FREMONT FUNDS, INC.
                          OPERATING EXPENSES AGREEMENT

     THIS  OPERATING  EXPENSES  AGREEMENT (the  "Agreement")  is effective as of
December 31, 2000, by and between  FREMONT FUNDS,  INC.,  (the "Fund Group"),  a
Maryland  corporation,  on behalf of the  Fremont  New  Economy  Value Fund (the
"Funds"),  and the Advisor of the Fund, Fremont Investment  Advisors,  Inc. (the
"Advisor").

                                   WITNESSETH:

     WHEREAS,  the Advisor  renders  advice and services to the Fund pursuant to
the terms and provisions of an Investment  Advisory and Administrative  Services
Agreement  between  the Fund and the  Advisor  dated  December  31,  2000,  (the
"Investment Management Agreement"); and

     WHEREAS,  the Fund is responsible for, and have assumed the obligation for,
payment of certain expenses  pursuant the Investment  Management  Agreement that
have not been assumed by the Advisor; and

     WHEREAS,  the Advisor  desires to limit the Fund's  Operating  Expenses (as
that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and
provisions of this Agreement, and the Fund Group (on behalf of the Fund) 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  Operating  Expenses to the  respective  annual  rate of Total  Operating
Expenses specified for the Fund in APPENDIX A of this Agreement.

     2.   DEFINITION.  For  purposes  of this  Agreement,  the  term  "Operating
Expenses" with respect to the Fund is defined to include all expenses  necessary
or appropriate for the operation of the Fund including the Advisor's  investment
advisory and administrative fees under Paragraph 5 of the Investment  Management
Agreement, and other

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expenses described in Paragraph 4 of the Investment  Management  Agreement,  but
does not include any taxes, 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  reductions  of its  investment  management  fee  and
Operating  Expenses  paid  by it  that  are not  its  responsibility  under  the
Investment Management Agreement.

     4.   TERM.  This  Agreement  shall become  effective on the date  specified
herein and shall remain in effect for a period of fourteen  (14) months,  unless
sooner  terminated as provided in Paragraph 5 of this Agreement.  This Agreement
shall continue in effect thereafter for additional periods not exceeding one (1)
year so long as such  continuation is approved for the Fund at least annually by
the Board of Directors of the Fund Group (and  separately  by the  disinterested
Directors of the Fund Group).

     5.   TERMINATION.  This  Agreement  may be  terminated by the Fund Group on
behalf of the Fund at any time without payment of any penalty or by the Board of
Directors  of the Fund  Group,  upon  sixty  (60)  days'  written  notice to the
Advisor.  The Advisor may decline to renew this  Agreement by written  notice to
the Fund Group at least thirty (30) days before its annual expiration date.

     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.

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     8.   GOVERNING LAW. This  Agreement  shall be governed by, and construed in
accordance  with,  the laws of the State of California  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.

     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 FUNDS, INC.

________________________________

By:_____________________________

Title:__________________________


FREMONT INVESTMENT ADVISORS, INC.

________________________________

By:_____________________________

Title:__________________________

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                           FREMONT MUTUAL FUNDS, INC.

                          OPERATING EXPENSES AGREEMENT
                                   APPENDIX A
                                   ----------

FUND                         TOTAL OPERATING EXPENSES             PERIOD
--------------------------------------------------------------------------------
New Economy Value Fund                 1.20%             12/31/00 through 3/1/02

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