable. The Fund may also elect on its own initiative to honor a redemption in kind in extraordinary circumstances. If the Fund elects to redeem shares in kind (i.e., in assets other than cash), it must pay in cash (if so requested) all redemptions with respect to any shareholder during any 90-day period in an amount equal to the lesser of (i) $250,000 or (ii) 1% of the net asset value of the Fund at the beginning of such period. Shareholders who elect to sell securities received in a redemption in kind will be responsible for paying any brokerage commissions associated with those sale transactions. SUSPENSION OF REDEMPTION PRIVILEGES The Fund may suspend redemption privileges or postpone the date of payment for more than seven calendar days after the redemption order is received during any period (1) when the New York Stock Exchange is closed other than customary weekend and holiday closings, or trading on the Exchange is restricted as determined by the SEC, (2) when an emergency exists, as defined by the SEC, which makes it not reasonably practicable for the Investment Company to dispose of securities owned by it or to fairly determine the value of its assets, or (3) as the SEC may otherwise permit. B-24 TAXES - MUTUAL FUNDS STATUS AS A "REGULATED INVESTMENT COMPANY" The Fund will be treated under the Internal Revenue Code of 1986, as amended (the "Code") as a separate entity, and the Fund intends to qualify and elect, and to continue to qualify, to be treated as a separate "regulated investment company" under Subchapter M of the Code. To qualify for the tax treatment afforded a regulated investment company under the Code, the Fund must annually distribute at least 90% of the sum of its investment company taxable income (generally net investment income and certain short-term capital gains), its tax-exempt interest income (if any) and net capital gains, and meet certain diversification of assets and other requirements of the Code. If the Fund qualifies for such tax treatment, it will not be subject to federal income tax on the part of its investment company taxable income and its net capital gain which it distributes to shareholders. To meet the requirements of the Code, the Fund must (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities or currencies; (b) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund's total assets is represented by cash, U.S. Government securities, securities of other regulated investment companies, and other securities, limited, in respect of any one issuer, to an amount not greater than 5% of the Fund's total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities of any one issuer (other than U.S. Government securities or the securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses. Income and gain from investing in gold or other commodities will not qualify in meeting the 90% gross income test. Even though the Fund has elected and intends to continue to qualify as a "regulated investment company," it may be subject to certain federal excise taxes unless the Fund meets certain additional distribution requirements. Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a regulated investment company's "required distribution" for the calendar year over the "distributed amount" for such calendar year. The term "required distribution" means the sum of (i) 98% of ordinary income (generally net investment income) for the calendar year, (ii) 98% of capital gain net income (both long-term and short-term) for the one-year period ending on October 31 of such year, and (iii) the sum of any untaxed, undistributed net investment income and net capital gains of the regulated investment company for prior periods. The term "distributed amount" generally means the sum of (i) amounts actually distributed by the Fund from its current year's ordinary income and capital gain net income and (ii) any amount on which the Fund pays income tax for the year. The Fund intends to meet these distribution requirements to avoid the excise tax liability. If for any taxable year the Fund does not qualify for the special tax treatment afforded regulated investment companies, all of its taxable income will be subject to tax at regular corporate rates (without any deduction for distributions to its shareholders). In such event, dividend distributions would be taxable to shareholders to the extent of earnings and profits. DISTRIBUTIONS OF NET INVESTMENT INCOME Dividends from net investment income (including net short-term capital gains) are taxable as ordinary income. Shareholders will be taxed for federal income tax purposes on dividends from the Fund in the same manner whether such dividends are received as shares or in cash. If the Fund does not receive any B-25 dividend income from U.S. corporations, dividends from the Fund will not be eligible for the dividends received deduction allowed to corporations. To the extent that dividends received by the Fund would qualify for the dividends received deduction available to corporations, the Fund must designate in a written notice to shareholders the amount of the Fund's dividends that would be eligible for this treatment NET CAPITAL GAINS Any distributions designated as being made from the Fund's net capital gains will be taxable as long-term capital gains regardless of the holding period of the shareholders of the Fund's shares. The maximum federal capital gains rate for individuals is 20% with respect to capital assets held more than 12 months. The maximum capital gains rate for corporate shareholders is the same as the maximum tax rate for ordinary income. Capital loss carryforwards result when the Fund has net capital losses during a tax year. These are carried over to subsequent years and may reduce distributions of realized gains in those years. Unused capital loss carryforwards expire in eight years. Until such capital loss carryforwards are offset or expire, it is unlikely that the Board of Directors will authorize a distribution of any net realized gains. NON-U.S. SHAREHOLDERS Under the Code, distributions of net investment income by the Fund to a shareholder who, as to the U.S., is a nonresident alien individual, nonresident alien fiduciary of a trust or estate, foreign corporation, or foreign partnership (a "foreign shareholder") will be subject to U.S. tax withholding (at a 30% or lower treaty rate). Withholding will not apply if a dividend paid by the Fund to a foreign shareholder is "effectively connected" with a U.S. trade or business, in which case the reporting and withholding requirements applicable to U.S. citizens, U.S. residents, or domestic corporations will apply. Distributions of net long-term capital gains are not subject to tax withholding, but in the case of a foreign shareholder who is a nonresident alien individual, such distributions ordinarily will be subject to U.S. income tax at a rate of 30% if the individual is physically present in the U.S. for more than 182 days during the taxable year. OTHER INFORMATION The amount of any realized gain or loss on closing out a futures contract such as a forward commitment for the purchase or sale of foreign currency will generally result in a realized capital gain or loss for tax purposes. Under Section 1256 of the Code, futures contracts held by the Fund at the end of each fiscal year will be required to be "marked to market" for federal income tax purposes, that is, deemed to have been sold at market value. Sixty percent (60%) of any net gain or loss recognized on these deemed sales and sixty percent (60%) of any net realized gain or loss from any actual sales will be treated as long-term capital gain or loss, and the remainder will be treated as short-term capital gain or loss. Code Section 988 may also apply to currency transactions. Under Section 988 of the Code, each foreign currency gain or loss is generally computed separately and treated as ordinary income or loss. In the case of overlap between Sections 1256 and 988 of the Code, special provisions determine the character and timing of any income, gain, or loss. The Fund will attempt to monitor transactions under Section 988 of the Code to avoid an adverse tax impact. See also "Investment Objective, Policies, and Risk Considerations" in this Statement of Additional Information. B-26 Any loss realized on redemption or exchange of the Fund's shares will be disallowed to the extent shares are reacquired within the 61 day period beginning 30 days before and ending 30 days after the shares are redeemed or exchanged. Under the Code, the Fund's taxable income for each year will be computed without regard to any net foreign currency loss attributable to transactions after October 31, and any such net foreign currency loss will be treated as arising on the first day of the following taxable year. The Fund may be required to pay withholding and other taxes imposed by foreign countries generally at rates from 10% to 40% which would reduce the Fund's investment income. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. It is not anticipated that shareholders will be entitled to a foreign tax credit or deduction for such foreign taxes. The Fund may purchase the securities of certain foreign investment funds or trusts called passive foreign investment companies ("PFICs"). Currently, PFICs are the only or primary means by which the Fund may invest in some countries. If the Fund invests in PFICs, it may be subject to U.S. federal income tax on a portion of any "excess distribution" or gain from the disposition of such shares even if such income is distributed as a taxable dividend to shareholders. In addition to bearing their proportionate share of the Fund's expenses, shareholders will also bear indirectly similar expenses of PFICs in which the Fund has invested. Additional charges in the nature of interest may be imposed on either the Fund or its shareholders in respect of deferred taxes arising from such distributions or gains. Capital gains on the sale of such holdings will be deemed to be ordinary income regardless of how long such PFICs are held. If the Fund were to invest in a PFIC and elect to treat the PFIC as a "qualified electing fund" under the Code, in lieu of the foregoing requirements, the Fund might be required to include in income each year a portion of the ordinary earnings and net capital gains of the qualified electing fund, even if not distributed to the Fund, and such amounts would be subject to the 90% and calendar year distribution requirements described above. In order to qualify for the dividends received deduction, a corporate shareholder must hold the Fund's shares paying the dividends, upon which a dividend received deduction would be based, for at least 46 days during the 90-day period that begins 45 days before the stock becomes ex-dividend with respect to the dividend without protection from risk of loss. Similar requirements apply to the Fund with respect to each qualifying dividend the Fund receives. Shareholders are advised to consult their tax advisor regarding application of these rules to their particular circumstances. The foregoing is a general abbreviated summary of present United States federal income taxes on dividends and distributions by the Fund. Investors are urged to consult their own tax advisors for more detailed information and for information regarding any foreign, state, and local taxes applicable to dividends and distributions received. B-27 ADDITIONAL INFORMATION CUSTODIAN State Street Bank & Trust Company, 801 Pennsylvania, Kansas City, Missouri 64105, acts as Custodian for the Investment Company's assets, and as such safekeeps the Fund's portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Investment Company's request, and maintains records in connection with its duties. INDEPENDENT AUDITORS; FINANCIAL STATEMENTS The Investment Company's independent auditor is PricewaterhouseCoopers LLP, 333 Market Street, San Francisco, California 94105. PricewaterhouseCoopers LLP will conduct an annual audit of the Fund, assist in the preparation of the Fund's federal and state income tax returns, and consult with the Investment Company as to matters of accounting, regulatory filings, and federal and state income taxation. LEGAL OPINIONS The validity of the shares of common stock offered hereby will be passed upon by Paul, Hastings, Janofsky & Walker LLP, 345 California Street, San Francisco, California 94104. In addition to acting as counsel to the Investment Company, Paul, Hastings, Janofsky & Walker LLP has acted and may continue to act as counsel to the Advisor and its affiliates in various matters. USE OF NAME The Advisor has granted the Investment Company the right to use the "Fremont" name and has reserved the rights to withdraw its consent to the use of such name by the Investment Company at any time, or to grant the use of such name to any other company, and the Investment Company has granted the Advisor, under certain conditions, the use of any other name it might assume in the future, with respect to any other investment company sponsored by the Advisor. SHAREHOLDER VOTING RIGHTS The Investment Company currently issues shares in 12 series and may establish additional classes or series of shares in the future. When more than one class or series of shares is outstanding, shares of all classes and series will vote together for a single set of directors, and on other matters affecting the entire Investment Company, with each share entitled to a single vote. On matters affecting only one class or series, only the shareholders of that class or series shall be entitled to vote. On matters relating to more than one class or series but affecting the classes and series differently, separate votes by class and series are required. Shareholders holding 10% of the shares of the Investment Company may call a special meeting of shareholders. LIABILITY OF DIRECTORS AND OFFICERS The Articles of Incorporation of the Investment Company provide that, subject to the provisions of the 1940 Act, to the fullest extent permitted under Maryland law, no officer or director of the Investment Company may be held personally liable to the Investment Company or its shareholders. B-28 CERTAIN SHAREHOLDERS To the best knowledge of the Fund, shareholders owning 5% or more of the outstanding shares of the Fund as of record are set forth below: OTHER INVESTMENT INFORMATION The Advisor directs the management of over $7.26 billion of assets and internally manages over $1.55 billion of assets for retirement plans, foundations, private portfolios, and mutual funds. The Advisor's philosophy is to apply a long-term approach to investing that balances risk and return potential. Historical annual returns of various market indices may be used to represent the returns of various asset classes as follows: (1) U.S. Stocks: Standard & Poor's 500 Index, (2) Foreign Stocks: Morgan Stanley Europe, Australasia and Far East (EAFE) Index; (3) Intermediate U.S. Bonds: Lehman Brothers Intermediate Government/Corporate Bond Index; (4) Foreign Bonds: Salomon Brothers Non-U.S. Dollar Bond Index; and Money Market Securities: 1980-1986, 90 day U.S. Treasury Bill rate: 1987-1998 IBC First Tier Money Market Fund Average. The total returns for the above indices for the years 1980 through 1999 are as follows (source: Fremont Investment Advisors, Inc.): U.S. Intermediate Money Market Stocks Foreign Stocks U.S. Bonds Foreign Bonds Securities ------ -------------- ---------- ------------- ---------- 1980 32.40% 24.40% 6.40% 14.20% 11.80% 1981 -5.00% -1.00% 10.50% -4.60% 16.10% 1982 21.30% -0.90% 26.10% 11.90% 10.70% 1983 22.30% 24.60% 8.60% 4.40% 8.60% 1984 6.30% 7.90% 14.40% -1.90% 10.00% 1985 31.80% 56.70% 18.10% 35.00% 7.50% 1986 18.70% 70.00% 13.10% 31.40% 5.90% 1987 5.10% 24.90% 3.70% 35.20% 6.00% 1988 16.80% 28.80% 6.70% 2.40% 6.90% 1989 31.40% 11.10% 12.80% -3.40% 8.50% 1990 -3.20% -23.00% 9.20% 15.30% 7.50% 1991 30.60% 12.90% 14.60% 16.20% 5.50% 1992 7.70% -11.50% 7.20% 4.80% 3.30% 1993 10.00% 33.30% 8.80% 15.10% 2.60% 1994 1.30% 8.10% -1.90% 6.00% 3.60% 1995 37.50% 11.20% 15.30% 19.60% 5.30% 1996 23.00% 6.10% 4.10% 4.50% 4.80% 1997 33.40% 1.80% 7.90% -4.30% 5.00% 1998 28.60% 20.00% 9.50% 11.50% 4.90% 1999 21.00% 27.00% -2.20% -5.10% 4.50% B-29 The Fund is best suited as a long-term investment. While it offers higher potential total returns than certificates of deposit or money market funds, it involves added return volatility or risk. The prospective investor must weigh this potential for higher return against the associated higher risk. The Investment Company offers shares in twelve additional series under separate Prospectuses and Statements of Additional Information. INVESTMENT RESULTS The Investment Company may from time to time include information on the investment results of the Fund in advertisements or in reports furnished to current or prospective shareholders. The average annual rate of return ("T") for a given period is computed by using the redeemable value at the end of the period ("ERV") of a hypothetical initial investment of $1,000 ("P") over the period in years ("n") according to the following formula as required by the SEC: n P(1+T) = ERV The following assumptions will be reflected in computations made in accordance with the formula stated above: (1) reinvestment of dividends and distributions at net asset value on the reinvestment date determined by the Board of Directors; and (2) a complete redemption at the end of any period illustrated. The Fund will calculate total return for one, five, and ten-year periods after such a period has elapsed, and may calculate total returns for other periods as well. In addition, the Fund will provide lifetime average annual total return figures. The Fund's investment results will vary from time to time depending upon market conditions, the composition of the Fund's portfolio, and operating expenses of the Fund, so that current or past total return should not be considered representations of what an investment in the Fund may earn in any future period. These factors and possible differences in the methods used in calculating investment results should be considered when comparing the Fund's investment results with those published for other investment companies and other investment vehicles. The Fund's results also should be considered relative to the risks associated with the Fund's investment objective and policies. The Investment Company may from time to time compare the investment results of the Fund with, or refer to, the following: 1. Average of Savings Accounts, which is a measure of all kinds of savings deposits, including longer-term certificates (based on figures supplied by the U.S. League of Savings Institutions). Savings accounts offer a guaranteed rate of return on principal, but no opportunity for capital growth. During certain periods, the maximum rates paid on some savings deposits were fixed by law. 2. The Consumer Price Index, which is a measure of the average change in prices over time in a fixed market basket of goods and services (e.g., food, clothing, shelter, and fuels, transportation fares, charges for doctors' and dentists' services, prescription medicines, and other goods and services that people buy for day-to-day living). B-30 3. Statistics reported by Lipper Analytical Services, Inc., which ranks mutual funds by overall performance, investment objectives, and assets. 4. Standard & Poor's "500" Index, which is a widely recognized index composed of the capitalization-weighted average of the price of 500 large publicly traded U.S. common stocks. 5. Dow Jones Industrial Average. 6. CNBC/Financial News Composite Index. 7. Russell 1000 Index, which reflects the common stock price changes of the 1,000 largest publicly traded U.S. companies by market capitalization. 8. Russell 2000 Index, which reflects the common stock price changes of the 2,000 largest publicly traded U.S. companies by market capitalization. 9. Russell 3000 Index, which reflects the common stock price changes of the 3,000 largest publicly traded U.S. companies by market capitalization. 10. Wilshire 5000 Index, which reflects the investment return of the approximately 5,000 publicly traded securities for which daily pricing is available, weighted by market capitalization, excluding income. 11. Salomon Brothers Broad Investment Grade Index, which is a widely used index composed of U.S. domestic government, corporate, and mortgage-backed fixed income securities. 12. Wilshire Associates, an on-line database for international financial and economic data including performance measures for a wide variety of securities. 13. Morgan Stanley Europe, Australasia and Far East (EAFE) Index, which is composed of foreign stocks. 14. IFC Emerging Markets Investables Indices, which measure stock market performance in various developing countries around the world. 15. Salomon Brothers World Bond Index, which is composed of domestic and foreign corporate and government fixed income securities. 16. Lehman Brothers Government/Corporate Bond Index, which is a widely used index composed of investment quality U.S. government and corporate fixed income securities. B-31 17. Lehman Brothers Government/Corporate Intermediate Bond Index, which is a widely used index composed of investment quality U.S. government and corporate fixed income securities with maturities between one and ten years. 18. Salomon Brothers World Government Bond Index, which is a widely used index composed of U.S. and non-U.S. government fixed income securities of the major countries of the World. 19. 90-day U.S. Treasury Bills Index, which is a measure of the performance of constant maturity 90-day U.S. Treasury Bills. 20. IBC First Tier Money Fund Average, which is an average of the 30-day yield of approximately 250 major domestic money market funds. 21. Salomon Brothers Non-U.S. World Government Bond Index, which is the World Government Bond index excluding its U.S. market component. 22. Salomon Brothers Non-Dollar Bond Index, which is composed of foreign corporate and government fixed income securities. 23. Bear Stearns Foreign Bond Index, which provides simple average returns for individual countries and GNP-weighted index, beginning in 1975. The returns are broken down by local market and currency. 24. Ibbottson Associates International Bond Index, which provides a detailed breakdown of local market and currency returns since 1960. 25. The World Bank Publication of Trends in Developing Countries ("TIDE"), which provides brief reports on most of the World Bank's borrowing members. The World Development Report is published annually and looks at global and regional economic trends and their implications for the developing economies. 26. Datastream and Worldscope, which is an on-line database retrieval service for information including but not limited to international financial and economic data. 27. International Financial Statistics, which is produced by the International Monetary Fund. 28. Various publications and annual reports such as the World Development Report, produced by the World Bank and its affiliates. 29. Various publications from the International Bank for Reconstruction and Development/The World Bank. 30. Various publications including but not limited to ratings agencies such as Moody's Investors Service, Fitch Investors Service, and Standard Poor's Ratings Group. 31. Various publications from the Organization for Economic Cooperation and Development. B-32 Indices prepared by the research departments of such financial organizations as J.P. Morgan; Lehman Brothers; S.G. Warburg; Jardine Fleming; the Asian Development Bank; Bloomberg, L.P.; Morningstar, Inc; Salomon Brothers, Inc.; Merrill Lynch, Pierce, Fenner & Smith, Inc.; Morgan Stanley; Bear Stearns & Co., Inc.; Prudential Securities, Inc.; Smith Barney Inc.; and Ibbottson Associates of Chicago, Illinois ("Ibbottson") may be used, as well as information provided by the Federal Reserve and the respective central banks of various countries. The Investment Company may use performance rankings and ratings reported periodically in national financial publications such as, but not limited to, Money Magazine, Forbes, The Wall Street Journal, Investor's Business Daily, Fortune, Smart Money, Business Week, and Barron's. The Advisor believes the Fund is an appropriate investment for long-term investment goals including, but not limited to, funding retirement, paying for education, or purchasing a house. The Fund does not represent a complete investment program, and investors should consider the Fund as appropriate for a portion of their overall investment portfolio with regard to their long-term investment goals. The Advisor believes that a growing number of consumer products, including, but not limited to, home appliances, automobiles, and clothing, purchased by Americans are manufactured abroad. The Advisor believes that investing globally in the companies that produce products for U.S. consumers can help U.S. investors seek protection of the value of their assets against the potentially increasing costs of foreign manufactured goods. Of course, there can be no assurance that there will be any correlation between global investing and the costs of such foreign goods unless there is a corresponding change in value of the U.S. dollar to foreign currencies. From time to time, the Investment Company may refer to or advertise the names of such companies although there can be no assurance that the Fund may own the securities of these companies. From time to time, the Investment Company may refer to the number of shareholders in the Fund or the aggregate number of shareholders in all Fremont Mutual Funds or the dollar amount of Fund assets under management or rankings by DALBAR Savings, Inc. in advertising materials. The Fund may compare its performance to that of other compilations or indices of comparable quality to those listed above which may be developed and made available in the future. The Fund may be compared in advertising to Certificates of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent the ten largest Consumer Metropolitan statistical areas, or other investments issued by banks. The Fund differs from bank investments in several respects. The Fund may offer greater liquidity or higher potential returns than CDs; but unlike CDs, the Fund will have a fluctuating share price and return and is not FDIC insured. The Fund's performance may be compared to the performance of other mutual funds in general, or to the performance of particular types of mutual B-33 funds. These comparisons may be expressed as mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper), an independent service which monitors the performance of mutual funds. Lipper generally ranks funds on the basis of total return, assuming reinvestment of distributions, but does not take sales charges or redemption fees into consideration, and is prepared without regard to tax consequences. In addition to the mutual fund rankings, the Fund's performance may be compared to mutual fund performance indices prepared by Lipper. The Investment Company may provide information designed to help individuals understand their investment goals and explore various financial strategies. For example, the Investment Company may describe general principles of investing, such as asset allocation, diversification, and risk tolerance. Ibbottson provides historical returns of capital markets in the United States, including common stocks, small capitalization stocks, long-term corporate bonds, intermediate-term government bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation (based on the CPI), and combinations of various capital markets. The performance of these capital markets is based on the returns of different indices. The Investment Company may use the performance of these capital markets in order to demonstrate general risk-versus-reward investment scenarios. Performance comparisons may also include the value of a hypothetical investment in any of these capital markets. The risks associated with the security types in any capital market may or may not correspond directly to those of the Fund. The Fund may also compare performance to that of other compilations or indices that may be developed and made available in the future. In advertising materials, the Advisor may reference or discuss its products and services, which may include retirement investing, the effects of dollar-cost averaging, and saving for college or a home. In addition, the Advisor may quote financial or business publications and periodicals, including model portfolios or allocations, as they relate to fund management, investment philosophy, and investment techniques. The Fund may discuss its NASDAQ symbol, CUSIP number, and its current portfolio management team. From time to time, the Fund's performance also may be compared to other mutual funds tracked by financial or business publications and periodicals. For example, the Fund may quote Morningstar, Inc. in its advertising materials. Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the basis of risk-adjusted performance. In addition, the Fund may quote financial or business publications and periodicals as they relate to fund management, investment philosophy, and investment techniques. Rankings that compare the performance of Fremont Mutual Funds to one another in appropriate categories over specific periods of time may also be quoted in advertising. The Fund may quote various measures of volatility and benchmark correlation such as beta, standard deviation, and R2 in advertising. In addition, the Fund may compare these measures to those of other funds. Measures of volatility seek to B-34 compare the Fund's historical share price fluctuations or total returns compared to those of a benchmark. Measures of benchmark correlation indicate how valid a comparative benchmark may be. All measures of volatility and correlation are calculated using averages of historical data. The Fund may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in the Fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against loss in a declining market, the investor's average cost per share can be lower than if a fixed number of shares are purchased at the same intervals. In evaluating such a plan, investors should consider their ability to continue purchasing shares through periods of low price levels. The Fund may be available for purchase through retirement plans of other programs offering deferral of or exemption from income taxes, which may produce superior after-tax returns over time. For example, a $10,000 investment earning a taxable return of 10% annually would have an after-tax value of $17,976 after ten years, assuming tax was deducted from the return each year at a 39.6% rate. An equivalent tax-deferred investment would have an after-tax value of $19,626 after ten years, assuming tax was deducted at a 39.6% rate from the deferred earnings at the end of the ten-year period. The Fund may describe in its sales material and advertisements how an investor may invest in the Fund through various retirement accounts and plans that offer deferral of income taxes on investment earnings and may also enable an investor to make pre-tax contributions. Because of their advantages, these retirement accounts and plans may produce returns superior to comparable non-retirement investments. The Fund may also discuss these accounts and plans which include the following: INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) Any individual who receives earned income from employment (including self-employment) can contribute up to $2,000 each year to an IRA (or 100% of compensation, whichever is less). If your spouse is not employed, a total of $2,250 may be contributed each year to IRAs set up for each individual (subject to the maximum of $2,000 per IRA). Some individuals may be able to take an income tax deduction for the contribution. Regular contributions may not be made for the year after you become 70 1/2, or thereafter. ROLLOVER IRAS Individuals who receive distributions from qualified retirement plans (other than required distributions) and who wish to keep their savings growing tax-deferred can rollover (or make a direct transfer of) their distribution to a Rollover IRA. These accounts can also receive rollovers or transfers from an existing IRA. SEP-IRAS AND SIMPLE IRAS Simplified employee pension (SEP) plans and SIMPLE plans provide employers and self-employed individuals (and any eligible employees) with benefits similar to Keogh-type plans or 401(k) plans, but with fewer administrative requirements and therefore lower annual administration expenses. B-35 ROTH IRA The Roth IRA allows investment of after-tax dollars in a retirement account that provides tax-free growth. Funds can be withdrawn without federal income tax or penalty after the account has been open for five years and the age of 59 1/2 has been attained. PROFIT SHARING (INCLUDING 401(K) AND MONEY PURCHASE PENSION PLANS) Corporations can sponsor these qualified defined contribution plans for their employees. A 401(k) plan, a type of profit sharing plan, additionally permits the eligible, participating employees to make pre-tax salary reduction contributions to the plan (up to certain limitations). The Advisor may from time to time in its sales methods and advertising discuss the risks inherent in investing. The major types of investment risk are market risk, industry risk, credit risk, interest rate risk, and inflation risk. Risk represents the possibility that you may lose some or all of your investment over a period of time. A basic tenet of investing is the greater the potential reward, the greater the risk. From time to time, the Fund and the Advisor will quote certain information including, but not limited to, data regarding: individual countries, regions, world stock exchanges, and economic and demographic statistics from sources the Advisor deems reliable, including, but not limited to, the economic and financial data of such financial organizations as: 1. Stock market capitalization: Morgan Stanley Capital International World Indices, International Finance Corporation, and Datastream. 2. Stock market trading volume: Morgan Stanley Capital International World Indices, and International Finance Corporation. 3. The number of listed companies: International Finance Corporation, Salomon Brothers, Inc., and S.G. Warburg. 4. Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital International World Indices. 5. International industry performance: Morgan Stanley Capital International World Indices, Wilshire Associates, and Salomon Brothers, Inc. 6. Stock market performance: Morgan Stanley Capital International World Indices, International Finance Corporation, and Datastream. 7. The Consumer Price Index and inflation rate: The World Bank, Datastream, and International Finance Corporation. 8. Gross Domestic Product (GDP): Datastream and The World Bank. B-36 9. GDP growth rate: International Finance Corporation, The World Bank, and Datastream. 10. Population: The World Bank, Datastream, and United Nations. 11. Average annual growth rate (%) of population: The World Bank, Datastream, and United Nations. 12. Age distribution within populations: Organization for Economic Cooperation and Development and United Nations. 13. Total exports and imports by year: International Finance Corporation, The World Bank, and Datastream. 14. Top three companies by country, industry, or market: International Finance Corporation, Salomon Brothers, Inc., and S.G. Warburg. 15. Foreign direct investments to developing countries: The World Bank and Datastream. 16. Supply, consumption, demand, and growth in demand of certain products, services, and industries, including, but not limited to, electricity, water, transportation, construction materials, natural resources, technology, other basic infrastructure, financial services, health care services and supplies, consumer products and services, and telecommunications equipment and services (sources of such information may include, but would not be limited to, The World Bank, OECD, IMF, Bloomberg, and Datastream). 17. Standard deviation and performance returns for U.S. and non-U.S. equity and bond markets: Morgan Stanley Capital International. 18. Political and economic structure of countries: Economist Intelligence Unit. 19. Government and corporate bonds - credit ratings, yield to maturity and performance returns: Salomon Brothers, Inc. 20. Dividend for U.S. and non-U.S. companies: Bloomberg. In advertising and sales materials, the Advisor may make reference to or discuss its products, services, and accomplishments. Such accomplishments do not provide any assurance that the Fund's investment objective will be achieved. B-37 As filed with the Securities and Exchange Commission on December 19, 2000 Registration No. 33-23453 File No. 811-5632 ================================================================================ Part C of Form N-1A COMBINED REGISTRATION STATEMENT FREMONT MUTUAL FUNDS, INC. -------------------------- Fremont New Era Value Fund ================================================================================ FREMONT MUTUAL FUNDS, INC. PART C ITEM 23. EXHIBITS (a) (1) Articles of Incorporation -- on file (File No. 811-5632) (2) Articles of Amendment -- on file (File No. 811-5632) (3) Articles of Amendment changing name -- on file (File No. 811-5632) (4) Articles Supplementary relating to shares of International Growth Fund -- on file (File No 811-5632 under Post-Effective Amendment No. 16 filed December 29, 1993) (5) Articles Supplementary for Income Fund, changing name to Bond Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 17 filed March 1, 1994) (6) Articles Supplementary relating to shares of the International Small-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 18 filed April 22, 1994) (7) Articles Supplementary relating to shares of the U.S. Micro-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 18 filed April 22, 1994) (8) Articles Supplementary relating to shares of the Emerging Markets Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 22 filed April 10, 1996) (9) Articles Supplementary relating to shares of the Institutional U.S. Micro Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (10) Articles Supplementary relating to shares of the U.S. Small Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (11) Articles Supplementary relating to shares of the Real Estate Securities Funds -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) C-1 (l2) Articles Supplementary relating to shares of the Select Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (l3) Articles Supplementary relating to shares of the Fremont New Economy Value Fund - Filed Herewith (b) Bylaws - Amended June 2000 -- Filed herewith (c) Instruments Defining Rights of Security Holder -Not Applicable (d) (1) Amended and Restated Investment Advisory and Administrative Services Agreement relating to Money Market Fund, Global Fund, California Intermediate Tax-Free Fund, Bond Fund, Growth Fund and Emerging Markets Fund on file (File No. 811-5632) (2) Investment Advisory and Administrative Services Agreement relating to International Growth Fund - on file (File No. 811-5632 under Post-Effective Amendment No. 17 filed March 1, 1994) (3) Investment Advisory and Administrative Services Agreement relating to International Small-Cap Fund and U.S. Micro-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 19 filed August 1, 1994) (4) Portfolio Management Agreement with Pacific Investment Management Co. and Fremont Investment Advisors, Inc. for Bond (formerly Income) Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 17 filed March 1, 1994) (5) Portfolio Management Agreement with Acadian Asset Management, Inc. and Fremont Investment Advisors, Inc. for International Small Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 18 filed April 22, 1994) (6) Form of Portfolio Management Agreement with Credit Lyonnais International Asset Management (HK) Limited for Emerging Markets Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 22 filed April 10, 1996) (7) Investment Advisory and Administrative Services Agreement relating to Institutional U.S. Micro Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (8) Investment Advisory and Administrative Services Agreement relating to U.S. Small Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) C-2 (9) Investment Advisory and Administrative Services Agreement relating to Real Estate Securities Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (10) Investment Advisory and Administrative Services Agreement relating to Select Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (11) Portfolio Management Agreement with Kern Capital Management LLC and Fremont Investment Advisors, Inc. for U.S. Micro-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 31 file March 2, 1998) (12) Portfolio Management Agreement with Kern Capital Management LLC and Fremont Investment Advisors, Inc. for Institutional U.S. Micro-Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (13) Portfolio Management Agreement with Kern Capital Management LLC and Fremont Investment Advisors, Inc. for U.S. Small-Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998 (14) Portfolio Management Agreement with Kensington Investment Group and Fremont Investment Advisors, Inc. for Real Estate Securities Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (15) Portfolio Management Agreement with Bee & Associates, Inc. and Fremont Investment Advisors, Inc. for International Small Cap Fund B -- on file (File No. 811-5632 Under Post-Effective Amendment No. 32 file April 15, 1998) (16) Portfolio Management Agreement with Capital Guardian Trust Company and Fremont Investment Advisors, Inc. for International Growth Fund B -- on file (File No. 811-5632 Under Post-Effective Amendment No. 32 file April 15, 1998) (17) Portfolio Management Agreement with Rayner Associates, Inc. and Fremont Investment Advisors, Inc. for California Intermediate Tax-Free Fund - on file (File No. 811-5632 Under Post-Effective Amendment No. 33 file December 15, 1998) (18) Contractual Expense Limitation Agreement between Fremont Investment Advisors and each of the Fremont Mutual Funds - (File No. 811-5632 under Post-Effective Amendment No. 34, filed March 1, 1999) C-3 (19) Investment Advisory and Administrative Services Agreement relating to Fremont New Economy Value Fund - (File No. 811-5632 under Post-Effective Amendment No. 36 filed September 28, 2000) (20) Contractual Expense Limitation Agreement between Fremont Investment Advisors and Fremont Mutual Funds on behalf Fremont New Economy Value Fund - filed herewith (e) Distribution Agreement with First Fund Distributors, Inc.-- on file (File No. 811-5632 under Post-Effective Amendment No. 28 filed October 17, 1997) (f) Bonus Profit Sharing Contracts - Not applicable (g) (1) Custodian Agreement with The Northern Trust Company -- on file (File No. 811-5632 under Post-Effective Amendment No. 21 filed January 20, 1996) (2) Custody Agreement with Investors Fiduciary Trust Company - on file (File No. 811-5632 under Post-Effective Amendment No. 34 filed March 1, 1999) (3) Custody Agreement with State Street Bank and Trust Company - on file (File No. 811-5632 under Post-Effective Amendment No. 35 filed February 10, 2000) (h) (1) Transfer, Dividend Disbursing, Shareholder Service and Plan Agency Agreement with Fremont Investment Advisors, Inc. -- on file (File No. 811-5632 under Post-Effective Amendment No. 23 filed February 28, 1997) (2) Sub-Transfer Agency Agreement with Countrywide Fund Services, Inc. -- on file (File No. 811-5632 under Post-Effective Amendment No. 23 filed February 28, 1997) (3) Administration Agreement with Investment Company Administration Corporation (File No. 811-5632 under Post-Effective Amendment No. 28 filed October 17, 1997) (4) License Agreement relating to the Mark "Fremont" with Fremont Investment Advisors, Inc. -- on file (File No. 811-5632) (5) Investment Accounting Agreement between Investors Fiduciary Trust Company and Fremont Mutual Funds, Inc. -- on file (File No. 811-5632 under Post-Effective Amendment No. 17 filed March 1, 1994) C-4 (6) Sub-Transfer Agency Agreement with National Financial Data Services, Inc. -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (7) Transfer Agency Agreement with National Financial Data Services, Inc. - Filed herewith (8) Investment Accounting Agreement with State Street Bank and Trust Company - on file (File No. 811-5632 under Post-Effective Amendment No. 35 filed February 10, 2000) (i) Opinion of Counsel (1) Opinion and Consent of Counsel - on file (File No. 811-5632 under Post-Effective Amendment No. 35 filed February 10, 2000) (2) Institutional U.S. Micro-Cap Fund B -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (3) U.S. Small Cap Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (4) Real Estate Securities Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (5) Select Fund -- on file (File No. 811-5632 Under Post-Effective Amendment No. 31 file March 2, 1998) (6) New Era Value Fund - Filed Herewith (j) Independent Auditors' Consent - Not Applicable (k) Omitted Financial Statements - Not Applicable. (l) Initial Capital Agreements (1) Subscription Agreement with initial shareholders -- on file (File No. 811-5632 under Post-Effective Amendment filed May 11, 1992) (2) Subscription Agreement with initial shareholders of International Growth Fund - on file (File No. 811-5632 under Post-Effective Amendment No. 16 filed December 29, 1993) C-5 (3) Subscription Agreement with initial shareholders of International Small-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 18 filed April 22, 1994) (4) Subscription Agreement with initial shareholders of U.S. Micro-Cap Fund -- on file (File No. 811-5632 under Post-Effective Amendment No. 18 filed April 22, 1994) (m) Form of Plan of Distribution Pursuant to Rule 12b-1 -- on file (File No. 811-5632 under Post-Effective Amendment No. 31 file March 2, 1998) (n) Financial Data Schedule. - No Longer Applicable. (o) 18f-3 Plan - Not Applicable. (p) Code of Ethics (1) Fremont Mutual Funds, Inc. and Fremont Investment Advisors, Inc. - Filed Herewith (2) First Fund Distributors, Inc. - Filed Herewith ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT Stephen D. Bechtel, Jr. and members of his family, including trusts for family members, would be considered controlling persons under applicable Securities and Exchange Commission regulations, on account of their shareholdings in the Funds. ITEM 25. INDEMNIFICATION Article VII(g) of the Articles of Incorporation, filed as Exhibit (1), Item 24(b), 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 charter and bylaws, or otherwise, the Registrant has been advised that in the 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 C-6 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR The information required by this item is contained in the Form Adv of the following entities and is incorporated herein by reference: NAME OF INVESTMENT ADVISOR FILE NO. -------------------------- --------- Kern Capital Management LLC 801-54766 Pacific Investment Management Company 801-48187 BDT Investments Kensington Investment Group 801-44964 Capital Guardian Trust Company Mellon Capital Management Corporation SIT Investment Associates, Inc. Rayner Associates 801-13556 ITEM 27. PRINCIPAL UNDERWRITER. (a) First Fund Distributors, Inc. is the principal underwriter for the following investment companies or series thereof: Advisors Series Trust Allegiance Investment Trust Builders Fixed Income Fund, Inc. Guinness Flight Investment Funds Fleming Mutual Fund Group, Inc. Fremont Mutual Funds Investors Research Fund, Inc. Jurika & Voyles Mutual Funds Kayne Anderson Mutual Funds Masters' Select Funds Trust O'Shaughnessy Funds, Inc. PIC Investment Trust Purisima Funds Professionally Managed Portfolios Rainier Investment Management Mutual Funds Brandes Investment Funds RNC Mutual Fund Group, Inc. Trust For Investment Managers Dessauer Global Equity Fund C-7 (b) The following information is furnished with respect to the officers of First Fund Distributors, Inc.: Name and Principal Position and Offices with Positions and Offices Business Address* First Fund Distributors, Inc. with Registrant - ----------------- ----------------------------- --------------- Robert H. Wadsworth President and Treasurer None Steven J. Paggioli Vice President and Secretary Assistant Secretary Eric M. Banhazl Vice President Assistant Treasurer - ---------- * The principal business address of persons and entities listed is 4455 E. Camelback Road, Suite 261E, Phoenix, AZ 85018. (c) The distributor receives and annual fee of $50,000 per year. ITEM 28. LOCATION OF ACCOUNTS AND RECORDS Accounts, books, and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant and its investment manager, Fremont Investment Advisors, Inc., 333 Market Street, 26th Floor, San Francisco, California 94105. Other books and records will be maintained by the sub-advisers to the Funds. Records covering stockholder accounts and portfolio transactions are also maintained and kept by the Funds' Transfer Agent, National Financial Data Services, Inc., and by the Custodian and Fund Accountants, Investors Fiduciary Trust Company. ITEM 29. MANAGEMENT SERVICES There are no management -related services contracts not discussed in Parts A and B. ITEM 30. UNDERTAKINGS (a) Inapplicable (b) The information required by part 5A of the Form N-1A is or will be contained in the latest annual report to shareholders, and Registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge. (c) The Registrant undertakes that within five business days after receipt of a written application by shareholders holding in the aggregate at least 1% of the shares then outstanding or shares then having a net asset value of $25,000, which is less, each of whom shall have been a shareholder for at least six months prior to the date of application (hereinafter the "Petitioning Shareholders"), requesting to communicate with other shareholders with a view to obtaining signatures to a request for a meeting for the purpose of voting upon removal of any Director of the Registrant, which application shall be accompanied by a form of communication and request which such Petitioning Shareholders wish to transmit, Registrant will: (i) provide such Petitioning Shareholders with access to a list of the names and addresses of all shareholders of the Registrant; or (ii) inform such Petitioning Shareholders of the approximate number of shareholders and the estimated costs of mailing such communication, and to undertake such mailing promptly after tender by such Petitioning Shareholders to the Registrant of the material to be mailed and the reasonable expenses of such mailing. C-8 SIGNATURE OF THE REGISTRANT Pursuant to the requirements of the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant (certified that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of San Francisco, and the State of California, on the 19th day of December 2000. FREMONT MUTUAL FUNDS, INC. By: /s/ DAVID L. REDO ------------------------------------ DAVID L. REDO Chairman Pursuant to the requirements of the Securities Act of 1933 this Amendment to the Registration Statement has been signed below by the following persons in the capacities listed, and each on December 19, 2000. PRINCIPAL EXECUTIVE OFFICER: /s/ DAVID L. REDO - ----------------------------------- David L. Redo Chairman PRINCIPAL ACCOUNTING OFFICER: /s/ JACK GEE - ----------------------------------- Jack Gee Vice President and Chief Financial Officer DIRECTORS: /s/ RICHARD E. HOLMES* Director - ----------------------------------- Richard E. Holmes /s/ DONALD C. LUCHESSA* Director - ----------------------------------- Donald C. Luchessa /s/ DAVID L. EGAN* Director - ----------------------------------- David L. Egan /s/ KIMUN LEE* Director - ----------------------------------- Kimun Lee /s/ CHRISTINE D. TIMMERMAN* Director - ----------------------------------- Christine D Timmerman /s/ DAVID L. REDO Director - ----------------------------------- David L. Redo /s/ NANCY TENGLER Director - ----------------------------------- Nancy Tengler *By: /s/ ROBERT M. SLOTKY ------------------------------ Robert M. Slotky Pursuant to Power of Attorney -- on file (File No. 811-5632 under Post-Effective Amendment No. 31 file March 2, 1998 and filed herewith) C-9 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - -------------- ----------- A(13) Articles Supplementary for Fremont New Era Value Fund B By-Laws, amended June 2000 D(20) Expense Limitation Agreement H(7) Transfer Agent Agreement I(6) Legal Opinion Letter P(1) Code of Ethics for Registrant and Adviser P(2) Code of Ethics for Distributor EX-99.A.13 2 exa_13.txt ARTICLES SUPPLEMENTARY Exhibit A(13) FREMONT MUTUAL FUNDS, INC. ARTICLES SUPPLEMENTARY Fremont Mutual Funds, Inc., a Maryland corporation, having its principal office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Article FIFTH of the Charter of the Corporation, the Board of Directors has duly classified 100,000,000 shares of the unissued shares of capital stock of the Corporation into a series designated the Fremont New Era Value Fund (the "New Era Value Fund") and has provided for the issuance of such series. The Board of Directors of the Corporation may from time to time increase or decrease the number of shares of capital stock so classified. All such shares are initially classified as "Class A Common Stock" of the New Era Value Fund. The Board of Directors may classify or reclassify any unissued shares of capital stock of the New Era Value Fund (whether or not such shares have been previously classified or reclassified) from time to time by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of such shares of stock. SECOND: A description of the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the New Era Value Fund is as follows: (1) ASSETS BELONGING TO THE NEW ERA VALUE FUND SERIES. All consideration received by the Corporation from the issue or sale of shares of the New Era Value Fund, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to the New Era Value Fund for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Corporation. Such consideration, assets, income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, together with any General Items allocated to the New Era Value Fund as provided in the following sentence, are herein referred to as "assets belonging to" the New Era Value Fund. If there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular class or series (collectively "General Items"), such General Items shall be allocated by or under the supervision of the Board of Directors to the New Era Value Fund in such manner and on such basis as the Board of Directors, in its sole discretion, deems fair and equitable; and any General Items so allocated to the New Era Value Fund shall belong to that series. Each such allocation by the Board of Directors shall be conclusive and binding for all purposes. 1 (2) LIABILITIES OF THE NEW ERA VALUE FUND SERIES. The assets belonging to the New Era Value Fund shall be charged with the liabilities of the Corporation in respect of that series and all expenses, costs, charges and reserves attributable to that series, and any general liabilities, expenses, costs, charges or reserves of the Corporation which are not readily identifiable as belonging to any particular class or series shall be allocated and charged by or under the supervision of the Board of Directors to the New Era Value Fund in such manner and on such basis as the Board of Directors, in its sole discretion, deems fair and equitable. The liabilities, expenses, costs, charges and reserves allocated and so charged to the New Era Value Fund are herein referred to as "liabilities belonging to" that series. Each allocation of liabilities, expenses, costs, charges and reserves by the Board of Directors shall be conclusive and binding for all purposes. (3) INCOME BELONGING TO THE NEW ERA VALUE FUND SERIES. The Board of Directors shall have full discretion, to the extent not inconsistent with the Maryland General Corporation Law and the Investment Company Act of 1940, as amended (the "1940 Act"), to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding. Income belonging to the New Era Value Fund includes all income, earnings and profits derived from assets belonging to the New Era Value Fund less any expenses, costs, charges or reserves belonging to the New Era Value Fund for the relevant time period, all determined in accordance with generally accepted accounting principles. (4) DIVIDENDS AND DISTRIBUTIONS. Dividends and distributions on shares of the New Era Value Fund may be paid with such frequency, in such form and in such amount as the Board of Directors may from time to time determine. Dividends may be daily or otherwise pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Board of Directors may determine, after providing for actual and accrued liabilities belonging to the New Era Value Fund. All dividends on shares of the New Era Value Fund shall be paid only out of the income belonging to the New Era Value Fund and capital gains distributions on shares of the New Era Value Fund shall be paid only out of the capital gains belonging to the New Era Value Fund. Subject to subsection (12) below, all dividends and distributions on shares of the New Era Value Fund shall be distributed pro rata to the holders of the New Era Value Fund in proportion to the number of shares of the New Era Value Fund held by such holders at the date and time of record established for the payment of such dividends or distributions, except that in connection with any dividend or distribution program or procedure, the Board of Directors may determine that no dividend or distribution shall be payable on shares as to which the Shareholder's purchase order and/or payment have not been received by the time or times established by the Board of Directors under such program or procedure. 2 The New Era Value Fund intends to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, as amended, or any successor or comparable statute thereto, and regulations promulgated thereunder. Inasmuch as the computation of net income and gains for federal income tax purposes may vary from the computation thereof on the books of the New Era Value Fund, the Board of Directors shall have the power, in its sole discretion, to distribute in any fiscal year as dividends, including dividends designated in whole or in part as capital gains distributions, amounts sufficient, in the opinion of the Board of Directors, to enable the New Era Value Fund to qualify as a regulated investment company and to avoid liability of the New Era Value Fund for federal income tax in respect of that year. However, nothing in the foregoing shall limit the authority of the Board of Directors to make distributions greater than or less than the amount necessary to qualify as a regulated investment company and to avoid liability of the New Era Value Fund for such tax. Dividends and distributions may be made in cash, property or additional shares of the New Era Value Fund or another class or series, or a combination thereof, as determined by the Board of Directors or pursuant to any program that the Board of Directors may have in effect at the time for the election by each Shareholder of the mode of the making of such dividend or distribution to that Shareholder. Any such dividend or distribution paid in shares will be paid at the net asset value thereof as defined in subsection (9) below. (5) LIQUIDATION. In the event of the liquidation or dissolution of the Corporation, the shareholders of the New Era Value Fund shall be entitled to receive, as a series and in preference to any other series, when and as declared by the Board of Directors, the excess of the assets belonging to the New Era Value Fund over the liabilities belonging to that series and such shareholders shall not be entitled thereby to any distribution upon liquidation of any other class or series. The assets so distributable to the shareholders of the New Era Value Fund shall be distributed among such shareholders in proportion to the number of shares of that series held by them and recorded on the books of the Corporation. The liquidation of the New Era Value Fund may be authorized by vote of a majority of the Board of Directors then in office, subject to the approval of a majority of the outstanding securities of that series, as defined in the 1940 Act, and without the vote of the holders of any other class or series. The liquidation or dissolution of the New Era Value Fund may be accomplished, in whole or in part, by the transfer of assets of such series to another class or series or by the exchange of shares of such series for the shares of another class or series. 3 (6) VOTING. On each matter submitted to a vote of the shareholders of the Corporation, each holder of a share of the New Era Value Fund shall be entitled to one vote for each share of the New Era Value Fund standing in his name on the books of the Corporation, and all shares of all classes or series shall vote as a single class or series ("Single Class Voting"); provided, however, that (a) as to any matter with respect to which a separate vote of the New Era Value Fund or of any class or classes thereof is required by the 1940 Act or by the Maryland General Corporation Law (including, without limitation, approval of any plan, agreement or other arrangement referred to in subsection (12)(b)(iii) below), such requirement as to a separate vote by the New Era Value Fund or of any class or classes thereof shall apply in lieu of Single Class Voting as described above; (b) in the event that the separate vote requirements referred to in (a) above apply with respect to one or more classes of series, then, subject to (c) below, the shares of all other classes or series shall vote as a single class or series; and (c) as to any matter which does not affect the interest of the New Era Value Fund, or of any class or classes thereof, the holders of shares of the New Era Value Fund, or of any class or classes thereof, as the case may be, shall not be entitled to vote. As to any matter with respect to which a separate vote of the New Era Value Fund is required pursuant to proviso (a) above, notwithstanding any provision of law requiring any action on that matter to be taken or authorized by the holders of a greater proportion than a majority of the New Era Value Fund entitled to vote thereon, such action shall be valid and effective if taken or authorized by the affirmative vote of the holders of a majority of shares of the New Era Value Fund outstanding and entitled to vote thereon. (7) REDEMPTION BY SHAREHOLDER. Each holder of shares of the New Era Value Fund shall have the right at such times as may be permitted by the Corporation, but no less frequently than once each week, to require the Corporation to redeem all or any part of his shares of the New Era Value Fund at a redemption price per share equal to the net asset value per share of the New Era Value Fund next determined (in accordance with subsection (9)) after the Shares are properly tendered for redemption, less such redemption charge (which may, but is not required to be, the same for the shares of each class of the New Era Value Fund) as is determined by the Board of Directors. Payment of the redemption price shall be in cash; provided, however, that if the Board of Directors determines, which determination shall be conclusive, that conditions exist which make payment wholly in cash unwise or undesirable, the Corporation may make payment wholly or partly in securities or other assets belonging to the New Era Value Fund at the value of such securities or assets used in such determination of net asset value. 4 Notwithstanding the foregoing, the Corporation may postpone payment of the redemption price and may suspend the right of the holders of shares of the New Era Value Fund to require the Corporation to redeem shares of that series during any period or at any time when and to the extent permissible under the 1940 Act. (8) REDEMPTION BY CORPORATION. The Board of Directors may cause the Corporation to redeem at net asset value the shares of the New Era Value Fund from a holder who has had shares of that series having an aggregate net asset value (determined in accordance with subsection (9)) of an amount equal to $100 less than the minimum initial investment in or less in his account, provided that at least sixty (60) days' prior written notice of the proposed redemption has been given to such holder by postage paid mail to his last known address. Upon redemption of such shares pursuant to this subsection, the Corporation shall promptly cause payment of the full redemption price to be made to the holder of such shares so redeemed. (9) NET ASSET VALUE PER SHARE. Subject to subsection (12) below, the net asset value per share of the New Era Value Fund shall be the quotient obtained by dividing the value of the net assets of that series (being the value of the assets belonging to that series less the liabilities belonging to that series) by the total number of shares of the New Era Value Fund outstanding, all determined by the Board of Directors in accordance with generally accepted accounting principles and not inconsistent with the 1940 Act. The Board of Directors may determine to maintain the net asset value per share of the New Era Value Fund at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the 1940 Act for the continuing declarations of income attributable to that series as dividends payable in additional shares of the New Era Value Fund at the designated constant dollar amount and for the handling of any losses attributable to that series. Such procedures may provide that in the event of any loss, each shareholder shall be deemed to have contributed to the capital of the Corporation attributable to the New Era Value Fund his pro rata portion of the total number of shares required to be canceled in order to permit the net asset value per share of the New Era Value Fund to be maintained, after reflecting such loss, at the designated constant dollar amount. Each shareholder of the New Era Value Fund shall be deemed to have agreed, by his investment in such series, to make the contribution referred to in the preceding sentence in the event of any such loss. 5 (10) EQUALITY. Subject to subsection (12) below, all shares of the New Era Value Fund shall represent an equal proportionate interest in the assets belonging to the New Era Value Fund (subject to the liabilities belonging to that series), and each share of the New Era Value Fund shall be equal to each other share of that series. The Board of Directors may from time to time divide or combine the shares of the New Era Value Fund, or any class or classes thereof, into a greater or lesser number of shares of the New Era Value Fund or any class or classes thereof, as the case may be, without thereby changing the proportionate beneficial interest in the assets belonging to the New Era Value Fund or in any way affecting the rights of shares of the New Era Value Fund, or any class thereof. (11) CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with the requirements of the 1940 Act, the Board of Directors shall have the authority to provide that holders of shares of the New Era Value Fund shall have the right to convert or exchange said shares into shares of one or more other classes or series of shares in accordance with such requirements and procedures as may be established by the Board of Directors. (12) DESIGNATION OF CLASSES. (a) The New Era Value Fund of Common Stock may have such number of classes of Common Stock as shall be designated by the Board of Directors from time to time. Any class of Common Stock of the New Era Value Fund shall be referred to herein individually as a "Class" and collectively, together with any further class or classes of such Series from time to time established, as the "Classes." Each Class shall consist of, until further changed, such number of shares as shall be designated by the Board of Directors from time to time, provided that the total number of shares of all Classes of the New Era Value Fund shall not exceed the number of shares classified from time to time as capital stock of the New Era Value Fund. All such shares are initially classified as Class A Common Stock of the New Era Value Fund. Designations of shares among the Classes by the Board of Directors shall be effectuated through the filing from time to time of articles supplementary to the Corporation's Charter. (b) All Classes of the New Era Value Fund shall represent the same interest in the Corporation and have identical voting, dividend, liquidation, and other rights with any other shares of Common Stock of that Series; provided, however, that notwithstanding anything in the Charter of the Corporation or these Articles Supplementary to the contrary: 6 (i) The shares of Class A Common Stock shall be sold without front-end sales loads; provided, however, if no other Class is at that time established, that the Board of Directors may in its discretion authorize the sale of Class A Common Stock with fro sales loads, contingent deferred sales charges or such other sales or redemption charge arrangements as are in accordance with the 1940 Act and applicable rules and regulations (if any) of NASD Regulation, Inc. ("NASDR"). (ii) Articles supplementary hereafter adopted by the Board of Directors in connection with the designation of any additional Classes may provide that shares of each additional Class may be subject to such no-load arrangements, front-end sales loads, contingent deferred sales charges or such other sales or redemption charge arrangements as may be established from time to time by the Board of Directors in accordance with the 1940 Act and applicable rules and regulations (if any) of NASDR. (iii) Expenses related solely to a particular Class (including, without limitation, distribution expenses under a 1940 Act Rule 12b-1 plan and administrative expenses under an administration or service agreement, plan or other arrangement, however designated) shall be borne by that Class and shall be appropriately reflected (in the manner determined by the Board of Directors) in the net asset value, dividends, distribution and liquidation rights of the shares of that Class. (iv) Articles supplementary hereafter adopted by the Board of Directors in connection with the designation of any additional Classes may provide that on an anniversary (as designated in such articles supplementary) of the first business day of the month following the month in which shares of a Class were purchased by a stockholder, such shares (as well as a pro rata portion of any shares purchased through the reinvestment of dividends and other distributions paid in respect of all shares of that Class held by such stockholder) may automatically convert to shares of Class A Common Stock or any other Class as may be designated in the articles supplementary; provided, however, that such conversion may be subject to the continuing availability of an opinion of counsel to the effect that the conversion of the shares of that Class does not constitute a taxable event under federal income tax law. The Board of Directors, in its sole discretion, may suspend the conversion of shares of that Class if such opinion is no longer available. (13) Fractional Shares. The Corporation may issue and sell fractions of shares of the New Era Value Fund, or any class or classes thereof, having pro rata all the rights of full shares of the New Era Value Fund, or any class thereof, including, without limitation, the right to vote and to receive dividends, and wherever the words "share" or "shares" are used in the Articles or in the By-Laws, they shall be deemed to include fractions of shares of the New Era Value Fund, or any class or classes thereof, as the case may be, where the context does not clearly indicate that only full shares are intended. 7 (14) Stock Certificates. The Corporation shall not be obligated to issue certificates representing shares of the New Era Value Fund, or any class or classes thereof, unless it shall receive a written request therefor from the record holder thereof in accordance with procedures established in the Bylaws or by the Board of Directors. IN WITNESS WHEREOF, Fremont Mutual Funds, Inc., has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary on September 26, 2000. FREMONT MUTUAL FUNDS, INC. WITNESS: By: - ---------------------------- ------------------------------------ Tina Thomas, Michael H. Kosich, Secretary President 8 THE UNDERSIGNED, President of Fremont Mutual Funds, Inc., who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. - ---------------------------- Michael H. Kosich, President 9 EX-99.B 3 ex-b.txt AMENDED BY-LAWS Exhibit B BY-LAWS OF FREMONT MUTUAL FUNDS, INC. (as amended and restated June 2000) TABLE OF CONTENTS PAGE ---- Article I. SHAREHOLDERS...................................................... 1 Section 1.01 Annual Meetings............................................. 1 Section 1.02 Special Meetings............................................ 1 Section 1.03 Place of Meetings........................................... 1 Section 1.04 Notice of Meetings.......................................... 1 Section 1.05 Quorum...................................................... 2 Section 1.06 Votes Required.............................................. 2 Section 1.07 Proxies..................................................... 3 Section 1.08 List of Shareholders........................................ 3 Section 1.09 Voting...................................................... 3 Section 1.10 Action by Shareholders Other than at a Meeting.............. 3 Article II. BOARD OF DIRECTORS................................................4 Section 2.01 Powers...................................................... 4 Section 2.02 Number of Directors......................................... 4 Section 2.03 Election of Directors....................................... 4 Section 2.04 Regular Meetings............................................ 4 Section 2.05 Special Meetings............................................ 4 Section 2.06 Notice of Meetings.......................................... 5 Section 2.07 Quorum...................................................... 5 Section 2.08 Vacancies................................................... 5 Section 2.09 Compensation and Expenses................................... 6 Section 2.10 Action by Directors Other Than at a Meeting................. 6 Section 2.11 Committees.................................................. 6 Section 2.12 Committee Procedure......................................... 6 Section 2.13 Emergency................................................... 6 Section 2.14 Holding of Meetings by Conference Telephone Call............ 7 Article III. OFFICERS........................................................ 7 Section 3.01 Executive Officers.......................................... 7 Section 3.02 Chairman and Vice Chairman of the Board..................... 7 Section 3.03 President................................................... 8 Section 3.04 Vice Presidents............................................. 8 Section 3.05 Secretary and Assistant Secretaries......................... 8 Section 3.06 Treasurer and Assistant Treasurers.......................... 8 Section 3.07 Subordinate Officers........................................ 9 Section 3.08 Removal..................................................... 9 Section 3.09 Compensation................................................ 9 Section 3.10 Annual Statement of Affairs................................. 9 Article IV. STOCK............................................................ 9 Section 4.01 Certificates................................................ 9 Section 4.02 Transfers................................................... 10 Section 4.03 Stock Ledgers............................................... 10 Section 4.04 Record Dates................................................ 10 Section 4.05 Replacement Certificates.................................... 10 Section 4.06 Certification of Beneficial Owners.......................... 11 Article V. GENERAL PROVISIONS................................................ 11 Section 5.01 Dividends................................................... 11 Section 5.02 Checks...................................................... 11 Section 5.03 Fiscal Year................................................. 11 Section 5.04 Custodian................................................... 11 Section 5.05 Seal........................................................ 12 Section 5.06 Representation of Shares.................................... 12 Section 5.07 Bonds....................................................... 12 Section 5.08 Action by Electronic Communication.......................... 12 Article VI. AMENDMENT OF BY-LAWS............................................. 13 BY-LAWS OF FREMONT MUTUAL FUNDS, INC. ARTICLE I. SHAREHOLDERS SECTION 1.01. ANNUAL MEETINGS. The annual meeting of shareholders shall be held during the month of January, at such date and time as may be designated from time to time by the Board of Directors for the election of Directors and the transaction of any business within the powers of the Corporation, except that the Corporation shall not be required to hold an annual meeting in any year in which none of the following matters is required to be acted upon by shareholders under the Investment Company Act of 1940: election of Directors, approval of the investment advisory and service agreement, ratification of the selection of independent public accountants or approval of the distribution agreement. Any business of the Corporation may be transacted at an annual meeting without being specifically designated in the notice, except such business as is specifically required by statute or by the Articles of Incorporation to be stated in the notice. Failure to hold an annual meeting at the designated time shall not, however, invalidate the corporate existence or affect otherwise valid corporate acts. SECTION 1.02. SPECIAL MEETINGS. At any time in the interval between annual meetings, special meetings of the shareholders may be called by the Chairman of the Board or the President or by a majority of the Board by vote at a meeting or in writing (addressed to the Secretary of the Corporation) with or without a meeting or by 10% of the shareholders by written consent. SECTION 1.03. PLACE OF MEETINGS. Meetings of the shareholders for the election of Directors shall be held at such place either within or without the State of Maryland or elsewhere in the United States as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of shareholders for any other purpose may be held at such time and place, within the State of Maryland or elsewhere in the United States, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. SECTION 1.04. NOTICE OF MEETINGS. Not less than ten days nor more than ninety days before the date of every shareholders' meeting, the Secretary shall give to each shareholder entitled to vote at such meeting, written or electronically communicated notice stating the time and place of the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose or purposes for which the meeting is called, either by mail 1 or by presenting it to the shareholder personally or by leaving it at the shareholder's residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the shareholder at his post office address as it appears on the records of the Corporation, with postage thereon prepaid. Notwithstanding the foregoing provision, a waiver of notice in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting in person or by proxy, shall be deemed equivalent to the giving of such notice to such persons. Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement at the meeting. SECTION 1.05. QUORUM. At any meeting of shareholders the presence in person or by proxy of a majority of all the votes entitled to be cast at the meeting shall constitute a quorum; but this Section shall not affect any requirement under statute or under the Articles for the vote necessary for the adoption of any measure. In the absence of a quorum no business may be transacted; provided, however, that at any meeting of shareholders whether or not a quorum is present, the holders of a majority of the shares of capital stock present in person or by proxy and entitled to vote may adjourn the meeting from time to time, without notice other than announcement at the meeting except as otherwise required by the Articles and these By-Laws, until the holders of the requisite amount of shares of capital stock shall be present to constitute a quorum or to transact the business to be transacted, or for any other lawful purpose, provided that no such adjournment without notice shall continue for more than 120 days after the original record date. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. The absence from any meeting, in person or by proxy, of holders of the number of shares of capital stock of the Corporation in excess of a majority thereof which may be required by the General Laws of the State of Maryland, the Investment Company Act of 1940, these By-laws, or the Articles of Incorporation, for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if there shall be present at the meeting, in person or by proxy, holders of the number of shares of capital stock of the Corporation required for action in respect of such other matter or matters. SECTION 1.06. VOTES REQUIRED. A majority of the votes cast at a meeting of shareholders, duly called and at which a quorum is present, shall be sufficient to take or authorize action upon any matter which may properly come before the meeting. Each outstanding share of stock shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders and fractional shares shall be entitled to corresponding fractions of one vote on such matters, except that a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director. 2 SECTION 1.07. PROXIES. A shareholder may note the shares owned of record by him either in person or by proxy executed in writing by the shareholder or by the shareholder's duly authorized attorney-in-fact. No proxy shall be valid after eleven months from its date, unless otherwise provided in the proxy. Every proxy shall be in writing, subscribed by the shareholder or the shareholder's duly authorized attorney, and dated, but need not be sealed, witnessed or acknowledged. SECTION 1.08. LIST OF SHAREHOLDERS. At each meeting of shareholders, a full, true and complete list in alphabetical order of all shareholders entitled to vote at such meeting, certifying the number and class or series of shares held by each, shall be made available by the Secretary. SECTION 1.09. VOTING. In all elections for Directors every shareholder shall have the right to vote, in person or by proxy, the shares owned of record by the shareholder for as many persons as there are Directors to be elected and for whose election the shareholder has a right to vote. At all meetings of shareholders, unless the voting is conducted by inspectors, the proxies and ballots shall be received, and all questions regarding the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by, the chairman of the meeting. If demanded by shareholders, present in person or by proxy, entitled to cast 10% in number of votes, or if ordered by the chairman, the vote upon any election or question shall be taken by ballot. Upon like demand or order, the voting shall be conducted by two inspectors in which event the proxies and ballots shall be received, and all questions regarding the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by such inspectors. Unless so demanded or ordered, no vote need be by ballot, and voting need not be conducted by inspectors. Inspectors may be elected by the shareholders at their annual meeting, to serve until the close of the next annual meeting and their election may be held at the same time as the election of Directors. In case of a failure to elect inspectors, or in case an inspector shall fail to attend, or refuse or be unable to serve, the shareholders at any meeting may choose an inspector or inspectors to act at such meeting, and in default of such election the chairman of the meeting may appoint an inspector or inspectors. SECTION 1.10 . ACTION BY SHAREHOLDERS OTHER THAN AT A MEETING. Any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing or by electronic communication, setting forth such action, is signed (or effectively signed in the case of electronic communications) by all the shareholders entitled to notice of the meeting. Consenting shareholders shall be deemed to have waived any rights which they may have to dissent from such action. Such consent and waiver shall be filed with the records of the Corporation. 3 ARTICLE II. BOARD OF DIRECTORS SECTION 2.01. POWERS. The Board may exercise all the powers of the Corporation, except such as are conferred upon or reserved to the shareholders by the Articles of Incorporation, these By-Laws, the Investment Company Act of 1940 or the Maryland General Corporation Law. The Board shall keep full and fair accounts of its transactions. SECTION 2.02. NUMBER OF DIRECTORS. The Corporation shall have at least six directors; provided that, if there is no stock outstanding, the number of Directors may be less than three but not less than one, and, if there is stock outstanding and so long as there are less than three stockholders, the number of Directors may be less than three but not less than the number of stockholders. The Corporation shall have the number of Directors provided in the Articles of Incorporation until changed as herein provided. A majority of the entire board of directors may alter the number of Directors set by the Articles of Incorporation to not exceeding fifteen nor less than the minimum number then permitted herein, but the action may not affect the tenure of office of any Director. SECTION 2.03. ELECTION OF DIRECTORS. Until the first annual meeting of shareholders and until successors or additional Directors are duly elected and qualify, the Board shall consist of the persons named as such in the Articles of Incorporation. When and as required at each annual meeting that may be held by the Corporation beginning with the first annual meeting, the shareholders shall elect Directors to hold office until the next annual meeting and until their successors are elected and quality. At any meeting of shareholders, duly called and at which a quorum is present, the shareholders may, by the affirmative vote of the holders of a majority of the votes entitled to be cast thereon, remove any Director or Directors from office and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of removed Directors. SECTION 2.04. REGULAR MEETINGS. After each meeting of shareholders at which a Board of Directors shall have been elected, the Board so elected shall meet for the purpose of organization and the transaction of other business. No notice of such first meeting shall be necessary if held immediately after the adjournment, and at the site, of such meeting of shareholders. Other regular meetings of the Board shall be held without notice on such dates and at such places within or without the State of Maryland as may be designated from time to time by the Board. SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board may be called at any time by the Chairman of the Board, the President or the Secretary of the Corporation, or by a majority of the Board by vote at a meeting, or in writing with or without a meeting. Such special meetings shall be held at such place or places within or without the State of Maryland as may be designated from time to time by the Board. In the absence of such designation such meetings shall be held at such places as may be designated in the calls. 4 SECTION 2.06. NOTICE OF MEETINGS. Except as provided in Section 2.04, notice of the place, day and hour of all meetings shall be given to each Director two days (or more) before the meeting, by delivering the same personally, or be sending the same by telegraph or electronic communication, or by leaving the same at the Director's residence or usual place of business, or, in the alternative, by mailing such notice three days (or more) before the meeting, postage prepaid, and addressed to the Director at the Director's last known business or residence post office address, according to the records of the Corporation. Unless required by these By-Laws or by resolution of the Board, no notice of any meeting of the Board need state the business to be transacted thereat. No notice of any meeting of the board need be given to any Director who attends, or to any Director who in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. Any meeting of the Board, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meting other than by announcement at the adjourned meeting. SECTION 2.07. QUORUM. At all meetings of the Board, a majority of the entire Board (but in no event fewer than two Directors) shall constitute a quorum for the transaction of business. Except in cases in which it is by statute, by the Articles of Incorporation or by these By-Laws otherwise provided, the act of a majority of such quorum at a duly constituted meeting shall be sufficient to elect and pass any measure. In the absence of a quorum, the Directors present by majority vote and without notice other than by announcement at the meeting may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 2.08. VACANCIES. Any vacancy occurring in the Board of Directors for any cause other than by reason of an increase in the number of Directors may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum. Any vacancy occurring by reason of an increase in the number of Directors may be filled by action of a majority of the entire Board of Directors. If at any time after the first annual meeting of shareholders of the Corporation a majority of the Directors in office shall consist of Directors elected by the Board of Directors, a meeting of the shareholders shall be called forthwith for the purpose of electing the entire Board of Directors, and the terms of office of the Directors then in office shall terminate upon the election and qualification of such Board of Directors. A Director elected by the Board of Directors or the shareholders to fill a vacancy shall be elected to hold office until the next annual meeting of shareholders and until his successor is elected and qualifies. 5 SECTION 2.09. COMPENSATION AND EXPENSES. Directors may, pursuant to resolution of the Board, be paid fees for their services, which fees may consist of an annual fee or retainer and/or a fixed fee for attendance at meetings. In addition, Directors may in the same manner be reimbursed for expenses incurred in connection with their attendance at meetings or otherwise in performing their duties as Directors. Members of committees may be allowed like compensation and reimbursement. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 2.10. ACTION BY DIRECTORS OTHER THAN AT A MEETING. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting, if a written consent to such action is signed by all members of the Board or of such committee (electronic signatures are permissible), as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee. SECTION 2.11. COMMITTEES. The Board of Directors may appoint from among its members an Executive Committee, Audit Committee or other committees composed of two or more directors and delegate to these committees any of the powers of the Board of Directors to the extent permitted by the General Laws of the State of Maryland. If the Board of Directors has given general authorization for the issuance of stock, a committee of the Board, in accordance with a general formula or method specified by the Board by resolution, may fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. SECTION 2.12. COMMITTEE PROCEDURE. Each committee may fix rules of procedure for its business. A majority of the members of a committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum is present shall be the act of the committee. The members of a committee present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member. Any action required or permitted to be taken at a meeting of a committee may be taken without a meeting, if an unanimous written consent which sets forth the action is signed by each member of the committee and filed with the minutes of the committee. The members of a committee may conduct any meeting thereof by conference telephone in accordance with the provisions of Section 2.14. SECTION 2.13. EMERGENCY. In the event of a state of disaster of sufficient severity to prevent the conduct and management of these affairs and business of the Corporation by its directors and officers as contemplated by the Articles of Incorporation and these By-Laws, any two or more available members of the then incumbent Executive Committee shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Corporation. In the event of the unavailability, at such time, of a minimum of two members of the then incumbent Executive Committee, the available directors shall elect an Executive Committee consisting of any two members of the Board of Directors, whether or not they be officers of the Corporation, which two members shall constitute the Executive Committee for the full conduct and management of the 6 affairs of the Corporation in accordance with the foregoing provisions of this Section. This Section shall be subject to implementation by resolution of the Board of Directors passed from time to time for that purpose, and any provisions of the By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary resolutions shall be suspended until it shall be determined by an interim Executive Committee acting under this Section that it shall be to the advantage of the Corporation to resume the conduct and management of its affairs and business under all the other provisions of the By-Laws. SECTION 2.14. HOLDING OF MEETINGS BY CONFERENCE TELEPHONE CALL. At any regular or special meeting of the Board or any committee thereof, members thereof may participate in such meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at such meeting. ARTICLE III. OFFICERS SECTION 3.01. EXECUTIVE OFFICERS. The Board of Directors may choose a Chairman of the Board and a Vice Chairman of the Board from among the Directors, and shall choose a President, a Secretary and a Treasurer who need not be Directors. The Board of Directors shall designate as principal executive officer of the Corporation either the Chairman of the Board, or the Vice Chairman of the Board. The Board of Directors may choose an Executive Vice President, one or more Senior Vice Presidents, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, none of whom need be a Director. Any two or more of the above-mentioned offices, except those of President and a Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument be required by law, by the Articles of Incorporation, by these By-Laws or by resolution of the Board of Directors to be executed by any two or more officers. Each such officer shall hold office until his successor shall have resigned or shall have been removed. Any vacancy in any of the above offices may be filled for the unexpired portion of the term of the Board of Directors at any regular or special meeting. SECTION 3.02. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and of the shareholders at which he is present. He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors. The Vice Chairman of the Board, if one be elected, shall, when present and in the absence of the Chairman of the Board, preside at all meetings of the shareholders and Directors, and he shall perform such other duties as may from time to time be assigned to him by the Board of Directors or as may be required by law. 7 SECTION 3.03. PRESIDENT. In the absence of the Chairman or Vice Chairman of the Board, the President shall preside at all meetings of the shareholders and of the Board at which the President is present; and in general, shall perform all duties incident to the office of a president of a Maryland Corporation, and such other duties, as from time to time, may be assigned to him by the Board. SECTION 3.04. VICE PRESIDENTS. The Vice President or Vice Presidents, including any Executive or Senior Vice President(s), at the request of the President or in the President's absence or during the President's inability or refusal to act, shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President. If there be more than one Vice President, the Board may determine which one or more of the Vice Presidents shall perform any of such duties or exercise any of such functions, or if such determination is not made by the Board, the President may make such determination. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board, the Chairman of the Board, or the President. SECTION 3.05. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall keep the minutes of the meetings of the shareholders, of the Board and of any committees, in books provided for the purpose; shall see that all notices are fully given in accordance with the provisions of these By-Laws or as required by law; be custodian of the records of the Corporation; see that the corporate seal is affixed to all documents the execution of which, on behalf of the Corporation, under its seal, is duly authorized, and when so affixed may attest the same; and in general perform all duties incident to the office of a secretary of a Maryland Corporation, and such other duties as, from time to time may be assigned to him by the Board, the Chairman of the Board, or the President. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board, the President or the Chairman of the Board, shall, in the absence of the Secretary or in the event of the Secretary's inability or refusal to act, perform the duties and exercise the power of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe. SECTION 3.06. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board in accordance with Section 5.04 of these By-Laws; render to the President, the Chairman of the Board and to the Board, whenever requested, an 8 account of the financial condition of the Corporation; and in general, perform all the duties incident to the office of a treasurer of a corporation, such other duties as may be assigned to him by the Board, the President or the Chairman of the Board. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board, the President or the Chairman of the Board shall, in the absence of the Treasurer or in the event of the Treasurer's inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform other duties and have such other powers as the Board may from time to time prescribe. SECTION 3.07. SUBORDINATE OFFICERS. The Board may from time to time appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period and perform such duties as the Board, the President or the Chairman of the Board may prescribe. The Board may, from time to time, authorize any committee or officer to appoint and remove subordinate officers and prescribe the duties thereof. SECTION 3.08. REMOVAL. Any officer or agent of the Corporation may be removed by the Board whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. SECTION 3.09. COMPENSATION. The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. It may authorize any committee or officer, upon whom the power of appointing assistant and subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such assistant and subordinate officers. SECTION 3.10. ANNUAL STATEMENT OF AFFAIRS. The President shall prepare annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of the operations for the preceding fiscal year. The statement of affairs shall be submitted at the annual meeting of stockholders, if any, within twenty days after the meeting (or, in the absence of an annual meeting within twenty days after the end of the second month following the close of the fiscal year), placed on file at the Corporation's principal office. ARTICLE IV. STOCK SECTION 4.01. CERTIFICATES. Each shareholder shall be entitled to a certificate or certificates which shall represent and certify the number of shares of stock owned by him in the Corporation. Such certificate shall be signed by the President, the Chairman of the Board or a Vice President and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation. The signatures may be either manual or facsimile signatures and the seal may be either facsimile or any other form of seal. No certificates shall be issued for 9 fractional shares. Such certificates shall be in such form, not inconsistent with law or with the Articles of Incorporation, as shall be approved by the Board. In case any officer of the Corporation who has signed any certificate ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before such certificate is issued, the certificate may nevertheless by issued and delivered by the Corporation as if the officer had not ceased to be such officer as of the date of its issue. Certificates need not be issued except to shareholders who request such issuance in writing. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. SECTION 4.02. TRANSFERS. The Board of Directors shall have power and authority to make such rules and regulations as it may deem necessary or expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar, if any, may be combined. SECTION 4.03. STOCK LEDGERS. A stock ledger, containing the names and addresses of the shareholders of the Corporation and the number of shares of each class or series held by them, respectively, shall be kept by the Transfer Agent of the Corporation. The stock ledger may be in written from or in any other form which can be converted within a reasonable time into written form for visual inspection. SECTION 4.04. RECORD DATES. The Board is hereby empowered to fix, in advance, a date as the record date for the purpose of determining shareholders entitled to notice of, or to vote at, any meeting of shareholders, or shareholders entitled to receive payment of any dividend, capital gains distribution or the allotment of any rights, or in order to make a determination of shareholders for any other proper purpose. Such date in any case shall be not more than ninety (90) days, and in case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action, requiring such determining of shareholders, is to be taken; the transfer books may not be closed for a period longer than twenty (20) days. SECTION 4.05. REPLACEMENT CERTIFICATES. The Board of Directors may direct a new stock certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon such conditions as the Board shall determine. When authorizing such issue of a new certificate or certificates, the Board of Directors may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the Certificate alleged to have been lost, stolen or destroyed. 10 SECTION 4.06. CERTIFICATION OF BENEFICIAL OWNERS. The Board of Directors may adopt by resolution a procedure by which a shareholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the shareholder are held for the account of a specified person other than the shareholder. The resolution shall set forth the class of shareholders who may certify; the purpose for which the certification may be made; the form of certification and the information to be contained in it; if the certification is with respect to a record date or a closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board considers necessary or desirable. On receipt of a certification which complies with the procedure adopted by the Board in accordance with this Section, the person specified in the certification is, for the purpose set forth in the certification, the holder of record of the specified stock in place of the shareholder who makes the certification. ARTICLE V. GENERAL PROVISIONS SECTION 5.01. DIVIDENDS. Dividends or distribution upon the capital stock of the Corporation, subject to provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends or distributions may be paid only in cash or in shares of the capital stock, subject to the provisions of the Articles of Incorporation. Before payment of any dividend or distribution there may be set aside out of any funds of the Corporation available for dividends or distributions such or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends or distributions or for maintaining any property of the Corporation, or for such other purpose as the Directors shall think conductive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created. SECTION 5.02. CHECKS. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board may from time to time designate. SECTION 5.03. FISCAL YEAR. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. SECTION 5.04. CUSTODIAN. All securities and cash of the Corporation shall be placed in the custody of a bank or trust Company ("Custodian") having (according to its last published report) not less than $2,000,000 aggregate capital, surplus and undivided profits, provided such a Custodian can be found ready and willing to act (or maintained in such other manner as is consistent with Section 17(f) of the Investment Company Act of 1940 and the rules and regulations promulgated thereunder). The Corporation shall enter into a written contract with the Custodian regarding the powers, duties and compensation of the Custodian with respect to the cash and securities of the Corporation held by the Board of Directors of the Corporation. The Corporation shall upon the 11 resignation or inability to serve of the Custodian use its best efforts to obtain a successor custodian; require that the cash and securities owned by the Corporation be delivered directly to the successor custodian; and in the event that no successor custodian can be found, submit to the shareholders, before permitting delivery of the cash and securities owned by the Corporation to other than a successor custodian, the question whether or not the Corporation shall be liquidated or shall function without a custodian. SECTION 5.05. SEAL. The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the custody of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirements of any law, rule, or regulation relating to a corporate seal to place the word "Seal" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation. SECTION 5.06. REPRESENTATION OF SHARES. Any officer of the Corporation is authorized to vote, represent and exercise for the Corporation any and all rights incident to any shares of any corporation or other business enterprise owned by the Corporation. SECTION 5.07. BONDS. The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. The Board of Directors shall, in any event, require the Corporation to provide and maintain a bond issued by a reputable fidelity insurance company, against larceny and embezzlement, covering each officer and employee of the Corporation who may singly, or jointly with others, have access to securities or funds of the Corporation, either directly or through authority to draw upon such funds, or to direct generally the disposition of such securities, such bond or bonds to be in such reasonable amount as a majority of the Board of Directors who are not such officers or employees of the Corporation shall determine with due consideration to the value of the aggregate assets of the Corporation to which any such officer or employee may have access, or in any amount or upon such terms as the Securities and Exchange Commission may prescribe by order, rule or regulations. SECTION 5.08. ACTION BY ELECTRONIC COMMUNICATION. Any action, vote, consent or notice which is permitted or required to be given in writing may be given by means of electronic communication, and such electronic communication shall be deemed a "writing" and presumptively valid if reasonable measures are employed to ascertain receipt and validity. 12 ARTICLE VI. AMENDMENT OF BY-LAWS These By-Laws of the Corporation may be altered, amended, added to or repealed by majority vote of the shareholders or by majority vote of the entire Board. 13 WARNING: This section retains the original formatting, including headers and footers, of the main document. If you delete the section break above this message, any special formatting, including headers and footers for the Table of Contents/Authorities section will be lost. If you delete the section break above the Table of Contents/Authorities, you will overwrite the headers and footers of the main document with Table of Contents/Authorities headers and footers. To delete the Table of Contents/Authorities, begin your selection at the section break above the TOC/TOA section and continue through the end of this message. EX-99.D.20 4 exd_20.txt EXPENSE LIMITATION AGREEMENT Exhibit D(20) FREMONT MUTUAL FUNDS, INC. OPERATING EXPENSES LIMITATION AGREEMENT THIS OPERATING EXPENSES LIMITATION AGREEMENT (the "Agreement") is effective __________________, 2000 by and between FREMONT MUTUAL FUNDS, INC., a Maryland Corporation (the "Corporation"), on behalf of each series of the Corporation and listed in Appendix A, as may be amended from time to time (each a "Fund" and collectively the "Funds") and FREMONT INVESTMENT ADVISORS, INC., a Delaware Corporation, the investment advisor of the Funds (the "Advisor"). WITNESSETH: WHEREAS, the Advisor renders advice and services to the Funds pursuant to the terms and provisions of an Investment Management Agreement between the Corporation and the Advisor dated November 15, 1998 (the "Investment Management Agreement"); and WHEREAS, the Funds are responsible for, and has assumed the obligation for, payment of certain expenses pursuant to the Investment Management Agreement that have not been assumed by the Advisor; and WHEREAS, the Advisor desires to limit the Funds' Operating Expenses (as that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and provisions of this Agreement, and the Corporation (on behalf of the Funds) desires to allow the Advisor to implement those limits; NOW THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties, intending to be legally bound hereby, mutually agree as follows: 1. LIMIT ON OPERATING EXPENSES. The Advisor hereby agrees to limit the Fund's current Operating Expenses to an annual rate, expressed as a percentage of the Fund's average annual net assets, to the amounts listed in Appendix A (the "Annual Limits"). In the event that the current Operating Expenses of the Funds, as accrued each month, exceed its Annual Limit, the Advisor will pay to the Fund, on a monthly basis, the excess expense within 30 days of being notified that an excess expense payment is due. 2. DEFINITION. For purposes of this Agreement, the term "Operating Expenses" with respect to a Fund is defined to include all expenses necessary or appropriate for the operation of the Fund, including the Advisor's investment advisory or management fee detailed in the Investment Management Agreement, any Rule 12b-1 fees and other expenses described in the Investment Management Agreement, but does not include any front-end or contingent deferred loads, taxes, leverage interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, or extraordinary expenses such as litigation. 3. REIMBURSEMENT OF FEES AND EXPENSES. The Advisor retains its right to receive reimbursement of any excess expense payments paid by it pursuant to this Agreement under the same terms and conditions as it is permitted to receive reimbursement of reductions of its investment management fee under the Investment Management Agreement. 4. TERM. This Agreement shall become effective on the date specified herein and shall remain in effect indefinitely unless sooner terminated as provided in Paragraph 5 of this Agreement. 5. TERMINATION. This Agreement may be terminated at any time, and without payment of any penalty, by the Board of Directors of the Corporation, on behalf of the Funds, upon sixty (60) days' written notice to the Advisor. This Agreement may not be terminated by the Advisor without the consent of the Board of Directors of the Corporation. This Agreement will automatically terminate, with respect to the Funds, if the Investment Management Agreement for the Funds is terminated, with such termination effective upon the effective date of the Investment Advisory Agreement's termination for the Funds. 6. ASSIGNMENT. This Agreement and all rights and obligations hereunder may not be assigned without the written consent of the other party. 7. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby. 8. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act of 1940, as amended and the Investment Advisers Act of 1940, as amended and any rules and regulations promulgated thereunder. 9. NOTICE OF DECLARATION OF TRUST. The Advisor agrees that the Corporation's obligations under this Agreement shall be limited to the Funds and to its assets, and that the Advisor shall not seek satisfaction of any such obligation from the shareholders of the Funds nor from any trustee, officer, employee or agent of the Corporation or the Funds. 2 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested by their duly authorized officers, all on the day and year first above written. FREMONT MUTUAL FUNDS, INC. FREMONT INVESTMENT ADVISORS, INC. By: By: ------------------------------- ------------------------------------ Title: Title: ---------------------------- --------------------------------- 3 APPENDIX A Fund Operating Expense Limit - ---- ----------------------- Global Fund N/A International Growth Fund 1.50% Emerging Markets Fund 1.50% U.S. Micro-Cap Fund 1.98% U.S. Small Cap Fund 1.50% Growth Fund N/A Real Estate Securities Fund 1.50% Bond Fund Waive .05% of .15% Admin Fee Money Market Fund N/A California Intermediate Tax-Free Fund 0.49% Institutional U.S. Micro-Cap Fund 1.25% New Era Value Fund 1.20% 4 EX-99.H.7 5 exh_7.txt TRANSFER AGENT AGREEMENT Exhibit H(7) TRANSFER AGENCY AND SERVICE AGREEMENT between FREMONT MUTUAL FUNDS, INC. and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS Page ---- 1. Terms of Appointment and Duties...........................................1 2. Third Party Administrators for Defined Contribution Plans.................4 3. Fees and Expenses.........................................................5 4. Representations and Warranties of the Transfer Agent......................5 5. Representations and Warranties of the Fund................................5 6. Wire Transfer Operating Guidelines........................................6 7. Data Access and Proprietary Information...................................7 8. Indemnification...........................................................9 9. Standard of Care.........................................................10 10. Year 2000................................................................10 11. Confidentiality..........................................................11 12. Covenants of the Fund and the Transfer Agent.............................11 13. Termination of Agreement.................................................12 14. Assignment and Third Party Beneficiaries.................................12 15. Subcontractors...........................................................13 16. Miscellaneous............................................................13 17. Additional Funds.........................................................13 TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the thirty-first day of July, 1998, by and between FREMONT MUTUAL FUNDS, INC., a Maryland corporation, having its principal office and place of business at 333 Market Street, Suite 2600, San Francisco, California 94105 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Transfer Agent"). WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in 13 series, such series shall be named in the attached Schedule A which may be amended by the parties from time to time (each such series, together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Article 13, being herein referred to as a "Portfolio", and collectively as the "Portfolios"); WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer Agent as its transfer agent, dividend disbursing agent, custodian of certain retirement plans and agent in connection with certain other activities, and the Transfer Agent desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: l. TERMS OF APPOINTMENT AND DUTIES 1.1 TRANSFER AGENCY SERVICES. Subject to the terms and conditions set forth in this Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as its transfer agent for the Fund's authorized and issued shares of its common stock, $0.0001 par value, ("Shares"), dividend disbursing agent, custodian of certain retirement plans and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of each of the respective Portfolios of the Fund ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund on behalf of the applicable Portfolio, including without limitation any periodic investment plan or periodic withdrawal program. The Transfer Agent agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund on behalf of each of the Portfolios, as applicable and the Transfer Agent, the Transfer Agent shall: (i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Articles of Incorporation of the Fund (the "Custodian"); (ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account; (iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian; (iv) In respect to the transactions in items (i), (ii) and (iii) above, the Transfer Agent shall execute transactions directly with broker-dealers authorized by the Fund; (v) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; (vi) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vii) Prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the applicable Portfolio; (viii) Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Transfer Agent of indemnification satisfactory to the Transfer Agent and protecting the Transfer Agent and the Fund, and the Transfer Agent at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; (ix) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing and (x) Record the issuance of Shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of Shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Transfer Agent shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Fund. 2 1.2 ADDITIONAL SERVICES. In addition to, and neither in lieu nor in contravention of, the services set forth in the above paragraph, the Transfer Agent shall perform the following services: (a) OTHER CUSTOMARY SERVICES. Perform the customary services of a transfer agent, dividend disbursing agent, custodian of certain retirement plans and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing Shareholder proxies, Shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information. (b) CONTROL BOOK (ALSO KNOWN AS "SUPER SHEET"). Maintain a daily record and produce a daily report for each Fund of all transactions and receipts and disbursements of money and securities and deliver a copy of such report for each Fund for each business day to the Fund no later than 9:00 AM, or such earlier time as the Fund may reasonably require, on the next business day; (c) "BLUE SKY" REPORTING. The Fund shall (i) identify to the Transfer Agent in writing those transactions and assets to be treated as exempt from blue sky reporting for each State and (ii) verify the establishment of transactions for each State on the system prior to activation and thereafter monitor the daily activity for each State. The responsibility of the Transfer Agent for the Fund's blue sky State registration status is solely limited to the initial establishment of transactions subject to blue sky compliance by the Fund and providing a system which will enable the Fund to monitor the total number of Shares sold in each State; (d) NATIONAL SECURITIES CLEARING CORPORATION (THE "NSCC"). (i) accept and effectuate the registration and maintenance of accounts through Networking and the purchase, redemption, transfer and exchange of shares in such accounts through Fund/SERV (networking and Fund/SERV being programs operated by the NSCC on behalf of NSCC's participants, including the Fund), in accordance with, instructions transmitted to and received by the Transfer Agent by transmission from NSCC on behalf of broker-dealers and banks which have been established by, or in accordance with the instructions of authorized persons, as hereinafter defined on the dealer file maintained by the Transfer Agent; (ii) issue instructions to Fund's banks for the settlement of transactions between the Fund and NSCC (acting on behalf of its broker-dealer and bank participants); (iii) provide account and transaction information from affected Fund's records on DST Systems, Inc. computer system TA2000 ("TA2000 System") in accordance with NSCC's Networking and Fund/SERV rules for those broker-dealers; (iii) maintain Shareholder accounts on TA2000 System through Networking. 3 (e) NEW PROCEDURES. New procedures as to who shall provide certain of these services in Section 1 may be established in writing from time to time by agreement between the Fund and the Transfer Agent. The Transfer Agent may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf. 2. THIRD PARTY ADMINISTRATORS FOR DEFINED CONTRIBUTION PLANS 2.1 The Fund may decide to make available to certain of its customers, a qualified plan program (the "Program") pursuant to which the customers ("Employers") may adopt certain plans of deferred compensation ("Plan or Plans") for the benefit of the individual Plan participant (the "Plan Participant"), such Plan(s) being qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code") and administered by third party administrators which may be plan administrators as defined in the Employee Retirement Income Security Act of 1974, as amended)(the "TPA(s)"). 2.2 In accordance with the procedures established in the initial Schedule 2.1 entitled "Third Party Administrator Procedures", as may be amended by the Transfer Agent and the Fund from time to time ("Schedule 2.1"), the Transfer Agent shall: (a) Treat Shareholder accounts established by the Plans in the name of the Trustees, Plans or TPAs as the case may be as omnibus accounts; (b) Maintain omnibus accounts on its records in the name of the TPA or its designee as the Trustee for the benefit of the Plan; and (c) Perform all services under Section 1 as transfer agent of the Funds and not as a record-keeper for the Plans. 2.3 Transactions identified under Section 2 of this Agreement shall be deemed exception services ("Exception Services") when such transactions: (a) Require the Transfer Agent to use methods and procedures other than those usually employed by the Transfer Agent to perform services under Section 1 of this Agreement; (b) Involve the provision of information to the Transfer Agent after the commencement of the nightly processing cycle of the TA2000 System; or (c) Require more manual intervention by the Transfer Agent, either in the entry of data or in the modification or amendment of reports generated by the TA2000 System than is usually required by non-retirement plan and pre-nightly transactions. 4 3. FEES AND EXPENSES 3.1 FEE SCHEDULE. For the performance by the Transfer Agent pursuant to this Agreement, the Fund agrees to pay the Transfer Agent an annual maintenance fee for each Shareholder account as set forth in the attached fee schedule ("Schedule 3.1"). Such fees and out-of-pocket expenses and advances identified under Section 3.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Transfer Agent. 3.2 OUT-OF-POCKET EXPENSES. In addition to the fee paid under Section 3.1 above, the Fund agrees to reimburse the Transfer Agent for out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, mailing and tabulating proxies, records storage, or advances incurred by the Transfer Agent for the items set out in Schedule 3.1 attached hereto. In addition, any other expenses incurred by the Transfer Agent at the request or with the consent of the Fund, will be reimbursed by the Fund. 3.3 INVOICES. The Fund agrees to pay all fees and reimbursable expenses within thirty (30) days following the receipt of the respective billing notice, except for any fees or expenses which are subject to good faith dispute. In the event of such a dispute, the Fund may only withhold that portion of the fee or expense subject to the good faith dispute. The Fund shall notify the Transfer Agent in writing within twenty-one (21) calendar days following the receipt of each billing notice if the Fund is disputing any amounts in good faith. If the Fund does not provide such notice of dispute within the required time, the billing notice will be deemed accepted by the Fund. 4. REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT The Transfer Agent represents and warrants to the Fund that: 4.1 It is a trust company duly organized and existing and in good standing under the laws of The Commonwealth of Massachusetts. 4.2 It is duly qualified to carry on its business in The Commonwealth of Massachusetts. 4.3 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 4.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 4.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 5 5. REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to the Transfer Agent that: 5.1 It is a corporation duly organized and existing and in good standing under the laws of the State of Maryland. 5.2 It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement. 5.3 All corporate proceedings required by said Articles of Incorporation and By-Laws have been taken to authorize it to enter into and perform this Agreement. 5.4 It is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act") and, for those series that are described in the registration statement as diversified, such series are diversified in accordance with the Investment Company Act. 5.5 A registration statement under the Securities Act of 1933, as amended is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale. 6. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM COMMERCIAL CODE 6.1 The Transfer Agent is authorized to promptly debit the appropriate Fund account(s) upon the receipt of a payment order in compliance with the selected security procedure (the "Security Procedure") chosen for funds transfer and in the amount of money that the Transfer Agent has been instructed to transfer. The Transfer Agent shall execute payment orders in compliance with the Security Procedure and with the Fund instructions on the execution date provided that such payment order is received by the customary deadline for processing such a request, unless the payment order specifies a later time. All payment orders and communications received after this the customary deadline will be deemed to have been received the next business day. 6.2 The Fund acknowledges that the Security Procedure it has designated on the Fund Selection Form was selected by the Fund from security procedures offered by the Transfer Agent. The Fund shall restrict access to confidential information relating to the Security Procedure to authorized persons as communicated to the Transfer Agent in writing. The Fund must notify the Transfer Agent immediately if it has reason to believe unauthorized persons may have obtained access to such information or of any change in the Fund's authorized personnel. The Transfer Agent shall verify the authenticity of all Fund instructions according to the Security Procedure. 6.3 The Transfer Agent shall process all payment orders on the basis of the account number contained in the payment order. In the event of a discrepancy between any name indicated on the payment order and the account number, the account number shall take precedence and govern. 6 6.4 The Transfer Agent reserves the right to decline to process or delay the processing of a payment order which (a) is in excess of the collected balance in the account to be charged at the time of the Transfer Agent's receipt of such payment order; (b) if initiating such payment order would cause the Transfer Agent, in the Transfer Agent's sole judgement, to exceed any volume, aggregate dollar, network, time, credit or similar limits which are applicable to the Transfer Agent; or (c) if the Transfer Agent, in good faith, is unable to satisfy itself that the transaction has been properly authorized. 6.5 The Transfer Agent shall use reasonable efforts to act on all authorized requests to cancel or amend payment orders received in compliance with the Security Procedure provided that such requests are received in a timely manner affording the Transfer Agent reasonable opportunity to act. However, the Transfer Agent assumes no liability if the request for amendment or cancellation cannot be satisfied. 6.6 The Transfer Agent shall assume no responsibility for failure to detect any erroneous payment order provided that the Transfer Agent complies with the payment order instructions as received and the Transfer Agent complies with the Security Procedure. The Security Procedure is established for the purpose of authenticating payment orders only and not for the detection of errors in payment orders. 6.7 The Transfer Agent shall assume no responsibility for lost interest with respect to the refundable amount of any unauthorized payment order, unless the Transfer Agent is notified of the unauthorized payment order within thirty (30) days of notification by the Transfer Agent of the acceptance of such payment order. In no event (including failure to execute a payment order) shall the Transfer Agent be liable for special, indirect or consequential damages, even if advised of the possibility of such damages. 6.8 When the Fund initiates or receives Automated Clearing House credit and debit entries pursuant to these guidelines and the rules of the National Automated Clearing House Association and the New England Clearing House Association, the Transfer Agent will act as an Originating Depository Financial Institution and/or receiving depository Financial Institution, as the case may be, with respect to such entries. Credits given by the Transfer Agent with respect to an ACH credit entry are provisional until the Transfer Agent receives final settlement for such entry from the Federal Reserve Bank. If the Transfer Agent does not receive such final settlement, the Fund agrees that the Transfer Agent shall receive a refund of the amount credited to the Fund in connection with such entry, and the party making payment to the Fund via such entry shall not be deemed to have paid the amount of the entry. 6.9 Confirmation of Transfer Agent's execution of payment orders shall ordinarily be provided within twenty four (24) hours notice of which may be delivered through the Transfer Agent's proprietary information systems, or by facsimile or call-back. Fund must report any objections to the execution of an order within thirty (30) days. 7. DATA ACCESS AND PROPRIETARY INFORMATION 7.1 The Fund acknowledges that the data bases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Transfer Agent as part of the Fund's ability to access certain Fund-related data 7 ("Customer Data") maintained by the Transfer Agent on data bases under the control and ownership of the Transfer Agent or other third party ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Transfer Agent or other third party. In no event shall Proprietary Information be deemed Customer Data. The Fund agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents to: (a) Use such programs and databases (i) solely on the Fund's computers, or (ii) solely from equipment at the location agreed to between the Fund and the Transfer Agent and (iii) solely in accordance with the Transfer Agent's applicable user documentation; (b) Refrain from copying or duplicating in any way (other than in the normal course or performing processing on the Fund's computer(s)), the Proprietary Information; (c) Refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform in a timely manner of such fact and dispose of such information in accordance with the Transfer Agent's instructions; (d) Refrain from causing or allowing information transmitted from the Transfer Agent's computer to the Fund's terminal to be retransmitted to any other computer terminal or other device except as expressly permitted by the Transfer Agent (such permission not to be unreasonably withheld); (e) Allow the Fund to have access only to those authorized transactions as agreed to between the Fund and the Transfer Agent; and (f) Honor all reasonable written requests made by the Transfer Agent to protect at the Transfer Agent's expense the rights of the Transfer Agent in Proprietary Information at common law, under federal copyright law and under other federal or state law. 7.2 Neither Proprietary Information or Customer Data shall include all or any portion of any of the foregoing items that: (i) are or become publicly available without breach of this Agreement; (ii) are released for general disclosure by a written release by the Transfer Agent; or (iii) are already in the possession of the receiving party at the time or receipt without obligation of confidentiality or breach of this Agreement. 7.3 The parties acknowledge that their obligation to protect the other's Proprietary Information or Customer Data is essential to the business interest of the Transfer Agent and the other party and that the disclosure of such Proprietary Information or Customer Data in breach of this Agreement would cause the other party immediate, substantial and irreparable harm, the value of which would be extremely difficult to determine. Accordingly, the parties agree that, in addition to any other remedies that may be available in 8 law, equity, or otherwise for the disclosure or use of the Proprietary Information or Customer Data in breach of this Agreement, the party whose Proprietary Information or Customer Data is disclosed shall be entitled to seek and obtain a temporary restraining order, injunctive relief, or other equitable relief against the continuance of such breach. 7.4 If the Fund notifies the Transfer Agent that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Transfer Agent shall endeavor in a timely manner to correct such failure. Organizations from which the Transfer Agent may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Transfer Agent arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 7.5 If the transactions available to the Fund include the ability to originate electronic instructions to the Transfer Agent in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event the Transfer Agent shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Transfer Agent from time to time. 7.4 Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 7. The obligations of this Section shall survive any earlier termination of this Agreement. 8. INDEMNIFICATION 8.1 The Transfer Agent shall not be responsible for, and the Fund shall indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of the Transfer Agent or its agent or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct; (b) The Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder; (c) The reliance upon, and any subsequent use of or action taken or omitted, by the Transfer Agent, or its agents or subcontractors on: (i) any information, records, documents, data, stock certificates or services, which are received by the Transfer Agent or its agents or subcontractors by machine readable input, facsimile, CRT data entry, electronic 9 instructions or other similar means authorized by the Fund, and which have been prepared, maintained or performed by the Fund or any other person or firm on behalf of the Fund including but not limited to any previous transfer agent or registrar; (ii) any instructions or requests of the Fund or any of its officers; (iii) any instructions or opinions of legal counsel with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement which are provided to the Transfer Agent after consultation with such legal counsel; or (iv) any paper or document, reasonably believed to be genuine, authentic, or signed by the proper person or persons; (d) The offer or sale of Shares in violation of federal or state securities laws or regulations requiring that such Shares be registered or in violation of any stop order or other determination or ruling by any federal or any state agency with respect to the offer or sale of such Shares; (e) The negotiation and processing of any checks including without limitation for deposit into the Fund's demand deposit account maintained by the Transfer Agent; and (f) Upon the Fund's request entering into any agreements required by the National Securities Clearing Corporation (the "NSCC") required by the NSCC for the transmission of Fund or Shareholder data through the NSCC clearing systems; 8.2 In order that the indemnification provisions contained in this Section 8 shall apply, upon the assertion of a claim for which the Fund may be required to indemnify the Transfer Agent, the Transfer Agent shall promptly notify the Fund of such assertion, and shall keep the Fund advised with respect to all developments concerning such claim. The Fund shall have the option to participate with the Transfer Agent in the defense of such claim or to defend against said claim in its own name or in the name of the Transfer Agent. The Transfer Agent shall in no case confess any claim or make any compromise in any case in which the Fund may be required to indemnify the Transfer Agent except with the Fund's prior written consent. 9. STANDARD OF CARE 9.1 The Transfer Agent shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees, except as provided in Section 9.2 below. 9.2 In the case of Exception Services as defined in Section 2.3 herein, the Transfer Agent shall be held to a standard of gross negligence and encoding and payment processing errors shall not be deemed negligence. 10 10. YEAR 2000 The Transfer Agent will take reasonable steps to ensure that its products (and those of its third-party suppliers) reflect the available technology to offer products that are Year 2000 ready, including, but not limited to, century recognition of dates, calculations that correctly compute same century and multi century formulas and date values, and interface values that reflect the date issues arising between now and the next one-hundred years, and if any changes are required, the Transfer Agent will make the changes to its products at a price to be agreed upon by the parties and in a commercially reasonable time frame and will require third-party suppliers to do likewise. 11. CONFIDENTIALITY 11.1 The Transfer Agent and the Fund agree that they will not, at any time during the term of this Agreement or after its termination, reveal, divulge, or make known to any person, firm, corporations or other business organization, any customers' lists, trade secrets, cost figures and projections, profit figures and projections, or any other secret or confidential information whatsoever, whether of the Transfer Agent or of the Fund, used or gained by the Transfer Agent or the Fund during performance under this Agreement. The Fund and the Transfer Agent further covenant and agree to retain all such knowledge and information acquired during and after the term of this Agreement respecting such lists, trade secrets, or any secret or confidential information whatsoever in trust for the sole benefit of the Transfer Agent or the Fund and their successors and assigns. In the event of breach of the foregoing by either party, the remedies provided by Section 7.3 shall be available to the party whose confidential information is disclosed. The above prohibition of disclosure shall not apply to the extent that the Transfer Agent must disclose such data to its sub-contractor or Fund agent for purposes of providing services under this Agreement. 11.2 In the event that any requests or demands are made for the inspection of the Shareholder records of the Fund, other than request for records of Shareholders pursuant to standard subpoenas from state or federal government authorities (i.e., divorce and criminal actions), the Transfer Agent will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Transfer Agent expressly reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by counsel that it may be held liable for the failure to exhibit the Shareholder records to such person or if required by law or court order. 12. COVENANTS OF THE FUND AND THE TRANSFER AGENT 12.1 The Fund shall promptly furnish to the Transfer Agent the following: (a) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement; and (b) A copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto. 11 12.2 The Transfer Agent hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 12.3 The Transfer Agent shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act, and the Rules thereunder, the Transfer Agent agrees that all such records prepared or maintained by the Transfer Agent relating to the services to be performed by the Transfer Agent hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request. 13. TERMINATION OF AGREEMENT 13.1 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other. 13.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund. Additionally, the Transfer Agent reserves the right to charge for any other reasonable expenses associated with such termination and a charge equivalent to the average of three (3) months' fees. Payment of such expenses or costs shall be in accordance with Section 3.4 of this Agreement. 13.3 Upon termination of this Agreement, each party shall return to the other party all copies of confidential or proprietary materials or information received from such other party hereunder, other than materials or information required to be retained by such party under applicable laws or regulations. 14. ASSIGNMENT AND THIRD PARTY BENEFICIARIES 14.1 Except as provided in Section 15.1 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. Any attempt to do so in violation of this Section shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement. 14.2 Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer Agent and the Fund, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent and the Fund. This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 14.3 This Agreement does not constitute an agreement for a partnership or joint venture between the Transfer Agent and the Fund. Other than as provided in Section 15.1, neither party shall make any commitments with third parties that are binding on the other party without the other party's prior written consent. 12 15. SUBCONTRACTORS 15.1 The Transfer Agent may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as a transfer agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended, (ii) a BFDS subsidiary duly registered as a transfer agent or (iii) a BFDS affiliate duly registered as a transfer agent; provided, however, that the Transfer Agent shall be fully responsible to the Fund for the acts and omissions of BFDS or its subsidiary or affiliate as it is for its own acts and omissions. 15.2 Nothing herein shall impose any duty upon the Transfer Agent in connection with or make the Transfer Agent liable for the actions or omissions to act of unaffiliated third parties such as by way of example and not limitation, Airborne Services, Federal Express, United Parcel Service, the U.S. mails, the NSCC and telecommunication companies, provided, if the Transfer Agent selected such company, the Transfer Agent shall have exercised due care in selecting the same. 16. MISCELLANEOUS 16.1 AMENDMENT. This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors of the Fund. 16.2 MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts. 16.3 FORCE MAJEURE. In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 16.4 CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 16.5 SURVIVAL. All provisions regarding indemnification, warranty, liability, and limits thereon, and confidentiality and/or protection of proprietary rights and trade secrets shall survive the termination of this Agreement. 16.6 SEVERABILITY. If any provision or provisions of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. 13 16.7 PRIORITIES CLAUSE. In the event of any conflict, discrepancy or ambiguity between the terms and conditions contained in this Agreement and any Schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence. 16.8 WAIVER. No waiver by either party or any breach or default of any of the covenants or conditions herein contained and performed by the other party shall be construed as a waiver of any succeeding breach of the same or of any other covenant or condition. 16.9 MERGER OF AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 16.10 COUNTERPARTS. This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 16.11. REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction shall likewise be admissible in evidence. 16.12 NOTICES. All notices and other communications as required or permitted hereunder shall be in writing and sent by first class mail, postage prepaid, addressed as follows or to such other address or addresses of which the respective party shall have notified the other. (a) If to State Street Bank and Trust Company, to: State Street Bank and Trust Company c/o Boston Financial Data Services, Inc. Two Heritage Drive Quincy, Massachusetts 02171 Attention: Legal Department Telephone: (617) 328-5000 Facsimile: (617) 483-2287 (b) If to the Fund, to: Fremont Mutual Funds, Inc. 333 Market Street, Suite 2600 San Francisco, California 94105 Attention: Operations Department 17. ADDITIONAL FUNDS In the event that the Fund establishes one or more series of Shares in addition to the attached Schedule A with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. FREMONT MUTUAL FUNDS, INC. BY: ------------------------------------ ATTEST: - --------------------------------- STATE STREET BANK AND TRUST COMPANY BY: ------------------------------------ Executive Vice President ATTEST: - --------------------------------- 16 SCHEDULE A Dated July 31, 1998 to Transfer Agency Agreement dated July 31, 1998. Fremont Global Fund Fremont Money Market Fund Fremont California Intermediate Tax-Free Fund Fremont Bond Fund Fremont Growth Fund Fremont International Growth Fund Fremont Emerging Markets Fund Fremont U.S. Institutional Micro-Cap Fund Fremont U.S. Small Cap Fund Fremont Select Fund Fremont Real Estate Securities Fund Fremont International Small Cap Fund Fremont U.S/ Micro-Cap Fund FREMONT MUTUAL FUNDS, INC. STATE STREET BANK AND TRUST COMPANY BY: BY: ------------------------------- ------------------------------------ SCHEDULE 3.1 FEES Dated July 31, 1998 to Transfer Agency Agreement dated July 31, 1998 I. SHAREHOLDER AND TRANSFER AGENT SERVICES A. ACCOUNT MAINTENANCE FEES (per account within a fund) $ 14.90 per year Closed Account Fee (per closed account within a fund) $ 2.40 per year B. ANNUAL BASE FEES (per cusip) $13,000 per year* Includes Market Advisor and FANMAIL C. ACTIVITY FEES New Account Set-Up $ 4.00 each Manual Financial transactions $ 1.50 each Telephone Service - 5:00 A.M. - 3:00 P.M. PSY $ 2.00 each Manual Non-Financial Transactions $ 0.75 each DDI's Items $ 0.75 each Letters to Shareholders/Dealers $ 3.00 each D. CONVERSION FEE (ONE-TIME FEE) $20,000 E. NEW FUND IMPLEMENTATION FEE $ 1,500 each F. OUT-OF-POCKET EXPENSES Out-of-pocket expenses are billed as incurred and include, but are not limited to, mailing expenses (statements, stationery, checks, certificates, sales literature, printing, postage, etc.), automated telephone servicing charges, telecommunication expenses, equipment/software expenses, custom programming, ACH service charges, check writing redemption processing charges, microfiche, freight and all other expenses incurred on the fund's behalf. * Annual base fees will be $10,000 until installation of Market Advisor. II. DISTRIBUTION PRODUCTS A. Market Advisor (10 workstations), FANMAIL - See above, Section IV B. Vision ) See Appendix II } for individual C. FAN/Internet ) fee schedules FREMONT MUTUAL FUNDS, INC. STATE STREET BANK AND TRUST COMPANY BY: BY: ------------------------------- ------------------------------------ EX-99.I.6 6 ex-i6.txt OPINION OF COUNSEL Exhibit I(6) December 18, 2000 Fremont Mutual Funds, Inc. 333 Market Street, Suite 2600 San Francisco, California 94105 Re: Fremont New Era Value Fund Ladies and Gentlemen: We have acted as counsel to Fremont Mutual Funds, Inc., a Maryland corporation (the "Corporation"), in connection with Post-Effective Amendments to the Corporation's Registration Statement on Form N-1A filed with the Securities and Exchange Commission (the "Post-Effective Amendments") and relating to the issuance by the Corporation of up to a maximum of 100,000,000 of $.0001 par value shares of beneficial interest (the "Shares") for the Fremont New Era Value Fund (the "Fund"), a series of the Corporation. In connection with this opinion, we have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of all natural persons, and the conformity to the originals of all records, documents, and instruments submitted to us as copies. We have based our opinion on the following: (a) the Corporation's Articles of Incorporation filed with the State Department of Assessments and Taxation of Maryland on July 13, 1988, as amended on October 5, 1988 and November 1, 1988, as supplemented twice on November 14, 1988, as corrected twice on December 8, 1988, as supplemented on June 27, 1990, as corrected on July 17, 1990, as supplemented on May 8, 1992, February 25, 1993, and July 1, 1993, as amended on July 26, 1993 and three times on July 30, 1993, as supplemented on December 27, 1993 and twice on January 3, 1994, as amended on March 2, 1994, as supplemented on July 2, 1996, August 7, 1997, October 16, 1997, and three times on December 30, 1997 (as so amended, supplemented and corrected, the "Articles of Incorporation"), as certified to us by an officer of the Corporation as being true and complete and in effect on the date hereof; (b) the By-laws of the Corporation as amended June 2000 and certified to us by an officer of the Corporation as being true and complete and in effect on the date hereof; (c) resolutions of the Board of Directors of the Corporation adopted at a meeting on September 29, 2000, authorizing the establishment of the Fund and the issuance of the Shares; (d) the Post-Effective Amendment; and (e) a certificate of an officer of the Corporation as to certain factual matters relevant to this opinion. Our opinion below is limited to the federal law of the United States of America and the Maryland General Corporation Law. We are not licensed to practice law in the State of Maryland, and we have based our opinion below solely on our review of the Maryland General Corporation Law and the case law interpreting such Law as reported in Annotated Laws of Maryland (Aspen Law & Business 1997 & Supp. 1999). We have not undertaken a review of other Maryland law or of any administrative or court decisions in connection with rendering this opinion. We disclaim any opinion as to any law other than that of the United States of America and the Maryland General Corporation Law as described above, and we disclaim any opinion as to any statute, rule, regulation, ordinance, order or other promulgation of any regional or local governmental authority. Based on the foregoing and our examination of such questions of law as we have deemed necessary and appropriate for the purpose of this opinion, and assuming that (i) all of the Shares will be issued and sold for cash at the per-share public offering price on the date of their issuance in accordance with statements in the Corporation's Prospectuses included in the Post-Effective Amendments and in accordance with the Articles of Incorporation, (ii) all consideration for the Shares will be actually received by the Corporation, and (iii) all applicable securities laws will be complied with, it is our opinion that, when issued and sold by the Corporation, the Shares will be legally issued, fully paid and nonassessable. This opinion is rendered to you in connection with the Post-Effective Amendments and is solely for your benefit. This opinion may not be relied upon by you for any other purpose or relied upon by any other person, firm, corporation or other entity for any purpose, without our prior written consent. We disclaim any obligation to advise you of any developments in areas covered by this opinion that occur after the date of this opinion. We hereby consent to (i) the reference to our firm as Legal Counsel in the Prospectus included in the Post-Effective Amendment, and (ii) the filing of this opinion as an exhibit to the Post-Effective Amendment. Very truly yours, /s/ Paul, Hastings, Janofsky & Walker LLP EX-99.P.1 7 exp_1.txt CODE OF ETHICS REGISTRANT & ADVISOR Exhibit P(1) FREMONT INVESTMENT ADVISORS, INC. AND FREMONT MUTUAL FUNDS, INC. CODE OF ETHICS CERTIFICATE OF COMPLIANCE AMENDED JUNE 15, 2000. This Code of Ethics, (the "Code") has been adopted by Fremont Investment Advisors, Inc. ("FIA" or "Advisor") and Fremont Mutual Funds, Inc. (the "Funds") primarily for the purpose of providing rules for employees with respect to their personal securities transactions. FIA and the Funds are each required to adopt a code of ethics in accordance with Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act"). I have read and agree to comply with the Code of Ethics of Fremont Investment Advisors, Inc., and Fremont Mutual Funds, Inc. _________________________________________ Print Name _________________________________________ Signature _________________________________________ Date FREMONT INVESTMENT ADVISORS, INC. AND FREMONT MUTUAL FUNDS, INC. CODE OF ETHICS AMENDED JUNE 15, 2000 I. INTRODUCTION This Code of Ethics (the "Code") has been adopted by Fremont Investment Advisors, Inc. ("FIA" or "Advisor") and Fremont Mutual Funds, Inc. (the "Funds") primarily for the purpose of providing rules for employees with respect to their personal securities transactions. FIA and the Funds are each required to adopt a code of ethics in accordance with Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act"). FIA is also a registered investment Advisor under the Investment Advisers Act of 1940 (the "Advisers Act"), and as such, FIA and its employees are subject to certain standards of conduct with respect to activities relating to all of FIA's advisory clients. In addition, FIA is required to make and keep accurate and current records of securities transactions in which the Advisor, its officers and directors, and certain employees and other related persons have a beneficial interest. The reports pursuant to this Code will enable FIA to fulfill this requirement. II. BACKGROUND The investment management industry is closely regulated under the provisions of the Advisers Act and the 1940 Act, and by the regulations and interpretations of the Securities and Exchange Commission (the "SEC") under those statutes. Transactions in securities are also governed by the provisions of the Securities Act of 1933 (the "Securities Act"), and the Securities Exchange Act of 1934 (the "Exchange Act") as well as by state laws. The rules of conduct set forth in this Code are based in large part on rules of law and legal concepts developed under those statutes. These legal concepts do not remain static, and further developments of the law in these areas may be expected. In 1994, the Code was updated to conform with an extensive set of recommendations developed by the Investment Company Institute. These additional measures, while not mandated by law, are considered industry standards. They were developed in an effort to self-regulate and preserve investors' confidence that their interests are placed ahead of our own personal trading activities. Employees of FIA should conduct business so as to avoid not only any violation of law, but also any appearance of violation or grounds for criticism. III. SCOPE OF THE CODE OF ETHICS The Code covers two general topic areas. First, it includes some broad prohibitions against fraudulent conduct in connection with the Funds or other clients of FIA. Because fraudulent conduct can take many forms as noted above, the Code cannot reasonably contain an all-inclusive list of actions or omissions. 1 Second, the Code includes specific rules, restrictions and reporting obligations with respect to personal securities transactions. These restrictions have been adopted for the purpose of better avoiding any conflicts of interest, or any appearances of conflicts of interest, between the securities trading which FIA undertakes on behalf of the Funds and other clients and personal securities trading by the employees of FIA and other persons subject to this Code. The rules are intended to better assure that trading on behalf of clients is given priority over trading for personal accounts, and that trading for personal accounts does not take place at a time which could adversely affect the trading for clients. These rules are also intended to prevent FIA personnel from misusing material, non-public information concerning issuers or securities. This misuse might, for example, take the form of either personal securities trading or "tipping" other persons concerning the material, non-public information. As required by the 1940 Act and the Advisers Act, most persons covered by this Code are also required to file with FIA quarterly reports of their personal securities transactions. These reports will be reviewed by the Compliance Officer at FIA to determine whether the information suggests any possible violation of this Code. These reports also are reviewed by the staff of the SEC when the SEC undertakes compliance examinations of FIA. In addition to serving the purpose of compliance with this Code, the reporting requirements serve to create greater consciousness of possible conflicts and, at the same time, provide a means to detect and correct possible problems. The reporting system is an essential part of this Code and must be strictly adhered to, without exception. IV. WHO IS SUBJECT TO THIS CODE OF ETHICS? All employees of FIA (including directors other than the non-interested directors of the Funds) are subject to this Code. Rule 17j-1 under the 1940 Act requires that a Code of Ethics be established to govern certain activities of directors, officers and employees of an investment company and its Advisor. These persons are referred to in this Code as "Access Persons". For purposes of this Code, all employees of FIA are Access Persons. Among other matters, Access Persons must submit to their employers quarterly reports of personal securities trading. Separately, the Advisers Act requires under Rule 204-2 that "Advisory Representatives" of an advisor file quarterly reports of personal trading activity. Further, Section 204A of the Advisers Act requires investment Advisors to adopt, maintain and enforce policies reasonably designed, considering the nature of the Advisor's business, to prevent the misuse of material, non-public information or violation of the Advisers Act, the Exchange Act and the Rules thereunder by any person associated with the Advisor. "Access Persons" and "Advisory Representatives" for the purposes of this Code of Ethics are the same. V. LEGAL CONCEPTS Important legal concepts under which the Advisor and the Funds conduct their businesses are described below. 2 A. FIDUCIARY DUTY. Investment advisors owe a fiduciary duty to their clients. This means a duty of loyalty, fairness and good faith toward clients, and a corresponding duty on the part of the advisor not to do anything prejudicial to or in conflict with the interests of clients. This is a higher standard than that applicable to ordinary arm's length business transactions between persons who do not owe a fiduciary duty to the other parties. Fiduciary principles reflect the following: (1) the duty at all times to place the interests of FIA's clients and the Funds' shareholders first; (2) the requirement that all personal securities transactions be conducted consistent with the Code of Ethics and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual's position of trust and responsibility; and (3) the fundamental standard that investment company personnel should not take inappropriate advantage of their positions. B. FRAUD AND DECEIT; INSIDE INFORMATION. The various securities laws contain broad provisions prohibiting fraud or deceit or "any manipulative or deceptive device or contrivance" in connection with securities transactions and giving of investment advice. It is under these broad general provisions that the SEC and private individuals have successfully brought many of the important cases in the securities field that have received so much publicity in recent years, including cases on improper use of material, non-public ("inside") information (as defined below). The Advisers Act requires investment advisors to adopt, maintain and enforce written policies and procedures reasonably designed, taking into consideration the nature of their business, to prevent misuse of material non-public information in violation of the Advisor's Act, the Exchange Act and regulations thereunder by the advisor and its associated persons. The policies and procedures in this Code are intended to meet this requirement. Fund employees and other participants in securities market activity are also prohibited from trading securities on the basis of, or tipping others about, inside information. Also care must always be taken to avoid market manipulation, which is strictly prohibited by law. In addition to this Code, Fremont Group has put into effect policies and procedures, to which all FIA and Fund personnel are subject, reasonably designed to prevent the misuse of material non-public information. C. UNDERWRITING. Although not discussed elsewhere in this Code, Access Persons should be extremely careful not to engage in any activities, particularly in connection with new offerings, that could be construed as participating as an underwriter in violation of the Securities Act. These general prohibitions are basically the same as those in the federal securities laws, and are intended to reflect the expansive and flexible nature of the restrictions which are applicable to the activities of the Advisor and the Funds. 3 VI. ENFORCEMENT OF THE CODE. The enforcement of these rules and procedures is the responsibility of FIA's Compliance Officer. As this Code emphasizes, personal trading must always be carried on in good judgment and good faith. It is obvious that all possible situations cannot be covered by this Code and that under special circumstances, exceptions may occasionally be appropriate. Any Access Person contemplating a transaction, or anyone who has any other question as to any part of this Code or FIA's policy should consult with the Compliance Officer. If the Compliance Officer is absent or unavailable, contact the Assistant Compliance Officer, or a senior manager at FIA for assistance in this regard. A. REPORTING. This Code of Ethics includes requirements for an initial certification of securities holdings at the time of hire, pre-approval of personal securities trades, informing the Compliance Officer of pre-approved trades that are not executed [exception for limit orders, see Section X (A.)(a)], quarterly reports of personal securities transactions, and an annual certification of all personal securities holdings. Late reports, unreported transactions, unapproved transactions and repeated violations of the Code of Ethics are all bases upon which sanctions may be imposed as generally described below. All violations of this Code will be reported to the President and a violation notice will be kept in the employee's personnel file. Refer to Section XI: Reporting and Certification. B. CODE VIOLATIONS. A person charged with a violation of this Code will have the opportunity to meet with the Compliance Officer, at which time such person shall have the opportunity, orally or in writing, to deny any and all charges, set forth mitigating circumstances, and set forth reasons why the sanctions for any violations should not be severe. The Counsel to the Advisor and to the Funds shall be advised promptly of the initiation and outcome of any enforcement actions hereunder. C. SANCTIONS. Upon determining that a material violation of this Code of Ethics has occurred, FIA or the Funds, as the case may be, may impose such sanctions as it deems appropriate, including, among other matters, a letter of censure or suspension or termination of the employment of the violator, and disgorgement of profits on any transaction in violation of this Code of Ethics. All material violations of this Code of Ethics and any sanctions imposed with respect thereto will be reported periodically to the board of directors of the Funds. Careful adherence to this Code is one of the basic conditions of employment by FIA and the Funds. As noted at the beginning of this Code, and in this section, an Access Person is liable to be subject to sanctions for conduct inconsistent with this Code. In addition, as pointed out in section II entitled "Background", certain violations of this Code (including the late filing of quarterly reports) may also involve violation of laws, with the possibility of civil and/or criminal penalties. 4 D. PENALTIES. Under the various federal securities statutes, penalties that may be imposed for insider trading or other violations include civil liability for damages, temporary suspension or permanent prohibition from engaging in various aspects of the securities or investment advisory businesses and criminal penalties. Among other matters, penalties for insider trading and misuse of material, non-public information include civil injunctions, treble damages, disgorgement of profits, jail sentences, fines for the person who committed the violation of up to three times the profit gained or loss avoided whether or not the person actually benefited and fines for the controlling person of the violator, which may include an employer, of up to $1 million or three times the amount of the profit gained or loss avoided. Under certain circumstances, profits received by an Access Person in connection with unapproved transactions may have to be disgorged and paid over to the Funds. VII. DEFINITIONS. A. "ACCESS PERSON" and "ADVISORY REPRESENTATIVE": All of the employees of FIA are considered "Access Persons" and "Advisory Representatives" with respect to this Code of Ethics and in connection with the reporting of personal securities transactions. FIA believes that this universal coverage is appropriate given the subject matter of the Code of Ethics and the fact that it does not represent an unreasonable burden upon the employees of FIA. (1940 Act, Rule 17j-1; Advisers Act, Rule 204-2). B. "AFFILIATED PERSON" (1940 Act, Section 2(a)(3)) means: (a) any person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of such other person; (b) any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person; (c) any person directly or indirectly controlling, controlled by, or under common control with, such other person; and (d) any officer, director, partner, co-partner or employee of such other person. C. "ASSOCIATED PERSON" means any officer or director of FIA (or any person occupying a similar status of performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with FIA, or any employee thereof. (Advisers Act, Section 202(a)(17)) 5 D. "BENEFICIAL OWNERSHIP" In general, a person is considered to have "beneficial ownership" of securities when that person (a) has the power to dispose of or to vote such securities, and (b) when that person has a pecuniary (i.e., economic) interest in the securities. Beneficial Ownership shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Exchange Act. E. "DIRECT OR INDIRECT BENEFICIAL OWNERSHIP" This Code of Ethics extends to the ownership of and transactions in securities either by the Access Person for his or her own account, or for the account of a member of his or her family, or for any account in which such Access Person or a member of his or her family may have an interest, including IRAs, partnerships, trusts, etc. Consult the compliance department for clarification as necessary. F. "CONTROL" means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company is presumed to control such company. (Section 2(a)(9) of the 1940 Act) G. "SECURITY" OR "SECURITY" shall have the meaning set forth in Section 2(a)(36) of the 1940 Act. Security does not include futures contracts or options on futures contracts (provided these instruments are not used to indirectly acquire an interest which would be prohibited under this Code) but the purchase and sale of such instruments are nevertheless subject to the reporting requirements of this Code. For purposes hereof, "futures" are futures on securities or securities indexes; "options" on future contracts are options (puts or calls) on futures on securities or securities indexes. H. "PURCHASE OR SALE OF A SECURITY" includes, among other acts, the writing or acquisition of an option to purchase or sell a Security. I. "INSIDER" means an Associated Person of FIA, or any Affiliated Person thereof, or any member of his or her immediate family. Additionally, a person is deemed an "Insider" if he enters into a special confidential relationship in the conduct of the affairs of FIA or the Funds, or any Affiliated Person thereof, and as a result is given access to material, non-public information. Examples of such insiders include accountants, consultants, advisors, attorneys, bank lending officers, and the employees of such organizations. J. "INSIDER TRADING" for purposes of this Code of Ethics means the use of material, non-public information to trade in a security (whether or not one is an Insider) or the communication of material, non-public information to others (other than as required by performance of a person's duties). While the meaning of the term is not static, "Insider Trading" generally includes: 6 (a) trading in a Security by an Insider, while in possession of material, non-public information; (b) trading in a Security by a person who is not an Insider, while in possession of material, non-public information, where the information either was disclosed to such person in violation of an Insider's duty to keep it confidential or was misappropriated; and (c) communicating material, non-public information to any person, who then trades in a Security while in possession of such information. K. "MATERIAL INFORMATION" means information for which there is a substantial likelihood that a reasonable investor would consider it important in making investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company's securities. Examples of material information include information regarding dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals of agreements, major litigation, liquidation problems, and extraordinary management developments. Such examples are only illustrative and not all inclusive. L. "MEMBER OF IMMEDIATE FAMILY" means a person's spouse, children under the age of twenty-five years residing with such person, and any trust or estate in which such person or any other member of his immediate family has a substantial beneficial interest, unless neither such person nor any other member of his immediate family is able to control or participate in the investment decisions of such trust or estate. M. "NON-PUBLIC INFORMATION" means information that has not been effectively communicated to the market place. N. "RESTRICTED SECURITY" means any Security which: (a) is held by the Funds or other clients of FIA, or (b) is being considered by the Funds or other clients of the Advisor for purchase on behalf of the Funds or other clients. VIII. GENERAL RESTRICTIONS A. RESTRICTIONS UNDER RULE 17J-L(A) OF THE 1940 ACT No Access Person may: (a) employ any device, scheme or artifice to defraud the shareholders of the Funds or other clients of FIA; (b) make to the shareholders of the Funds or other clients of FIA any untrue statement of a material fact or omit to state to the shareholders of the Funds or such 7 client a material fact necessary in order to make the statements made in light of the circumstances under which they are made, not misleading; (c) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Funds or other clients of FIA; or (d) engage in any manipulative practice with respect to the Funds or other clients of FIA. Any violation of the above shall be considered a violation of this Code. B. MAINTAINING CONFIDENTIALITY. No Access Person may disclose information about actual purchase or sale decisions, contemplated purchases or sales, or other transactions under consideration for the Funds or the Advisor, whether or not actually executed. Research information on portfolio companies must not be divulged to persons outside of the firm. In addition, information about clients is confidential and must not be disclosed. Access Persons must use care in keeping information confidential. Any violation of these confidentiality requirements shall be a violation of this Code. C. USE OF NON-PUBLIC INFORMATION. The following issues should be kept in mind when considering material, non-public information: (1) SECURITY. An Insider shall use due care to ensure that material, non-public information remains secure. For example, files containing material, non-public information should be kept confidential, and access to computer files containing material, non-public information must be restricted. (2) NO TIPPING. An Insider shall not divulge to any person any material, non-public information, except in the performance of his or her duties (3) NO INSIDER TRADING. No Insider shall engage in Insider Trading, on his or her own behalf or on behalf of others. (4) NO IMPROPER USE. No Access Person may use any material, non-public information, no matter how acquired, in his or her own transactions or in the transactions for the Funds or other clients of FIA. (5) CONFIDENTIALITY OF FUND AND FIA ACTIVITY. Information about actual purchase or sale decisions, contemplated purchases or sales, or other transactions under consideration by FIA on behalf of the Funds or other clients, whether or not actually authorized, must be kept confidential. An Access Person shall not divulge to any person contemplated or completed securities transactions of the Funds or other clients of the Advisor, except in the performance of his or her duties, unless such information previously has become a matter of public knowledge. Research information on portfolio issues must not be divulged to persons who do not have a need to know such information in connection with their employment by FIA or the Funds. In 8 addition, information about clients is confidential and must not be disclosed. Access Persons must use care in keeping information confidential. (6) E-MAIL/INTERNET/VOICEMAIL This policy describes Fremont's guidelines with regard to access to and disclosure of electronic mail messages sent or received by Fremont employees with the use of the Fremont e-mail system, and use of company internet and voice mail facilities. Company's Right to Access Information Fremont's electronic mail system has been made available to its employees to facilitate business communications. Although each employee has an individual password to access the e-mail system, the system belongs to Fremont and the content of e-mail communications is accessible at all times by Fremont for any purpose. The system may be subject to unannounced inspections and, as such, should be treated like other shared filing systems. All passwords to the e-mail system (including without limitation individual passwords) are the property of Fremont and not of the individual employee, and Fremont reserves the right to override any individual passwords and/or codes to facilitate access by Fremont to e-mail. Employees may not install any programs or hardware or otherwise attempt to make their e-mail communications inaccessible to Fremont. All e-mail messages are Fremont records. The contents of all e-mail an employee stores, processes or transmits may be monitored, copied, accessed and disclosed by Fremont without the employee's permission. Therefore, employees should not assume that any e-mail messages are confidential or private. Back-up copies of e-mail are regularly made, and may be maintained and referenced by Fremont. PERSONAL USE OF E-MAIL E-mail messages are considered business records of Fremont and may be discoverable in litigation, administrative proceedings and other legal proceedings. Employees are authorized to use the e-mail system for official company business, although incidental and occasional personal use of e-mail is permitted by Fremont. However, Fremont reserves the right to access and disclose as necessary all messages sent over its e-mail system, without regard to content and without the recipient or sender's permission. PROHIBITED CONTENT OF E-MAIL COMMUNICATIONS Employees may not use the Fremont e-mail system in any way that may be illegal, or may be seen as vulgar, disparaging, harassing, obscene, disruptive or offensive by other persons, including persons other than the intended recipient of the e-mail communication. Employees may not use the e-mail system in a way that may constitute abuse, slander or defamation. Examples of prohibited transmissions include sexually-explicit messages, cartoons or jokes; unwelcome personal propositions; ethnic or racial slurs; or any other messages that can be construed to be harassment or 9 disparagement of others based on their sex, race, sexual orientation, age, national origin, or religious or political beliefs. Use of the e-mail system in violation of this policy will result in disciplinary action, up to and including termination. UNAUTHORIZED ACCESS TO OTHER EMPLOYEE'S E-MAIL MESSAGES Employees are prohibited from the unauthorized use of e-mail passwords of other employees to gain access to the other employees' e-mail messages. RETENTION OF E-MAIL Generally, e-mail messages (both received and sent) are to be deleted after thirty (30) days. Notwithstanding any deletion by an employee, an e-mail message may still exist in Fremont's backup system by the recipient or by any person to whom the message was forwarded, or otherwise may be retained by Fremont; however, such back-up should not be retained for more than one (1) year. INTERNET USAGE Employees are authorized to use their company computers to access the internet for official company business, although incidental and occasional personal use of the internet is permitted. Fremont has the capability to view the internet sites employees have visited. Employees are prohibited from accessing or attempting to access, view, download, distribute or send illegal, vulgar, disparaging, harassing, obscene, pornographic, disruptive or offensive materials via the internet. Employees may not attempt to modify their software in any manner to bypass Fremont's security system blocking access to unauthorized internet sites. Use of the internet in violation of this policy will result in disciplinary action, up to and including termination. VOICE MAIL Even though Fremont's voice mail system involves different technology and a different type of communication than e-mail, the same basic policies apply to the voice mail system. As with e-mail, employees should be aware that their voice messages can be forwarded to other persons without their consent. Employees should be no less careful in using the voice mail system than in using the e-mail system. OTHER POLICIES Other Fremont policies apply to the use of e-mail, voice mail and internet usage.. For example, policies regarding confidentiality, harassment and inspection of Fremont property all apply to the use of e-mail, voice mail and the internet. In particular, employees should be aware that any documents, information or e-mail transmitted over the internet is not completely secure and can be accessed by unauthorized third parties. (7) QUESTIONS. Questions regarding whether the information is material and/or nonpublic may be directed to the Compliance Officer, or the Assistant Compliance Officer. 10 IX. RESTRICTIONS AND EXEMPTIONS ON PERSONAL SECURITIES TRANSACTIONS. A. DIRECT OR INDIRECT BENEFICIAL OWNERSHIP. Purchases and sales of securities by an Access Person for his or her own account, for the account of a member of his or her family or for any account in which such Access Person or a member of his or her family may have a direct or indirect beneficial ownership interest, are subject to the personal securities transaction rules (except for transactions in exempt securities, described below). These rules are intended to prevent any suggestion or implication that Access Persons are using their relationship with FIA to obtain advantageous treatment to the detriment of the interests of the Funds or other clients of FIA or that an Access Person is profiting improperly from his or her position on behalf of the Funds. Most transactions are also subject to the reporting requirements of Section XI below. B. PERSONAL TRADING PROHIBITIONS. 1. "INITIAL PUBLIC OFFERINGS". No Access Person may purchase any security, whether or not a "Hot Issue", in an initial public offering or any "Hot Issue" in a follow on offering. 2. DEALINGS WITH CLIENTS. No Access Person may knowingly sell any security to the Funds or other clients of FIA or knowingly purchase any security from the Funds or other clients of FIA. 3. SHORT-TERM TRADING. FIA believes that personal short-term trading may increase the risk of problems arising under the rules of this Code. While FIA leaves the extent of trading to an individual's judgment, consistent with his or her objectives and past trading practices, all Access Persons are on notice that such short-term trading practices will be periodically reviewed. In the case of any individual whose trading is deemed to be: (a) excessive, or (b) causing or giving the appearance of conflict of interest with the Funds' or other clients' accounts, FIA will require that individual to reduce or eliminate this short-term trading activity. 4. PRIVATE PLACEMENTS. No Access Person shall acquire securities in a private placement without express prior written approval of the compliance officer of FIA. C. EXEMPTED SECURITIES. Notwithstanding Section IX B, trading in the following securities is exempted from the prior clearance requirements set forth in Section X and other restrictions of this Section: 11 (a) Open-end Mutual Funds, including the Funds (investment companies registered under the 1940 Act will be referred to as "Mutual Funds"). This exception means that Access Persons may, without prior clearance, purchase and redeem the shares of Fremont Mutual Funds and other open-end mutual funds, including redemptions through the use of a checkwriting arrangement with the mutual fund. Purchases and redemptions of the shares of other open-end Mutual Funds are exempt from the quarterly reporting requirement, but transactions in the shares of closed-end mutual funds and unit investment trusts must be both pre-approved and reported quarterly. (b) Government securities; (c) Short-term money market instruments such as bankers' acceptances, repurchase agreements and commercial paper; and (d) Bank certificates of deposit and bank deposit accounts. D. EXEMPTED TRANSACTIONS. Notwithstanding section IX B, the following transactions are exempted from the prior clearance requirements and other restrictions of Sections IX and X hereof: (a) Purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control. (b) Purchases or sales of securities which are not eligible for purchase or sale by the Funds or any other client of FIA. (c) Purchases or sales which are non-volitional. (d) Purchases which are part of an automatic dividend reinvestment plan. (e) Purchases effected upon the exercise of rights issued by an issuer PRO RATA to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired. (f) Transactions by Access Persons who are participants in the Fremont Group Section 401(k) Benefit Plan with respect to the investment options in such plan, including enrollments, contributions and transfers among investment options. (g) Purchases or sales which receive the prior approval of the Compliance Officer of FIA on the basis that the potential for harm to the Funds or other clients of FIA is remote because the transactions would be very unlikely to affect market price or liquidity, or because they clearly are not related economically to the securities to be purchased, sold or held by the Funds or other clients of FIA, and because they do not involve material non public information. . 12 E. SPECIAL RULE FOR DISINTERESTED DIRECTORS OF THE FUNDS. Notwithstanding subsection IX B above, transactions in securities by disinterested directors of the Funds are not subject to the requirements of this Section IX hereof if the disinterested director is an Access Person solely by reason of his or her directorship with the Funds, except where at the time of such transactions such disinterested director knew, or, in the ordinary course of fulfilling his or her official duties as a disinterested director should have known, that during the 15-day period immediately preceding or after the date of the director's transaction in a security that such security was or was to be purchased or sold by the Funds or such purchase or sale by the Funds was considered by the Funds or the Advisor. X. RESTRICTIONS ON TIMING OF PERSONAL SECURITIES TRANSACTIONS. The following are specific restrictions relating to personal securities transactions of all persons covered by this Code. Absent extraordinary circumstances, no Access Person shall be deemed to have violated this Code for effecting a securities transaction if such Access Person has been advised in writing by the Compliance Officer that the transaction would be consistent with this Code and has not been advised of any countermanding determination. FIA shall maintain written records of such actions, which records shall be made available in the manner required by Rule 17j-1 of the 1940 Act. A. PRIOR CLEARANCE PROCEDURE. 1. TRANSACTIONS IN PUBLICLY TRADED SECURITIES. Prior to effecting a transaction in a security, (other than those securities exempted under Section IX above), an Access Person must notify in writing the Compliance Officer of the proposed transaction, including the name, title, and amount of the security involved, using the Pre-Approval Form. The Compliance Officer shall (i) confirm with the appropriate portfolio manager that the security is not under consideration for trading, and (ii) otherwise determine whether such proposed transaction would or would not be consistent with this Code. Such conclusion shall be promptly (GENERALLY WITHIN 24 HOURS) communicated in writing to the Access Person making such request, at which point the Access Person may execute the trade if approved. Any approval which is granted will be good for no more than three trading days, following which the approval will no longer be valid and the Access Person will be required to reapply for approval if the pre-approved transaction has not been executed. If the Access Person does not execute the pre-approved transaction within the given time frame, he or she must inform the Compliance Officer as soon as possible. The Compliance Officer will note on the Pre-Approval Form that the transaction was not executed 13 2. GOOD 'TILL CANCELED ("GTC"), LIMIT, AND STOP-LOSS ORDERS. Prior to placing a transaction as a GTC, limit, or stop-loss order, an Access Person must notify in writing the Compliance Officer of the proposed transaction, including the name, price and conditions of the order, using the Pre-Approval Form. GTC, limit orders and stop-loss orders for securities that have received pre-approval and which are NOT SUBSEQUENTLY ALTERED, may be executed on a subsequent day (i.e., when triggered by market action) without receiving further permission. However, if such an order is altered in any way, the Access Person must notify the Compliance Officer prior to making such alterations and the Compliance Officer must approve the new conditions of the order. Also, if such an order is canceled, the Access Person must notify the Compliance Officer as soon as possible. If a GTC, limit order, or stop-loss order is found to be in conflict with this Code at any time, the Compliance Officer may direct that the order be canceled. Access Persons will immediately comply with cancellation instructions from the Compliance Officer. 3. PRIVATE PLACEMENT TRANSACTIONS. As set forth in IX B 4, the prior clearance procedure described in subsection above includes transactions by Access Persons in a private placement. In connection with a private placement acquisition, the Compliance Officer and the portfolio manager will take into account, among other factors, whether the investment opportunity should be reserved for the Funds and its shareholders, and whether the opportunity is being offered to an Access Person by virtue of his or her position with the Funds. Access Persons who have been authorized to acquire securities in a private placement will, in connection therewith, be required to disclose that investment if and when the Access Person takes part in the Funds' subsequent investment in the same issuer. In such a circumstance, the determination by the Funds to purchase securities of that issuer will be subject to an independent review by personnel of FIA with no personal interest in the issuer. B. PERSONAL TRADING BLACKOUT PERIODS. An Access Person may not be granted prior clearance to execute a securities transaction on a day during which the Funds have a pending "buy" or "sell" order in that same security until that order is executed or withdrawn. Any profits realized by an Access Person on trades within these periods must be disgorged by the Access Person to the benefit of the Funds. There also may be blackout periods regarding the Funds when a material event has occurred. The blackout period will cover the period from the time of the event to the notification of shareholders. 14 C. OTHER TRANSACTIONS AND RESTRICTIONS. 1. SHORT SALES. Short sales are permitted by Access Persons provided all other requirements of the Code are met. 2. CONVERTIBLE SECURITIES AND COMMODITY OR SECURITIES DERIVATIVES. The foregoing restrictions in this Code also apply to any purchase or sale of a security which is convertible into, exchangeable or exercisable for a security, securities, index or commodity that is being purchased or sold, or is actively being considered for, purchase or sale, for the Funds or other client accounts of the Advisor. 3. SERVICE AS A DIRECTOR. Access Persons are prohibited from serving on the boards of directors of publicly traded companies, absent prior authorization in accord with the general procedures with this Code of Ethics relating to personal securities transactions. The consideration of prior authorization will be based upon a determination that the board service would be consistent with the interests of the Funds and their shareholders. In the event that board service is authorized, Access Persons serving as directors should expect to be isolated from other Access Persons making investment decisions with respect to the securities of the company in question, through the use of "Chinese Wall" or other appropriate procedures to be considered and placed into effect at the time. XI. REPORTING AND CERTIFICATION REQUIREMENTS. A. INITIAL AND ANNUAL DISCLOSURE OF PERSONAL HOLDINGS. At the commencement of employment with FIA or the Funds, an Access Person will be required to disclose in writing all personal securities holdings beneficially owned by the Access Person (including futures contracts or options on futures contracts as defined in Section VII G). In addition, each Access Person will be required to submit on an annual basis an updated listing of those personal securities holdings. Forms for this purpose are available from the Compliance Officer, and are to be completed and returned to the Compliance Officer. The annual updated lists are to be submitted no later than February 15 with a listing as of the immediately preceding December 31 year-end date. These lists are to include all personal securities holdings beneficially owned by the Access Person, which may include securities that are exempt from the prior clearance procedures and from the quarterly transaction reporting requirements. B. QUARTERLY REPORTS. Under this Code, all employees are considered "Access Persons," and are required to prepare and file records of their personal securities transactions (including futures contracts or options on futures contracts as defined in Section VII G). If no transactions occurred during the period, check the box on the report to indicate this. All employees must file a report with the Compliance Officer within ten calendar days after the end of each calendar quarter. 15 1. INFORMATION IN REPORTS. Each report must contain the following information: (a) the date of the transaction, the title and the number of shares (or the principal amount) of each security involved; (b) the nature of the transaction (e.g., purchase, sale, option or any other type of acquisition or disposition); (c) the price at which the transaction was effected; and (d) the name of the broker, dealer or bank with or through whom the transaction was effected; and (e) copies of confirmations and monthly statements (upon receipt if not received at time of report). 2. REVIEW OF COMPLIANCE OFFICER'S TRADING. The Compliance Officer's personal trading must be reviewed by the President of the Advisor or in his or her absence a Managing Director of the Advisor. The results of the quarterly reporting and review procedure and the related documentation must be reviewed by the President of the Advisor or in his or her a Managing Director of the Advisor and the Funds. These reviews will be documented by the reviewing party. 3. ADDITIONAL INFORMATION IN REPORTS. At the option of the reporting person, the SEC allows the quarterly report to contain a statement declaring that the reporting of any transaction is not to be construed as an admission by the reporting person that he or she has any direct or indirect beneficial ownership in the security. Using that disclaimer language may be useful in an unclear situation to avoid a potential risk in not reporting a transaction while at the same time avoiding prejudicing any position the person may take or later seek to take with respect to ownership status. Where a report made to the Compliance Officer would duplicate information recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Advisers Act, no Access Person will be required to make a report. C. Exemptions from Quarterly Reporting. Quarterly Reports are not required with respect to any of the following: (a) transactions in securities which are direct obligations of the United States; (b) transactions in open-end mutual funds; or (c) transactions over which the reporting person does not have any direct or indirect influence or control; or 16 (d) transactions by Access Persons who are participants in the Fremont Group Section 401(k) Benefit Plan with respect to the investment options in such plan, including enrollments, contributions and transfers among investment options. Please note that there are categories of securities, or particular transactions, which are not subject to the restrictions of Section X above (e.g., purchases under an automatic dividend reinvestment plan) but which are subject to the reporting requirement of this Section XI. D. REPORTS OF VIOLATIONS. In addition to the quarterly reports required under this Section, Associated Persons and Access Persons promptly shall report to the Compliance Officer or the President of the Advisor any transaction which is, or might appear to be, in violation of this Code. Such report shall contain the information required in quarterly reports. E. CONFIRMATIONS AND STATEMENTS. All Associated Persons and Access Persons must direct their brokers to send duplicate copies of confirmations of all personal securities transactions and duplicate copies of monthly or periodic statements for all securities accounts to the Chief Compliance Officer. XII. OTHER RULES. A. GIFTS AND OTHER PREFERENTIAL TREATMENT. An Access Person may not in relation to the business of FIA seek or accept from any broker or dealer, other financial institution or supplier or contractor to FIA, (a) any gifts of material value (i.e., in excess of $100 per year), or; (b) any sort of preferential treatment from, or special arrangements with the institution or supplier. Any Access Person who receives an offer for a gift or bequest of material value from any such party should promptly report it to the Compliance Officer. B. FINDER'S FEES. Access Persons should not become involved in negotiations for corporate financing, acquisitions or other transactions for outside companies (whether or not securities of the company involved are held by the Funds or other clients of FIA) without the prior permission of the Compliance Officer. Specifically, no finder's or similar fee in connection with any such transactions may be negotiated or accepted without prior permission. 17 C. ANNUAL CERTIFICATION. Each access person will be required to certify annually that: (a) he or she has read and understands this Code of Ethics and that he or she is subject to it; (b) that he or she has complied with the requirements of this Code of Ethics; and (c) that he or she has disclosed and reported all personal securities transactions required to be disclosed or reported pursuant to this Code of Ethics. 18 SAMPLE ** URGENT - CONFIDENTIAL - HAND CARRY ** PRE-APPROVAL FOR EMPLOYEE SECURITIES TRANSACTIONS FREMONT INVESTMENT ADVISORS, INC. AND FREMONT MUTUAL FUNDS, INC. INSTRUCTIONS: - ------------- 1. Employee completes top section and gives it to Assistant Compliance Officer: Mona S. Mikhail or in her absence, Tina Thomas. 2. Compliance determines if transaction complies with Code of Ethics, completes bottom section, e-mails Employee with trade approval or rejection. 3. M. Mikhail files form @ 1.13, then at quarter end, compares it to Employee Personal Transactions Report AND COPIES OF EMPLOYEE'S BROKERAGE ACCOUNT CONFIRMATIONS OR STATEMENTS. EMPLOYEE: - --------- Security Name: Buy Sell: shares - -------------------------------------------------------------------------------- Notes: - -------------------------------------------------------------------------------- Trade Order: Mark one Price & Other Trade Instructions: [ ] Market _________________________________ [ ] Good 'till Cancelled _________________________________ [ ] Limit at $__________ _________________________________ [ ] Stop-Loss _________________________________ ================================================================================ If you are responsible for the _________________________________ investment decisions of a Fremont _________________________________ Fund, please explain briefly why _________________________________ this security is not appropriate _________________________________ for the fund that you manage. ================================================================================ Signature: Date: - -------------------------------------------------------------------------------- Print Name: Time: COMPLIANCE OFFICER USE ONLY: - ---------------------------- Security Held in Funds? Yes[ ] No[ ] In Private Client Portfolios? Yes[ ] No[ ] - -------------------------------------------------------------------------------- Considered for Purchase or Sale? Yes[ ] No[ ] - -------------------------------------------------------------------------------- Notes: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transaction Approved? Yes[ ] No[ ] Employee Notified? Yes[ ] No[ ] - -------------------------------------------------------------------------------- Notes: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature: Date: - -------------------------------------------------------------------------------- Print Name: Time: 19 SAMPLE FREMONT INVESTMENT ADVISORS, INC. AND FREMONT MUTUAL FUNDS, INC. EMPLOYEE SECURITIES TRANSACTIONS: CALENDAR QUARTER ENDED September 30, 1999 Note: MUST be filed with Compliance Officer within 10 days following end of quarter. PRINT NAME: - ------------------------------------------------------------------------ BANK OR CHECK & : TRADE TITLE OF SECURITY PURCHASE BROKER/ ATTACH DATE Common Stock unless otherwise noted. OR SALE (P/S) QUANTITY PRICE DEALER CONFIRM - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- [ ] INITIAL HERE TO INDICATE THAT YOU HAVE NOT TRADED SHARES OF FREMONT INTERNATIONAL SMALL CAP FUND BETWEEN JULY 29, 1999 AND SEPTEMBER 15, 1999, INCLUSIVELY. [ ] CHECK HERE IF YOU HAVE NOT TRADED ANY SECURITIES DURING THE QUARTER EXCLUDING EXEMPT TRANSACTIONS. Above is a record of transactions during the quarter indicated in securities in which I had, or in which I acquired or disposed of direct or indirect beneficial ownership. This report is made solely to comply with SEC regulations and shall not be construed as an admission by me that I am the beneficial owner of the securities listed above. SIGNED: DATED: - ----------------------------------------------------------------------------------------------------------------------------- Compliance Notes: - -----------------------------------------------------------------------------------------------------------------------------
SAMPLE _____________________________________ Print Name Page ____of_____ FREMONT INVESTMENT ADVISORS, INC. AND FREMONT MUTUAL FUNDS, INC. CODE OF ETHICS ANNUAL CERTIFICATION OF PERSONAL SECURITIES HOLDINGS* HOLDINGS AS OF ________________ Date YEAR NAME OF SECURITY # SHARES ACQUIRED** BROKER/DEALER - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ------------------------------------------------------- Signature ---------------------------------------- Date (Due by February 15th) *You may report holdings using any printed media, such as your own software or copies of investment statements, as long as you sign and date it. **an approximation is adequate. EX-99.P.2 8 exp_2.txt CODE OF ETHICS - DISTRIBUTOR Exhibit P(2) INVESTMENT COMPANY ADMINISTRATION, LLC FIRST FUND DISTRIBUTORS, INC. This Code of Ethics (the "Code") has been adopted by Investment Company Administration, LLC ("ICA")and First Fund Distributors, Inc.("FFD") in accordance with Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act"). I. LEGAL REQUIREMENT Rule 17j-1 makes it unlawful for certain persons, in connection with the purchase or sale by such person of a security held or to be acquired by a Fund: (1) To employ any device, scheme, or artifice to defraud the Fund; (2) To make to the Fund any untrue statement of a material fact or omit to state to the Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Fund; or (4) To engage in any manipulative practice with respect to the Fund. II. DEFINITIONS (a) "Fund" means any investment company registered under the 1940 Act, or any series or class of shares of such an investment company, which has a contractual relationship with ICA or FFD. (b) "Access person" means any employee of ICA or FFD who, in connection with his or her regular functions or duties, obtains information that a security is held or to be acquired by a Fund. (c) A security is "held or to be acquired" if within the most recent 15 days it (i) is or has been held by a Fund, or (ii) is being or has been considered by the Fund or its investment adviser for purchase by a Fund. A purchase or sale includes the writing of an option to purchase or sell. (d) A security is "being considered for purchase or sale" when a recommendation to purchase or sell a security has been made and communicated. (e) "Beneficial ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except that the determination of direct or indirect beneficial ownership shall apply to all securities which an access person has or acquires. (f) "Control" shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act. (g) "Security" shall have the meaning set forth in Section 2(a)(36) of the 1940 Act, except that it shall not include securities issued by the Government of the United States, bankers' acceptances, bank certificates of deposit, commercial paper and shares of registered open-end investment companies. III. EXEMPTED TRANSACTIONS The prohibitions of Section IV of this Code shall not apply to: (a) Purchases or sales effected in any account over which the access person has no direct or indirect influence or control. (b) Purchases or sales of securities which are not eligible for purchase or sale by a Fund. (c) Purchases or sales which are non-volitional on the part of either the access person or the Fund. (d) Purchases which are part of an automatic dividend reinvestment plan. (e) Purchases effected upon the exercise of rights issued by an issuer pro rata to al lholders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired. IV. PROHIBITED PURCHASES AND SALES (a) No access person shall knowingly purchase or sell, directly or indirectly, any security held or to be acquired by a Fund until the first business day after such Fund completes all of its intended trades in such security. (b) In order to avoid making a prohibited purchase or sale of a security, no access person shall purchase or sell any security except as indicated below, without obtaining advance written clearance of such transaction from a person designated by ICA and FFD to grant such advance clearance. (c) Advance clearance is not required for the purchase or sale of 500 shares or less (during a rolling 30 day period) of an equity security which (i) is listed on the New York Stock Exchange or the NASDAQ National Market System, or (ii) has a market capitalization of $1 billion or more at the time of purchase or sale. (d) No access person may purchase a security in an initial public offering without the prior written approval of the person designated by ICA and FFD to grant such advance clearance. (e) No access person shall engage in any act, practice, or course of conduct that would violate the provisions of Rule 17j-1 as set forth in Section I above. V. REPORTING Every access person shall report to the Compliance Officer designated by ICA and FFD the information described below with respect to transactions in any security in which such access person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security, provided, however, that an access person shall not be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence. (a) INITIAL HOLDINGS REPORT. Within ten days of beginning employment, each Access Person must report the following information: (1) The title, number of shares and principal amount of each security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person; (2) The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person; and (3) The date the report is submitted by the Access Person. . (b) QUARTERLY TRANSACTION REPORTS. Within ten days of the end of each calendar quarter, each Access Person must report the following information: (1) With respect to any transaction during the quarter in a Security in which the Access Person had any direct or indirect beneficial ownership: (a) The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each security involved; (b) The nature of the transaction (I.E., purchase, sale); (c) The price of the security at which the transaction was effected; (d) The name of the broker, dealer or bank with or through which the transaction was effected; and (e) The date that the report is submitted by the Access Person. (C) ANNUAL HOLDINGS REPORTS. Each year, the Access Person must report the following information: (1) The title, number of shares and principal amount of each security in which the Access Person had any direct or indirect beneficial ownership; (2) The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities were held for the direct or indirect benefit of the Access Person; and (3) The date the report is submitted by the Access Person. VI. SANCTIONS Upon discovering a violation of this Code, ICA or FFD may impose such sanctions as it deems appropriate, including, inter alia, a letter of censure, suspension, or termination of the employment of the violator, and/or a disgorging of any profits made by the violator. May 1, 2000 -----END PRIVACY-ENHANCED MESSAGE-----