FLEMING CAPITAL
MUTUAL FUND GROUP, INC.
SEMI-ANNUAL REPORT
March 31, 1999
[FLEMING LOGO]
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Shareholder Letter and Comments from Investment Adviser
Fleming Fund.............................................. 2
Fleming Fledgling Fund.................................... 4
Schedules of Investments
Fleming Fund.............................................. 6
Fleming Fledgling Fund.................................... 9
Statements of Assets and Liabilities........................................ 13
Statements of Operations.................................................... 14
Statements of Changes in Net Assets......................................... 15
Financial Highlights........................................................ 17
Notes To Financial Statements............................................... 19
THIS REPORT IS PROVIDED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FLEMING CAPITAL MUTUAL FUND GROUP, INC. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS. DISTRIBUTOR: FIRST FUND DISTRIBUTORS, INC.
<PAGE>
Fleming Fund
Semi-Annual report dated March 31, 1999
- --------------------------------------------------------------------------------
Dear Shareholder:
The six month period under review got off to a shaky start as the net asset
value (NAV) plunged to $9.74 by October 8th, below the initial launch price of
$10. Fortunately the stock market rebounded and the NAV had recovered to $12.43
by year end, only to enter a period of stagnation in the first quarter of 1999.
There were sporadic periods when the market leadership changed in favour of
small cap and value stocks, but these periods were few and far between. The
overwhelming trend has been, and continues to be, a widening valuation gap
between the blue chip big cap growth stocks and the rest of the market. This
trend has not favoured our conservative investment style, which attempts to
reduce absolute risk by applying disciplined valuation criteria.
The silver lining of the gloomy relative performance cloud is that several of
the fund's major positions are in companies whose stock prices do not reflect
their positive business characteristics and growth prospects. A good example
would be Midas, the automotive repair chain famous of its mufflers, but now
offering a variety of services for the aging car population. New management has
sold most of the company-owned stores so that the revenues now derive from
royalties, parts sales and rent. This is a financial model with minimal capital
employed and strong free cash flow. If various new initiatives can drive some
store sales the earnings growth rate will accelerate and the stock's PE multiple
of 15 should expand. Time will tell.
Since the end of the period the fund's performance has improved. Maybe April is
not the cruelest month after all.
Sincerely,
Jonathan K.L. Simon
President and Portfolio Manager of the Fleming Fund
2
<PAGE>
THE FLEMING FUND
VALUE OF $10,000 VS S&P 500 AND WILSHIRE 5000
Average Annual Total Returns
for Period Ending 3/31/99
Since Inception One Year
16.49% 3.41%
------ -----
QUARTER FLEMING FUND S&P 500 WILSHIRE 5000
------- ------------ ------- -------------
11/13/97 10,000.00 10,000.00 10,000.00
11/30/97 10,200.00 10,431.00 10,239.00
12/31/97 10,490.00 10,610.41 10,428.42
1/31/98 10,570.23 10,728.19 10,484.73
2/28/98 11,071.66 11,501.69 11,248.02
3/31/98 11,934.13 12,090.58 11,810.42
4/30/98 11,994.30 12,212.69 11,950.97
5/31/98 11,853.90 12,002.63 11,633.07
6/30/98 11,974.24 12,489.94 12,041.39
7/31/98 11,362.50 12,357.55 11,777.69
8/31/98 10,169.08 10,573.12 9,943.90
9/30/98 10,650.46 11,250.85 10,593.24
10/31/98 11,412.64 12,165.55 11,381.38
11/30/98 12,124.67 12,902.78 12,098.40
12/31/98 12,563.62 13,645.98 12,872.70
1/31/99 12,331.15 14,216.38 13,346.41
2/28/99 12,280.61 13,774.25 12,861.94
3/31/99 12,341.26 14,325.22 13,358.41
Past performance is not predictive of future performance.
The S&P 500 Index is an unmanaged index composed of 500 widely held common
stocks listed on the New York Stock Exchange, American Stock Exchange and
Over-The-Counter market. The Wilshire 5000 Index is an unmanaged index that
measures the performance of all U.S. headquartered equity securities with
readily available price data.
3
<PAGE>
Fleming Fledgling Fund
Semi-Annual report dated March 31, 1999
- --------------------------------------------------------------------------------
Dear Shareholder:
The six months to the end of March 31, 1999 saw a welcome recovery in your
fund's net asset value; in total a return of 21.7 percent. This compared with a
return of 10.0 percent for the Russell 2000 and a return of 12.9 percent for the
Lipper Small Cap index and continues the fund's record of strong relative
performance since its launch close to a year and a half ago.
However, relative to the market in general small cap stocks have continued to
struggle, particularly in the past three months when supercaps and technology
were the few areas working for investors, while the speculative frenzy continued
unabated in the Internet space. Stocks in general were supported by positive
economic news and a sense that momentum in corporate profits might be recovering
slightly, outweighing a rising trend in interest rates and the distant rumblings
of war in the Balkans. Signs of life in Asia also boosted confidence that the
large multinationals might finally be able to diversify their reliance on the
stalwart U.S. economy.
The stock market has never been so polarised in terms of valuation and
performance. Although the liquidity driven supercap growth stocks and the
Internet names present great cause for concern, in the broader market the
fundamentals remain fairly sound and valuations are in touch with them.
Surprisingly perhaps, our flow of new ideas is stronger than ever, with
virtually every recent trip generating one or more ideas worthy of inclusion in
the portfolio. To make room for new names we continue to take a hard look at
some tired positions, many of which are very cheap but which may remain that way
for an indefinite period. The growth profile of the portfolio is edging up,
although this is not reflected in a heavy weighting of conventional technology
stocks. However, the application of new technology is really changing the way a
lot of industries function, opening chinks in the armour of many established
leaders and presenting exciting opportunities in all sectors of the market.
That being said, since the end of the period of review I am pleased to note that
for the first time in a long time small cap stocks have started to outperform,
in part driven by the rotation into cyclicals in the S&P 500. It remains to be
seen whether this will be sustained or not.
Sincerely,
Christopher M.V. Jones
Vice President and Portfolio Manager of the Fleming Fledgling Fund
4
<PAGE>
THE FLEMING FLEDGLING FUND
VALUE OF $10,000 VS RUSSELL 2000 AND LIPPER SMALL CAP INDEX
Average Annual Total Return
for Period Ending 3/31/99
Since Inception One Year
--------------- --------
10.97% -0.69%
QUARTER FLEMING FLEDGLING FUND RUSSELL 2000 LIPPER SMALL CAP
- ------- ---------------------- ------------ ----------------
11/14/97 10,000.00 10,000.00 10,000.00
11/30/97 9,970.00 9,957.00 9,812.94
12/31/97 10,206.00 10,131.25 9,911.05
1/31/98 10,386.28 9,971.17 9,720.36
2/28/98 10,927.13 10,708.04 10,504.39
3/31/98 11,618.21 11,149.21 10,973.30
4/30/98 11,748.42 11,210.54 11,019.19
5/31/98 11,297.71 10,606.29 10,409.44
6/30/98 11,608.20 10,628.56 10,549.97
7/31/98 10,776.89 9,767.65 9,814.36
8/31/98 8,663.58 7,870.77 7,866.82
9/30/98 9,484.87 8,487.05 8,292.67
10/31/98 10,065.78 8,833.32 8,631.14
11/30/98 10,646.69 9,296.19 9,134.90
12/31/98 11,722.23 9,871.62 9,826.35
1/31/99 11,967.29 10,002.62 9,910.10
2/28/99 11,426.11 9,192.68 9,118.97
3/31/99 11,538.43 9,336.09 9,362.33
Past performance is not predictive of future performance.
The Russell 2000 Index is an unmanaged, capitalization weighted price only index
which is comprised of 2000 of the smallest stocks (on the basis of
capitalization) in the Russell 3000 Index. The Lipper Small Cap Index measures
the performance of the 30 largest mutual funds that invest primarily in
companies with market capitalizations of less than $1 billion at time of
purchase.
5
<PAGE>
FLEMING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 94.5% Value
- --------------------------------------------------------------------------------
BANKS: 2.1%
150 M & T Bank Corp. $ 71,850
-----------
BEVERAGES: 1.7%
1,100 Brown-Forman Corp. - Class A 59,400
-----------
BUILDING RELATED: 5.8%
7,000 Clayton Homes, Inc. 77,437
1,300 Martin Marietta Materials 74,181
2,300 Palm Harbor Homes, Inc. 50,025
-----------
201,643
-----------
COMMERCIAL SERVICES: 5.8%
3,000 Convergys Corp. 51,375
3,200 Dun & Bradstreet Corp. 114,000
1,000 Equifax, Inc. 34,375
-----------
199,750
-----------
DISTRIBUTION/WHOLESALE: 1.6%
2,500 VWR Scientific Products* 56,250
-----------
DIVERSIFIED FINANCIAL: 1.8%
1,800 Legg Mason, Inc. 60,638
-----------
FINANCE: 4.2%
1,250 American Express Co. 146,875
-----------
INSURANCE: 17.4%
6,300 CNA Surety Corp. 77,963
2,900 Horace Mann Educators 67,244
1,000 Marsh & McLennan Companies, Inc. 74,188
3,630 Medical Assurance, Inc. 101,640
1,500 NAC Re Corp. 80,531
2,000 Nationwide Financial Service 84,000
1,000 Partner RE, LTD 40,500
2,400 Torchmark Corp. 75,900
-----------
601,966
-----------
INVESTMENT MANAGEMENT: 2.0%
3,487 Waddell & Reed Financial 69,304
-----------
See Accompanying Notes to Financial Statements
6
<PAGE>
FLEMING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
LODGING: 6.3%
6,500 Marriott International, Inc. Class A $ 218,562
-----------
MEDIA: 11.4%
1,000 Cox Radio, Inc. Class A* 51,250
1,650 E.W. Scripps Co. 73,013
1,100 Gannett Co. 69,300
1,000 TCA Cable TV, Inc. 43,500
300 Washington Post Co. Class B 156,450
-----------
393,513
-----------
MISCELLANEOUS MANUFACTURING: 3.0%
1,500 Carlisle Companies, Inc. 70,125
1,600 Hon Industries, Inc. 35,100
-----------
105,225
-----------
OILS & GAS PRODUCERS: 2.1%
2,600 Devon Energy Corp. 71,662
-----------
REAL ESTATE: 4.4%
6,000 Security Capital Group Class B* 80,250
9,300 Security Cap. US Realty* 73,005
-----------
153,255
-----------
REITS: 6.1%
4,600 Kimco Realty Corp. 169,625
1,720 Public Storage, Inc. 43,000
-----------
212,625
-----------
RETAIL: 16.1%
2,300 Dayton-Hudson Corp. 153,237
6,500 Hancock Fabrics 41,031
5,000 Midas, Inc. 166,875
1,100 Payless Shoesource, Inc.* 51,150
2,500 Shopko Stores, Inc.* 74,688
4,500 Vicorp Restaurants, Inc.* 72,000
-----------
558,981
-----------
See Accompanying Notes to Financial Statements
7
<PAGE>
FLEMING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED) (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
TELEPHONE COMMUNICATIONS: 1.9%
3,000 Cincinnati Bell, Inc. 67,313
-----------
TOBACCO: 0.8%
800 Philip Morris Companies, Inc. $ 28,150
-----------
TOTAL COMMON STOCKS: 94.5%
(cost $2,973,191) $ 3,276,962
-----------
SHORT-TERM INVESTMENTS: 3.5%
-----------------------------
121,449 Firstar Treasury Money Market Fund
(cost $121,449) 121,449
-----------
TOTAL INVESTMENTS
(cost $3,094,640): 98.0% 3,398,411
Other Assets, less Liabilities: 2.0% 70,123
-----------
NET ASSETS: 100.0% $ 3,468,534
===========
*Non-income producing security
See Accompanying Notes to Financial Statements
8
<PAGE>
FLEMING FLEDGLING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS: 90.9% Value
- --------------------------------------------------------------------------------
ADVERTISING: 4.4%
1,270 Advo, Inc. $ 24,527
569 TMP Worldwide, Inc.* 36,878
-----------
61,405
-----------
AUTO PARTS: 3.9%
3,300 Jason, Inc.* 28,050
860 Keystone Automotive Industries, Inc.* 13,975
2,790 Tyler Corp. 12,206
-----------
54,231
-----------
BANKS: 5.0%
620 Investors Financial Services Corp. 17,825
80 M & T Bank Corp. 38,320
500 Texas Regional Bancshares 13,500
-----------
69,645
-----------
CHEMICALS: 3.5%
1,315 The Scotts Co.* 49,148
-----------
COMMERCIAL SERVICES: 14.8%
2,550 Ace Cash Express, Inc.* 32,512
1,400 Acnielson Corp.* 37,975
1,100 Coinmach Laundry Corp.* 11,275
370 Duff & Phelps Credit Rating 19,378
460 Envoy Corp. 20,240
1,550 Interim Services, Inc.* 23,250
515 Iron Mountain, Inc. 16,094
1,725 Rental Service Corp.* 30,188
600 Sylvan Learning Systems 16,425
-----------
207,337
-----------
CONSULTING SERVICES: 2.0%
400 T. Rowe Price Associates 13,750
415 Superior Consultants Holdings* 14,162
-----------
27,912
-----------
DATA PROCESSING: 1.4%
400 Choicepoint, Inc.* 19,950
-----------
See Accompanying Notes to Financial Statements
9
<PAGE>
FLEMING FLEDGLING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED), Continued
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
DISTRIBUTION/WHOLESALE: 4.9%
195 CDW Computer Centers, Inc. $ 13,455
1,700 Daisytek International Corp. 28,263
810 Scansource, Inc. 14,479
540 Tech Data Corp.* 12,386
-----------
68,583
-----------
ELECTRICAL COMPONENTS & EQUIPMENT: 1.1%
350 Jabil Circuit, Inc. 14,175
25 Richie Brothers* 842
-----------
15,017
-----------
ELECTRONICS: 3.9%
760 Cyberoptics Corp. 9,880
1,580 Kemet Corp. 18,170
500 Pittway Corp. Class A 13,250
280 Solectron Corp. 13,598
-----------
54,898
-----------
HAND/MACHINE TOOLS: 2.4%
1,225 Applied Power, Inc. Class A 33,381
-----------
HEALTH CARE: 2.7%
1,050 Hanger Orthopedic Group* 14,175
720 Staar Surgical Co.* 5,580
700 Henry Schein, Inc. 17,675
-----------
37,430
-----------
INSURANCE BROKERS: 1.1%
450 Poe & Brown, Inc. 14,934
-----------
LEISURE TIME: 1.8%
1,550 American Classic Voyages* 25,188
-----------
MEDIA: 8.8%
720 Jones Intercable, Inc. - Class A * 28,395
1,500 Penton Media, Inc. 33,750
700 Primedia, Inc.* 9,800
1,405 TV Guide Inc. - Class A 51,809
-----------
123,754
-----------
See Accompanying Notes to Financial Statements
10
<PAGE>
FLEMING FLEDGLING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED), Continued
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
MISCELLANEOUS MANUFACTURING: 3.3%
400 Carbo Ceramics Inc. $ 8,650
400 Ivex Packaging Corp. 6,075
1,280 Mettler-Toledo International* 31,680
-----------
46,405
-----------
OILS & GAS PRODUCERS: 1.7%
1,065 Newfield Exploration Co.* 24,096
-----------
REAL ESTATE INVESTMENT MGMT.: 4.6%
1,700 Grubb & Ellis Co.* 11,262
880 Prologis Trust 18,040
1,250 SL Green Realty Corp. 23,515
600 Trammel Crow Co.* 11,100
-----------
63,917
-----------
REITS: 0.9%
330 Kimco Realty Corp. 12,168
-----------
RETAIL: 5.0%
937 Regis Corp. 24,948
972 Sonic Corp. 26,183
750 Tractor Supply Co.* 19,172
-----------
70,303
-----------
SEMICONDUCTORS: 1.6%
540 Xilinx Inc. 21,904
-----------
SOFTWARE: 5.7%
550 Acxiom Corp.* 14,575
640 Advent Software, Inc. 32,000
580 CSG Systems Int'l, Inc. 22,874
950 Integrated Systems, Inc. 12,172
-----------
81,621
-----------
TRANSPORTATION: 6.4%
1,045 Air Express International 15,806
285 Expeditors International Wash, Inc. 15,390
2,000 Forward Air Corp. 26,250
675 Heartland Express, Inc.* 10,252
-----------
See Accompanying Notes to Financial Statements
11
<PAGE>
FLEMING FLEDGLING FUND
SCHEDULE OF INVESTMENTS MARCH 31, 1999 (UNAUDITED), Continued
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
TRANSPORTATION: 6.4% CONTINUED
490 Pittston Brink's Group $ 11,515
450 Swift Transportation Co. 11,644
-----------
90,857
-----------
TOTAL COMMON STOCKS: 90.9%
(cost $1,217,966) $ 1,274,084
-----------
SHORT-TERM INVESTMENTS: 6.1%
-----------------------------
85,656 Star Treasury Money Market Fund
(cost $85,656) 85,656
-----------
TOTAL INVESTMENTS
(cost $1,303,622): 97.0% 1,359,740
Other Assets, less Liabilities: 3.0% 42,166
-----------
NET ASSETS: 100.0% $ 1,401,906
===========
*Non-income producing security
See Accompanying Notes to Financial Statements
12
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
STATEMENTS OF ASSETS AND LIABILITIES, MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
FLEMING
FLEMING FLEDGLING
FUND FUND
----------- -----------
ASSETS
Investments securities at value
(cost $3,094,640 and $1,303,622 respectively) $ 3,398,411 $ 1,359,740
----------- -----------
Receivables:
Dividends and interest 3,494 1,306
Investment securities sold 95,510 3,933
From Adviser 19,897 22,092
Deferred organization costs, net 50,417 50,460
Other assets 9,245 1,469
----------- -----------
Total assets $ 3,576,974 $ 1,439,000
----------- -----------
LIABILITIES
Payable:
For investment securities purchased 74,650 --
Other accrued expenses 33,790 37,094
----------- -----------
Total liabilities 108,440 37,094
----------- -----------
NET ASSETS $ 3,468,534 $ 1,401,906
=========== ===========
COMPOSITION OF NET ASSETS
Paid-in capital $ 3,075,131 $ 1,261,207
Accumulated net investment loss (3,370) (7,535)
Accumulated undistributed net realized gain
on investments 93,002 92,116
Net unrealized appreciation on investments 303,771 56,118
----------- -----------
Net assets $ 3,468,534 $ 1,401,906
=========== ===========
Number of shares issued and outstanding
(unlimited shares authorized no par value) 284,010 124,016
=========== ===========
Net asset value per share $ 12.21 $ 11.30
=========== ===========
See Accompanying Notes to Financial Statements.
13
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
FLEMING
FLEMING FLEDGLING
FUND FUND
----------------- -----------------
October 1, 1998 October 1, 1998
to March 31, 1999 to March 31, 1999
----------------- -----------------
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividend income $ 17,596 $ 2,723
Interest income 3,439 2,450
--------- ---------
Total income 21,035 5,173
EXPENSES:
Advisory fees 14,791 6,463
Custodian fees 2,917 2,917
Administration fees 19,945 19,945
Fund accounting fees 9,972 9,972
Transfer agent fees 7,231 7,231
Legal fees 4,987 4,987
Insurance 3,491 3,491
Audit fees 8,947 9,207
Reports to shareholders 1,496 1,496
Registration fees 1,198 1,198
Directors fees 4,113 4,113
Amortization of deferred organization costs 6,881 6,881
Miscellaneous expenses 2,493 2,493
--------- ---------
Total expenses 88,462 80,394
--------- ---------
Expenses reimbursed/waived (67,921) (71,669)
--------- ---------
Net expenses 20,541 8,725
--------- ---------
NET INVESTMENT INCOME (LOSS) 494 (3,552)
--------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 40,507 67,910
Net change in unrealized appreciation on investments 416,892 177,940
Net realized and unrealized gain on investments 457,399 245,850
--------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 457,893 $ 242,298
========= =========
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
FLEMING FUND
October 1, 1998 November 13, 1997*
to March 31, 1999 to September 30, 1998
----------------- ---------------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 494 $ 14,836
Net realized gain on investments 40,507 52,495
Net change in unrealized appreciation
(depreciation) on investments 416,892 (113,121)
----------- -----------
Net increase (decrease) in net assets
resulting from operations 457,893 (45,790)
----------- -----------
Distributions to shareholders:
From net investment income (26,443) (3,632)
----------- -----------
Capital share transactions:
Proceeds from shares sold 140,967 3,048,047
Net asset value of shares issued on
reinvestment of distributions 23,827 3,632
Cost of shares redeemed (480) (229,487)
----------- -----------
Net increase from capital share transactions 164,314 2,822,192
----------- -----------
NET INCREASE IN NET ASSETS 595,764 2,772,770
NET ASSETS
Beginning of period 2,872,770 100,000
----------- -----------
End of period (including undistributed and
(distributions in excess of) net investment
income of ($3,370) and $22,579, respectively) $ 3,468,534 $ 2,872,770
=========== ===========
CHANGE IN SHARES
Shares sold 11,657 280,770
Shares issued on reinvestment of distributions 1,946 347
Shares redeemed (38) (20,672)
----------- -----------
Net increase 13,565 260,445
=========== ===========
</TABLE>
* Commencement of operations
See Accompanying Notes to Financial Statements.
15
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
FLEMING FLEDGLING FUND
-----------------------------------------
October 1, 1998 November 14, 1997*
to March 31, 1999 to September 30, 1998
----------------- ---------------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss $ (3,552) $ (3,225)
Net realized gain on investments 67,910 39,511
Net change in unrealized appreciation
(depreciation) on investments 177,940 (121,823)
----------- -----------
Net increase (decrease) in net assets
resulting from operations 242,298 (85,537)
----------- -----------
Distributions to shareholders:
From net investment income (10,499) (1,608)
From net realized gain on investment transactions (15,305) --
----------- -----------
Total distributions (25,804) (1,608)
----------- -----------
Capital share transactions:
Proceeds from shares sold 53,435 1,190,227
Net asset value of shares issued on
reinvestment of distributions 25,336 1,608
Cost of shares redeemed (28) (98,021)
----------- -----------
Net increase from capital share transactions 78,743 1,093,814
----------- -----------
NET INCREASE IN NET ASSETS 295,237 1,006,669
NET ASSETS
Beginning of period 1,106,669 100,000
----------- -----------
End of period (including undistributed
(distributions in excess of) net investment
income of ($7,535) and $6,517, respectively) $ 1,401,906 $ 1,106,669
=========== ===========
CHANGE IN SHARES
Shares sold 4,872 116,718
Shares issued on reinvestment of distributions 2,266 158
Shares redeemed (3) (9,995)
----------- -----------
Net increase 7,135 106,881
=========== ===========
</TABLE>
* Commencement of operations
See Accompanying Notes to Financial Statements.
16
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi-Annual Report.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEMING FUND
-----------------------------------------
October 1, 1998 November 13, 1997*
to March 31, 1999 to September 30, 1998
----------------- ---------------------
(Unaudited)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.62 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income -- 0.11
Net Realized and Unrealized Gains
on Investments 1.69 0.54
------ ------
Total from Investment Operations 1.69 0.65
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.10) (0.03)
------ ------
NET ASSET VALUE, END OF PERIOD $12.21 $10.62
====== ======
Total Return+ 15.88% 6.50%
Net Assets at End of Period ('000) $3,469 $2,873
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement++ 5.38% 7.72%
After Expense Reimbursement++ 1.25% 1.25%
Ratio of Net Investment Income to Average
Net Assets (Net of Expense Reimbursement)++ 0.03% 0.73%
Portfolio Turnover Rate+ 53.77% 73.34%
</TABLE>
* Commencement of operations
+ Not annualized
++ Annualized
See Accompanying Notes to Financial Statements.
17
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi-Annual Report.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FLEMING FLEDGLING FUND
-----------------------------------------
October 1, 1998 November 13, 1997*
to March 31, 1999 to September 30, 1998
----------------- ---------------------
(Unaudited)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.47 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.03) 0.08
Net Realized and Unrealized Gains
on Investments 2.08 (0.59)
------- -------
Total from Investment Operations 2.05 (0.51)
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.09) (0.02)
Dividends from net realized gains
on investments (0.13) --
------- -------
Total Distributions (0.22) (0.02)
------- -------
NET ASSET VALUE, END OF PERIOD $ 11.30 $ 9.47
======= =======
Total Return+ 21.65% (5.15%)
Net Assets at End of Period ('000) $ 1,402 $ 1,107
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement++ 12.42% 13.84%
After Expense Reimbursement++ 1.35% 1.35%
Ratio of Net Investment Loss to Average
Net Assets (Net of Expense Reimbursement)++ (0.55%) (0.30%)
Portfolio Turnover Rate+ 36.52% 35.47%
</TABLE>
* Commencement of operations
+ Not annualized
++ Annualized
See Accompanying Notes to Financial Statements.
18
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Fleming Capital Mutual Fund Group, Inc., (the "Group"), was
organized as a Maryland corporation on August 19, 1997 and is
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management investment company. The Group
consist of two separate series: the Fleming Fund and the Fleming
Fledgling Fund (each a "Fund" and collectively the "Funds"). Robert
Fleming, Inc. (the "Adviser") serves as the investment adviser to the
Funds and purchased 10,000 shares of each Fund on September 26, 1997.
Investment operations began on November 13, 1997 for the Fleming Fund
and November 14, 1997 for the Fleming Fledgling Fund.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Group in the preparation of its financial
statements. These policies are in conformity with generally accepted
accounting principles ("GAAP"). The presentation of financial
statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
Expenses directly attributable to each Fund are charged to that Fund=s
operations; expenses which are applicable to both Funds are allocated
among them on a pro-rata basis.
(a) Investment Valuation
Securities which are traded on a recognized stock exchange are
valued at the last sale price on the securities exchange on
which such securities are traded. Short-term investments with
maturities of sixty days or less are valued at amortized cost.
Securities and other assets for which market prices are not
readily available are valued at fair value as determined in
good faith in accordance with procedures approved by the Board
of Directors.
Repurchase Agreements. The Funds' custodian takes possession
of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a
mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price.
In the event of default of the obligation to repurchase, each
Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the
19
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject
to legal proceedings.
(b) Organization Costs
Costs incurred by the Funds in connection with their
organization, registration and the initial public offering of
shares have been deferred and are amortized over 5 years. If
any of the original shares of the Funds are redeemed by any
holder thereof prior to the end of the amortization period,
the redemption proceeds will be reduced by the pro rata share
of the unamortized expenses as of the date of redemption. The
pro rata share by which the proceeds are reduced will be
derived by dividing the number of original shares outstanding
at the time of redemption.
(c) Federal Income and Excise Taxes
The Funds intend to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and
to distribute substantially all investment company net taxable
income and net capital gains to shareholders in a manner which
results in no tax cost to the Fund. Therefore, no federal
income or excise tax provision is required.
(d) Distributions to Shareholders
Dividends from net investment income are generally declared
and paid annually. Distributions of net realized gains, if
any, are generally declared at least annually. Distributions
to shareholders are recorded on the ex-dividend date. The
Funds periodically make reclassifications among certain of its
capital accounts as a result of the recognition and
characterization of certain income and capital gain
distributions determined annually in accordance with federal
tax regulations which may differ from generally accepted
accounting principles.
Due to permanent book to tax differences relating to the
treatment of deferred organizational expenses, the Fleming
Fund and the Fleming Fledgling Fund reclassified $11,375 and
$11,350, respectively, from accumulated undistributed net
investment income (loss) to paid-in-capital. These
reclassifications had no effect on net assets of the Funds.
20
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
(e) Investment Transactions and Investment Income
Investment transactions are accounted for on trade date. The
Funds determine the gain or loss realized from investment
transactions using the identified cost method. Dividend income
is recognized on the ex-dividend date and interest income is
recognized on an accrual basis. Discounts are accreted and
premiums are amortized as adjustments to interest income and
the identified costs of investments.
(3) INVESTMENT ADVISER AND OTHER TRANSACTIONS WITH AFFILIATES
The Group has an Investment Advisory Agreement with the Adviser, with
whom certain officers and directors of the Funds are affiliated, to
furnish investment advisory services to the Funds. Under the terms of
this agreement, the Funds pay the Adviser equal to the following annual
percentage of average daily net assets:
Fleming Fund 0.90%
Fledgling Fund 1.00%
The Adviser has agreed to voluntarily reduce fees for expenses
(exclusive of brokerage, interest, taxes and extraordinary expenses)
that exceed the annual expense limitation of 1.25% for the Fleming Fund
and 1.35% for the Fleming Fledgling Fund of average daily net assets.
For the six months ended March 31, 1999, the Adviser reimbursed and
waived $67,921 of expenses for the Fleming Fund and $71,669 for the
Fleming Fledgling Fund. The Investment Advisory Agreement permits the
Adviser to seek reimbursement of any reductions made to its advisory
fees and payments made to limit expenses which are the responsibility
of the Funds within the three-year period following such reduction,
subject to the Funds ability to effect such reimbursement and remain in
compliance with applicable expense limitations.
Investment Company Administration, L.L.C. is the Administrator to the
Funds pursuant to an administration agreement. Each Fund pays the
Administrator an annual fee equal to 0.10% of the first $200 million of
average daily net assets, 0.05% of the next $300 million, and 0.03%
assets over $500 million, payable monthly and subject to a minimum
annual fee of $40,000 per Fund.
First Fund Distributors, Inc. serves as the Distributor to the Funds
pursuant to a Distribution Agreement. The Distributor receives no fee
for its distribution services.
21
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Each independent Director is compensated by the Group at an annual rate
of $5,000, plus related travel expense.
Certain officers of the Adviser, Administrator and Distributor are also
officers and/or Directors of the Funds.
(4) INVESTMENT TRANSACTIONS
For the six months ended March 31, 1999, the aggregate purchases and
sales of securities, excluding short-term investments, for the Funds
are summarized below:
Fleming
Fleming Fund Fledgling Fund
------------ --------------
Purchases $1,557,235 $381,233
Sales 1,534,983 411,997
At March 31, 1999, the Fleming Fund and the Fleming Fledgling Fund had
gross unrealized appreciation and depreciation of investments, based on
cost for the federal income tax purposes of $3,094,640 and $1,303622
respectively, as follows:
Fleming
Fleming Fund Fledgling Fund
Gross appreciation $ 429,290 $ 215,441
Gross depreciation (125,519) (159,323)
---------- ----------
Net unrealized appreciation on investments $ 303,771 $ 56,118
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