<PAGE> 1
FREMONT MUTUAL FUNDS, INC.(R)
ANNUAL REPORT
[GRAPHIC]
October 31, 1996
[FREMONT FUNDS LOGO]
<PAGE> 2
FREMONT FUNDS
A MESSAGE FROM DAVID L. REDO, CHAIRMAN AND CEO OF FREMONT MUTUAL FUNDS
[PICTURE OF DAVE REDO]
Dear Fellow Shareholder:
We are pleased to report on the progress of our nine mutual funds and some of
the exciting recent developments at our firm.
First, we would like to formally introduce Fremont Mutual Funds' new
President, Michael Kosich. Mike joins us from the Benham Group, where as Senior
Vice President and Director of Business Development, he was instrumental in
Benham's dramatic growth in the 1980's and 1990's. Mike brings extensive
investment experience, industry expertise and, most importantly, commitment to
the interests of shareholders of the Fremont Funds to this new position.
On the performance front, six of the eight Fremont Funds reporting for the
full fiscal year exceeded their designated benchmark returns. That is a batting
average any mutual fund family would be proud of. Portfolio Managers Bob Kern of
Fremont U.S. Micro-Cap Fund and Bill Gross of Fremont Bond Fund deserve special
mention. Fremont U.S. Micro-Cap Fund returned 41.46% compared to the Russell
2000's 16.61% gain. We just recently learned that for the two-year period ended
November 26, 1996, Fremont U.S. Micro-Cap Fund finished first in Investor
Business Daily's growth fund category with a 114% total return. Fremont Bond
Fund returned 8.18% versus the Lehman Brothers Aggregate Index's 5.83% gain for
fiscal 1996 -- a 40% higher return than this widely followed bond market index.
As you read through this annual report, you will notice a number of changes in
its format. These changes reflect your responses to the questionnaire we sent in
our last semi-annual report. We have added a Fund Profile which explains each
fund's investment philosophy and methodology in simple straightforward language.
This feature will continue in all subsequent reports. We have also asked each of
our portfolio managers to discuss one or more current holdings to demonstrate
how investment theory is put into practice. Finally, we have put faces to
portfolio management names so that you can get to know us better.
We are pleased with our funds' success in fiscal 1996, but are reminded of the
many challenges that face us in the year ahead. We are ever mindful of our
mandate -- to preserve and enhance the assets you have entrusted to us. We
pledge our very best efforts on your behalf.
Sincerely,
/s/ David L. Redo
David L. Redo
Chairman & CEO
<PAGE> 3
FREMONT FUNDS
TABLE OF CONTENTS
FUND PROFILES AND LETTERS TO SHAREHOLDERS
Fremont Global Fund..................................... 2
Fremont International Growth Fund....................... 5
Fremont International Small Cap Fund.................... 8
Fremont Emerging Markets Fund.......................... 11
Fremont U.S. Micro-Cap Fund............................ 14
Fremont Growth Fund.................................... 16
Fremont Bond Fund...................................... 18
Fremont Money Market Fund.............................. 20
Fremont California Intermediate Tax-Free Fund.......... 22
Auditor's Opinion...................................... 24
STATEMENTS OF INVESTMENTS
Fremont Global Fund.................................... 25
Fremont International Growth Fund...................... 30
Fremont International Small Cap Fund................... 32
Fremont Emerging Markets Fund.......................... 35
Fremont U.S. Micro-Cap Fund............................ 36
Fremont Growth Fund.................................... 38
Fremont Bond Fund...................................... 40
Fremont Money Market Fund.............................. 42
Fremont California Intermediate Tax-Free Fund.......... 44
COMBINED FINANCIAL STATEMENTS
Statements of Assets and Liabilities................... 46
Statements of Operations............................... 48
Statements of Changes in Net Assets.................... 50
FINANCIAL HIGHLIGHTS................................... 54
NOTES TO FINANCIAL STATEMENTS.......................... 59
1
<PAGE> 4
FREMONT FUNDS
FREMONT GLOBAL FUND
The Fremont Asset Allocation Committee, Portfolio Managers for Fremont Global
Fund Dave Redo, Pete Landini, Bob Haddick, Sandie Kinchen, Vince Kuhn
[FUND PROFILE]
Fremont Global Fund offers conservative investors a truly balanced approach to
global investing. The Fund management team understands and appreciates both the
reward potential and perhaps more importantly, the risks of global investing.
Through country diversification, prudent allocation between stocks, bonds and
cash, and disciplined securities selection, the Fund seeks total returns
equaling at least 80% of the global equities markets with only half of the
downside risk as measured by portfolio beta.
The Fund's five-member portfolio management team employs a three-step
investment process. First, economic growth, inflation, and interest rate
forecasts are developed to identify those regions and individual countries
offering the best investment opportunities. Second, financial market data are
examined to determine the most advantageous mix of stocks and bonds. Finally,
individual stocks are selected from those industry groups with the best earnings
growth potential. Fund management favors large, financially healthy companies
with consistent earnings records. Individual bonds are chosen based on credit
quality and opportunistic pricing.
[PHOTO OF A MEETING]
The Fremont Asset Allocation Committee Vince Kuhn, Sandie Kinchen, Dave Redo,
Bob Haddick, Pete Landini
Global investing demands truly professional management. The Fund's portfolio
management team collectively has over 100 years of global investing experience.
FREMONT GLOBAL FUND INVESTMENT RETURNS
FREMONT MUTUAL FUNDS
GROWTH OF $10,000 CHART
<TABLE>
<CAPTION>
LEHMAN BROS SAL NON-US BOND
FREMONT GLOBAL FUND S&P500 COPR/GOVT INTER EAFE INDEX 100% HEDGED
--------------------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18-NOV-88 $10,000 $10,000 $10,000 $10,000 $10,000
30-NOV-88 0.40% $10,040 2.81% $10,281 -0.34% $9,966 1.61% $10,161 0.04% $10,004
31-DEC-88 0.83% $10,123 1.81% $10,467 0.09% $9,975 0.56% $10,218 0.80% $10,084
31-JAN-89 2.88% $10,415 7.22% $11,223 1.05% $10,080 1.76% $10,398 0.56% $10,141
28-FEB-89 -0.87% $10,325 -2.48% $10,944 -0.42% $10,037 0.51% $10,451 -0.84% $10,055
31-MAR-89 1.75% $10,506 2.34% $11,201 0.43% $10,081 -1.96% $10,246 0.69% $10,125
30-APR-89 1.63% $10,677 5.15% $11,777 2.00% $10,282 0.93% $10,341 0.97% $10,223
31-MAY-89 1.41% $10,828 4.05% $12,254 1.98% $10,486 -5.44% $9,779 0.05% $10,228
30-JUN-89 0.46% $10,878 -0.55% $12,187 2.52% $10,750 -1.68% $9,614 0.87% $10,317
31-JUL-89 4.72% $11,391 8.98% $13,281 2.05% $10,970 12.56% $10,822 2.18% $10,542
31-AUG-89 1.06% $11,512 1.93% $13,538 -1.29% $10,829 -4.50% $10,335 0.09% $10,551
30-SEP-89 -0.44% $11,462 -0.39% $13,485 0.47% $10,880 4.56% $10,806 -0.53% $10,495
31-OCT-89 -0.79% $11,371 -2.36% $13,167 2.12% $11,110 -4.02% $10,371 -0.06% $10,489
30-NOV-89 1.30% $11,519 2.07% $13,439 0.95% $11,216 5.03% $10,893 -0.23% $10,465
31-DEC-89 1.88% $11,735 2.37% $13,758 0.28% $11,247 3.69% $11,295 0.33% $10,500
31-JAN-90 -3.09% $11,373 -6.71% $12,835 -0.64% $11,175 -3.73% $10,874 -1.98% $10,292
28-FEB-90 -0.37% $11,331 1.29% $13,000 0.37% $11,217 -6.97% $10,116 -1.49% $10,138
31-MAR-90 0.38% $11,373 2.62% $13,341 0.13% $11,231 -10.42% $9,062 -0.05% $10,133
30-APR-90 -1.50% $11,203 -2.48% $13,010 -0.35% $11,192 -0.79% $8,990 -0.08% $10,125
31-MAY-90 5.42% $11,810 9.75% $14,278 2.20% $11,438 11.41% $10,016 2.48% $10,376
30-JUN-90 0.27% $11,842 -0.69% $14,180 1.34% $11,591 -0.88% $9,928 0.52% $10,430
31-JUL-90 0.72% $11,927 -0.32% $14,134 1.39% $11,753 1.41% $10,068 0.39% $10,471
31-AUG-90 -4.91% $11,341 -9.04% $12,857 -0.41% $11,704 -9.71% $9,090 -1.35% $10,330
30-SEP-90 -4.13% $10,873 -4.92% $12,224 0.77% $11,795 -13.94% $7,823 -0.56% $10,272
31-OCT-90 1.82% $11,070 -0.37% $12,179 1.16% $11,931 15.59% $9,042 2.87% $10,567
30-NOV-90 2.52% $11,349 6.43% $12,961 1.52% $12,112 -5.90% $8,509 1.64% $10,740
31-DEC-90 1.57% $11,527 2.75% $13,318 1.37% $12,278 1.62% $8,647 1.00% $10,847
31-JAN-91 2.34% $11,797 4.42% $13,907 1.02% $12,403 3.23% $8,926 1.90% $11,053
28-FEB-91 4.00% $12,270 7.16% $14,902 0.80% $12,501 10.72% $9,883 1.47% $11,216
31-MAR-91 0.37% $12,315 2.37% $15,255 0.68% $12,586 -6.00% $9,290 0.05% $11,221
30-APR-91 0.46% $12,371 0.28% $15,297 1.09% $12,724 0.98% $9,381 0.49% $11,276
31-MAY-91 1.91% $12,607 4.30% $15,955 0.61% $12,802 1.04% $9,479 0.59% $11,343
30-JUN-91 -2.77% $12,258 -4.56% $15,228 0.07% $12,811 -7.35% $8,782 -0.54% $11,282
31-JUL-91 2.75% $12,596 4.68% $15,940 1.12% $12,954 4.91% $9,213 0.91% $11,384
31-AUG-91 1.70% $12,810 2.35% $16,315 1.91% $13,202 -2.03% $9,026 1.29% $11,531
30-SEP-91 0.79% $12,911 -1.65% $16,046 1.72% $13,429 5.64% $9,535 1.63% $11,719
31-OCT-91 1.50% $13,105 1.33% $16,259 1.14% $13,582 1.42% $9,671 0.71% $11,802
30-NOV-91 -1.78% $12,872 -4.03% $15,604 1.15% $13,738 -4.67% $9,219 0.32% $11,840
31-DEC-91 6.24% $13,676 11.42% $17,386 2.44% $14,073 5.16% $9,695 1.78% $12,051
31-JAN-92 -0.59% $13,595 -1.85% $17,064 -0.91% $13,946 -2.14% $9,488 0.84% $12,152
29-FEB-92 1.12% $13,747 1.28% $17,282 0.39% $14,001 -3.58% $9,148 0.33% $12,192
31-MAR-92 -2.04% $13,466 -1.95% $16,945 -0.39% $13,946 -6.60% $8,544 -0.57% $12,123
30-APR-92 0.26% $13,501 2.92% $17,440 0.88% $14,068 0.48% $8,585 0.31% $12,160
31-MAY-92 2.01% $13,773 0.53% $17,533 1.55% $14,286 6.69% $9,160 1.08% $12,292
30-JUN-92 -0.86% $13,655 -1.46% $17,277 1.48% $14,498 -4.74% $8,726 0.41% $12,342
31-JUL-92 1.13% $13,808 4.04% $17,975 1.99% $14,786 -2.56% $8,502 0.70% $12,428
31-AUG-92 0.26% $13,844 -2.02% $17,612 1.00% $14,934 6.27% $9,035 0.32% $12,468
30-SEP-92 0.86% $13,964 1.15% $17,815 1.36% $15,138 -1.98% $8,856 1.64% $12,673
31-OCT-92 0.51% $14,035 0.36% $17,879 -1.30% $14,941 -5.25% $8,392 1.71% $12,889
30-NOV-92 1.30% $14,218 3.37% $18,482 -0.38% $14,884 0.94% $8,471 0.04% $12,895
31-DEC-92 1.20% $14,389 1.30% $18,722 1.34% $15,083 0.52% $8,515 0.95% $13,017
31-JAN-93 0.43% $14,450 0.73% $18,858 1.94% $15,375 -0.01% $8,514 1.05% $13,154
28-FEB-93 1.10% $14,609 1.36% $19,115 1.58% $15,618 3.02% $8,771 1.83% $13,395
31-MAR-93 2.10% $14,916 2.15% $19,527 0.40% $15,681 8.72% $9,536 -0.28% $13,358
30-APR-93 0.16% $14,940 -2.45% $19,049 0.80% $15,806 9.49% $10,441 -0.05% $13,351
31-MAY-93 0.99% $15,089 2.67% $19,558 -0.22% $15,771 2.11% $10,662 0.48% $13,416
30-JUN-93 0.82% $15,212 0.33% $19,623 1.57% $16,019 -1.56% $10,495 1.86% $13,666
31-JUL-93 1.38% $15,423 -0.49% $19,526 0.24% $16,058 3.50% $10,863 1.12% $13,819
31-AUG-93 3.07% $15,896 3.78% $20,263 1.59% $16,313 5.40% $11,449 1.97% $14,091
30-SEP-93 1.25% $16,095 -0.74% $20,114 0.41% $16,381 -2.25% $11,192 0.67% $14,185
31-OCT-93 2.47% $16,493 2.05% $20,527 0.27% $16,425 3.08% $11,536 1.30% $14,369
30-NOV-93 -0.99% $16,330 -0.90% $20,342 -0.56% $16,333 -8.74% $10,528 0.84% $14,490
31-DEC-93 5.38% $17,209 1.23% $20,592 0.46% $16,408 7.22% $11,288 1.88% $14,763
31-JAN-94 1.32% $17,436 3.36% $21,284 1.11% $16,590 8.45% $12,242 -0.77% $14,650
28-FEB-94 -2.83% $16,944 -2.71% $20,707 -1.48% $16,344 -0.28% $12,208 -1.96% $14,362
31-MAR-94 -4.10% $16,249 -4.34% $19,808 -1.65% $16,075 -4.31% $11,683 -0.62% $14,273
30-APR-94 0.39% $16,312 1.29% $20,064 -0.68% $15,965 4.24% $12,178 -0.55% $14,194
31-MAY-94 0.39% $16,375 1.63% $20,392 0.07% $15,976 -0.57% $12,108 -0.77% $14,084
30-JUN-94 -1.08% $16,198 -2.47% $19,887 0.01% $15,978 1.41% $12,279 -1.09% $13,930
31-JUL-94 1.95% $16,514 3.31% $20,545 1.44% $16,208 0.96% $12,397 0.69% $14,026
31-AUG-94 2.83% $16,982 4.07% $21,381 0.31% $16,259 2.37% $12,691 -0.95% $13,893
30-SEP-94 -2.16% $16,615 -2.42% $20,864 -0.92% $16,109 -3.15% $12,291 0.30% $13,934
31-OCT-94 0.99% $16,780 2.30% $21,344 -0.01% $16,108 3.33% $12,700 0.34% $13,982
30-NOV-94 -1.98% $16,447 -3.67% $20,560 -0.45% $16,035 -4.81% $12,089 1.30% $14,163
31-DEC-94 0.26% $16,491 1.47% $20,862 0.35% $16,091 0.63% $12,166 0.04% $14,169
31-JAN-95 -1.09% $16,310 2.59% $21,403 1.68% $16,362 -3.84% $11,699 1.06% $14,319
28-FEB-95 1.26% $16,516 3.87% $22,231 2.07% $16,700 -0.29% $11,665 1.27% $14,501
31-MAR-95 2.19% $16,877 2.96% $22,889 0.57% $16,795 6.24% $12,392 2.21% $14,821
30-APR-95 2.14% $17,238 2.95% $23,564 1.24% $17,004 3.76% $12,858 1.60% $15,059
31-MAY-95 3.56% $17,851 3.96% $24,498 3.02% $17,517 -1.19% $12,705 3.20% $15,540
30-JUN-95 1.17% $18,060 2.35% $25,073 0.67% $17,635 -1.75% $12,483 -0.15% $15,517
31-JUL-95 3.03% $18,608 3.33% $25,908 0.01% $17,636 6.23% $13,261 1.19% $15,702
31-AUG-95 -0.21% $18,568 0.23% $25,968 0.91% $17,797 -3.81% $12,756 0.71% $15,813
30-SEP-95 1.56% $18,858 4.17% $27,051 0.72% $17,925 1.95% $13,004 1.64% $16,073
31-OCT-95 0.35% $18,924 -0.28% $26,975 1.11% $18,124 -2.69% $12,654 1.04% $16,240
30-NOV-95 1.47% $19,204 4.40% $28,161 1.31% $18,361 2.78% $13,006 2.04% $16,571
31-DEC-95 2.42% $19,669 1.85% $28,683 1.05% $18,554 4.03% $13,530 0.84% $16,710
31-JAN-96 3.18% $20,294 3.44% $29,669 0.86% $18,714 0.41% $13,586 1.11% $16,896
29-FEB-96 -0.34% $20,225 0.96% $29,955 -1.17% $18,495 0.34% $13,632 -1.12% $16,707
31-MAR-96 0.34% $20,294 0.96% $30,244 -0.51% $18,401 2.12% $13,921 0.97% $16,869
30-APR-96 2.12% $20,725 1.47% $30,688 -0.35% $18,336 2.91% $14,326 0.98% $17,034
31-MAY-96 0.68% $20,865 2.58% $31,480 -0.08% $18,321 -1.84% $14,063 0.05% $17,042
30-JUN-96 0.67% $21,006 0.38% $31,599 1.06% $18,516 0.56% $14,141 0.83% $17,184
31-JUL-96 -2.61% $20,458 -4.42% $30,203 0.30% $18,571 -2.92% $13,728 0.67% $17,299
31-AUG-96 1.31% $20,727 2.11% $30,840 0.08% $18,586 0.22% $13,759 0.76% $17,430
30-SEP-96 3.21% $21,392 5.63% $32,576 1.39% $18,844 2.66% $14,125 2.02% $17,783
31-OCT-96 0.60% $21,520 2.76% $33,475 1.77% $19,178 -1.00% $13,983 1.64% $18,074
110.06% 10.24% $2.16 16.31% $0.85 8.43% $0.41 4.66% $0.72
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, November 18, 1988.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the S&P 500 Index, the Morgan Stanley Capital International
EAFE Index, the Salomon Non-U.S. Government Bond Index (currency hedged), or
the Lehman Bros. Intermediate Government/Corporate Bond Index.
2
<PAGE> 5
FREMONT FUNDS
FREMONT GLOBAL FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1996
[MAP]
<TABLE>
<S> <C>
CANADA............................. 2.9%
EUROPE............................. 17.6%
UNITED STATES...................... 62.4%
JAPAN.............................. 4.1%
EMERGING MARKETS--LATIN AMERICA.... 0.3%
PACIFIC RIM........................ 8.3%
EMERGING MARKETS--OTHER............ 4.3%
</TABLE>
TO OUR SHAREHOLDERS
In second half fiscal 1996, ended October 31, 1996, Fremont Global Fund
returned 3.84% compared to the Lipper Global Flexible Fund Average's 5.48%. For
full fiscal year 1996, the Fund returned 13.7% versus the Average's 13.6%.
The Fund's overweighting in European, Canadian and Australian bonds and our
9.8% portfolio position in Asian (except Japan) stocks aided performance. The
Fund's relatively high (on average 20-25%) cash position restrained returns.
The Fund's larger than normal cash holdings reflected our concern that strong
global economic growth would lead to higher inflation and interest rates,
thereby increasing financial market risk. Based on economic data released in
early November which indicate more moderate global economic expansion, low
inflation and stable-to-declining interest rates, we are now comfortable putting
more money to work in global stock and bond markets.
In the U.S. stock market, we see attractive, albeit less robust, return
potential. We are forecasting corporate earnings to be up 5% to 10% in the
coming year. We doubt stocks will experience the price/earnings multiple
expansion witnessed in 1996. But, stock market gains in the high single digits
are achievable. With inflationary fear subsiding, U.S. bonds should have a
yield-like return with little net price movement in the coming 12 months.
In Europe, central banks should continue to keep interest rates low. We
believe these low rates will finally induce some broad-based economic momentum
(2 - 2.5% GDP growth). With high unemployment and low industrial capacity
utilization rates, European economies have a lot of room to grow before
rekindling any inflationary pressure. The European monetary union should be
particularly beneficial to countries like Spain, Portugal and Italy, whose
volatile currencies have restrained economic growth and foreign investment. We
will continue to focus our attention on these markets.
The Japanese economy should continue its modest expansion. But, an increase in
the consumption tax scheduled for April 1997 and long-term structural problems
in the banking sector make us neutral on the Japanese stock market. Extremely
low yields on Japanese bonds eliminate them from serious consideration.
The robust long-term economic growth prospects for Southeast Asian countries
makes this region an attractive investment arena. Substantial declines in
Thailand, Singapore, and Korea have wrung the speculative excess out of these
stock markets, and created some very appealing funda-
(continued on page 4)
3
<PAGE> 6
FREMONT FUNDS
THE CHANGING FREMONT GLOBAL FUND ASSET MIX
ASSET MIX ASSET MIX ASSET MIX
ASSET CLASS 11/30/96 10/31/96 10/31/95
STOCKS
U.S 38% 30% 35%
FOREIGN 25% 22% 35%
--- --- ---
TOTAL STOCKS 63% 52% 70%
BONDS
U.S 7% 6% 10%
FOREIGN 17% 16% 15%
--- --- ---
TOTAL BONDS 24% 22% 25%
CASH RESERVES 13% 26% 5%
-------------------------------------------------------------
TOTAL 100% 100% 100%
mental values. The decent returns of emerging market indices, up around 10% in
1996, have restored international investor confidence, and with the U.S. and
many European stock markets at record levels, we could see a very favorable flow
of funds into Pacific Rim equities markets in the year ahead. Over the next
several months, we plan to invest some of the Fund's cash reserves into
carefully selected Southeast Asian stocks.
Next we would like to briefly discuss some of the global equities that appear
particularly compelling today. Since things can change rapidly in the financial
markets, it should be noted that the following stocks may or may not be
portfolio holdings at the time you read this report.
When Hong Kong is officially handed over to China on June 30, 1997, the great
uncertainty that has restrained the market in recent years will finally subside.
Citic Pacific will be the most direct beneficiary of the changing of the guard.
A publicly-held company, Citic Pacific is essentially the investment arm of the
Chinese central government. It is aggressively investing in Hong Kong commercial
real estate, transportation systems and finance companies. Citic is going to
replace the British trading companies that have dominated the Hong Kong economy
for a century. The company will make money in Hong Kong and be one of the
biggest commercial conduits to mainland China. Citic is not a monopoly, but it
is going to be one of the biggest and most influential players in the region.
With its recent acquisition of Morton Thiokol's auto airbag business,
Sweden's Autoliv is now the world's largest player in what will continue to be a
great growth industry. Over the next several years, global auto manufacturers
will be adding front passenger side airbags in their mid-price lines. Many will
follow Volvo and Mercedes' lead by adding side impact airbags to their luxury
lines. This translates into incremental revenues and earnings for dominant
market share companies like Autoliv.
We are pleased to have modestly exceeded our performance benchmark in fiscal
1996 despite the portfolio's relatively large cash holdings. Based on
better-than-expected news on the global inflation and interest rate fronts, we
will be more fully invested in the year ahead. We expect decent absolute returns
from global stock and bond markets in general and particularly good relative
returns from our investments in Southeast Asia. We remain confident the Fund
will continue to produce attractive risk-adjusted returns in global financial
markets.
Sincerely,
/s/Dave Redo /s/Pete Landini
/s/Robert L. Haddick /s/Sandie Kinchen
/s/Vince Kuhn
The Fremont Asset Allocation Committee
Portfolio Managers
Fremont Global Fund
4
<PAGE> 7
FREMONT FUNDS
FREMONT INTERNATIONAL GROWTH FUND
Andrew L. Pang, Portfolio Manager
Fremont Investment Advisors, Inc.
[PHOTO OF ANDREW PANG]
[FUND PROFILE]
Fremont International Growth Fund invests in international stocks with
superior earnings growth potential. Approximately 40 percent of the portfolio
is generally invested in European stock markets, with the balance devoted to
Asian markets including Japan.
First, fund management employs a top-down approach -- factoring in economic
growth potential, corporate earnings outlook, market valuations, political and
currency stability, and inflation and interest rate trends -- in making country
asset allocation decisions. Then, within each country, the Fund focuses on those
industry groups providing essential products and services -- consumer basics,
banking, telecommunications, information technology, power generation, health
care and infrastructure. The Fund favors dominant market share companies (in
some cases monopolies) most likely to produce consistent earnings growth.
Portfolio Manager Andrew L. Pang is a Chinese American with strong cultural
ties and investment research contacts in Asia. He travels globally on a regular
basis meeting with research analysts and directly with corporate management to
identify investment opportunities.
TO OUR SHAREHOLDERS
For the six months ended October 31, 1996, Fremont International Growth Fund
returned -4.06% compared to -2.39% for the Europe, Australia, and Far East
(EAFE) Index. For full fiscal year 1996, the Fund gained 7.07% versus EAFE's
10.51%.
Feathers in our cap for the second fiscal half include our overweighting in
Hong Kong (7.5% compared to EAFE's 3.5%), and our underweighting in Japan (23.5%
versus EAFE's 40%). The Hong Kong stock market rose to record highs recently,
and over the last six months the Japanese stock market as measured by the MSCI
was off 16.02% including yen-to-dollar currency translation. Black eyes for the
portfolio included an overweighting in other Southeast Asian markets, which
performed poorly
(continued on page 6)
FREMONT INTERNATIONAL GROWTH FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT INT'L GROWTH FUND EAFE
----------------- --------------
<S> <C> <C> <C> <C> <C>
01-MAR-94 $10,000 $10,000
31-MAR-94 -3.66% $9,634 -4.31% $9,569
30-APR-94 0.33% $9,666 4.24% $9,975
31-MAY-94 0.11% $9,676 -0.57% $9,918
30-JUN-94 -1.94% $9,488 1.41% $10,058
31-JUL-94 2.42% $9,718 0.96% $10,155
31-AUG-94 4.73% $10,178 2.37% $10,395
30-SEP-94 -1.44% $10,031 -3.15% $10,068
31-OCT-94 1.98% $10,230 3.33% $10,403
30-NOV-94 -4.80% $9,739 -4.81% $9,903
31-DEC-94 -0.51% $9,689 0.63% $9,965
31-JAN-95 -6.90% $9,020 -3.84% $9,582
28-FEB-95 1.97% $9,198 -0.29% $9,555
31-MAR-95 2.05% $9,386 6.24% $10,151
30-APR-95 3.34% $9,699 3.76% $10,533
31-MAY-95 2.59% $9,950 -1.19% $10,407
30-JUN-95 2.10% $10,159 -1.75% $10,225
31-JUL-95 5.66% $10,734 6.23% $10,862
31-AUG-95 -2.43% $10,473 -3.81% $10,448
30-SEP-95 0.70% $10,546 1.95% $10,652
31-OCT-95 -2.87% $10,243 -2.69% $10,366
30-NOV-95 -0.93% $10,148 2.78% $10,654
31-DEC-95 2.36% $10,387 4.03% $11,083
31-JAN-96 3.45% $10,746 0.41% $11,129
29-FEB-96 1.57% $10,915 0.34% $11,166
31-MAR-96 0.77% $10,999 2.12% $11,403
30-APR-96 3.93% $11,431 2.91% $11,735
31-MAY-96 -0.92% $11,326 -1.84% $11,519
30-JUN-96 1.68% $11,516 0.56% $11,584
31-JUL-96 -5.22% $10,915 -2.92% $11,245
30-AUG-96 1.74% $11,104 0.22% $11,270
30-SEP-96 2.37% $11,368 2.66% $11,570
31-OCT-96 -3.53% $10,967 -1.00% $11,454
15.16% 6.24% 15.84% 6.50%
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, March 1, 1994.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the Morgan Stanley Capital International EAFE Index.
5
<PAGE> 8
FREMONT FUNDS
FREMONT INTERNATIONAL GROWTH FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1996
[MAP]
<TABLE>
<S> <C>
CANADA........................... 0.3%
UNITED KINGDOM................... 8.4%
CONTINENTAL EUROPE............... 31.0%
UNITED STATES.................... 3.5%
JAPAN............................ 23.5%
HONG KONG/SINGAPORE/MALAYSIA..... 11.2%
OTHER EMERGING MARKETS:
INCLUDING THAILAND, INDONESIA,
THE PHILIPPINES, TAIWAN AND
SOUTH KOREA.................... 18.9%
AUSTRALIA/NEW ZEALAND............ 3.2%
</TABLE>
relative to European markets. We are currently seeing a rebound in some of these
markets. Portfolio performance was also restrained by our underweighting in the
United Kingdom (8.4% versus EAFE's 16%), even though our UK stocks outperformed
the UK index 16% to 14%.
Looking ahead, we believe our overweighting in Hong Kong in particular and
Southeast Asia in general will serve us well. We are forecasting 6 - 8% real GDP
growth in Southeast Asia compared to 2 - 2.5% growth in Europe. In addition,
after three years of lackluster performance relative to European stock markets,
Southeast Asian stock market valuations are more than reasonable. Our current
asset allocation of approximately 54% in Asia (23.5% in Japan and 30% spread out
among eight other Southeast Asian markets), and about 40% in Europe, reflects
our expectations for much better relative returns for Southeast Asian stocks.
Bearing in mind we are committed to no stock forever, let's talk about a few
of our current favorites. Datacraft Asia (Singapore) is in the information
technology upgrade business serving companies throughout Southeast Asia. They
have developed a particularly promising niche in China, where they recently
received six contracts to upgrade telecommunications systems in corporate
regional offices. We are looking for 30 - 35% earnings growth in the next two
years. This rapid earnings growth could be extended well into the future if
Datacraft can further expand its presence in China.
In the United Kingdom, we have found an intriguing monopolistic company.
Railtrack, created via an initial public offering in May 1996, is part of the
privatization of the United Kingdom's transportation system. Railtrack owns all
the railroad infrastructure and is paid by railroad companies to maintain and
improve railway tracks and station
6
<PAGE> 9
FREMONT FUNDS
houses throughout the country. Because of long-term contracts with the railroad
companies, Railtrack's revenues are very predictable. The company is now in the
process of aggressively cutting costs, which will improve margins and earnings.
Railtrack stock has performed well and we believe it will continue to rise on
accelerating earnings.
Going forward, we believe our commitment to Southeast Asian markets will be
more adequately rewarded. Our focus on dominant market share essential service
companies should continue to contribute to our stock-picking success. We thank
you for your appreciation of our investment discipline and look forward to a
financially rewarding year ahead.
Sincerely,
/s/Andrew L. Pang
Andrew L. Pang
Portfolio Manager
Fremont International Growth Fund
<TABLE>
<CAPTION>
FREMONT INTERNATIONAL GROWTH FUND
SECTOR ALLOCATION AS OF OCTOBER 31, 1996
<S> <C>
SHORT TERM SECURITIES (3.6%)
TECHNOLOGY (14.1%)
FINANCIAL SERVICES (11.4%)
HEALTH CARE (10.6%)
UTILITIES (8.0%)
CONSUMER NON-DURABLES (7.0%)
CONSUMER SERVICES (6.7%)
CAPITAL GOODS (6.6%)
CONSUMER DURABLES (6.6%)
OTHER (25.4%)
</TABLE>
7
<PAGE> 10
FREMONT FUNDS
FREMONT INTERNATIONAL SMALL CAP FUND
Dr. Gary L. Bergstrom, Portfolio Manager
Acadian Asset Management, Inc.
[PHOTO OF GARY BERGSTROM]
[FUND PROFILE]
Fremont International Small Cap Fund's investment thesis is simple: extensive
statistical evidence shows that superior long-term returns are achieved by
investing in fundamentally undervalued small company stocks. The Fund's
Sub-Advisor, Acadian Asset Management, Inc., has a unique financial database of
approximately 20,000 companies in over 50 countries. This database includes up
to 25 years of historical earnings, dividends, book values, stock prices,
country indices, and inflation and interest rate statistics for individual
countries.
After screening stocks through numerous fundamental value models, country and
currency valuation is factored in, producing a relative attractiveness ranking
("alpha ranking") for all the stocks in this extensive global universe. The Fund
invests in those highly ranked stocks judged to have above average performance
potential. Country diversification is maintained to reduce portfolio risk.
Portfolio Manager Dr. Gary L. Bergstrom, (President and Chief Investment
Officer of the Fund's Sub-Advisor, Acadian Asset Management, Inc.) has more than
25 years of professional investment experience in global markets. He has
personally developed many of the quantitative techniques employed in Acadian's
valuation models.
TO OUR SHAREHOLDERS
For the six months ended October 31, 1996, Fremont International Small Cap
Fund was down 1.3% compared to the Salomon Brothers Extended Market Index of
Europe and Pacific Countries' (EMI EPAC) loss of 3.4%. For the full fiscal year,
the Fund gained 13.7% versus EMI EPAC's 12.8%. The Fund outperformed the Lipper
International Small Company Average by 0.6% for the year.
In the second half of fiscal 1996, the Fund achieved superior relative returns
from Japanese stocks, as signs of economic recovery boosted the smaller,
economically-sensitive companies in the
FREMONT INTERNATIONAL SMALL CAP FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT INTERNATIONAL SMALL CAP FUND SOLOMON EMI INDEX
------------------------------------ -----------------
<S> <C> <C> <C> <C>
30-JUN-94 $10,000 $10,000
31-JUL-94 1.30% $10,130 1.14% $10,114
31-AUG-94 2.37% $10,370 1.06% $10,221
30-SEP-94 -4.34% $9,920 -2.86% $9,929
31-OCT-94 -0.60% $9,860 1.81% $10,109
30-NOV-94 -5.58% $9,310 -6.24% $9,478
31-DEC-94 -3.11% $9,020 1.34% $9,605
31-JAN-95 -5.32% $8,540 -3.25% $9,293
28-FEB-95 -0.94% $8,460 -1.46% $9,157
31-MAR-95 2.25% $8,650 4.25% $9,546
30-APR-95 3.47% $8,950 3.00% $9,833
31-MAY-95 2.57% $9,180 -1.75% $9,660
30-JUN-95 -0.98% $9,090 -1.23% $9,542
31-JUL-95 5.61% $9,600 5.83% $10,098
31-AUG-95 -2.19% $9,390 -2.53% $9,842
30-SEP-95 0.43% $9,430 0.78% $9,919
31-OCT-95 -3.76% $9,075 -2.88% $9,634
30-NOV-95 -0.78% $9,004 1.06% $9,736
31-DEC-95 2.95% $9,270 3.83% $10,109
31-JAN-96 6.47% $9,870 1.78% $10,288
29-FEB-96 1.75% $10,043 1.56% $10,449
31-MAR-96 1.92% $10,236 2.30% $10,689
30-APR-96 2.09% $10,450 5.26% $11,252
31-MAY-96 0.10% $10,460 -0.81% $11,160
30-JUN-96 -1.17% $10,338 0.01% $11,162
31-JUL-96 -2.85% $10,043 -3.78% $10,740
30-AUG-96 1.21% $10,165 1.01% $10,848
30-SEP-96 0.50% $10,216 0.56% $10,909
31-OCT-96 1.00% $10,318 0.00% $10,909
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, June 30, 1994.
Performance data illustrated is historical. Past performance is not predictive
of future performance. Share price and return will vary so that a gain or loss
may be realized when shares are sold. All performance figures assume
reinvestment of dividends. Management fees and other expenses are included in
the Fund's performance; however, fees and expenses are not incorporated in the
Salomon Brothers Extended Market Index.
8
<PAGE> 11
FREMONT FUNDS
FREMONT INTERNATIONAL SMALL CAP FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1996
[MAP]
<TABLE>
<S> <C>
CANADA........................................ 3.3%
IRELAND....................................... 0.9%
CONTINENTAL EUROPE............................ 19.5%
UNITED STATES................................. 1.1%
UNITED KINGDOM................................ 12.7%
JAPAN......................................... 17.1%
HONG KONG/SINGAPORE/MALAYSIA.................. 10.5%
EMERGING MARKETS: LATIN AMERICA............... 10.0%
OTHER EMERGING MARKETS:
INCLUDING SOUTH KOREA, TURKEY,
CZECH REPUBLIC, PORTUGAL, GREECE,
CHINA AND OTHERS............................ 23.5%
AUSTRALIA/NEW ZEALAND ........................ 1.4%
</TABLE>
portfolio. Investments in smaller markets like Italy, Spain, New Zealand and
Malaysia were rewarding, as was successful stock selection in emerging markets
including Greece, China, Mexico and Turkey. The Fund's overweighting in the
strong Brazilian stock market was also a performance positive. The portfolio's
underweighting in the United Kingdom and the relative underperformance of
portfolio holdings in France restrained Fund returns.
The Fund's portfolio characteristics remain consistent with our investment
thesis that over the longer term, superior returns are generated through
investing in fundamentally undervalued small cap stocks.
As the following chart indicates, our bottom-up stock selection discipline has
resulted in attractive portfolio valuations and higher yield relative to three
international benchmarks -- EAFE, for large cap developed nations; EMI-EPAC, for
small cap developed nations; and IFC Investable, for emerging countries.
(continued on page 10)
PORTFOLIO VALUATIONS AND YIELDS
<TABLE>
<CAPTION>
PRICE/ PRICE/ CURRENT NEXT YEAR PRICE/CASH
BOOK SALES P/E P/E EARNINGS YIELD
---- ----- ---- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C>
EAFE 2.2 0.8 20.8 18.6 9.0 2.1%
EMI-EPAC 1.8 0.6 21.0 17.5 7.9 2.0%
IFC INVESTABLE 1.7 1.4 15.0 12.4 9.1 2.0%
FREMONT 1.0 0.3 10.7 9.0 4.3 4.2%
</TABLE>
9
<PAGE> 12
FREMONT FUNDS
Based on our value-oriented stock selection criteria and the expected return
forecasts of our country and currency models, the United Kingdom and Canadian
markets are among those with superior relative investment potential. The United
Kingdom market should continue to benefit from steady economic growth, low
inflation, and strong corporate earnings, all boons to smaller value-oriented
companies. We believe the recent uptick in UK interest rates represents a modest
adjustment rather than a change of trend in relatively relaxed monetary policy.
We find the U.S. market relatively overvalued at present, with Canada
appearing more attractive in aggregate. Even though the Canadian market is up
30% compared to the U.S. market's 23.8% gain over the last year, it remains
fundamentally cheaper. The Canadian macro-economic outlook is positive, with
controlled inflation, strong foreign capital in-flows, and a government
committed to deficit reduction.
With the IFC Investable Index, a widely-used benchmark for emerging market
performance, up 10.4% year-to-date through October 1996, the Fund's 33%
commitment to emerging market stocks has been productive while providing
diversification benefits that make this asset class a valuable component of any
broad international equities strategy. The emerging markets in aggregate are
quite cheap relative to the U.S. and other developed country equities markets.
With good year-to-date 1996 performance renewing investor confidence in the
emerging markets and the U.S. market being perceived as increasingly risky at
its current lofty levels, we anticipate a strong international flow of funds
into the emerging markets in the year ahead.
In the Pacific Rim, the Hong Kong market is fundamentally attractive, as is
the Thailand market, which is down 30% over the last year. Among emerging
markets in Latin America, Brazil remains our favorite, with an aggregate
price/book value ratio among the lowest in the world. Earnings, particularly for
the utilities sector, which has received a government-approved rate increase,
look good. The government's privatization program is attracting additional
foreign capital and providing more opportunities in the market. Mexico has
delivered strong returns year-to-date, making it somewhat less attractive on a
relative valuation basis despite a still favorable political and economic
outlook.
In our semi-annual report to you, we covered a lot of ground on developed and
emerging market valuations and prospects. This is relevant to our investment
outlook, but it is driven by our individual stock selection process. To give you
a feel for our stock picking discipline, we will also briefly discuss an
individual stock in the portfolio. Bearing in mind that things can change in a
hurry, we add the caveat that the company we are writing about today may or may
not be a timely investment by the time you read this.
Hollandsche Beton (HBG) is a Dutch construction company involved in
industrial, commercial and public works from housing and civil development
projects to road and infrastructure building. The stock's price has fallen to
attractive levels as some analysts are predicting that slower government
spending in the United Kingdom and Germany might limit HBG's prospects. Based on
its currently low price/earnings ratio and other fundamental value criteria, and
in view of its strong cash position being used for a well-planned expansion into
new markets, Hollandsche Beton is our brand of attractive investment
opportunity.
In closing, the short-to-intermediate performance of Fremont International
Small Cap Fund will always be determined by a number of variables --
macro-economic and market trends within the countries in which we invest, the
performance of small cap stocks relative to bigger cap stocks within each
market, and most importantly, the effectiveness of our stock-picking discipline.
Longer term, we believe international small cap value investing will produce
attractive absolute and relative rates of return for equities investors. We
thank you for your appreciation of our investment philosophy and our investment
talents. Be assured, we continue to work diligently on your behalf.
Sincerely,
/S/Gary L. Bergstrom
Dr. Gary L. Bergstrom
Portfolio Manager
Fremont International Small Cap Fund
10
<PAGE> 13
FREMONT FUNDS
FREMONT EMERGING MARKETS FUND
Henry L. Thornton, Portfolio Manager
Credit Lyonnais International Asset Management (HK) Limited
[PHOTO OF HENRY THORNTON]
[FUND PROFILE]
Around the globe, countries that once relied on agriculture, natural resources
or low-level manufacturing are developing sophisticated, high-growth,
export-driven industrial economies. These emerging market countries offer a
wealth of opportunity for experienced professional investors.
Fremont Emerging Markets Fund employs a bottom-up stock picking approach in
building a diversified portfolio of emerging market companies. The Fund focuses
on the stocks of companies with rapid, sustainable earnings growth trading at
reasonable market valuations. Portfolio risk is further reduced by country
diversification. Fund management establishes a country allocation policy and
each regional investment team conducts rigorous fundamental research, including
company visits, to select individual stocks within each market. Liquidity is
also carefully monitored.
Portfolio Manager Henry Thornton (Investment Director of Sub-Advisor Credit
Lyonnais International Asset Management, CLIAM) is widely recognized as an
expert in emerging market investing. Headquartered in London, with offices in
Hong Kong and Singapore, CLIAM's experienced team of analysts is geographically
well positioned for "hands-on" emerging market research.
TO OUR SHAREHOLDERS
From its June 24, 1996 inception, the Fremont Emerging Markets Fund declined
3.12% compared to a 6.19% loss for the Morgan Stanley Capital International
Emerging Markets Free (MSCI-EMF) Index and a 4.45% loss for the IFC Investable
Index over the June 30 - October 31, 1996 time period.
At this early juncture, performance comparisons between our four-month-old
mutual fund and appropriate indices are premature and largely immaterial. We
have just begun planting the seeds we hope to harvest in the years ahead. We are
progressing slowly, partially due to short-term caution regarding the emerging
markets, (certainly justified by poor performance of emerging market
(continued on page 12)
FREMONT EMERGING MARKETS FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT Emerging Markets Fund MSCI Emerging Markets Free Index
----------------------------- ---------------------------------------
<S> <C> <C> <C> <C>
24-JUN-96 $10,000 $10,000
31-JUL-96 -4.40% $9,560 -4.44% $9,556
30-AUG-96 2.09% $9,760 -6.83% $8,903
30-SEP-96 1.64% $9,920 2.56% $9,131
31-OCT-96 -2.34% $9,688 -2.67% $8,887
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, June 24, 1996.
Performance data illustrated is historical. Past performance is not predictive
of future performance. Share price and return will vary so that a gain or loss
may be realized when shares are sold. All performance figures assume
reinvestment of dividends. Management fees and other expenses are included in
the Fund's performance; however, fees and expenses are not incorporated in the
MSCI Emerging Markets Free Index.
11
<PAGE> 14
FREMONT FUNDS
FREMONT EMERGING MARKETS FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1996
[MAP]
<TABLE>
<S> <C>
UNITED STATES............................ 29.4%
PACIFIC RIM: INCLUDING
HONG KONG, MALAYSIA,
AND TAIWAN............................. 37.1%
EMERGING MARKETS: INCLUDING
INDONESIA, THAILAND, THE PHILIPPINES
TURKEY, SOUTH AFRICA, INDIA,
RUSSIA AND CHINA....................... 33.5%
</TABLE>
indices over the last four months), but more particularly, consistent with our
risk-averse stock picking discipline.
Before we address investment issues specific to the Fund, let's step back and
review the still embryonic history of emerging market investing. In the early
1990's, the global investment community "discovered" the emerging markets.
Buoyed by strong cash in-flows, the emerging markets took off, creating the
speculative excess that culminated in a major peak in Asia in first quarter 1994
and in Latin America in third quarter 1994. Since then, emerging markets in
aggregate have performed quite poorly relative to the robust returns from the
U.S. and major European stock markets. From 1994 through third quarter 1996, the
IFC Investable Index declined 18% and the MSCI-EMFI lost 12%.
Now, back to the future. The basic investment thesis that first attracted
investors to the emerging markets -- rapidly expanding economies producing
superior corporate earnings growth and appealing long term investment returns --
remains quite valid. Today, you can buy this growth at very reasonable prices.
At year end 1993, emerging markets price/earnings ratios approximated 30. Today,
aggregate emerging market P/E's are around 20. In short, you no longer have to
pay a large premium for growth. We suggest this spells opportunity and
foreshadows significantly better returns for emerging market investors over the
next several years.
As you know, due to our extensive investment experience in Southeast Asia (we
had our research teams in place in the mid 1980's, long before most of our
competitors), the Fund is structurally biased to these emerging markets. We are
building research capacity in Eastern Europe and Latin America and recently made
our first investment in Russia -- Mosenergo, the electric utility in Moscow.
Going forward, we expect to have the Fund portfolio 70 - 75% invested in
Southeast Asia with 10 - 15% of assets in each of Eastern Europe and Latin
America.
Rather than commenting on the short-term prospects for individual emerging
markets or briefly reviewing portfolio holdings, we thought it would be more
constructive to discuss an individual stock that demonstrates our
"growth-at-a-price" investment discipline. We want to buy well-managed companies
with superior earnings potential. We do not want to
12
<PAGE> 15
FREMONT FUNDS
make the classic mistake of overpaying for them.
Yageo, a Taiwanese manufacturer of the resistors used in cellular telephones,
is our kind of investment opportunity. Yageo is one of a handful of companies in
the world that makes these resistors (there are approximately 130 of these tiny
items in one wireless telephone), and the only non-Japanese company in the
business. The stock had been under some pressure as the Yen's decline has made
their Japanese counterparts more price competitive. However, with Japanese
monetary authorities signaling that the Yen has fallen far enough, Yageo should
be able to once again increase its market share in this fast-growing business.
Currently priced around 16 times earnings, which we believe will grow 20 - 30%
annually, Yageo stock offers superior growth at a discount price.
In this, our first letter to shareholders, we've provided a brief history of
emerging market investing, discussed current emerging market valuations, and
profiled a portfolio holding that demonstrates our stock picking discipline. In
future letters to you, we will focus on the prospects for individual emerging
markets and detail more of our portfolio holdings. In closing, we reaffirm our
conviction that disciplined emerging market investing will produce attractive
long-term returns for growth-oriented investors.
Sincerely,
/s/Henry Thornton
Henry Thornton
Portfolio Manager
Fremont Emerging Markets Fund
13
<PAGE> 16
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FREMONT MUTUAL FUNDS INC
PO BOX 193663
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<PAGE> 17
ATTENTION!
FREMONT U.S. MICRO-CAP SHAREHOLDERS
INVEST IN THE SMALLEST COMPANIES THROUGHOUT THE WORLD
WITH THE FREMONT INTERNATIONAL SMALL CAP FUND.*
[ ] YES! I'd like to find out how investing in international small cap stocks
can help me take advantage of the higher-than-average growth potential of small
companies around the world, while diversifying my investment portfolio. Please
send me more information on the Fremont International Small Cap Fund, including
a prospectus which contains more information about the fees and expenses of the
Fund. I will read the prospectus carefully before I invest.
Name (first, middle initial, last):____________________________________________
Address:_______________________________________________________________________
Apt. # or P.O. Box:____________________________________________________________
City:______________________________ State:_____ Zip:___________________________
Daytime Phone:_________________________________________________________________
*There are risks of investing in a fund of this type which invests in newly
emerging foreign companies which may be subject to competitive conditions in the
industry, limited earnings history, reliance on one or a limited number of
products, erratic market conditions, economic and political instability, and
fluctuations in currency exchange rates.
Distributed by Funds Distributor, Inc., 50 Beale Street, Suite 100, San
Francisco, CA 94105
<PAGE> 18
CAN WE SEND INFORMATION
ON OUR FUNDS TO ANYONE ELSE?
We often get requests from shareholders to send information to other people they
know who are looking for no-load investments from top managers. If you would
like us to send a Fremont Funds brochure and prospectus to someone that you
know, just complete this postage-paid card and drop it in the mail.
[ ] PLEASE SEND A FREMONT FUNDS BROCHURE AND PROSPECTUS TO:
Name (first, middle initial, last):____________________________________________
Address:_______________________________________________________________________
Apt. # or P.O. Box:____________________________________________________________
City:______________________________ State:_____ Zip:___________________________
Daytime Phone:_________________________________________________________________
Distributed by Funds Distributor, Inc., 50 Beale Street, Suite 100, San
Francisco, CA 94105
<PAGE> 19
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| IN THE |
| UNITED STATES |
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-----------------------------------------------------------
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|FIRST CLASS MAIL PERMIT NO. 25985 SAN FRANCISCO, CA |
-----------------------------------------------------------
POSTAGE WILL BE PAID BY ADDRESSEE
[FREMONT FUNDS LOGO]
FREMONT MUTUAL FUNDS INC
PO BOX 193663
SAN FRANCISCO CA 94119-9747
<PAGE> 20
FREMONT FUNDS
FREMONT U.S. MICRO-CAP FUND
Robert E. Kern, Portfolio Manager
Morgan Grenfell Capital Management, Inc.
[PHOTO OF ROBERT E. KERN]
[FUND PROFILE]
The U.S. micro-cap stock market (stocks with market capitalizations in the
bottom 5% of the equities market) is a breeding ground for
entrepreneurially-managed companies with exceptional growth prospects. With
minimal Wall Street research coverage and low institutional ownership, micro-cap
stocks represent the least efficient sector of the domestic equities market.
This inefficiency creates attractive investment opportunities for the
research-driven stock pickers managing Fremont U.S. Micro-Cap Fund.
Since the investment potential of micro-cap stocks is largely determined by
the business prospects for individual companies rather than macro-economic
trends, the Fund's focus is on bottom-up stock selection. Fund management
analyzes financial statements, the company's competitive position, and meets
with key corporate decision makers to discuss strategies for future growth. The
Fund's goal is to find "winners" early in their growth cycle and, importantly,
to minimize fundamental investment mistakes.
Successful micro-cap investing also involves minimizing transaction costs. The
Fund's dedicated traders work hand-in-hand with the portfolio management team on
execution strategies to enhance the Fund's performance.
Robert E. Kern (Executive Vice President of the Fund's Sub-Advisor, Morgan
Grenfell Capital Management) is nationally recognized as a pioneer and leading
practitioner of micro-cap research and portfolio management.
TO OUR SHAREHOLDERS
For the six months ended October 31, 1996, Fremont U.S. Micro-Cap Fund
returned 2.45% compared to the Russell 2000's -1.53%. For full fiscal year 1996,
the Fund gained 41.46% versus the Index's 16.61%. Over the 24 months ending
November 26, 1996, the Fund's performance ranked first in Investor's Business
Daily's Growth
FREMONT U.S. MICRO-CAP FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT U.S. MICRO-CAP FUND RUSSELL 2000 INDEX
---------------------------
<S> <C> <C> <C> <C>
30-JUN-94 $10,000 $10,000
31-JUL-94 2.20% $10,220 1.64% $10,164
31-AUG-94 0.98% $10,320 5.57% $10,730
30-SEP-94 1.45% $10,470 -0.34% $10,694
31-OCT-94 -1.05% $10,360 -0.40% $10,651
30-NOV-94 -3.48% $10,000 -4.04% $10,221
31-DEC-94 1.50% $10,150 2.68% $10,494
31-JAN-95 1.97% $10,350 -1.26% $10,362
28-FEB-95 3.10% $10,671 4.16% $10,793
31-MAR-95 4.23% $11,122 1.71% $10,978
30-APR-95 2.43% $11,392 2.22% $11,222
31-MAY-95 4.57% $11,913 1.72% $11,415
30-JUN-95 4.88% $12,495 5.19% $12,007
31-JUL-95 6.82% $13,346 5.76% $12,699
31-AUG-95 6.31% $14,188 2.07% $12,961
30-SEP-95 2.54% $14,549 1.79% $13,193
31-OCT-95 -1.24% $14,368 -4.48% $12,602
30-NOV-95 4.53% $15,020 4.21% $13,132
31-DEC-95 4.10% $15,635 2.64% $13,479
31-JAN-96 3.44% $16,174 -0.11% $13,465
29-FEB-96 6.66% $17,250 3.12% $13,884
31-MAR-96 3.24% $17,810 2.04% $14,167
30-APR-96 11.40% $19,839 5.35% $14,924
31-MAY-96 8.40% $21,506 3.94% $15,512
30-JUN-96 -3.76% $20,699 -4.11% $14,875
31-JUL-96 -8.70% $18,897 -8.73% $13,576
30-AUG-96 6.14% $20,057 5.81% $14,364
30-SEP-96 4.75% $21,009 3.91% $14,925
31-OCT-96 -3.25% $20,326 -1.54% $14,695
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, June 30, 1994.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the Russell 2000 Index.
14
<PAGE> 21
FREMONT FUNDS
Fund category with a 114% total return.
If I may borrow from Charles Dickens, fiscal 1996 was "A Tale of Two Halves."
In the first half, smaller company stocks as a group performed well and our
micro-cap portfolio did even better as evidenced by the Fund's strong returns
relative to the benchmark index. Smaller company stocks got slammed in June -
July, and rebounded, but did not keep pace with bigger cap stocks from August
through October. Peak to trough, the Fund was down 15.7% during the summer
correction, but we managed a relatively impressive comeback to finish the second
half of 1996 in the black. We are as proud of this performance in a challenging
market environment as we were of our superior results in the first half's more
favorable investment climate.
After market shocks such as we experienced this summer, investor confidence
generally returns to the big cap sector first. This is reflected in the strong
performance of the S&P 500 relative to the Russell 2000 in recent months. Today,
the dust has cleared and we expect investors to once again gravitate to smaller
company stocks. With the caution that rising stock prices or unexpected
fundamental deterioration can rather quickly change our opinion on any given
portfolio holding, we will briefly review some of our current favorites.
Micrel has carved a niche for itself as a leading supplier of high performance
analog semiconductors. Micrel's products find application in laptop computers,
cellular phones and PC memory card (PCMCIA) sockets. These fast-growing markets
and a focused product strategy have driven revenues from less than $20 million
in 1993 to a current annualized rate of over $70 million. We are forecasting a
continuation of strong growth for Micrel and revenues could accelerate as the
new digital Personal Communications Services (PCS) systems are built over the
next few years. Micrel's growth potential, focused business strategies,
financial strength and attractive valuation support its #1 ranking among the
Fund's technology holdings.
LodgeNet is the fastest growing company in hotel room interactive media
business. In hotels with LodgeNet systems, you can order movies whenever you
want to watch them rather than at scheduled intervals. Your kids can also play
Nintendo games. LodgeNet systems generate approximately $23 in revenues per room
per month, which translates into a short two-year payback period for hotel
operators. The company's modular technology also makes its systems more
cost-efficient for smaller hotels, which have generally not offered interactive
media services. As existing hotel contracts come up for re-bid, LodgeNet should
continue to gain market share from its primary competitor, On Command (the
reincarnation of Spectravision, which recently emerged from bankruptcy). With
its current rapid expansion, LodgeNet is a cash flow, rather than an earnings
story. We expect cash flow to grow 20 - 25% annually for the foreseeable future.
Bottom-line oriented management (they don't overbid for contracts) is doing a
terrific job building value that will ultimately translate into strong earnings
growth.
Daisytek is the leading U.S. wholesale distributor of computer office supplies
and accessories. This is a "razorblade" company that wholesales all the
consumable products that have to be replaced on a fairly regular basis. We
believe that Daisytek will grow earnings at around 20% annually, with the
possibility of accelerating earnings as the company expands globally (they
recently opened offices in Latin America and made an acquisition in Australia to
serve the Pacific Rim markets). Currently trading at 14 times our 1997 earnings
estimates, Daisytek remains fundamentally appealing.
In closing, we are very pleased with the Fund's fiscal 1996 performance. We
can't promise we'll deliver 40% plus returns every year. However, we are
confident that our intensive research efforts in selecting successful micro-cap
companies will generate superior long-term investment returns.
Sincerely,
/s/Robert E. Kern
Robert E. Kern
Portfolio Manager
Fremont U.S. Micro-Cap Fund
15
<PAGE> 22
FREMONT FUNDS
FREMONT GROWTH FUND
W. Kent Copa, CFA, Portfolio Manager
Fremont Investment Advisors, Inc.
[PHOTO OF W. KENT COPA]
[FUND PROFILE]
Fremont Growth Fund invests principally in large capitalization U.S. stocks
with superior earnings growth prospects. The Fund also invests selectively in
mid-cap companies with favorable earnings dynamics. The goal is to consistently
outperform the Standard & Poor's 500 Index (S&P 500). Extensive statistical
evidence reveals a direct relationship between the performance of stocks in
selected industry groups during the varying stages of the economic cycle. For
example, food and drug stocks, which generally produce consistent earnings
growth throughout the business cycle, tend to perform well in a sluggish
economy. Auto, energy, and banking company earnings and stock prices tend to
grow faster when the economy gains momentum.
Fremont Growth Fund utilizes sophisticated quantitative models to forecast
macro-economic trends and to identify those industry groups providing the best
relative investment potential. The stock selection process involves identifying
leading companies in each industry group with consistent earnings growth records
and reasonable valuations.
This "sector rotation" style is widely utilized by large institutional
investors. Fremont Growth Fund offers this sophisticated investment discipline
to mutual fund shareholders.
TO OUR SHAREHOLDERS
For the second half of the fiscal year ended October 31, 1996, Fremont Growth
Fund returned 10.81% compared to the S&P 500's 9.08%. For full fiscal year 1996,
the Fund gained 22.1% versus the S&P 500's 24.1%. Despite modestly
underperforming the S&P 500, our results compare quite favorably to the 18.5%
average return for the Lipper Growth Fund Average.
Fund performance benefitted from our overweighting in the technology, consumer
goods, and healthcare sectors for much of second fiscal half 1996. Performance
was restrained by underweighting in the financial service and energy sectors.
At the end of September, we overweighted
FREMONT GROWTH FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT GROWTH FUND S&P 500
------------------- ---------------------
<S> <C> <C> <C> <C> <C>
14-AUG-92 $10,000 $10,000
31-AUG-92 -1.01% $9,899 -1.27% $9,873
30-SEP-92 1.93% $10,091 1.15% $9,987
31-OCT-92 1.08% $10,200 0.36% $10,023
30-NOV-92 4.46% $10,655 3.37% $10,361
31-DEC-92 1.57% $10,822 1.30% $10,495
31-JAN-93 1.22% $10,954 0.73% $10,572
28-FEB-93 -1.02% $10,843 1.36% $10,716
31-MAR-93 1.50% $11,005 2.15% $10,947
30-APR-93 -3.60% $10,609 -2.45% $10,679
31-MAY-93 2.40% $10,863 2.67% $10,964
30-JUN-93 0.75% $10,945 0.33% $11,000
31-JUL-93 -0.09% $10,935 -0.49% $10,946
31-AUG-93 3.36% $11,302 3.78% $11,359
30-SEP-93 0.99% $11,414 -0.74% $11,276
31-OCT-93 0.80% $11,506 2.05% $11,507
30-NOV-93 -2.04% $11,270 -0.90% $11,404
31-DEC-93 2.18% $11,516 1.23% $11,544
31-JAN-94 3.40% $11,907 3.36% $11,932
28-FEB-94 -3.11% $11,536 -2.71% $11,608
31-MAR-94 -5.27% $10,929 -4.34% $11,104
30-APR-94 1.13% $11,052 1.29% $11,248
31-MAY-94 0.37% $11,093 1.63% $11,432
30-JUN-94 -3.35% $10,722 -2.47% $11,149
31-JUL-94 4.04% $11,155 3.31% $11,518
31-AUG-94 5.10% $11,724 4.07% $11,986
30-SEP-94 -2.12% $11,476 -2.42% $11,696
31-OCT-94 1.98% $11,704 2.30% $11,965
30-NOV-94 -3.15% $11,335 -3.67% $11,526
31-DEC-94 2.02% $11,563 1.47% $11,695
31-JAN-95 0.40% $11,609 2.59% $11,998
28-FEB-95 3.25% $11,987 3.87% $12,463
31-MAR-95 2.67% $12,307 2.96% $12,832
30-APR-95 2.14% $12,570 2.95% $13,210
31-MAY-95 3.28% $12,982 3.96% $13,733
30-JUN-95 4.93% $13,622 2.35% $14,056
31-JUL-95 4.45% $14,228 3.33% $14,524
31-AUG-95 1.37% $14,423 0.23% $14,558
30-SEP-95 3.89% $14,983 4.17% $15,164
31-OCT-95 0.08% $14,995 -0.28% $15,122
30-NOV-95 3.22% $15,477 4.40% $15,787
31-DEC-95 -0.18% $15,449 1.85% $16,079
31-JAN-96 2.91% $15,898 3.44% $16,633
29-FEB-96 1.22% $16,092 0.96% $16,793
31-MAR-96 -0.38% $16,032 0.96% $16,954
30-APR-96 3.03% $16,517 1.47% $17,204
31-MAY-96 3.45% $17,087 2.58% $17,647
30-JUN-96 0.57% $17,184 0.38% $17,714
31-JUL-96 -4.87% $16,347 -4.42% $16,932
30-AUG-96 1.78% $16,638 2.11% $17,289
30-SEP-96 7.29% $17,852 5.63% $18,262
31-OCT-96 2.53% $18,304 2.76% $18,766
71.84% 14.99% 77.14% 15.89%
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, August 14, 1992.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the S&P 500 Index.
16
<PAGE> 23
FREMONT FUNDS
FREMONT GROWTH FUND
SECTOR DIVERSIFICATION AS OF OCTOBER 31, 1996
<TABLE>
<S> <C>
FINANCIAL SERVICES (23.0%)
ENERGY (15.0%)
TECHNOLOGY (13.7%)
UTILITIES (10.5%)
HEALTH CARE (5.7%)
RETAIL (4.3%)
CAPITAL GOODS (3.2)
SHORT TERM SECURITIES (2.3%)
OTHER (22.3%)
</TABLE>
industrial cyclicals, financial service companies, and energy stocks in
anticipation of accelerating earnings for the balance of 1996 through first
quarter 1997. Concurrently, we reduced our commitments to technology and
healthcare stocks, and eliminated our positions in consumer non-durables stocks
- -- all sectors in which we expect good but less inspiring earnings relative to
the more economically sensitive groups we currently favor. This may seem
contrary in view of an economy that is slowing after the rapid growth posted in
first half 1996. However, corporate earnings generally lag GDP growth and we are
looking for strong earnings comparisons for the auto, insurance, and oil
companies, as well as banks over the next two quarters. We continuously
re-examine those economic forces most directly influencing corporate earnings
momentum and may well reverse course as this slowing economy begins to restrain
cyclical earnings.
Within the Fund's overweighted sectors, current stock selection favorites
include Chrysler, Mobil, Bank of America, Allstate Insurance and MGIC Investors.
Chrysler enjoys a clear production cost advantage over General Motors. It has
already made peace with the United Auto Workers in a contract that holds wage
increases to 3% per year. Most importantly, its light truck division, which
includes the Dodge Ram pickups and mini-van market leaders Dodge Caravan and
Plymouth Voyager, represents 70% of sales. This is the fastest growing and
highest margin segment of the auto industry. The popularity of its mini-vans in
particular should spare Chrysler the need to match the buyer incentives
currently being offered by Ford and GM. That means better margins and earnings.
In the energy sector, we favor Mobil, primarily because it has been the most
aggressive cost-cutter in the industry and is "leaner and meaner" than the other
major domestic oil companies. In the financial services sector, which we divide
between banking and non-banking companies, we would highlight Bank of America,
which is the most direct beneficiary of the strong recovery of the California
economy; Allstate Insurance, the "good hands" people have a nice string of
strong earnings comparisons and a very good risk management record; and MGIC
Investors (Mortgage Guarantee Insurance Company), which underwrote $110 billion
in new policies in 1995, and should continued to thrive as existing home sales
and new housing starts remain strong.
In conclusion, September's substantial shift in sector weighting has already
paid off in October. We believe it will continue to reward our shareholders for
the next several quarters. As always, we will be monitoring economic trends and
the ever-changing business cycle to identify those sectors and individual
companies with the best relative investment potential. We are pleased with our
fiscal 1996 returns relative to our peers in the large cap growth stock category
and will be working hard to duplicate this success in fiscal 1997.
Sincerely,
/s/Kent Copa
W. Kent Copa
Portfolio Manager
Fremont Growth Fund
17
<PAGE> 24
FREMONT FUNDS
FREMONT BOND FUND
Bill Gross, Founder and Managing Director
Pacific Investment Management Company (PIMCO)
[PHOTO OF BILL GROSS]
[FUND PROFILE]
Fremont Bond Fund invests in high quality corporate, mortgage backed, hedged
international, and government bonds. The Fund's goal is to consistently provide
attractive risk-adjusted returns relative to the broad fixed income market.
The Fund's investment philosophy embodies three key principles. First,
portfolio strategy is driven by longer term trends in interest rates. Three- to
five-year economic, demographic, and political forecasts are updated annually to
identify the long term interest rate trend, which determines the most
appropriate maturity/duration (interest rate sensitivity) range for the
portfolio. Second, consistent performance is achieved by avoiding extreme swings
in portfolio maturity/duration. By operating within a moderate duration range
relative to the broad fixed income market, the Fund limits downside risk during
short-lived, but periodically violent interest rate fluctuations. Finally,
emphasis is placed on adding value through the analysis of traditional variables
such as sector, coupon, and quality.
Portfolio Manager Bill Gross (Founder and Managing Director of PIMCO, Pacific
Investment Management Company) has 25 years of professional fixed-income
investment experience. In addition to serving as the sub-advisor to the Fremont
Bond Fund, PIMCO manages $83 billion in fixed income investments for
institutional clients.
TO OUR SHAREHOLDERS
For the six months ended October 31, 1996, Fremont Bond Fund returned 6.96%
compared to 5.29% for the Lehman Brothers Aggregate Index. For full fiscal year,
the Fund returned 8.18% versus 5.83% for the Index. We are pleased to have
exceeded our benchmark by 2.35% this year.
Focusing on the second half of the fiscal year, we were fortunate to have each
major portfolio strategy work in our favor. We maintained the portfolio's
average duration (a measure of interest rate sensitiv-
FREMONT BOND FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
LEHMAN BROS GOV/CORP LEHMAN BROS GOV/CORP LEHMAN BROS AGGREGATE
FREMONT BOND FUND INTER. BOND BOND INDEX BOND INDEX
----------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-APR-93 $10,000 $10,000 $10,000 $10,000
31-MAY-93 -0.37% $9,963 -0.22% $9,978 -0.05% $9,995 0.13% $10,013
30-JUN-93 2.20% $10,182 1.57% $10,135 2.27% $10,222 1.81% $10,194
31-JUL-93 0.16% $10,198 0.24% $10,159 0.64% $10,287 0.57% $10,252
31-AUG-93 2.12% $10,415 1.59% $10,321 2.30% $10,524 1.75% $10,432
30-SEP-93 0.63% $10,481 0.41% $10,364 0.35% $10,560 0.27% $10,460
31-OCT-93 0.32% $10,515 0.27% $10,392 0.41% $10,603 0.37% $10,499
30-NOV-93 -1.41% $10,366 -0.56% $10,333 -1.13% $10,483 -0.85% $10,410
31-DEC-93 0.68% $10,437 0.46% $10,381 0.44% $10,529 0.54% $10,466
31-JAN-94 1.42% $10,585 1.11% $10,496 1.50% $10,688 1.35% $10,607
28-FEB-94 -1.86% $10,388 -1.48% $10,340 -2.18% $10,455 -1.74% $10,423
31-MAR-94 -2.32% $10,147 -1.65% $10,170 -2.45% $10,199 -2.47% $10,166
30-APR-94 -0.97% $10,049 -0.68% $10,101 -0.83% $10,115 -0.80% $10,085
31-MAY-94 -0.89% $9,959 0.07% $10,108 -0.18% $10,097 -0.01% $10,083
30-JUN-94 0.66% $10,025 0.01% $10,109 -0.23% $10,073 -0.22% $10,061
31-JUL-94 1.79% $10,205 1.44% $10,254 2.00% $10,274 1.99% $10,261
31-AUG-94 0.25% $10,230 0.31% $10,286 0.04% $10,278 0.12% $10,274
30-SEP-94 -1.21% $10,106 -0.92% $10,192 -1.51% $10,123 -1.47% $10,123
31-OCT-94 -0.55% $10,050 -0.01% $10,191 -0.11% $10,111 -0.09% $10,114
30-NOV-94 -0.30% $10,020 -0.45% $10,145 -0.18% $10,093 -0.22% $10,091
31-DEC-94 -0.02% $10,018 0.35% $10,180 0.66% $10,160 0.69% $10,161
31-JAN-95 2.23% $10,242 1.68% $10,351 1.92% $10,355 1.98% $10,362
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
28-FEB-95 2.74% $10,522 2.07% $10,566 2.32% $10,595 2.38% $10,609
31-MAR-95 0.94% $10,621 0.57% $10,626 0.67% $10,666 0.61% $10,674
30-APR-95 1.90% $10,823 1.24% $10,758 1.39% $10,814 1.40% $10,823
31-MAY-95 3.74% $11,228 3.02% $11,082 4.19% $11,268 3.87% $11,242
30-JUN-95 0.63% $11,299 0.67% $11,157 0.80% $11,358 0.73% $11,324
31-JUL-95 -0.32% $11,263 0.01% $11,158 -0.39% $11,313 -0.22% $11,299
31-AUG-95 1.19% $11,397 0.91% $11,259 1.28% $11,458 1.21% $11,436
30-SEP-95 1.16% $11,530 0.72% $11,340 1.02% $11,575 0.97% $11,547
31-OCT-95 1.54% $11,707 1.11% $11,466 1.47% $11,745 1.30% $11,697
30-NOV-95 2.11% $11,954 1.31% $11,617 1.65% $11,939 1.50% $11,872
31-DEC-95 1.61% $12,146 1.05% $11,738 1.47% $12,114 1.40% $12,038
31-JAN-96 1.01% $12,269 0.86% $11,839 0.62% $12,190 0.66% $12,118
29-FEB-96 -2.73% $11,935 -1.17% $11,701 -2.12% $11,931 -1.74% $11,907
31-MAR-96 -0.35% $11,893 -0.51% $11,641 -0.84% $11,831 -0.70% $11,824
30-APR-96 -0.45% $11,840 -0.35% $11,601 -0.69% $11,749 -0.56% $11,758
31-MAY-96 -0.63% $11,765 -0.08% $11,591 -0.17% $11,729 -0.08% $11,748
30-JUN-96 1.69% $11,964 1.06% $11,714 1.34% $11,887 1.06% $11,873
31-JUL-96 0.08% $11,973 0.30% $11,749 0.23% $11,914 0.27% $11,905
30-AUG-96 0.20% $11,997 0.08% $11,759 -0.24% $11,885 -0.17% $11,885
30-SEP-96 2.64% $12,313 1.39% $11,922 1.78% $12,097 1.74% $12,091
31-OCT-96 2.85% $12,664 1.77% $12,133 2.33% $12,379 2.22% $12,360
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, April 30, 1993.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the Lehman Bros. Aggregate Bond Index.
18
<PAGE> 25
FREMONT FUNDS
ity) above that of the index, accentuating the price gains that occurred in the
market as interest rates declined across the curve by approximately 30 basis
points (0.3%). With respect to sector, our overweighting in mortgage-backed
securities helped to boost relative performance as we captured the higher yields
associated with this group. In addition, by focusing our corporate exposure in
lower rated (BBB and BB) issues, we captured the continued strong performance of
this portion of the corporate market. Finally, our modest allocation to foreign
bonds (both hedged foreign and dollar denominated Latin American issues) was a
strong positive as the non-U.S. markets significantly outperformed all domestic
market sectors.
Looking ahead, our long-term view on interest rates remains bullish for bonds.
There are a handful of prominent economic themes that serve as the basis for
this market outlook. First, the competitive forces unleashed by the
globalization of trade and production lead the way to lower-cost goods and limit
pricing power. Next, the integration of world capital markets empowers investors
to demand from governments sound, market-friendly fiscal and monetary policies.
And finally, we expect the aging populations across the developing world to
shift into a savings-oriented phase of their life as retirement approaches. We
expect these long-term, disinflationary forces to broadly pull interest rates
lower and anticipate a 5 - 7% range for the yield on the 30-year Treasury bond
over the next 3 - 5 years. As a result of our favorable outlook for interest
rates, we will continue to target the Fund's average duration moderately higher
than that of the broad market.
With respect to sector, we continue to like mortgage-backed securities,
particularly lower coupon fixed rate issues and adjustable rate mortgages. In
the corporate sector, lower rated issues (BBB and BB) are still attractive
because their higher yields offer downside protection in the event that
corporate bonds weaken relative to other U.S. market sectors. Finally, some
opportunities remain in the foreign sector, particularly in dollar bloc
countries (Canada, Australia, New Zealand) and Latin America.
In closing, we thank you for your ongoing investment in Fremont Bond Fund and
we will continue to work diligently to grow the assets you have entrusted with
us.
Sincerely,
/s/William H. Gross
Bill Gross
Portfolio Manager
Fremont Bond Fund
PORTFOLIO CREDIT QUALITY OF FREMONT BOND FUND
AS OF OCTOBER 31, 1996
<TABLE>
<S> <C>
AAA (80%)
AA (3%)
BBB (10%)
BB (7%)
</TABLE>
19
<PAGE> 26
FREMONT FUNDS
FREMONT MONEY MARKET FUND
Norman Gee, Portfolio Manager
Fremont Investment Advisors, Inc.
[PHOTO OF NORMAN GEE]
[FUND PROFILE]
Fremont Money Market Fund invests primarily in high-quality short-term debt
securities (commercial paper) issued by U.S. corporations and U.S. subsidiaries
of foreign corporations. The Fund will also take small positions in other
investment-grade short-term debt instruments such as Yankee CDs (dollar
denominated certificates of deposit in foreign banks).
Portfolio Manager Norman Gee strives to add value through price-sensitive
trading and by identifying undervalued high quality money market securities. He
will also make conservative adjustments to the portfolio's average maturity
relative to the market in attempting to enhance total portfolio yield.
TO OUR SHAREHOLDERS
For the six-month period ended October 31, 1996, Fremont Money Market Fund
returned 2.6% compared to the IBC Money Market First Tier Taxable Average's
2.0%. For the full fiscal year, the Fund returned 5.34% versus the Index's
4.86%. We are pleased to have once again finished in the top ten percent of
comparable money market funds in the IBC money market universe.
The Fund's slightly longer average maturity (65 days compared to 52 days for
the index of top-tier taxable money market funds) provided a total return
advantage in what has been a flat short-term interest rate environment over the
last two quarters. Our price-sensitive trading practice of tirelessly pursuing
the highest yields and our opportunistic securities selection also contributed
to superior returns. Looking ahead over the next several quarters, we expect
short-term interest rates to remain relatively stable. Consequently, we will
continue to maintain a slightly longer-than-average maturity. This may well
change, however, in second half 1997. Currently, Wall Street is focusing on the
benign "core" inflation rate (inflation excluding food and energy prices). But,
commodity pricing and wage pressure is build-
FREMONT MONEY MARKET FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT MONEY MARKET FUND 90 DAY US T-BILLS DONOGHUE FIRST TIER TAXABLE PRIME AVG.
------------------------- ----------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
18-NOV-88 $10,000 $10,000 $10,000
30-NOV-88 0.27% $10,027 0.26% $10,026 0.25% $10,025
31-DEC-88 0.68% $10,096 0.67% $10,093 0.65% $10,090
31-JAN-89 0.74% $10,170 0.69% $10,163 0.68% $10,159
28-FEB-89 0.65% $10,237 0.72% $10,236 0.68% $10,228
31-MAR-89 0.77% $10,315 0.73% $10,311 0.71% $10,300
30-APR-89 0.72% $10,389 0.70% $10,383 0.74% $10,377
31-MAY-89 0.83% $10,475 0.71% $10,457 0.73% $10,452
30-JUN-89 0.74% $10,552 0.66% $10,526 0.72% $10,528
31-JUL-89 0.73% $10,630 0.63% $10,592 0.69% $10,600
31-AUG-89 0.71% $10,705 0.65% $10,661 0.66% $10,670
30-SEP-89 0.65% $10,775 0.66% $10,731 0.66% $10,741
31-OCT-89 0.72% $10,852 0.76% $10,813 0.66% $10,812
30-NOV-89 0.66% $10,924 0.69% $10,887 0.64% $10,881
31-DEC-89 0.63% $10,993 0.62% $10,955 0.63% $10,949
31-JAN-90 0.67% $11,067 0.66% $11,027 0.62% $11,017
28-FEB-90 0.59% $11,132 0.60% $11,093 0.61% $11,084
31-MAR-90 0.63% $11,202 0.67% $11,168 0.61% $11,152
30-APR-90 0.66% $11,276 0.65% $11,240 0.62% $11,221
31-MAY-90 0.66% $11,350 0.68% $11,317 0.62% $11,291
30-JUN-90 0.62% $11,420 0.65% $11,390 0.61% $11,360
31-JUL-90 0.68% $11,498 0.66% $11,465 0.61% $11,429
31-AUG-90 0.65% $11,573 0.65% $11,540 0.60% $11,498
30-SEP-90 0.58% $11,640 0.61% $11,610 0.60% $11,567
31-OCT-90 0.68% $11,719 0.62% $11,682 0.60% $11,636
30-NOV-90 0.62% $11,792 0.59% $11,751 0.59% $11,704
31-DEC-90 0.64% $11,867 0.59% $11,821 0.59% $11,773
31-JAN-91 0.62% $11,941 0.57% $11,888 0.56% $11,839
28-FEB-91 0.53% $12,005 0.49% $11,946 0.52% $11,901
31-MAR-91 0.50% $12,065 0.52% $12,008 0.49% $11,959
30-APR-91 0.57% $12,134 0.48% $12,066 0.47% $12,015
31-MAY-91 0.50% $12,195 0.48% $12,124 0.44% $12,068
30-JUN-91 0.44% $12,249 0.46% $12,180 0.44% $12,121
31-JUL-91 0.52% $12,312 0.48% $12,238 0.44% $12,174
31-AUG-91 0.46% $12,369 0.47% $12,296 0.43% $12,227
30-SEP-91 0.47% $12,427 0.44% $12,350 0.42% $12,278
31-OCT-91 0.44% $12,482 0.44% $12,404 0.41% $12,328
30-NOV-91 0.39% $12,531 0.40% $12,454 0.39% $12,375
31-DEC-91 0.42% $12,584 0.37% $12,500 0.38% $12,422
31-JAN-92 0.37% $12,630 0.35% $12,543 0.34% $12,464
29-FEB-92 0.30% $12,668 0.31% $12,582 0.31% $12,502
31-MAR-92 0.31% $12,708 0.34% $12,625 0.30% $12,540
30-APR-92 0.29% $12,744 0.32% $12,666 0.29% $12,576
31-MAY-92 0.27% $12,779 0.33% $12,707 0.28% $12,612
30-JUN-92 0.30% $12,817 0.30% $12,745 0.28% $12,647
31-JUL-92 0.27% $12,852 0.30% $12,784 0.26% $12,680
31-AUG-92 0.26% $12,885 0.28% $12,819 0.25% $12,711
30-SEP-92 0.24% $12,917 0.25% $12,852 0.24% $12,741
31-OCT-92 0.24% $12,947 0.25% $12,884 0.22% $12,769
30-NOV-92 0.24% $12,978 0.25% $12,916 0.22% $12,798
31-DEC-92 0.23% $13,008 0.27% $12,951 0.23% $12,828
31-JAN-93 0.21% $13,036 0.27% $12,986 0.23% $12,857
28-FEB-93 0.20% $13,062 0.23% $13,016 0.22% $12,885
31-MAR-93 0.24% $13,093 0.25% $13,048 0.21% $12,912
30-APR-93 0.22% $13,122 0.24% $13,080 0.21% $12,939
31-MAY-93 0.20% $13,148 0.25% $13,113 0.21% $12,967
30-JUN-93 0.23% $13,178 0.25% $13,147 0.21% $12,994
31-JUL-93 0.22% $13,208 0.26% $13,181 0.21% $13,021
31-AUG-93 0.21% $13,235 0.26% $13,215 0.21% $13,049
30-SEP-93 0.21% $13,263 0.25% $13,248 0.21% $13,076
31-OCT-93 0.22% $13,291 0.26% $13,282 0.21% $13,104
30-NOV-93 0.21% $13,320 0.25% $13,315 0.21% $13,132
31-DEC-93 0.24% $13,351 0.26% $13,351 0.22% $13,161
31-JAN-94 0.21% $13,379 0.26% $13,385 0.22% $13,189
28-FEB-94 0.20% $13,406 0.24% $13,418 0.22% $13,218
31-MAR-94 0.23% $13,437 0.28% $13,455 0.23% $13,248
30-APR-94 0.25% $13,470 0.30% $13,496 0.25% $13,281
31-MAY-94 0.31% $13,512 0.33% $13,540 0.27% $13,317
30-JUN-94 0.32% $13,556 0.34% $13,586 0.29% $13,356
31-JUL-94 0.35% $13,603 0.36% $13,636 0.31% $13,397
31-AUG-94 0.36% $13,651 0.37% $13,687 0.32% $13,439
30-SEP-94 0.36% $13,701 0.37% $13,737 0.34% $13,485
31-OCT-94 0.40% $13,755 0.41% $13,794 0.35% $13,532
30-NOV-94 0.41% $13,812 0.42% $13,852 0.37% $13,582
31-DEC-94 0.50% $13,880 0.46% $13,915 0.40% $13,636
31-JAN-95 0.45% $13,943 0.46% $13,979 0.42% $13,694
28-FEB-95 0.45% $14,006 0.44% $14,041 0.44% $13,754
31-MAR-95 0.54% $14,081 0.49% $14,110 0.45% $13,816
30-APR-95 0.46% $14,145 0.48% $14,177 0.45% $13,877
31-MAY-95 0.50% $14,216 0.49% $14,247 0.44% $13,939
30-JUN-95 0.51% $14,289 0.47% $14,314 0.44% $14,000
31-JUL-95 0.46% $14,355 0.49% $14,384 0.43% $14,060
31-AUG-95 0.48% $14,423 0.47% $14,452 0.43% $14,120
30-SEP-95 0.47% $14,492 0.45% $14,517 0.42% $14,180
31-OCT-95 0.46% $14,558 0.46% $14,583 0.42% $14,239
30-NOV-95 0.45% $14,624 0.47% $14,652 0.42% $14,299
31-DEC-95 0.48% $14,695 0.55% $14,732 0.42% $14,359
31-JAN-96 0.45% $14,760 0.46% $14,800 0.41% $14,418
29-FEB-96 0.41% $14,821 0.40% $14,859 0.39% $14,474
31-MAR-96 0.43% $14,885 0.37% $14,913 0.38% $14,529
30-APR-96 0.42% $14,947 0.43% $14,977 0.38% $14,584
31-MAY-96 0.46% $15,015 0.44% $15,043 0.38% $14,640
30-JUN-96 0.39% $15,073 0.41% $15,105 0.38% $14,695
31-JUL-96 0.43% $15,139 0.45% $15,173 0.39% $14,752
30-AUG-96 0.46% $15,209 0.45% $15,242 0.39% $14,809
30-SEP-96 0.40% $15,269 0.47% $15,313 0.39% $14,867
31-OCT-96 0.44% $15,336 0.42% $15,378 0.39% $14,925
Tbills 51.05% # donoghue 46.95% 5.19%
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, November 18, 1988.
Performance data illustrated is historical. Past performance is not
predictive of future performance. All performance figures assume reinvestment
of dividends. Management fees and other expenses are included in the Fund's
performance; however, fees and expenses are not incorporated in the U.S.
91-Day T-Bill Index. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government. The Fund seeks to maintain a stable $1.00
share price although there is no assurance that it will be able to do so.
20
<PAGE> 27
FREMONT FUNDS
ing. We all have to put gas in the car, buy groceries and pay the heating bill.
We know it's getting more expensive. We all deserve a little bit of a pay raise
in the midst of this vibrant economy. With unemployment at historically low
levels, some of us will get one. Of course, our employers will do their best to
pass higher wage costs along to consumers. The bottom line is that at some point
in 1997, the Federal Reserve is likely to respond to an increase in the Consumer
Price Index by raising short-term rates by 25 - 50 basis points from today's
5.25%. Anticipating this modest uptick in short term rates, we will very
probably be shortening the portfolio's average maturity so that we can more
quickly average into higher yielding securities.
We will also continue to seek out undervalued securities. For example, every
Monday, Jostens Corporation (a dominant market share company in the school ring
and yearbook businesses) issues seven-day investment grade commercial paper.
Because the company wants to sell its paper within a short four-hour window at
the beginning of each week, it is generally priced to yield 3 - 5 basis points
above most other comparable maturity and credit quality issues. As long as
Jostens remains financially healthy and we can earn an extra 3 - 5 basis points
weekly, we will continue to be one of their best customers.
In closing, we thank you for your ongoing support. We remain dedicated to
delivering superior money market returns.
Sincerely,
/s/Norman Gee
Norman Gee
Portfolio Manager
Fremont Money Market Fund
21
<PAGE> 28
FREMONT FUNDS
FREMONT CALIFORNIA INTERMEDIATE
TAX-FREE FUND
William M. Feeney, Portfolio Manager
Fremont Investment Advisors, Inc.
[PHOTO OF WILLIAM M. FEENEY]
[FUND PROFILE]
Fremont California Intermediate Tax-Free Fund invests in California municipal
bonds. Essential service bonds (water, sewer, electric, gas, etc.) and general
obligation bonds (secured by the full faith and credit of the government issuer)
are emphasized in this conservatively managed portfolio. Income from the Fund is
free from both federal and state taxes for California residents.
The direction of interest rates impacts the total return potential of bonds.
When interest rates decline, longer maturities and higher durations (a measure
of interest rate sensitivity) are advantageous. When interest rates rise, the
reverse is true. Through the analysis of macro-economic, political, and market
factors, Fund management strives to identify the dominant interest rate trend.
The Fund's strategy is simply to position the portfolio's maturity/duration to
take advantage of the dominant interest rate trend rather than trading on
largely unpredictable temporary interest rate fluctuations.
The Fund invests almost exclusively in the highest investment grade credits
and will not invest in any bond below a BBB rating. Fund management also strives
to identify "special situation" opportunities created by incomplete credit
analysis, investor misperception, and market conditions.
TO OUR SHAREHOLDERS
For the six-month period ended October 31, 1996, Fremont California
Intermediate Tax-Free Fund returned 3.42% compared to the Lehman Brothers
Municipal 5-Year State General Obligation (GO) Index's 3.03%. For the full
fiscal year, the Fund returned 4.63% versus the Index's 4.63%. We are pleased to
report the Fund has maintained its Morningstar five year 5-star ranking.
In the first fiscal half, the Fund portfolio's longer than average maturity
(around 7 years) worked against us as stronger-than-expected economic growth
reawakened long dormant inflationary fears and drove interest rates higher. In
the second half,
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND INVESTMENT RETURNS
<TABLE>
<CAPTION>
FREMONT CA INTER TAX-FREE FUND LEHMAN MUNI 5 YR STATE G.O. INDEX
------------------------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
16-NOV-90 $10,000 $10,000
30-NOV-90 0.64% $10,064 0.67% $10,067 0.95%
31-DEC-90 0.40% $10,105 0.35% $10,102
31-JAN-91 1.67% $10,273 1.46% $10,250
28-FEB-91 0.88% $10,364 0.88% $10,340
31-MAR-91 0.06% $10,370 -0.26% $10,313
30-APR-91 0.93% $10,467 1.39% $10,456
31-MAY-91 0.60% $10,530 0.49% $10,508
30-JUN-91 -0.33% $10,496 -0.14% $10,493
31-JUL-91 1.02% $10,603 1.00% $10,598
31-AUG-91 1.26% $10,737 1.26% $10,731
30-SEP-91 1.34% $10,881 1.20% $10,860
31-OCT-91 0.50% $10,936 0.78% $10,945
30-NOV-91 0.16% $10,953 0.31% $10,979
31-DEC-91 2.14% $11,187 2.25% $11,226
31-JAN-92 0.27% $11,218 0.18% $11,246
29-FEB-92 0.04% $11,222 0.06% $11,253
31-MAR-92 -0.30% $11,188 -0.37% $11,211
30-APR-92 0.73% $11,270 0.85% $11,306
31-MAY-92 0.91% $11,373 0.94% $11,413
30-JUN-92 1.43% $11,535 1.40% $11,572
31-JUL-92 2.91% $11,871 2.62% $11,876
31-AUG-92 -1.04% $11,747 -0.75% $11,787
30-SEP-92 0.71% $11,831 0.64% $11,862
31-OCT-92 -0.75% $11,741 -0.34% $11,821
30-NOV-92 1.40% $11,906 1.19% $11,962
31-DEC-92 0.82% $12,004 0.73% $12,049
31-JAN-93 1.26% $12,155 1.09% $12,180
28-FEB-93 2.99% $12,518 2.58% $12,495
31-MAR-93 -1.55% $12,325 -1.10% $12,357
30-APR-93 0.89% $12,434 0.60% $12,432
31-MAY-93 0.21% $12,460 0.35% $12,475
30-JUN-93 1.66% $12,666 1.33% $12,641
31-JUL-93 -0.30% $12,629 0.01% $12,642
31-AUG-93 2.06% $12,889 1.38% $12,817
30-SEP-93 1.40% $13,069 0.76% $12,915
31-OCT-93 0.06% $13,076 0.12% $12,930
30-NOV-93 -0.86% $12,964 -0.24% $12,899
31-DEC-93 1.81% $13,198 1.39% $13,078
31-JAN-94 1.18% $13,354 0.95% $13,202
28-FEB-94 -2.60% $13,007 -1.97% $12,943
31-MAR-94 -2.63% $12,664 -2.24% $12,653
30-APR-94 0.41% $12,717 1.00% $12,779
31-MAY-94 0.62% $12,795 0.58% $12,854
30-JUN-94 -0.63% $12,714 -0.26% $12,820
31-JUL-94 1.58% $12,915 1.04% $12,954
31-AUG-94 0.23% $12,945 0.48% $13,016
30-SEP-94 -1.39% $12,765 -0.74% $12,920
31-OCT-94 -1.60% $12,561 -0.56% $12,847
30-NOV-94 -1.65% $12,354 -0.76% $12,750
31-DEC-94 1.60% $12,552 0.91% $12,866
31-JAN-95 2.22% $12,830 1.05% $13,001
28-FEB-95 2.94% $13,208 1.49% $13,195
31-MAR-95 1.12% $13,356 0.97% $13,323
30-APR-95 0.20% $13,382 0.25% $13,356
31-MAY-95 2.71% $13,745 2.17% $13,646
30-JUN-95 -0.68% $13,652 0.14% $13,665
31-JUL-95 0.87% $13,771 1.40% $13,856
31-AUG-95 1.08% $13,920 0.88% $13,979
30-SEP-95 0.42% $13,978 0.32% $14,023
31-OCT-95 1.34% $14,165 0.41% $14,081
30-NOV-95 1.05% $14,313 0.88% $14,204
31-DEC-95 0.75% $14,421 0.57% $14,285
31-JAN-96 1.13% $14,583 1.25% $14,464
29-FEB-96 -0.44% $14,519 -0.36% $14,412
31-MAR-96 -1.33% $14,326 -0.60% $14,326
30-APR-96 0.03% $14,330 -0.19% $14,299
31-MAY-96 -0.12% $14,313 -0.13% $14,280
30-JUN-96 0.57% $14,394 0.60% $14,366
31-JUL-96 1.26% $14,575 0.73% $14,470
30-AUG-96 -0.13% $14,557 0.13% $14,489
30-SEP-96 0.74% $14,665 0.69% $14,589
31-OCT-96 1.06% $14,820 0.98% $14,732
43.66% 6.66%
</TABLE>
* Unannualized
+ Assumes initial investment of $10,000 on inception date, November 16, 1990.
Performance data illustrated is historical. Past performance is not
predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the Lehman Bros. 5-Year State G.O. Index.
22
<PAGE> 29
FREMONT FUNDS
PORTFOLIO CREDIT QUALITY OF FREMONT CALIFORNIA
INTERMEDIATE TAX-FREE FUND AS OF OCTOBER 31, 1996
<TABLE>
<S> <C>
A (21.5%)
AA (26.9%)
AAA (51.6%)
</TABLE>
when no evidence of inflation materialized, interest rates came back down,
making our longer maturity posture a blessing as is demonstrated in second half
results. Going forward, with economic growth and inflation expectations
moderating, we see intermediate-term interest rates continuing to trend lower,
and consequently, have extended the portfolio's average maturity to 8 years. If
our interest rate forecast proves accurate, this longer maturity will enhance
the Fund's returns.
Looking ahead, there is some good news and potentially bad news in the
California municipal bond market. The California economy is gaining momentum.
Unemployment is down from a peak of around 11% to 7.4%. Existing home sales are
up 24% and housing starts are up 23.5% from year-ago levels. We have gone from
years of big state government budget deficits to a comfortable surplus.
California State general obligation bonds were recently upgraded from A to A+.
There may be further upgrades on the horizon.
The potentially bad news is that Medicare and welfare reform will increase the
financial burden on county and local governments. In addition, the recent
passage of Proposition 218 subjects certain revenue raising issues to public
referendum. This may restrict the ability of county and local governments to
raise additional funds. We are taking a hard look at the impact this may have on
county and municipal general obligation bonds. We anticipate reducing the Fund
portfolio's position in these issues until the dust clears, at which point some
attractive value-oriented opportunities may be available.
Currently some appetizing values are evolving in the utility bond sector. We
believe the rating agencies are over-reacting to the recent deregulation of the
water and electric utilities industries. Under new regulation, privately held
utilities will be allowed to compete for public utilities customers. But, being
allowed to compete and doing so effectively are horses of two very different
colors. For example, private electric utilities are to be given access to their
public counterparts' grids (electric delivery systems). But, they are going to
have to pay for it and in the end, may have little or no pricing advantage. We
doubt anyone is likely to move a major power plant from one locale to another
for modestly lower electric or water costs. Yet Los Angeles Department of Water
and Power Bonds and Pasadena Electric Bonds were recently downgraded from AA to
A+, creating higher yields we can take advantage of.
In conclusion, we strive to add value both by adjusting the Fund's average
maturity/duration to take advantage of dominant interest rate trends and by
searching for opportunistically-priced securities in the California municipal
bond universe. We are confident of continued success on both fronts and remain
committed to providing you with superior risk-adjusted returns.
Sincerely,
/s/William M. Feeney
William M. Feeney
Portfolio Manager
Fremont California Intermediate Tax-Free Fund
23
<PAGE> 30
FREMONT FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF FREMONT MUTUAL FUNDS, INC.:
We have audited the accompanying statements of assets and liabilities of each
of the nine funds comprising Fremont Mutual Funds, Inc. (the Funds), including
each Fund's statement of investments in securities and net assets as of October
31, 1996, and the related statements of operations, the statements of changes in
net assets, and the financial highlights for each of the periods presented.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principals used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the nine funds comprising Fremont Mutual Funds, Inc. as of October 31, 1996,
the results of their operations, the changes in their net assets, and their
financial highlights for each of the periods presented in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
San Francisco, California
December 6, 1996
24
<PAGE> 31
FREMONT GLOBAL FUND
October 31, 1996
- -------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- -------------------------------------------------------------------------
STOCKS - 51.6%
BUSINESS EQUIPMENT & SERVICES - 1.3%
2,800 Sodexho SA FR $ 1,350,945
143,000 Kyowa Exeo Corp. JP 1,367,881
100,000 Compass Group PLC UK 992,744
24,500 First Data Corp. US 1,953,875
59,300 WMX Technologies, Inc. US 2,038,437
-----------
7,703,882
-----------
CAPITAL GOODS - 2.4%
1,521,000 PT Dynaplast (Foreign Registered) ID 1,616,140
8,400 Kyocera Corp., ADR JP 1,103,550
206,000 Mitsubishi Heavy Industries JP 1,581,834
60,000 Cemex SA (Class B), ADR MX 433,248
20 Zardoya-Otis SP 2,037
80,000 Autoliv AB SW 3,391,556
20,300 Caterpillar, Inc. US 1,393,088
23,700 Emerson Electric Co. US 2,109,300
34,500 PACCAR, Inc. US 1,923,375
-----------
13,554,128
-----------
CONSUMER DURABLES - 2.6%
* 33,600 Daimler-Benz AG GM 1,973,149
31,000 Fukoku Co. Ltd. JP 372,707
33,000 Murata Manufacturing Co. Ltd. JP 1,059,939
33,000 Sony Corp., ADR JP 1,992,375
112,000 Suzuki Motor Co. Ltd. JP 1,140,149
53,500 Chrysler Corp. US 1,798,937
25,100 Eaton Corp. US 1,499,725
70,800 Ford Motor Co. US 2,212,500
48,400 General Motors Corp. US 2,607,550
-----------
14,657,031
-----------
CONSUMER NON-DURABLES - 2.3%
15,760 LVMH FR 3,603,464
440 LVMH, ADR FR 20,185
3,456,000 Pacific Andes International Holdings Ltd. HK 545,287
* 288,000 Pacific Andes International Holdings Ltd.
(Warrants 08/31/98) HK 16,202
1,000,000 PT Mayora Indah ID 407,848
460,295 San Miguel Corp. (Class B) PH 1,663,928
2,000,000 Universal Robina Corp. PH 913,242
76,000 Cerebos Pacific Ltd. SG 588,143
108,000 Fraser & Neave Ltd. SG 1,073,482
* 180,000 Pacific Andes Holdings Ltd. SG 90,000
100,000 Srithai Superware Co. Ltd.
(Foreign Registered) TH 497,785
* 162,955 President Enterprises, GDR TW 2,525,806
170,000 Associated British Foods PLC UK 1,167,533
-----------
13,112,905
-----------
CONSUMER SERVICES - 2.3%
22,000 News Corp. Ltd., ADR AU 497,750
190,820 Village Roadshow Ltd. (Preferred) AU 551,379
3,300 H.I.S. Co. Ltd. JP 174,919
35,000 Secom Co. JP 2,082,492
20,000 Sega Enterprises Ltd. JP 807,372
10,000 Sega Enterprises Ltd., ADR JP 101,107
265,000 Genting Berhad MY 1,981,994
CONSUMER SERVICES (CONTINUED)
70,600 Elsevier NV NL $ 1,171,164
7,902 Wolters Kluwer NV NL 1,013,810
9,953 Wolters Kluwer NV, ADR NL 1,280,001
280,000 Helicopter Line Ltd. (The) NZ 593,670
180,000 Rentokil Group PLC UK 1,208,382
28,000 Disney (Walt) Co. US 1,844,500
-----------
13,308,540
-----------
ENERGY - 5.0%
* 15 Petrofina SA (Warrants 06/03/97) BE 71
33,800 Amoco Corp. US 2,560,350
14,900 Atlantic Richfield Co. US 1,974,250
48,900 Chevron Corp. US 3,215,175
61,500 Dresser Industries, Inc. US 2,021,812
58,200 Exxon Corp. US 5,157,975
31,400 Kerr-McGee Corp. US 1,970,350
30,300 Mobil Corp. US 3,537,525
66,100 Occidental Petroleum Corp. US 1,619,450
37,700 Phillips Petroleum Co. US 1,545,700
33,200 Texaco, Inc. US 3,373,950
68,200 USX-Marathon Group US 1,491,875
-----------
28,468,483
-----------
FINANCIAL SERVICES - 11.8%
62,859 Lend Lease Corp. Ltd. AU 1,064,416
200,000 Westpac Banking Corp. Ltd. AU 1,139,976
5,000 Union Financiere de France Banque SA FR 615,060
770,000 Citic Pacific Ltd. HK 3,744,293
1,398,000 JCG Holdings Ltd. HK 1,301,760
1,452,750 PT Lippo Bank (Foreign Registered) ID 2,104,938
150,000 Instituto Mobiliare Italiano SPA IT 1,186,515
150,000 Arab Malaysian Finance Berhad
(Foreign Registered) MY 807,281
200,000 Commerce Asset Holding Berhad MY 1,305,896
33,912 Aegon NV, ADR NL 1,746,482
105,416 Oversea-Chinese Banking Corp. Ltd.
(Foreign Registered) SG 1,204,968
129,899 United Overseas Bank Ltd.
(Foreign Registered) SG 1,263,485
* 6,300 Housing & Commercial Bank, Korea SK 121,234
130 Samsung Fire & Marine Insurance SK 60,575
170,900 Bangkok Bank Ltd. (Foreign Registered) TH 1,822,004
600,000 Krung Thai Bank Public Co. Ltd.
(Foreign Registered) TH 1,622,702
120,000 Siam Commercial Bank
(Foreign Registered) TH 1,091,208
294,280 Thai Farmers Bank Co. Ltd.
(Foreign Registered) TH 2,249,230
* 24,285 Thai Farmers Bank Public Co. Ltd.
(Warrants 09/30/99) TH 23,797
73,789 HSBC Holdings PLC (Hong Kong Shares) UK 1,503,016
55,600 Ahmanson (H.F.) & Co. US 1,744,450
42,800 Allstate Corp. US 2,402,150
33,000 American Express Co. US 1,551,000
41,000 Banc One Corp. US 1,737,375
26,200 BankAmerica Corp. US 2,397,300
18,800 Bankers Trust New York Corp. US 1,588,600
27,500 Chase Manhattan Corp. US 2,358,125
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 32
FREMONT GLOBAL FUND
October 31, 1996
Country Value
Shares Security Description Code (Note 1)
- -------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
11,900 Cigna Corp. US $ 1,552,950
31,400 Citicorp US 3,108,600
33,700 Dean Witter, Discover & Co. US 1,984,088
18,200 Federal Home Loan Mortgage Corp. US 1,838,200
59,900 Federal National Mortgage Association US 2,343,588
40,700 First Chicago NBD Corp. US 2,075,700
40,000 First Hawaiian, Inc. US 1,240,000
21,200 First Union Corp. US 1,542,300
29,200 Fleet Financial Group, Inc. US 1,456,350
20,700 Nationsbank Corp. US 1,950,975
37,800 Norwest Corp. US 1,658,475
31,200 Republic New York Corp. US 2,379,000
39,300 Travelers, Inc. US 2,132,025
72,500 USLIFE Corp. US 2,265,625
-----------
67,285,712
-----------
HEALTH CARE - 2.2%
37,490 Gehe AG GM 2,520,336
800,500 PT Dankos Laboratories
(Foreign Registered) ID 670,148
22,000 Towa Pharmaceutical Co. Ltd. JP 361,036
8,000 Astra AB "A" Free SW 367,115
29,600 Aetna, Inc. US 1,979,500
44,900 Baxter International, Inc. US 1,868,963
51,900 Columbia HCA Healthcare Corp. US 1,855,425
21,600 Medtronic, Inc. US 1,390,500
27,000 Warner-Lambert Co. US 1,717,875
-----------
12,730,898
-----------
MISCELLANEOUS - 0.2%
100,900 Taiwan Index Fund Ltd. TW 1,198,692
-----------
1,198,692
-----------
MULTI-INDUSTRY - 2.6%
2,400 Viag AG GM 885,813
* 685 Viag AG (New) GM 248,988
560,000 Hutchison Whampoa HK 3,910,867
1,240,000 Renong Berhad MY 1,952,988
* 248,000 Renong Berhad
(Convertible Loan Stock 05/21/01) MY 90,780
* 155,000 Renong Berhad (Warrants Exp. 11/21/00) MY 63,178
963,000 Comfort Group Ltd. SG 854,633
110,000 Cycle & Carriage Ltd. SG 1,155,840
29,800 Allied-Signal, Inc. US 1,951,900
29,600 Minnesota Mining & Manufacturing Co. US 2,268,100
19,500 TRW, Inc. US 1,764,750
-----------
15,147,837
-----------
RAW MATERIALS - 1.6%
37,800 Broken Hill Proprietary Co. Ltd., ADR AU 1,015,875
776,000 Asiatic Development Berhad MY 694,009
24,567 Hansol Paper Ltd., GDR SK 362,363
11,875 Hansol Paper Ltd., GDR SK 175,156
27,200 Dow Chemical Co. US 2,114,800
19,000 Du Pont (E.I.) de Nemours & Co. US 1,762,250
80,900 Engelhard Corp. US 1,476,425
40,400 Goodrich (B.F.) Co. US 1,711,950
-----------
9,312,828
-----------
RETAIL - 2.5%
9,350 Hermes International FR $ 2,369,700
600,000 PT Hero Supermarket (Foreign Registered) ID 373,503
29,000 Ito-Yokado Co. Ltd. JP 1,445,546
45,000 Seven Eleven Japan JP 2,614,305
* 200,000 Cifra SA de CV MX 258,469
* 58,500 Federated Department Stores, Inc. US 1,930,500
36,100 Home Depot, Inc. US 1,976,475
38,600 McDonalds Corp. US 1,712,875
36,900 Sears Roebuck & Co. US 1,785,037
-----------
14,466,410
-----------
SHELTER - 2.4%
1,044,000 PT Jaya Real Property ID 1,154,124
28,000 Kimberly-Clark de Mexico SA MX 538,218
1,125,000 Ayala Land, Inc. PH 1,198,630
4,800,000 C & P Homes, Inc. PH 2,191,781
*3,562,500 Filinvest Land, Inc. PH 1,206,478
200,000 Nawarat Patanakarn Public Co. Ltd.
(Foreign Registered) TH 266,531
25,300 Armstrong World Industries, Inc. US 1,688,775
35,400 International Paper Co. US 1,513,350
21,500 Kimberly-Clark Corp. US 2,004,875
29,800 Mead Corp. US 1,691,150
-----------
13,453,912
-----------
TECHNOLOGY - 4.8%
6,000 SAP AG, ADR GM 276,000
110,000 Canon, Inc. JP 2,104,432
18,900 Hirose Electronics JP 1,121,229
40,000 Hoya Corp. JP 1,312,857
14,000 TDK Corp. JP 820,711
600,000 Informatics Holdings Ltd. SG 234,292
* 31,145 Samsung Electronics Ltd., GDS
(1/2 Non-Voting) SK 657,938
4,241 Samsung Electronics Ltd., GDS
(1/2 Voting) SK 192,966
* 9,386 Samsung Electronics Ltd., New GDS
(1/2 Non-Voting) SK 150,176
* 1,278 Samsung Electronics Ltd., New GDS
(1/2 Voting) SK 43,292
220 Sungmi Telecom Electronics SK 44,732
47,250 Advanced Information Services
(Foreign Registered) TH 640,791
39,300 Amp, Inc. US 1,331,287
33,000 Avnet, Inc. US 1,662,375
26,700 Boeing Co. US 2,546,512
* 29,700 Compaq Computer Corp. US 2,067,862
35,500 Hewlett-Packard Co. US 1,566,437
36,500 International Business Machines Corp. US 4,708,500
53,800 Motorola, Inc. US 2,474,800
30,000 Rockwell International Corp. US 1,650,000
15,500 United Technologies Corp. US 1,995,625
-----------
27,602,814
-----------
TRANSPORTATION - 1.4%
22,000 Grupo Casa Autrey SP, ADR MX 415,250
125,000 Keppel Corp. SG 931,842
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 33
FREMONT GLOBAL FUND
October 31, 1996
Country Value
Shares Security Description Code (Note 1)
- -------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
8,500 Keppel Corp.
(Convertible Loan Stock 07/15/97) SG $ 10,018
* 8,500 Keppel Corp. (Warrants 06/30/97) SG 26,553
9,770 Korean Air SK 182,097
100,000 British Airways PLC UK 901,607
245,000 Railtrack Group PLC UK 1,104,469
24,900 Burlington Northern Santa Fe US 2,051,138
25,600 Conrail, Inc. US 2,435,200
------------
8,058,174
------------
UTILITIES - 6.2%
* 42,048 Hong Kong & China Gas Co.
(Warrants 09/30/97) HK 15,498
1,020,000 Telecom Italia Mobile SPA IT 2,106,966
255 Nippon Telegraph & Telephone JP 1,779,070
22,100 Telecom of New Zealand, ADR NZ 1,839,825
305,975 Manila Electric Co. (Class B) PH 2,247,073
14,900 Philippine Long Distance Telephone Co. PH 892,979
70,000 Korea Electric Power Corp., ADR SK 1,260,000
* 61,000 Korea Mobile Telecommunications, ADR SK 762,500
130,000 Cable & Wireless PLC UK 1,034,570
113,200 Northern Electric PLC (Preferred) UK 189,294
30,000 Vodafone Group PLC, ADR UK 1,158,750
* 64,400 AirTouch Communications, Inc. US 1,682,450
35,400 Ameritech Corp. US 1,938,150
29,600 Bell Atlantic Corp. US 1,783,400
62,800 Bellsouth Corp. US 2,559,100
30,000 Boston Edison Co. US 720,000
37,500 Coastal Corp. US 1,612,500
73,600 Entergy Corp. US 2,060,800
44,300 GTE Corp. US 1,866,138
111,900 Pacific Gas & Electric Co. US 2,629,650
38,600 Texas Utilities Co. US 1,563,300
73,200 Unicom Corp. US 1,903,200
38,400 Williams Cos., Inc. US 2,006,400
------------
35,611,613
------------
TOTAL STOCKS (Cost $274,384,412) $295,673,859
------------
Value
Face Amount/Issuer/Coupon Rate/Stated Maturity (Note 1)
- --------------------------------------------------------------------------
BONDS - 21.9%
CORPORATE BONDS - 4.0%
2,000,000 Asia Pulp & Paper International Finance
10.250%, 10/01/00 2,040,000
2,000,000 BankAmerica Corp., 8.125%, 08/15/04
(Callable 08/15/99) @ 100) 2,121,060
3,000,000 Cemex SA de CV, 10.750%, 07/15/00 3,060,000
1,600,000 Chrysler Corp., 10.400%
08/01/99 (Callable 08/01/97 @ 100) 1,651,536
3,000,000 Ford Motor Credit Corp.
6.800%, 04/23/01 3,026,460
2,500,000 General Electric Capital Corp.
8.850%, 03/01/07 (Puttable 03/01/97 @ 100) 2,862,425
3,000,000 General Motors Acceptance Corp.
7.500%, 07/24/00 3,100,140
CORPORATE BONDS (CONTINUED)
2,000,000 Pohang Iron & Steel Co. Ltd.
7.375%, 05/15/05 $ 2,040,500
3,000,000 Sears, Roebuck and Co., 6.240%, 08/03/99 2,998,920
83,037 Zions Auto Trust, 5.650%, 06/15/99 83,098
------------
22,984,139
------------
MORTGAGE BACKED SECURITIES - 0.3%
1,561,586 FNMA CMO, 1992-137BA REMIC,
3.500%, 01/25/17 1,477,651
------------
1,477,651
------------
U.S. GOVERNMENT BONDS - 1.3%
U.S. Treasury Notes
4,000,000 6.375%, 09/30/01 4,045,000
3,000,000 7.125%, 02/29/00 3,103,110
------------
7,148,110
------------
FOREIGN BONDS - 16.3%
AUS $ 4,000,000 European Bank for Reconstruction
and Development, 9.000%, 10/15/02 3,441,698
Government of Australia
AUS $ 4,000,000 7.500%, 07/15/05 3,203,333
AUS $ 4,000,000 8.750%, 01/15/01 3,376,197
European Investment Bank
CAN $ 4,000,000 7.750%, 04/22/03 3,227,312
CAN $ 4,000,000 8.500%, 08/30/05 3,348,639
Government of Canada
CAN $ 4,000,000 7.500%, 03/01/01 3,225,565
Japan Highway Public Corp.
CAN $ 2,000,000 7.875%, 09/27/02 1,622,989
Oesterreichische Kontrollbank
CAN $ 2,000,000 (Republic of Austria), 9.000%, 06/19/02 1,699,518
Republic of Finland
CAN $ 2,000,000 9.500%, 09/15/04 1,762,982
Toyko Electric Power
CAN $ 2,000,000 10.500%, 06/14/01 1,765,782
Kingdom of Denmark
DKK 20,000,000 7.000%, 12/15/04 3,522,155
Government of France
FF 20,000,000 8.500%, 11/25/02 4,554,179
FF 15,000,000 8.500%, 04/25/03 3,419,442
Federal Republic of Germany
DM 6,000,000 6.000%, 01/05/06 3,953,337
DM 3,000,000 6.750%, 04/22/03 2,105,783
DM 4,500,000 6.875%, 05/12/05 3,144,736
DM 4,000,000 8.375%, 05/21/01 3,003,856
Treuhandanstalt
DM 3,000,000 7.750%, 10/01/02 2,209,590
World Bank
DM 3,000,000 6.125%, 09/27/02 2,059,318
Government of Ireland
IEP 2,000,000 6.250%, 04/01/99 3,260,229
IEP 2,000,000 6.500%, 10/18/01 3,279,781
IEP 2,000,000 8.000%, 08/18/06 3,493,219
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 34
FREMONT GLOBAL FUND
October 31, 1996
Value
Face Amount/Issuer/Coupon Rate/Stated Maturity (Note 1)
- --------------------------------------------------------------------------
FOREIGN BONDS (CONTINUED)
Government of Italy
ITL 4,500,000,000 8.500%, 01/01/04 $ 3,050,445
ITL 4,500,000,000 10.500%, 07/15/98 3,117,456
Government of Netherlands
NLG 6,000,000 6.500%, 04/15/03 3,734,227
Government of Sweden
SEK 20,000,000 6.000%, 02/09/05 2,800,708
SEK 25,000,000 10.250%, 05/05/03 4,446,707
UK Treasury
(pound) 2,500,000 7.500%, 12/07/06 4,033,024
(pound) 2,000,000 8.500%, 12/07/05 3,445,108
United Mexican States
US $ 6,000,000 6.250%, 12/31/19
(Callable at any time @ 100) 4,192,500
-------------
93,499,815
-------------
TOTAL BONDS (Cost $118,813,559) 125,109,715
-------------
Value
Face Amount/Issuer/Discount Rate/Stated Maturity (Note 1)
- --------------------------------------------------------------------------
SHORT TERM SECURITIES - 26.1%
9,025,091 Benchmark Diversified Assets Fund 9,025,091
** 5,000,000 Allianz of America Finance Corp.
5.300%, 11/05/96 4,997,056
5,000,000 Associates Corp. of North America,
CP, 5.250%, 12/03/96 4,976,667
5,000,000 Berliner Handels-und Frankfurt Bank,
CP, 5.240%, 11/18/96 4,987,628
5,000,000 C.I.T. Group Holdings, Inc.,
CP, 5.240%, 11/21/96 4,985,444
** 5,000,000 Cargill Financial Services Corp.,
CP, 5.240%, 11/08/96 4,994,906
5,000,000 Clorox Co., CP, 5.230%, 11/19/96 4,986,925
5,000,000 Ford Motor Credit Corp., CP,
5.250%, 11/06/96 4,996,354
** 5,000,000 Gillette Co., CP, 5.230%, 11/07/96 4,995,642
5,000,000 Goldman Sachs & Co., CP,
5.240%, 11/26/96 4,981,806
** 5,000,000 Great Lakes Chemical Corp.,
CP, 5.240%, 11/14/96 4,990,539
5,000,000 Heinz (H.J.) & Co., CP, 5.350%, 11/05/96 4,997,028
5,000,000 Jostens, Inc., CP, 5.330%, 11/04/96 4,997,779
** 5,000,000 Koch Industries, Inc., CP,
5.230%, 12/09/96 4,972,397
5,000,000 Merrill Lynch & Co., Inc., CP,
5.260%, 11/12/96 4,991,964
5,000,000 MetLife Funding, Inc.,
CP, 5.230%, 11/13/96 4,991,283
5,000,000 Mitsubishi International Corp., CP,
5.250%, 11/15/96 4,989,792
5,000,000 Mitsui & Co. (U.S.A.), Inc., CP,
5.280%, 12/06/96 4,974,333
SHORT TERM SECURITIES (CONTINUED)
5,000,000 Penney (J.C.) Funding Corp., CP,
5.230%, 11/20/96 $ 4,986,199
** 5,000,000 Rexam PLC, CP, 5.250%, 12/04/96 4,975,938
5,000,000 Sandoz Corp., CP, 5.230%, 11/14/96 4,990,557
** 5,000,000 Sony Capital Corp., CP, 5.250%,
11/01/96 5,000,000
** 5,000,000 St. Paul Cos., Inc., CP, 5.240%,
12/02/96 4,977,439
5,200,000 Toshiba Capital (Asia) Ltd., CP
5.300%, 12/11/96 5,169,378
5,000,000 Toys "R" Us, Inc., CP, 5.220%,
11/25/96 4,982,600
5,000,000 Transamerica Finance Corp., CP,
5.240%, 11/22/96 4,984,716
5,000,000 Unilever Capital Corp., CP, 5.300%,
11/04/96 4,997,791
5,000,000 Union Bank of Switzerland Finance, Inc.,
CP, 5.625%, 11/01/96 5,000,000
5,000,000 USAA Capital Corp., CP, 5.250%,
11/27/96 4,981,113
------------
TOTAL SHORT TERM SECURITIES (Cost $148,878,365) 148,878,365
------------
TOTAL INVESTMENTS (Cost $542,076,336), 99.6% 569,661,939
OTHER ASSETS AND LIABILITIES, NET, 0.4% 2,488,297
------------
NET ASSETS, 100.0% $572,150,236
============
PORTFOLIO ABBREVIATIONS:
ADR - American Depository Receipt
CP - Commercial Paper
CMO - Collateralized Mortgage Obligation
FNMA - Federal National Mortgage Association
GDR - Global Depository Receipt
GDS - Global Depository Share
REMIC - Real Estate Mortgage Investment Conduit
CURRENCY ABBREVIATIONS:
AUS$ - Australian Dollar
CAN$ - Canadian Dollar
DKK - Danish Kroner
FF - French Franc
DM - German Deutschemark
IEP - Irish Punt
ITL - Italian Lira
NLG - Netherlands Guilder
SEK - Swedish Krona
(pound) - British Pound
US$ - US Dollar
** These securities are generally issued to institutional investors. Any
resale must be in an exempt transaction pursuant to Section 4(2) of the
Securities Act of 1933.
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 35
FREMONT GLOBAL FUND
October 31, 1996
- -----------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
Country % of
Code Country Name Net Assets
- -----------------------------------------
AU Australia 2.5%
CN Canada 2.9%
DK Denmark 0.7%
FR France 2.9%
GM Germany 4.0%
HK Hong Kong 1.7%
ID Indonesia 1.1%
IR Ireland 1.8%
IT Italy 1.7%
JP Japan 4.1%
MX Mexico 0.3%
MY Malaysia 1.2%
NL Netherlands 1.6%
NZ New Zealand 0.4%
PH Philippines 1.8%
SG Singapore 1.3%
SK South Korea 0.7%
SW Sweden 2.0%
TH Thailand 1.4%
TW Taiwan 0.6%
UK United Kingdom 2.9%
US United States 62.4%
-----
TOTAL 100.0%
-----
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 36
FREMONT INTERNATIONAL GROWTH FUND
October 31, 1996
- -----------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- -----------------------------------------------------------------------
STOCKS - 95.5%
BUSINESS EQUIPMENT & SERVICES - 4.6%
825 Sodexho SA FR $ 398,046
81,000 Kyowa Exeo Corp. JP 774,814
45,000 Compass Group PLC UK 446,735
------------
1,619,595
------------
CAPITAL GOODS - 6.6%
7,000 Kyocera Corp. JP 461,343
6,000 Mabuchi Motors Co. JP 305,397
16,000 Raito Kogyo Co. JP 247,126
1,000 Shinkawa JP 17,990
30,600 Autoliv AB SW 1,297,270
------------
2,329,126
------------
CONSUMER DURABLES - 6.6%
1,200 Volkswagen AG GM 474,147
28,000 Alpine Electronics, Inc. JP 442,299
15,000 Matsushita-Kotobuki Electronics JP 346,204
10,000 Murata Manufacturing Co. Ltd. JP 321,194
17,600 Rinnai Corp. JP 375,323
6,000 Sony Corp. JP 359,631
------------
2,318,798
------------
CONSUMER NON-DURABLES - 7.0%
2,500 LVMH FR 571,615
240,000 PT Budi Acid Jaya (Foreign Registered) ID 309,106
40,000 PT Hanjaya Mandala Sampoerna
(Foreign Registered) ID 371,786
165,000 San Miguel Corp. (Class B) PH 596,461
*40,549 President Enterprises, GDR TW 628,513
------------
2,477,481
------------
CONSUMER SERVICES - 6.7%
200,000 PT Steady Safe (Foreign Registered) ID 193,191
8,000 Secom Co. JP 475,998
7,661 Wolters Kluwer NV NL 982,890
105,000 Rentokil Group PLC UK 704,889
------------
2,356,968
------------
FINANCIAL SERVICES - 11.4%
160,000 Reinsurance Australia Corp. Ltd. AU 478,790
375,000 PT Lippo Bank (Foreign Registered) ID 543,350
200,000 Public Bank Berhad (Foreign Registered) MY 375,148
14,558 Aegon NV, ADR NL 749,732
7,850 Kookmin Bank SK 125,410
67,600 Bangkok Bank Ltd.(Foreign Registered) TH 720,699
120,000 Finance One Public Co. Ltd.
(Foreign Registered) TH 338,651
25,000 Siam Commercial Bank
(Foreign Registered) TH 227,335
62,000 Thai Farmers Bank Public Co. Ltd.
(Foreign Registered) TH 473,876
* 3,750 Thai Farmers Bank Public Co. Ltd.
(Warrants 09/30/99) TH 3,675
------------
4,036,666
------------
HEALTH CARE - 10.6%
13,120 Gehe AG GM $ 882,017
600,000 PT Dankos Laboratories
(Foreign Registered) ID 502,297
40,000 Banyu Pharmaceutical Co. JP 508,995
35,000 Santen Pharmaceutical Co. JP 740,237
73 Roche Holding AG SZ 550,379
18,000 Glaxo Wellcome PLC, ADR UK 567,000
------------
3,750,925
------------
MULTI-INDUSTRY - 4.3%
98,000 Hutchison Whampoa HK 684,402
250,000 Renong Berhad MY 393,748
* 72,000 Renong Berhad
(Convertible Loan Stock 05/21/01) MY 26,355
* 45,000 Renong Berhad (Warrants 11/21/00) MY 18,342
*494,000 International UNP Holdings CN 114,339
300,000 Comfort Group Ltd. SG 266,241
------------
1,503,427
------------
RAW MATERIALS - 3.3%
250,000 M.I.M. Holdings Ltd. AU 324,577
160,000 QNI Ltd. AU 321,727
* 20,400 Concordia Paper Holdings Ltd., ADR HK 102,000
* 15,355 Hansol Paper Ltd., GDR SK 226,486
28,000 Siam City Cement Public Co. Ltd.
(Foreign Registered) TH 175,597
------------
1,150,387
------------
RETAIL - 6.0%
2,750 Hermes International FR 696,971
2,200 Ito Yokado Co. Ltd., ADR JP 440,000
17,164 Ceteco Holdings, ADS NL 970,796
------------
2,107,767
------------
SHELTER - 2.4%
160,000 Malaysian Resources Corp. Berhad MY 614,167
189,700 Nawarat Patanakarn Public Co. Ltd.
(Foreign Registered) TH 252,804
------------
866,971
------------
TECHNOLOGY - 13.2%
10,000 TT Tieto OY (Class B) FI 668,398
1,450 Rexel SA FR 428,931
5,500 SAP AG (Preferred) GM 738,771
1,000 Advantest Corp. JP 37,736
8,100 Canon, Inc., ADR JP 780,638
25,000 Hoya Corp. JP 820,535
16,000 NTT Data Communications Systems Co. JP 473,190
300,000 Datacraft Asia Ltd. SG 351,000
600,000 Informatics Holdings Ltd. SG 234,292
* 4,348 Samsung Electronics Ltd., GDS
(1/2 Non-Voting) SK 91,851
130 Samsung Electronics Ltd., GDS
(1/2 Voting) SK 5,915
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 37
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1996
- -----------------------------------------------------------------------
Country Value
Shares Security Description Code (Note 1)
- -----------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
* 1,310 Samsung Electronics Ltd., New GDS
(1/2 Non-Voting) SK $ 20,960
* 39 Samsung Electronics Ltd., New GDS
(1/2 Voting) SK 1,321
------------
4,653,538
------------
TRANSPORTATION - 4.8%
240,000 Cathay Pacific Airways HK 375,567
60,000 Singapore Airlines Ltd.
(Foreign Registered) SG 528,221
46,000 British Airways PLC UK 414,739
85,000 Railtrack Group PLC UK 383,183
------------
1,701,710
------------
UTILITIES - 8.0%
13,000 VEBA AG GM 692,048
260,000 Telecom Italia Mobile SPA IT 537,070
220,000 Telecom Italia SPA IT 250,777
51 Nippon Telegraph & Telephone JP 355,814
75,075 Manila Electric Co. (Class B) PH 551,350
55,000 Cable & Wireless PLC UK 437,703
------------
2,824,762
------------
TOTAL STOCKS (Cost $31,207,266) 33,698,121
------------
Country Value
Face Amount/Issuer/Coupon Rate/Stated Maturity Code (Note 1)
- -----------------------------------------------------------------------
CONVERTIBLE BONDS - 0.9%
250,000 United Micro Electronics,
1.250%, 06/08/04 TW 307,625
------------
TOTAL CONVERTIBLE BONDS (Cost $368,564) 307,625
------------
Country Value
Face Amount/Issuer Code (Note 1)
- -----------------------------------------------------------------------
SHORT TERM SECURITIES - 2.8%
991,842 Benchmark Diversified Assets Fund US 991,842
------------
TOTAL SHORT TERM SECURITIES (Cost $991,842) 991,842
------------
TOTAL INVESTMENTS (Cost $32,567,672), 99.2% 34,997,588
OTHER ASSETS AND LIABILITIES, NET, 0.8% 275,158
------------
NET ASSETS, 100.0% $ 35,272,746
============
PORTFOLIO ABBREVIATIONS:
ADR - American Depository Receipt
ADS - American Depository Shares
GDR - Global Depository Receipt
GDS - Global Depository Shares
COUNTRY DIVERSIFICATION
Country % of
Code Country Name Net Assets
- -----------------------------------------
AU Australia 3.2%
CN Canada 0.3%
FI Finland 1.9%
FR France 6.0%
GM Germany 7.9%
HK Hong Kong 3.3%
ID Indonesia 5.5%
IT Italy 2.2%
JP Japan 23.5%
MY Malaysia 4.0%
NL Netherlands 7.7%
PH Philippines 3.2%
SG Singapore 3.9%
SK South Korea 1.3%
SW Sweden 3.7%
SZ Switzerland 1.6%
TH Thailand 6.2%
TW Taiwan 2.7%
UK United Kingdom 8.4%
US United States 3.5%
-----
TOTAL 100.0%
=====
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 38
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1996
- --------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------
STOCKS - 98.3%
BUSINESS EQUIPMENT & SERVICES - 2.1%
5,000 Aida Engineering JP $ 35,542
6,000 Kyudenko Co. Ltd. JP 68,978
5,000 Toenec Corp. JP 37,692
8,933 Cowie Group PLC UK 52,191
------------
194,403
------------
CAPITAL GOODS - 11.5%
7,980,000 Companhia de Acos Especiais
Itabira-Acesita BR 16,313
6,400,000 Companhia Siderurgica de Tubarao
(Preferred B) BR 95,006
* 356 Skoda Koncern Plzen AS CZ 11,311
5,300 Rautaruukki OY FI 46,425
1,450 Bertrand Faure FR 49,547
20 Campagnie Fives-Lille FR 1,808
600 Legris Industries FR 23,302
750 Vallourec SA FR 41,795
* 350 DLW AG GM 22,376
200 Felten & Guilleaume Energietechnik AG GM 22,409
7,000 Bunka Shutter Co. JP 48,776
22,000 Energy Support JP 140,939
1,000 Inaba Denkisangyo Co. JP 21,150
* 13,000 Mitsubishi Steel Manufacturing JP 66,283
3,000 Seirei Industry JP 13,111
2,000 Yokogawa Bridge Corp. JP 23,519
6,700 Steel & Tube Holdings Ltd. NZ 37,029
36,000 Van Der Horst Ltd. SG 132,907
8,000 Dongkuk Steel Mill Co. SK 159,758
7,000 Poongsan Corp. SK 85,567
------------
1,059,331
------------
CONSUMER DURABLES - 0.9%
* 9,679 CIA Interamericana de Automotive AR 43,078
4,100 Toyota South Africa Ltd. SA 27,499
87,987 Arcelik AS TU 8,674
------------
79,251
------------
CONSUMER NON-DURABLES - 9.3%
1,300,000 Bombril SA (Preferred) BR 25,309
8,700,000 Ceval Alimentos SA (Preferred) BR 83,841
9,800,000 Perdigao SA Comercio e Industria
(Preferred) BR 18,507
100,000 Sao Paulo Alpargatas SA (Preferred) BR 6,230
107 Cokoladovny AS CZ 13,290
1,100 Delta Dairy SA (Preferred) GR 9,186
1,100 Hellenic Sugar Industry SA GR 10,756
7,000 Lai Sun Garment International Ltd. HK 10,501
* 8,000 PT Chareon Pokphand Indonesia
(Foreign Registered) ID 8,930
17,000 PT Japfa Comfeed Indonesia
(Foreign Registered) ID 11,312
4,000 Daito Gyorui Co. JP 14,041
6,000 Kirin Beverage Corp. JP 80,035
6,000 Marudai Food Co. Ltd. JP 36,911
CONSUMER NON-DURABLES (CONTINUED)
11,000 Prima Meat Packers JP $ 36,200
1,000 Sanyo Coca-Cola Bottling JP 13,690
53,000 Grupo Industrial Maseca SA de CV
(Series B) MX 65,036
17,000 Guinness Anchor Berhad MY 43,728
8,000 Nanyang Press Berhad MY 31,342
35,000 Yeo Hiap Seng Berhad MY 94,183
3,400 Lion Nathan Ltd. NZ 8,771
400 Unicer-Uniao Cervejeira SA
(Registered Shares) PT 7,192
11,000 GP Batteries International Ltd.
(U.S. Dollar Shares) SG 31,900
2,000 Dongwon Industries Co. SK 41,876
* 3,100 LG International Corp. SK 30,991
3,000 Sam Yang Co. Ltd. SK 103,843
900 American Standard Sanitaryware Ltd.
(Foreign Registered) TH 14,463
2,600 Karat Sanitaryware Co. Ltd.
(Foreign Registered) TH 5,554
15,999 Tat Konserve Sanayii AS TU 2,241
------------
859,859
------------
CONSUMER SERVICES - 0.7%
850 Gaumont FR 67,732
------------
67,732
------------
ENERGY - 4.2%
5,311 CIA Naviera Perez Co. (Class B) AR 33,465
3,600,000 Distribuidora de Produtos de Petroleo
Ipiranga SA (Preferred) BR 42,052
5,300,000 Petrobras Distribuidora SA (Preferred) BR 89,769
37,500 Uniao de Industrias Petroquimicas SA
(Preferred B) BR 15,331
100 Elf Gabon FR 23,821
2,000 Itochu Fuel Corp. JP 15,270
2,000 Kamei Corp. JP 22,115
* 1,325 Energy Africa Ltd. SA 3,978
46,300 Bangchak Petroleum Public Co. Ltd.
(Foreign Registered) TH 48,091
56,000 Petrol Ofisi AS TU 16,271
230,100 Turcas Petroculuk AS TU 16,475
112,200 Premier Oil PLC UK 60,258
------------
386,896
------------
FINANCIAL SERVICES (BANKS) - 13.0%
7,400 Advance Bank of Australia Ltd. AU 39,719
5,600 Bank of Melbourne Ltd. AU 38,569
17,200 National Bank of Canada CN 166,947
14,600 Investicni A Postovni Banka CZ 162,932
* 550 Credit Lyonnais FR 15,024
2,400 Parisienne de Reescompt FR 190,259
1,466 Credit Bank of Athens
(Registered Shares) GR 93,513
1,700 National Bank of Greece
(Registered Shares) GR 107,726
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 39
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1996
- ---------------------------------------------------------------------------
Country Value
Shares Security Description Code (Note 1)
- ---------------------------------------------------------------------------
FINANCIAL SERVICES (BANKS) (CONTINUED)
12,000 MBF Capital Berhad MY $ 16,525
300 KAS Associatie NV NL 13,236
* 24,696 Union Bank of the Philippines PH 28,192
2,100 Banco Totta & Acores
(Registered Shares) PT 38,019
13,800 BPI-SGPS SA (Registered Shares) PT 163,802
* 45,000 Bangkok Bank of Commerce Public
Co. Ltd. (Foreign Registered) TH 28,221
13,800 First Bangkok City Bank Public
Co. Ltd. (Foreign Registered) TH 15,956
1,405,000 Demirbank TAS TU 48,111
1,295,800 Yapi Ve Kredi Bankasi SA TU 33,615
------------
1,200,366
------------
FINANCIAL SERVICES (OTHER) - 7.8%
1,200 London Insurance Group CN 30,373
2,150 Credit National FR 113,347
350 Societe Financiere Interbail SA FR 15,171
212,400 Century City International Holdings Ltd. HK 50,269
60,000 Liu Chong Hing Investment Ltd. HK 65,569
42,000 Peregrine Investment Holdings Ltd. HK 67,625
27,500 Tai Cheung Holdings HK 22,406
7,100 Irish Permanent PLC IR 54,023
15,000 Life Co. Ltd. JP 50,417
13,000 Nippon Shinpan Co. JP 78,605
14,000 Datuk Keramat Holdings Berhad MY 23,269
23 Assurantieconcern Stad Rotterdam NL 864
2,800 Phatra Thanakit Co. Ltd.
(Foreign Registered) TH 10,371
12,600 Union Asia Finance Co. Ltd.
(Foreign Registered) TH 27,409
31,700 E D & F Man Group PLC UK 88,735
9,100 Lloyd Thompson Group PLC UK 25,103
------------
723,556
------------
HEALTH CARE - 0.8%
100 Andreae-Noris Zahn AG GM 37,898
90 Galenica Holdings AG
(Registered Shares) SZ 34,424
------------
72,322
------------
MULTI-INDUSTRY - 8.9%
1,400 Marine-Wendel FR 126,074
9,700 Crean (James) PLC (Units) IR 31,608
2,000 Suntelephone Co. Ltd. JP 13,357
115,000 Berjaya Group Berhad MY 81,460
* 57,500 Berjaya Group Berhad (Rights) MY 796
21,000 Oriental Holdings Berhad MY 142,936
700 Hollandsche Beton Groep NV NL 129,669
1,600 Internatio-Muller NV NL 38,495
10,000 Daewoo Corp. SK 84,720
*6,157,200 Dogan Sirketler Grubu Holdings AS TU 116,602
8,900 Goode Durrant PLC UK 51,057
------------
816,774
------------
RAW MATERIALS - 13.1%
29,120 Aluar Aluminio Argentina SA (Class B) AR $ 68,443
1,400 Voest-Alpine Stahl AG AS 46,370
200 Tessenderlo Chemie BE 73,594
1,400,000 Companhia Petroquimica de Sul BR 74,272
9,300,000 Fertilizantes Fosfatdos SA (Preferred) BR 49,519
292,000 Shanghai Petrochemical Co. Ltd.
(Hong Kong Shares) CH 78,360
614,000 Yizheng Chemical Fibre Co. Ltd.
(Hong Kong Shares) CH 142,139
* 18,400 Stelco, Inc. CN 107,843
* 116 Sepap AS CZ 4,658
* 221 Synthesia AS CZ 3,114
400 Nord Est FR 10,060
2,500 Sommer-Allibert FR 69,316
400 Hellas Can Packaging SA GR 7,260
31,000 Chuetsu Pulp & Paper Co. Ltd. JP 145,818
13,000 Cydsa SA (Series A) MX 24,793
* 36,000 Empaques Ponderosa SA de CV
(Series B) MX 17,164
900 DSM NV NL 86,032
6,100 Portucel Industrial-Empresa Produtora
de Celulosa SA PT 37,474
8,900 Hartebeesfontein Gold Mining Co. Ltd. SA 22,740
2,000 Sunkyong Industries Ltd. SK 33,404
2,800 Empresa Nacional de Celulosas SA SP 35,945
* 15,800 Ercros SA SP 7,421
4,500 National Petrochemical Co.
(Foreign Registered) TH 4,674
43,209 Cimentas TU 4,932
134,000 Petkim Petrokimya Holdings AS TU 54,229
------------
1,209,574
------------
RETAIL - 7.8%
* 200 Kaufring AG GM 11,336
7,000 Chiyoda Co. JP 130,233
10,000 Kotobukiya Co. Ltd. JP 53,532
2,000 Oak & Co. JP 12,550
5,000 Parco JP 46,951
* 42,000 Controladora Comercial Mexicana
SA de CV (Units) MX 37,099
2,300 Macintosh NV NL 54,119
12,700 East Asiatic Public Co. Ltd.
(Local Shares) TH 12,818
9,100 Saha Pathana Inter-Holding Ltd.
(Foreign Registered) TH 21,579
42,100 Kwik Save Group PLC UK 218,222
19,700 Lex Service PLC UK 116,541
------------
714,980
------------
SHELTER - 8.0%
700 Bau Holdings AG AS 33,116
5,000 Brasilit SA BR 8,031
* 56 Inzenyrske a Prumslove Stavby AS CZ 6,424
* 1,200 Societe Generale d'Enterprises SA FR 23,899
* 4,250 AGIV AG GM 61,064
89,000 Kumagai Gumi HK 82,298
* 17,800 Kumagai Gumi (Warrants 06/30/98) HK 3,338
20,000 Daikyo, Inc. JP 124,265
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
33
<PAGE> 40
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country Value
Shares Security Description Code (Note1)
- --------------------------------------------------------------------------------
SHELTER (CONTINUED)
<S> <C> <C> <C>
100 Daito Trust Construction JP $ 1,264
4,000 Kawasho Gecoss Corp. JP 46,687
10,000 Nichiei Construction JP 85,652
8,000 SXL Corp. JP 69,644
4,800 Vitro SA MX 9,214
1,100 Koninklijke BAM Groep NV NL 64,061
880 Sungwon Construction Co. SK 13,420
29,900 Persimmon PLC UK 101,458
---------
733,835
---------
TECHNOLOGY - 0.5%
* 322 SPT Telecom AS CZ 34,371
1,100 Alphatec Electronics Public Co. Ltd.
(Foreign Registered) TH 8,709
---------
43,080
---------
TRANSPORTATION - 3.3%
1,000 Compagnie Maritime Belge SA BE 74,874
5,000 Nippon Konpo Unyu Soko JP 38,350
3,800 Koninklijke Nedlloyd Groep NV NL 95,226
25,000 Hai Sun Hup Group Ltd. SG 17,661
37,000 Neptune Orient Lines Ltd. SG 30,997
* 2,000 Hanjin Shipping Co. SK 45,265
---------
302,373
---------
UTILITIES - 6.4%
3,100 Telecom de Argentina SA (Class B) AR 11,472
2,500,000 Companhia Energetica de Minas Gerais
(Preferred) BR 79,310
* 741 Ceske Energeticke Zavody AS CZ 26,374
1,200 Electricas Reunidas de Zaragoza SA SP 34,755
6,700 Hyder PLC UK 77,200
20,300 Northern Ireland Electricity PLC UK 107,536
5,300 Scottish Hydro-Electric PLC UK 23,720
19,400 Southern Electric PLC UK 203,169
5,400 Wessex Water PLC UK 31,066
---------
594,602
---------
TOTAL STOCKS (Cost $8,946,630) 9,058,934
---------
</TABLE>
<TABLE>
<CAPTION>
Country Value
Face Amount/Issuer Code (Note 1)
- ------------------ ------- --------
<S> <C> <C>
SHORT TERM SECURITIES - 1.2%
110,337 Benchmark Diversified Assets Fund US 110,337
-----------
TOTAL SHORT TERM SECURITIES (Cost $110,337) 110,337
-----------
TOTAL INVESTMENTS (Cost $9,056,967), 99.5% 9,169,271
OTHER ASSETS AND LIABILITIES, NET, 0.5% 44,904
-----------
NET ASSETS, 100.0% $ 9,214,175
===========
</TABLE>
COUNTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Country % of
Code Country Name Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
AR Argentina 1.7%
AS Austria 0.9%
AU Australia 0.9%
BE Belgium 1.7%
BR Brazil 6.6%
CH China 2.4%
CN Canada 3.3%
CZ Czech Republic 2.8%
FI Finland 0.5%
FR France 8.4%
GM Germany 1.7%
GR Greece 2.5%
HK Hong Kong 3.4%
ID Indonesia 0.2%
IR Ireland 0.9%
JP Japan 17.1%
MX Mexico 1.7%
MY Malaysia 4.8%
NL Netherlands 5.2%
NO Norway 0.1%
NZ New Zealand 0.5%
PH Philippines 0.3%
PT Portugal 2.7%
SA South Africa 0.6%
SG Singapore 2.3%
SK South Korea 6.5%
SP Spain 0.8%
SZ Switzerland 0.2%
TH Thailand 2.2%
TU Turkey 3.3%
UK United Kingdom 12.7%
US United States 1.1%
-----
TOTAL 100.0%
=====
</TABLE>
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
34
<PAGE> 41
FREMONT EMERGING MARKETS FUND
October 31, 1996
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
STOCKS - 69.9%
CAPITAL GOODS - 2.3%
40,000 IJM Corp. Berhad MY $ 87,060
-----------
87,060
-----------
CONSUMER DURABLES - 4.7%
635,000 Arcelik AS TU 62,597
74,000 China Motor Co. Ltd. TW 114,197
-----------
176,794
-----------
CONSUMER NON-DURABLES - 14.8%
300,000 Chaifa Holdings Ltd. HK 90,206
* 292,000 Glorious Sun Enterprises HK 135,005
90,000 Goldlion Holdings Ltd. HK 73,329
150,000 PT Davomas Abadi
(Foreign Registered) ID 138,454
* 125,000 PT Daya Guna Samudera
(Foreign Registered) ID 122,086
-----------
559,080
-----------
CONSUMER SERVICES - 3.1%
30,000 Tanjong PLC MY 116,343
-----------
116,343
-----------
FINANCIAL SERVICES - 9.4%
80,000 PT Lippo Life Insurance
(Foreign Registered) ID 61,821
* 8,700 Industrial Credit & Investment
Corp. of India Ltd., GDR IN 71,775
50,000 Public Finance Berhad
(Foreign Registered) MY 77,167
45,000 Siam General Factoring Co. Ltd.
(Foreign Registered) TH 64,820
3,000,000 Yapi Ve Kredi Bankasi SA TU 77,825
-----------
353,408
-----------
MULTI-INDUSTRY - 4.5%
* 240,000 Fairyoung Holdings Ltd. HK 96,220
6,200 Sasol Ltd. SA 75,578
-----------
171,798
-----------
RAW MATERIALS - 2.4%
25,000 PT Semen Gresik
(Foreign Registered) ID 71,910
* 1,600 Aromatics (Thailand)
Public Co. Ltd.
(Local Shares) TH 1,442
* 17,800 Aromatics (Thailand)
Public Co. Ltd.
(Foreign Registered) TH 16,047
-----------
89,399
-----------
SHELTER - 15.7%
20,000 New World Development Co. Ltd. HK 116,395
130,000 DNP Holdings Berhad MY 102,889
20,000 Malaysian Resources Corp. Berhad MY 76,771
* 400,000 Primetown Property Group, Inc. PH 83,714
* 500,000 Robinson's Land Corp. (Series B) PH 91,324
30,000 Central Pattana Public Co. Ltd.
(Foreign Registered) TH 119,939
-----------
591,032
-----------
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY - 7.1%
20,000 KCE Electronics Public Co. Ltd.
(Foreign Registered) TH $ 77,607
* 79,000 Macronix International Co. Ltd. TW 104,989
* 44,000 Yageo Corp. TW 87,073
-----------
269,669
-----------
TRANSPORTATION - 1.5%
* 150,000 Guangshen Railway Co. Ltd.
(Hong Kong Shares) CH 55,773
-----------
55,773
-----------
UTILITIES - 4.4%
29,000 Hong Kong Electric Holdings Ltd. HK 92,825
2,500 Mosenergo, ADR RU 71,346
-----------
164,171
-----------
TOTAL STOCKS (Cost $2,678,367) 2,634,527
-----------
<CAPTION>
Value
Face Amount/Issuer/Discount Rate/Stated Maturity (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
SHORT TERM SECURITIES - 30.7%
255,525 Benchmark Diversified Assets Fund US 255,525
310,000 Federal Farm Credit Bank, DN, 5.200%,
11/05/96 US 309,821
595,000 Federal National Mortgage Association,
DN, 5.170%, 11/07/96 US 594,487
-----------
TOTAL SHORT TERM SECURITIES (Cost $1,159,833) 1,159,833
-----------
TOTAL INVESTMENTS (Cost $3,838,200), 100.6% 3,794,360
OTHER ASSETS AND LIABILITIES, NET, (0.6)% (22,611)
-----------
NET ASSETS, 100.0% $ 3,771,749
===========
</TABLE>
PORTFOLIO ABBREVIATIONS:
ADR - American Depository Receipt
DN - Discount Note
GDR - Global Depository Receipt
COUNTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Country % of
Code Country Name Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
CH China 1.5%
HK Hong Kong 16.0%
ID Indonesia 10.5%
IN India 1.9%
MY Malaysia 12.2%
PH Philippines 4.6%
RU Russia 1.9%
SA South Africa 2.0%
TH Thailand 7.4%
TU Turkey 3.7%
TW Taiwan 8.9%
US United States 29.4%
-----
TOTAL 100.0%
=====
</TABLE>
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
35
<PAGE> 42
FREMONT U.S. MICRO-CAP FUND
October 31, 1996
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
STOCKS - 86.6%
BUSINESS EQUIPMENT & SERVICES - 13.2%
* 10,200 Daisytek International Corp. $ 390,150
* 117,800 IntelliQuest Information Group, Inc. 2,591,600
* 30,000 Mail Boxes Etc. 611,250
* 108,750 Metzler Group, Inc. 2,535,234
* 135,200 NuCO2, Inc. 1,791,400
* 33,000 Printrak International, Inc. 321,750
* 30,150 Rental Service Corp. 693,450
* 253,900 Richey Electronics, Inc. 2,221,625
* 88,850 Ultrak, Inc. 2,343,419
-----------
13,499,878
-----------
CAPITAL GOODS - 5.4%
* 84,600 Adept Technology, Inc. 549,900
* 88,000 AFC Cable Systems, Inc. 1,562,000
* 40,000 Channell Commercial Corp. 467,500
* 156,100 Gradall Industries, Inc. 1,697,588
* 18,000 Miller Industries, Inc. 420,750
100,000 PPT Vision, Inc. 837,500
-----------
5,535,238
-----------
CONSUMER DURABLES - 2.5%
* 111,300 Diamond Home Services, Inc. 2,559,900
-----------
2,559,900
-----------
CONSUMER NON-DURABLES - 6.5%
* 34,200 Boyds Wheels, Inc. 474,525
* 82,200 Conso Products Co. 1,171,350
* 206,100 Genesco, Inc. 1,854,900
* 61,850 Sonic Corp. 1,407,088
* 119,000 Sport-Haley, Inc. 1,710,625
-----------
6,618,488
-----------
CONSUMER SERVICES - 9.2%
* 144,000 Damark International, Inc. (Class A) 1,278,000
* 53,200 DM Management Co. 219,450
* 50,000 Gray Communications System, Inc.
(Class B) 1,006,250
* 17,000 Insight Enterprises, Inc. 578,000
* 137,300 LodgeNet Entertainment Corp. 2,162,475
* 86,150 Saga Communications, Inc. (Class A) 1,841,456
* 128,800 ShoLodge, Inc. 1,706,600
* 30,600 Suburban Lodges of America, Inc. 638,775
-----------
9,431,006
-----------
ENERGY - 7.5%
* 126,400 Basin Exploration, Inc. 853,200
* 73,000 Cairn Energy USA, Inc. 775,625
* 30,100 Core Laboratories NV 459,025
-----------
246,300 Lomak Petroleum, Inc. 4,033,163
-----------
<CAPTION>
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
ENERGY (CONTINUED)
* 83,900 Mallon Resources Corp. $ 671,200
* 12,100 Numar Corp. 193,600
* 20,500 Trico Marine Services, Inc. 722,625
-----------
7,708,438
-----------
FINANCIAL SERVICES - 7.5%
81,600 GA Financial, Inc. 1,111,800
6,500 ISB Financial Corp. 106,844
* 171,100 PennFed Financial Services, Inc. 3,336,450
40,000 Premier Financial Bancorp, Inc. 520,000
107,700 R&G Financial Corp. (Class B) 2,140,538
30,000 SierraWest Bancorp 431,250
-----------
7,646,882
-----------
HEALTH CARE - 5.8%
* 133,700 AccuMed International, Inc. 467,950
* 104,750 Advance Paradigm, Inc. 851,094
* 59,600 American Healthcorp, Inc. 528,950
* 66,050 Cytyc Corp. 850,394
* 113,700 FemRx, Inc. 568,500
111,100 Gensia, Inc. 555,500
* 90,500 MIME Corp. 497,750
* 103,200 Oasis Healthier Holdings Corp. 954,600
* 85,500 Unison Healthcare Corp. 705,375
-----------
5,980,113
-----------
RETAIL - 5.7%
* 119,350 Baby Superstore, Inc. 3,237,369
* 93,900 Chico's Fas, Inc. 586,875
* 208,100 Garden Ridge Corp. 2,002,963
-----------
5,827,207
-----------
SHELTER - 2.0%
* 199,916 D.R. Horton, Inc. 1,824,234
27,700 Engle Homes, Inc. 193,900
-----------
2,018,134
-----------
TECHNOLOGY (COMPONENTS) - 2.9%
* 130,600 Aware, Inc. 1,599,850
* 46,200 Elantec Semiconductor, Inc. 248,325
* 73,200 Speedfam International, Inc. 1,152,899
-----------
3,001,074
-----------
</TABLE>
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
36
<PAGE> 43
FREMONT U.S. MICRO-CAP FUND
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
TECHNOLOGY (EQUIPMENT) - 12.6%
* 55,000 Ade Corp. $ 488,125
* 20,900 Applied Signal Technology, Inc. 99,275
* 51,400 CEM Corp. 504,363
* 19,500 Cymer, Inc. 458,250
* 190,800 Micrel, Inc. 3,911,400
* 165,600 PCD, Inc. 1,821,600
* 78,000 PRI Automation, Inc. 2,769,000
* 47,000 Sawtek, Inc. 1,421,750
* 99,300 Specialty Teleconstructors, Inc. 732,338
99,000 World Access, Inc. 742,500
------------
12,948,601
------------
TECHNOLOGY (SOFTWARE) - 4.7%
* 9,005 Avant! Corp. 272,386
* 90,800 BTG, Inc. 1,566,300
* 93,900 ISG International Software Group Ltd. 1,525,875
* 42,300 OrCAD, Inc. 433,575
* 92,500 Timeline, Inc. 346,875
* 140,000 V-One Corp. 717,497
------------
4,862,508
------------
TRANSPORTATION - 1.1%
* 120,000 Smithway Motor Express Corp. (Class A) 1,080,000
------------
1,080,000
------------
TOTAL STOCKS (Cost $88,281,744) 88,717,467
------------
<CAPTION>
Value
Face Amount/Issuer/Discount Rate/Stated Maturity (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
SHORT TERM SECURITIES - 12.6%
530,225 Benchmark Diversified Assets Fund 530,225
3,000,000 A.I. Credit Corp., CP, 5.230%,11/08/96 2,996,949
1,400,000 Heinz (H.J.) & Co., CP, 5.250%,11/20/96 1,396,121
3,000,000 Jostens, Inc., CP, 5.330%,11/04/96 2,998,668
5,000,000 Merrill Lynch & Co., CP, 5.630%,11/01/96 5,000,000
------------
TOTAL SHORT TERM SECURITIES (Cost $12,921,963) 12,921,963
------------
TOTAL INVESTMENTS (Cost $101,203,707), 99.2% 101,639,430
OTHER ASSETS AND LIABILITIES, NET, 0.8% 841,521
------------
NET ASSETS, 100.0% $102,480,951
============
</TABLE>
PORTFOLIO ABBREVIATIONS:
CP - Commercial Paper
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 44
FREMONT GROWTH FUND
October 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
STOCKS - 97.7%
BUSINESS EQUIPMENT & SERVICES - 3.8%
2,500 Danka Business Systems PLC, ADR UK $ 99,063
* 1,500 Career Horizons, Inc. US 60,938
* 6,500 Ceridian Corp. US 322,563
* 2,500 Computer Sciences Corp. US 185,625
* 3,500 COREStaff, Inc. US 89,250
* 4,000 Dendrite International, Inc. US 106,500
8,600 First Data Corp. US 685,850
* 5,000 Fiserv, Inc. US 191,875
* 2,000 Interim Services, Inc. US 80,000
* 4,000 Medic Computer Systems, Inc. US 113,000
3,500 Paychex, Inc. US 199,500
3,500 Stewart Enterprises, Inc. (Class A) US 119,875
20,800 WMX Technologies, Inc. US 715,000
------------
2,969,039
------------
CAPITAL GOODS - 3.2%
10,900 Caterpillar, Inc. US 748,013
4,000 Crane Co. US 186,000
7,300 Emerson Electric Co. US 649,700
13,800 PACCAR, Inc. US 769,350
4,000 Sundstrand Corp. US 161,000
------------
2,514,063
------------
CONSUMER DURABLES - 4.5%
22,600 Chrysler Corp. US 759,925
25,700 Ford Motor Co. US 803,125
20,300 General Motors Corp. US 1,093,663
14,600 Goodyear Tire & Rubber Co. US 669,775
5,500 Harley-Davidson, Inc. US 248,188
------------
3,574,676
------------
CONSUMER SERVICES - 2.2%
* 9,000 CUC International, Inc. US 220,500
7,000 Gannett Co., Inc. US 531,125
5,000 Loewen Group, Inc. US 198,125
* 5,500 Promus Hotel Corp. US 174,625
7,300 Tribune Co. US 596,775
------------
1,721,150
------------
ENERGY - 15.0%
* 3,500 Petroleum Geo-Services AS, ADR NO 119,875
13,700 Amoco Corp. US 1,037,775
5,700 Atlantic Richfield Co. US 755,250
3,000 Camco International, Inc. US 116,250
19,100 Chevron Corp. US 1,255,825
22,500 Exxon Corp. US 1,994,063
12,700 Kerr-McGee Corp. US 796,925
11,700 Mobil Corp. US 1,365,975
1,000 Noble Affiliates, Inc. US 43,500
28,100 Occidental Petroleum Corp. US 688,450
15,400 Phillips Petroleum Co. US 631,400
7,200 Schlumberger Ltd. US 713,700
13,900 Texaco, Inc. US 1,412,588
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
ENERGY (CONTINUED)
3,500 Transocean Offshore, Inc. US $ 221,375
* 1,500 Triton Energy Ltd. US 66,938
27,900 USX-Marathon Group US 610,312
----------
11,830,201
----------
FINANCIAL SERVICES (BANKS) - 11.9%
13,400 Banc One Corp. US 567,825
9,000 BankAmerica Corp. US 823,500
6,600 Bankers Trust New York Corp. US 557,700
9,900 Chase Manhattan Corp. US 848,925
14,700 Citicorp US 1,455,300
14,300 First Chicago NBD Corp. US 729,300
25,500 First Hawaiian, Inc. US 790,500
6,800 First Union Corp. US 494,700
7,500 Mellon Bank Corp. US 488,437
7,000 Nationsbank Corp. US 659,750
12,500 Norwest Corp. US 548,437
10,300 Republic New York Corp. US 785,375
12,900 Suntrust Banks, Inc. US 601,462
----------
9,351,211
----------
FINANCIAL SERVICES (OTHER) - 11.1%
1,000 Ace Ltd. US 54,750
20,000 Ahmanson (H.F.) & Co. US 627,500
16,400 Allstate Corp. US 920,450
12,000 American Express Co. US 564,000
4,200 Cigna Corp. US 548,100
1,500 CMAC Investment Corp. US 103,687
12,400 Dean Witter, Discover & Co. US 730,050
7,100 Federal Home Loan Mortgage Corp. US 717,100
23,100 Federal National Mortgage
Association US 903,787
3,100 General Re Corp. US 456,475
3,000 Green Tree Financial Corp. US 118,875
7,000 Mercury General Corp. US 341,250
5,000 MGIC Investment Corp. US 343,125
1,500 NAC Re Corp. US 52,687
10,000 Price (T. Rowe) Associates US 341,250
6,000 TCF Financial Corp. US 232,500
15,200 Travelers, Inc. US 824,600
26,700 USLIFE Corp. US 834,375
----------
8,714,561
----------
HEALTH CARE - 5.7%
* 7,000 Elan Corp. PLC, ADR IR 194,250
13,700 Aetna, Inc. US 916,187
* 4,000 Amgen, Inc. US 245,250
* 5,500 Cephalon, Inc. US 123,062
* 4,000 Cerner Corp. US 48,500
21,900 Columbia HCA Healthcare Corp. US 782,925
5,000 HBO & Co. US 300,625
* 2,000 HCIA, Inc. US 55,500
* 8,500 Healthsouth Rehabilitation Corp. US 318,750
8,800 Medtronic, Inc. US 566,500
* 6,500 Oxford Health Plans, Inc. US 295,750
9,600 Warner-Lambert Co. US 610,800
----------
4,458,099
----------
</TABLE>
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
38
<PAGE> 45
FREMONT GROWTH FUND
October 31, 1996
<TABLE>
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
MULTI-INDUSTRY - 2.1%
11,800 Allied-Signal, Inc. US $ 772,900
11,400 Minnesota Mining & Manufacturing Co. US 873,525
----------
1,646,425
----------
RAW MATERIALS - 3.9%
12,000 Dow Chemical Co. US 933,000
7,100 Du Pont (E.I.) de Nemours & Co. US 658,525
31,200 Engelhard Corp. US 569,400
19,200 Goodrich (B.F.) Co. US 813,600
2,500 IMC Global, Inc. US 93,750
----------
3,068,275
----------
RETAIL - 4.3%
* 26,000 Federated Department Stores, Inc. US 858,000
12,500 Home Depot, Inc. US 684,375
* 6,500 Kohls Corp. US 234,000
9,900 Penney (J.C.), Inc. US 519,750
* 4,000 PETsMART, Inc. US 108,000
10,900 Sears Roebuck & Co. US 527,287
18,200 Wal Mart Stores, Inc. US 484,575
----------
3,415,987
----------
SHELTER - 3.6%
11,600 Armstrong World Industries, Inc. US 774,300
14,500 International Paper Co. US 619,875
7,900 Kimberly-Clark Corp. US 736,675
12,600 Mead Corp. US 715,050
----------
2,845,900
----------
TECHNOLOGY - 13.7%
* 5,500 Business Objects SA, ADR FR 81,813
* 3,500 Baan Co. NV NL 129,500
* 3,500 ADC Telecommunications, Inc. US 239,312
18,100 Amp, Inc. US 613,137
* 8,000 Analog Devices, Inc. US 208,000
* 3,000 Aspen Technologies, Inc. US 201,750
10,900 Boeing Co. US 1,039,588
* 5,500 Cisco Systems, Inc. US 340,313
* 12,700 Compaq Computer Corp. US 884,238
* 2,500 Electronics for Imaging, Inc. US 180,000
15,800 Hewlett-Packard Co. US 697,175
14,900 International Business Machines Corp. US 1,922,100
* 1,500 Legato Systems, Inc. US 53,250
* 2,000 Microsoft Corp. US 274,500
22,400 Motorola, Inc. US 1,030,400
* 8,000 Parametric Technology Corp. US 391,000
* 3,500 Peoplesoft, Inc. US 314,125
* 4,000 PictureTel Corp. US 108,000
* 1,500 Premisys Communications, Inc. US 75,000
11,900 Rockwell International Corp. US 654,500
* 2,000 U.S. Robotics Corp. US 125,750
7,900 United Technologies Corp. US 1,017,125
* 5,500 Xilinx, Inc. US 180,125
----------
10,760,701
----------
<CAPTION>
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 2.2%
8,800 Burlington Northern Santa Fe US $ 724,900
10,000 Conrail, Inc. US 951,250
----------
1,676,150
----------
UTILITIES - 10.5%
* 26,800 AirTouch Communications, Inc. US 700,150
12,100 Ameritech Corp. US 662,475
12,200 Bell Atlantic Corp. US 735,050
25,700 Bellsouth Corp. US 1,047,275
10,000 Boston Edison Co. US 240,000
15,500 Coastal Corp. US 666,500
27,500 Entergy Corp. US 770,000
26,200 GPU, Inc. US 861,325
* 3,000 LCI International, Inc. US 95,625
43,000 Pacific Gas & Electric Co. US 1,010,500
* 6,000 Paging Network, Inc. US 102,750
12,800 SBC Communications, Inc. US 622,400
28,700 Unicom Corp. US 746,200
----------
8,260,250
----------
TOTAL STOCKS (Cost $72,318,053) 76,806,688
----------
<CAPTION>
Country Value
Face Amount/Issuer Code (Note 1)
- --------------------------------------------------------------------------------
<S> <C>
SHORT TERM SECURITIES - 1.9%
1,527,432 Benchmark Diversified Assets Fund US 1,527,432
------------
TOTAL SHORT TERM SECURITIES (Cost $1,527,432) 1,527,432
------------
TOTAL INVESTMENTS (Cost $73,845,485), 99.6% 78,334,120
OTHER ASSETS AND LIABILITIES, NET, 0.4% 289,992
------------
NET ASSETS, 100.0% $ 78,624,112
============
</TABLE>
PORTFOLIO ABBREVIATIONS:
ADR - American Depository Receipt
COUNTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Country % of
Code Country Name Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
FR France 0.1%
IR Ireland 0.2%
NL Netherlands 0.2%
NO Norway 0.2%
UK United Kingdom 0.1%
US United States 99.2%
-----
TOTAL 100.0%
=====
</TABLE>
*Non-income producing securities
The accompanying notes are an integral part of these financial statements.
39
<PAGE> 46
FREMONT BOND FUND
October 31, 1996
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Coupon Maturity Value
Principal Issuer Rate Date (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS - 101.6%
COLLATERALIZED MORTGAGE OBLIGATIONS - 48.8%
528,948 Collateralized Mortgage Securities Corp. CMO, J-5Z, REMIC........ 7.985% 05/01/17 $ 543,817
1,511,289 FHLMC CMO, 1018 0Z, PAC-1 (11) REMIC............................. 7.000% 11/15/20 1,470,636
539,232 FNMA CMO, 1990-53G, PAC REMIC.................................... 8.000% 12/25/18 546,813
15,000,000 FNMA CMO, 1992-131KA, PAC(11) REMIC.............................. 8.000% 01/25/22 15,763,950
200,000 FNMA CMO, 1993-11J, PAC REMIC.................................... 7.500% 02/25/08 204,242
1,613,946 MDC Mortgage Funding Corp. CMO, P-4Z............................. 9.500% 11/20/17 1,607,894
1,000,000 Morgan Stanley Mortgage Trust CMO, 40-8, PAC (11) REMIC.......... 7.000% 07/20/21 985,890
7,978,928 Prudential Bache CMO Trust, 14-GZ, REMIC......................... 8.400% 03/20/21 8,279,384
536,814 Resolution Trust Corp. CMO, 1992-M4 A1 REMIC..................... 8.000% 09/25/21 541,511
980,959 Ryland Mortgage Securities Corp. CMO, 1993-8-A, REMIC............ 7.822% 09/25/23 996,286
567,574 Saxon Mortgage Securities Corp. CMO, 1992-1 A1, ARM REMIC........ 7.622% 09/25/22 574,846
3,000,000 Securitized Asset Sales, Inc. CMO, 1993-2A9, PAC (11) REMIC...... 6.200% 07/25/08 2,908,110
-----------
34,423,379
-----------
FIXED RATE AND ADJUSTABLE RATE MORTGAGE SECURITIES - 29.6%
639,668 FHLMC............................................................ 8.250% 08/01/17 662,453
430,439 FHLMC............................................................ 6.500% 01/01/26 412,817
218,479 FHLMC............................................................ 6.500% 03/01/26 209,329
1,131,996 FHLMC............................................................ 6.500% 04/01/26 1,084,588
223,377 FHLMC............................................................ 6.500% 05/01/26 214,231
774,553 FNMA ARM......................................................... 6.069% 12/01/27 771,409
1,018,559 FNMA ARM......................................................... 7.766% 11/01/23 1,055,798
3,630,444 GNMA II ARM...................................................... 7.125% 08/20/23 3,701,202
2,250,630 GNMA............................................................. 7.000% 01/15/26 2,206,322
7,767,157 GNMA............................................................. 7.000% 02/15/26 7,614,245
3,000,000 GNMA TBA......................................................... 6.000% 12/23/26 3,003,750
-----------
20,936,144
-----------
FOREIGN BONDS - 11.9%
CAN$ 2,500,000 Government of Canada............................................. 8.750% 12/01/05 2,173,255
NZ$ 1,500,000 Government of New Zealand........................................ 8.000% 04/15/04 1,102,318
NZ$ 1,300,000 Government of New Zealand........................................ 10.000% 03/15/02 1,027,650
US$ 1,960,000 Republic of Argentina, FRN
(Callable Semiannually in March or September @ 100)............. 6.625% 03/31/05 1,607,200
US$ 3,000,000 United Mexican States, FRN
(Callable Semiannually in June or December @ 100)............... 6.453% 12/31/19 2,463,750
-----------
8,374,173
-----------
CORPORATE BONDS - 10.7%
260,000 CMS Energy Corp. (Callable 10/01/97 @ 101.65).................... 9.875% 10/01/99 270,400
870,000 Delta Air Lines, Inc. (Sinking Fund Bond)........................ 9.450% 02/14/06 965,622
1,749,000 Delta Air Lines, Inc. (Sinking Fund Bond)........................ 9.450% 02/26/06 1,942,072
2,000,000 Time Warner, Inc................................................. 7.450% 02/01/98 2,029,560
225,000 Time Warner, Inc................................................. 7.975% 08/15/04 230,317
450,000 Time Warner, Inc................................................. 8.110% 08/15/06 457,969
450,000 Time Warner, Inc................................................. 8.180% 08/15/07 463,073
1,000,000 United Airlines.................................................. 10.670% 05/01/04 1,186,579
-----------
7,545,592
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE> 47
FREMONT BOND FUND
October 31, 1996
<TABLE>
<CAPTION>
Coupon Maturity Value
Principal Issuer Rate Date (Note 1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STRIPPED MORTGAGE SECURITIES - 0.6%
4,094,587 FNMA Interest Only, 1994-27WB, PAC-1 REMIC....................... 6.500% 06/25/14 $ 245,962
168,039 FNMA Principal Only, G93-12B, PAC (11) REMIC..................... 0.000% 02/25/23 160,949
------------
406,911
------------
TOTAL BONDS (Cost $69,821,209) 71,686,199
------------
OTHER SECURITIES - 6.7%
1,169,146 Benchmark Diversified Assets Fund......................................................... 1,169,146
20,000 Long Island Lighting Co. (Convertible Preferred Stock).................................... 472,500
7,000,000 Call Option on U.S. Treasury Note, 5.625%, 11/30/00,
Strike @ 91.875000, Exp. 01/06/97......................................................... 464,310
400,000 Abbott Laboratories, CP.......................................... 5.230% 11/21/96 398,838
300,000 Caisse d'Amortissement de la Dette Sociale, CP................... 5.260% 11/27/96 298,860
400,000 Caisse d'Amortissement de la Dette Sociale, CP................... 5.300% 12/04/96 398,057
1,200,000 General Electric Capital Corp., CP............................... 5.250% 12/12/96 1,192,825
+ 65,000 U.S. Treasury Bill............................................... 5.035% 11/21/96 64,818
+ 90,000 U.S. Treasury Bill............................................... 5.100% 11/14/96 89,834
+ 105,000 U.S. Treasury Bill............................................... 5.105% 11/14/96 104,807
+ 95,000 U.S. Treasury Bill............................................... 5.270% 11/14/96 94,819
------------
TOTAL OTHER SECURITIES (Cost $4,712,262) 4,748,814
------------
TOTAL INVESTMENTS (Cost $74,533,471), 108.3% 76,435,013
OTHER ASSETS AND LIABILITIES, NET, (8.3)% (5,857,950)
------------
NET ASSETS, 100.0% $ 70,577,063
============
</TABLE>
PORTFOLIO ABBREVIATIONS:
ARM - Adjustable Rate Mortgage
CMO - Collateralized Mortgage Obligation
CP - Commercial Paper
FHLMC - Federal Home Loan Mortgage Corp.
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
GNMA - Government National Mortgage Association
PAC - Planned Amortization Class
REMIC - Real Estate Mortgage Investment Conduit
TBA - To Be Announced
CURRENCY ABBREVIATIONS:
CAN$ - Canadian Dollar
NZ$ - New Zealand Dollar
US$ - US Dollar
+On deposit with broker for initial margin on futures contracts (Note 1).
The accompanying notes are an integral part of these financial statements.
41
<PAGE> 48
FREMONT MONEY MARKET FUND
October 31, 1996
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Discount Maturity Value
Principal Issuer Rate Date (Note 1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 84.3%
10,000,000 Abbey National North America Corp. ....................... 5.320% 11/04/96 $ 9,995,567
5,000,000 Akzo Nobel, Inc. ......................................... 5.330% 01/29/97 4,934,115
5,000,000 Allianz of America Finance Corp. ......................... 5.340% 11/13/96 4,991,100
5,000,000 Associates Corp. of North America ........................ 5.390% 02/03/97 4,929,631
5,000,000 B.B.V. Finance (Delaware), Inc. .......................... 5.290% 11/13/96 4,991,183
5,000,000 Bank One Corp.*........................................... 5.300% 11/21/96 4,985,278
5,000,000 British Columbia, Province of ............................ 5.310% 12/19/96 4,964,600
5,000,000 BTR Dunlop Finance, Inc. ................................. 5.480% 11/21/96 4,984,778
5,000,000 C.I.T. Group Holdings, Inc. .............................. 5.380% 11/19/96 4,986,550
5,000,000 Cargill Financial Services Corp.*......................... 5.330% 04/23/97 4,871,932
5,000,000 Clorox Co. ............................................... 5.370% 11/04/96 4,997,763
5,000,000 CPC International, Inc.*.................................. 5.300% 11/08/96 4,994,847
5,000,000 Daimler-Benz North America Corp. ......................... 5.290% 11/27/96 4,980,897
5,000,000 Dairy Investments (Bermuda) Ltd.*......................... 5.320% 01/30/97 4,933,500
5,000,000 Deutsche Bank Financial, Inc.............................. 5.320% 01/21/97 4,940,150
5,000,000 Electricite de France .................................... 5.400% 02/03/97 4,929,500
5,000,000 Electricity Corp. of New Zealand Ltd. .................... 5.280% 11/08/96 4,994,867
5,000,000 Ford Motor Credit Corp. .................................. 5.350% 11/18/96 4,987,368
5,000,000 General Electric Capital Corp. ........................... 5.330% 04/21/97 4,873,413
5,000,000 Glaxo Wellcome PLC*....................................... 5.290% 11/12/96 4,991,918
5,000,000 Goldman Sachs & Co. ...................................... 5.250% 11/27/96 4,981,042
5,000,000 Hancock, John Capital Corp.*.............................. 5.350% 12/30/96 4,956,160
5,000,000 Hewlett-Packard Co. ...................................... 5.400% 12/03/96 4,976,000
5,000,000 Hitachi America Ltd. ..................................... 5.340% 03/25/97 4,893,200
5,000,000 International Business Machines Corp. .................... 5.320% 01/10/97 4,948,278
5,000,000 Jostens, Inc. ............................................ 5.330% 11/04/96 4,997,779
5,000,000 Marsh & McLennan Cos., Inc.*.............................. 5.350% 05/06/97 4,861,792
5,000,000 Merrill Lynch & Co., Inc. ................................ 5.400% 01/06/97 4,950,500
5,000,000 MetLife Funding, Inc. .................................... 5.300% 01/08/97 4,949,944
5,000,000 Mitsui & Co. (U.S.A.), Inc. .............................. 5.340% 12/26/96 4,959,208
10,000,000 Morgan (J.P.) & Co., Inc. ................................ 5.490% 12/09/96 9,942,050
5,000,000 National Rural Utilities Cooperative Finance Corp. ....... 5.300% 01/13/97 4,946,264
5,000,000 New Zealand, Her Majesty the Queen in right of............ 5.270% 01/21/97 4,940,713
5,000,000 Panasonic Finance, Inc.*.................................. 5.380% 11/08/96 4,994,769
5,000,000 Repsol International Finance BV........................... 5.330% 12/09/96 4,971,869
5,000,000 Rexam PLC*................................................ 5.370% 12/16/96 4,966,438
5,000,000 RTZ America, Inc.*........................................ 5.300% 01/24/97 4,938,167
5,000,000 Sandoz Corp. ............................................. 5.400% 11/07/96 4,995,500
5,000,000 Sherwin-Williams Co.*..................................... 5.270% 12/23/96 4,961,939
5,000,000 Siemens Capital Corp...................................... 5.290% 02/04/97 4,930,201
5,000,000 Sony Capital Corp.*....................................... 5.260% 12/20/96 4,964,203
5,000,000 Stanford, Leland Junior University........................ 5.500% 12/18/96 4,964,097
10,000,000 Sweden, Kingdom of ....................................... 5.250% 12/18/96 9,931,458
5,000,000 Swedish Export Credit Corp. .............................. 5.300% 01/14/97 4,945,528
5,000,000 Toronto Dominion Holdings USA, Inc. ...................... 5.270% 12/20/96 4,964,135
5,000,000 Toshiba International Finance PLC (UK) ................... 5.360% 12/11/96 4,970,222
5,000,000 Toyota Motor Credit Corp. ................................ 5.310% 02/03/97 4,930,675
5,000,000 Transamerica Finance Corp. ............................... 5.390% 11/20/96 4,985,776
5,000,000 Unilever Capital Corp.*................................... 5.210% 12/05/96 4,975,397
5,000,000 Union Bank of Switzerland Finance, Inc. .................. 5.625% 11/01/96 5,000,000
5,000,000 USAA Capital Corp. ....................................... 5.400% 01/07/97 4,949,750
5,000,000 Wool International ....................................... 5.270% 11/26/96 4,981,701
5,000,000 Yale University .......................................... 5.380% 11/22/96 4,984,308
-----------
TOTAL COMMERCIAL PAPER 277,868,020
-----------
</TABLE>
* These securities are generally issued to insitutional investors. Any resale
must be in an exempt transaction pursuant to Section 4(2) of the Securities
Act of 1933.
The accompanying notes are an integral part of these financial statements.
42
<PAGE> 49
FREMONT MCNEY MARKET FUND
October 31, 1996
<TABLE>
<CAPTION>
Discount Maturity Value
Principal Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------
OTHER SHORT TERM SECURITIES - 15.4%
<S> <C> <C> <C> <C> <C>
926,146 Benchmark Diversified Assets Fund ................................................ $ 926,146
10,000,000 Bayerische Verinsbank AG, Yankee CD+ ..................... 5.260% 03/06/97 10,000,000
10,000,000 Berliner Handels-und Frankfurt Bank, Eurodollar TD+ ...... 5.500% 11/04/96 10,000,000
10,000,000 Federal Home Loan Bank, AN+............................... 5.415% 01/17/97 10,000,000
10,000,000 Federal Home Loan Bank, AN+............................... 5.670% 06/27/97 10,012,168
5,000,000 Rabobank Nederland, Yankee CD+............................ 5.500% 04/18/97 5,001,079
5,000,000 U.S. Treasury Bill ....................................... 5.430% 09/18/97 4,757,912
------------
TOTAL OTHER SHORT TERM SECURITIES 50,697,305
------------
TOTAL INVESTMENTS (Cost $328,565,325), 99.7% 328,565,325
OTHER ASSETS AND LIABILITIES, NET, 0.3% 1,086,594
------------
NET ASSETS, 100.0% $ 329,651,919
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AN - Agency Note
CD - Certificate of Deposit
TD - Time Deposit
+The rate indicated for these securities is the stated coupon rate.
The accompanying notes are an integral part of these financial statements.
43
<PAGE> 50
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
October 31, 1996
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Coupon Maturity Value
Principal Issuer Rate Date (Note 1)
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - 94.9%
<S> <C> <C> <C>
1,000,000 Anaheim, CA Public Finance Authority Revenue Bond, Anaheim Electric
Utility Projects ................................................... 5.600% 10/01/16 $ 977,080
1,000,000 California State Dept. of Veterans Affairs, Home Purchase Revenue 1991
Ser. A ............................................................. 6.450% 08/01/00 1,041,920
500,000 California State Dept. of Water Resources, Central Valley Project Revenue... 4.800% 12/01/07 487,770
1,000,000 California State Dept. of Water Resources, Central Valley Project Revenue
Ser. H.............................................................. 6.400% 12/01/00 1,085,190
1,000,000 California State GO, Various Purpose ................................ 6.500% 08/01/97 1,020,890
1,000,000 California State Public Works Board, Lease Revenue Dept. of Corrections,
Madera County State Prison 1990 Ser. A ............................. 6.700% 09/01/97 1,024,330
1,000,000 California State Public Works Board, Lease Revenue Dept. of Corrections,
Prison D ........................................................... 5.100% 06/01/06 999,200
1,000,000 California State Public Works Board, Lease Revenue Refunding, Trustees of
The California State University, 1995 Ser. B ....................... 5.600% 04/01/06 1,027,340
1,000,000 Contra Costa Transportation Authority, Sales Tax Revenue 1991 Ser. A... 6.400% 03/01/01 1,080,300
1,000,000 Contra Costa Water Authority, Water Treatment Revenue Refunding 1993
Ser. A (FGIC Insured) .............................................. 5.300% 10/01/05 1,032,230
1,000,000 Contra Costa Water District, Water Revenue Ser. F (FGIC Insured) .... 5.250% 10/01/08 1,009,300
1,000,000 East Bay CA MUD, Water System Subordinated Revenue Ser. 1994 ........ 8.500% 06/01/98 1,071,270
1,000,000 City of Irvine, Assessment District No. 89-10, Limited Obligation Refunding
Improvement (MBIA Insured) ......................................... 4.200% 09/02/05 927,130
750,000 Los Angeles County Sanitation District Finance Authority, 1993 Ser. A 5.250% 10/01/06 768,472
1,000,000 Los Angeles Dept. of Water & Power, Electric Plant Revenue .......... 4.700% 10/15/06 974,610
1,000,000 Los Angeles Dept. of Water & Power, Electric Plant Revenue Refunding... 5.500% 09/01/07 1,029,160
1,000,000 Los Angeles Dept. of Water & Power, Waterworks Revenue Refunding ...... 5.625% 04/15/08 1,029,790
1,000,000 Los Angeles, CA Convention & Exhibition Center Authority, Lease Revenue
Bonds Refunding Ser. A ............................................. 5.200% 08/15/09 997,610
1,000,000 City of Los Angeles, 1990 Solid Waste Collection Project COP Revenue... 6.400% 11/01/97 1,025,870
500,000 M-S-R Public Power Agency, San Juan Project Revenue Ser. D (AMBAC Insured)... 6.300% 07/01/98 511,750
1,000,000 M-S-R Public Power Agency, San Juan Project Revenue Ser. F .......... 5.650% 07/01/03 1,059,330
1,000,000 Metropolitan Water District of Southern California, Waterworks GO
Refunding 1993 Ser. A .............................................. 5.250% 03/01/05 1,032,270
1,000,000 Modesto High School District, 1993 GO Refunding (FGIC Insured) ...... 5.300% 08/01/04 1,038,190
1,000,000 Modesto Irrigation District Finance Authority, Domestic Water Project
Revenue 1992 Ser. A (AMBAC Insured) ................................ 5.650% 09/01/03 1,060,600
1,000,000 Northern California Power Agency, Geothermal Project #3 Revenue Ser. A... 5.600% 07/01/06 1,033,240
1,000,000 Orange County Transportation Authority, Measure M Sales Tax Revenue
First Ser. 1992 .................................................... 6.500% 02/15/06 1,070,420
1,000,000 Orange County Transportation Authority, Measure M Sales Tax Revenue
Second Senior Ser. 1994 (FGIC Insured) ............................. 5.000% 02/15/08 992,690
500,000 Orange County Water District, COP 1990 Project A .................... 6.500% 08/15/98 522,955
500,000 City of Pasadena, Electric Works Revenue Ser. 1990 .................. 6.500% 08/01/99 530,135
500,000 City of Pasadena, GO Refunding ...................................... 5.000% 06/01/07 495,725
1,000,000 Rancho Cucamonga RDA, 1994 Tax Allocation Refunding (MBIA Insured) .. 5.000% 09/01/07 999,520
1,000,000 City of Riverside, Electric Revenue 1991 ............................ 6.100% 10/01/00 1,061,800
1,000,000 City of Riverside, Electric Revenue Refunding 1993 .................. 5.000% 10/01/06 999,960
1,000,000 Sacramento County Sanitation District Finance Authority, Revenue Bond
(MBIA Insured) ..................................................... 5.000% 12/01/08 990,570
1,000,000 Sacramento MUD, Electric Revenue 1991 Ser. Y ........................ 6.250% 09/01/00 1,067,620
1,000,000 San Bernardino County Transportation Authority, Sales Tax Revenue 1992
Ser. A (FGIC Insured) .............................................. 6.000% 03/01/03 1,075,810
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE> 51
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
October 31, 1996
<TABLE>
<CAPTION>
Coupon Maturity Value
Principal Issuer Rate Date (Note 1)
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C> <C>
1,000,000 San Francisco, CA Bay Area Rapid Transit, Sales Tax Revenue Refunding... 6.400% 07/01/97 $ 1,018,120
1,000,000 City and County of San Francisco International Airport, Revenue Second Ser.
Issue 1 (AMBAC Insured) ............................................ 6.100% 05/01/03 1,083,160
1,000,000 City and County of San Francisco RDA, Lease Revenue Ser. 1991
(George R. Moscone Convention Center) (AMBAC Insured) .............. 6.200% 10/01/00 1,071,240
1,000,000 City and County of San Francisco Sewer, Revenue Refunding Ser. 1992
(AMBAC Insured) .................................................... 5.800% 10/01/05 1,064,830
1,000,000 San Jose, CA Finance Authority, Convention Center Revenue Refunding
Project Ser. C (MBIA Insured) ...................................... 5.750% 09/01/03 1,055,310
1,000,000 Santa Margarita/Dana Point Authority Orange County, Revenue Bond Ser. A... 5.375% 08/01/04 1,039,720
Southern California Public Power Authority
1,000,000 Mead-Phoenix Project Revenue 1994 Ser. A (AMBAC Insured) ........... 4.750% 07/01/09 944,800
1,000,000 Mead-Phoenix Project Revenue 1994 Ser. A (AMBAC Insured) ........... 4.750% 07/01/08 957,980
1,000,000 Palo Verde Power Projects Revenue 1993 Ser. A ...................... 5.100% 07/01/06 1,010,050
500,000 City of Stockton, 1990 Wastewater System Project COP (AMBAC Insured) 6.700% 09/01/98 525,195
500,000 City of Stockton, 1990 Wastewater System Project COP (AMBAC Insured) 6.800% 09/01/99 530,735
1,000,000 University of California, Housing System Revenue 1993 Ser. A (MBIA Insured).. 5.500% 11/01/08 1,020,990
500,000 University of California, Research Facilities Revenue 1995 Ser. C
(AMBAC Insured) .................................................... 5.100% 09/01/07 501,550
1,000,000 West & Central Basin Finance Authority, West Basin Water Revenue
Refunding Project (AMBAC Insured) .................................. 5.125% 08/01/06 1,015,420
1,500,000 Yucaipa School Facilities Finance Authority, 1995 Sweetwater Refunding
(MBIA Insured) ..................................................... 6.000% 09/01/10 1,555,695
-----------
TOTAL MUNICIPAL BONDS (Cost $46,848,541) 48,546,842
-----------
SHORT TERM SECURITIES - 3.7%
1,000,000 California State Revenue Anticipation Notes Ser. A .................. 4.500% 06/30/97 1,005,880
900,064 Provident Institutional Fund: Municipal Fund for California Investors, Inc. ....................... 900,064
-----------
TOTAL SHORT TERM SECURITIES (Cost $1,904,017) 1,905,944
-----------
TOTAL INVESTMENTS (Cost $48,752,558), 98.6% 50,452,786
OTHER ASSETS AND LIABILITIES, NET, 1.4% 703,258
-----------
NET ASSETS, 100.0% $ 51,156,044
============
</TABLE>
PORTFOLIO ABBREVIATIONS:
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Corp.
GO - General Obligation
MBIA - Municipal Bond Investor Assurance Corp.
MUD - Municipal Utility District
RDA - Redevelopment Agency
The accompanying notes are an integral part of these financial statements.
45
<PAGE> 52
FREMONT MUTUAL FUNDS, INC.
October 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL EMERGING
GLOBAL GROWTH SMALL CAP MARKETS
FUND FUND FUND FUND
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities at cost $542,076,336 $ 32,567,672 $ 9,056,967 $ 3,838,200
============ ============ ============ ============
Investments in securities at value (Note 1) 569,661,939 34,997,588 9,169,271 3,794,360
Securities lending collateral (Note 1) 34,883,640 4,004,476 219,791 71,319
Cash -- -- 35,310 46,424
Dividends and interest receivable 4,115,885 35,584 20,090 1,167
Receivable for securities sold -- 275,447 -- 21,682
Receivable from sale of fund shares 309,335 8,064 3,091 457
Variation margin receivable -- -- -- --
Unrealized appreciation on foreign currency contracts 29,466 -- -- --
Prepaid expense 4,925 -- -- --
Unamortized organization costs (Note 3) -- -- -- 17,518
------------ ------------ ------------ ------------
TOTAL ASSETS 609,005,190 39,321,159 9,447,553 3,952,927
------------ ------------ ------------ ------------
LIABILITIES:
Liabilities for securities lending collateral 34,883,640 4,004,476 219,791 71,319
Liabilities for options written (Note 4) -- -- -- --
Dividends payable to shareholders -- -- -- --
Reverse repurchase agreement (Note 1) -- -- -- --
Payable for securities purchased -- -- -- 92,330
Payable to management company -- -- -- 17,518
Payable for fund shares redeemed 470,983 150 2,550 --
Unrealized depreciation on foreign currency contracts 979,032 -- -- 11
Accrued expenses:
Investment advisory and administrative fees 362,362 43,787 11,037 --
Shareholder servicing fees 10,500 -- -- --
Custody fees 58,362 -- -- --
Accounting fees 28,000 -- -- --
Audit and legal fees 31,515 -- -- --
Other payables 30,560 -- -- --
------------ ------------ ------------ ------------
TOTAL LIABILITIES 36,854,954 4,048,413 233,378 181,178
------------ ------------ ------------ ------------
NET ASSETS $572,150,236 $ 35,272,746 $ 9,214,175 $ 3,771,749
============ ============ ============ ============
Net assets consist of:
Paid in capital $474,152,043 $ 32,740,261 $ 8,869,021 $ 3,892,802
Undistributed net investment income (loss) 2,241,575 -- 27,143 7,385
Unrealized appreciation (depreciation) on investments 27,585,603 2,429,916 112,304 (43,840)
Unrealized appreciation (depreciation) on foreign currency
contracts and other assets and liabilities (928,008) (485 869 11
Accumulated net realized gain (loss) 69,099,023 103,054 204,838 (84,609)
------------ ------------ ------------ ------------
NET ASSETS $572,150,236 $ 35,272,746 $ 9,214,175 $ 3,771,749
============ ============ ============ ============
SHARES OF CAPITAL STOCK OUTSTANDING 37,869,936 3,392,090 907,834 391,921
============ ============ ============ ============
NET ASSET VALUE PER SHARE $ 15.11 $ 10.40 $ 10.15 $ 9.62
============ ============ ============ `============
</TABLE>
The accompanying notes are an integral part of these financial statements.
46
<PAGE> 53
<TABLE>
<CAPTION>
CALIFORNIA
U.S. INTERMEDIATE
MICRO-CAP GROWTH BOND MONEY MARKET TAX-FREE
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities at cost $101,203,707 $ 73,845,485 $ 74,533,471 $328,565,325 $ 48,752,558
============ ============ ============ ============ ============
Investments in securities at value (Note 1) 101,639,430 78,334,120 76,435,013 328,565,325 50,452,786
Securities lending collateral (Note 1) 17,827,172 6,891,188 -- -- --
Cash -- -- -- -- 148,990
Dividends and interest receivable 26,104 129,790 714,366 1,143,370 640,350
Receivable for securities sold -- 82,317 -- 1,318,202 --
Receivable from sale of fund shares 1,467,142 257,302 356,968 -- 1,650
Variation margin receivable -- -- 28,594 --
Unrealized appreciation on foreign currency contracts -- -- 248,829 -- --
Prepaid expense -- 428 714 6,604 462
Unamortized organization costs (Note 3) -- 1,578 2,386 -- --
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 120,959,848 85,696,723 77,786,870 331,033,501 51,244,238
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Liabilities for securities lending collateral 17,827,172 6,891,188 -- -- --
Liabilities for options written (Note 4) -- -- 10,000 -- --
Dividends payable to shareholders -- -- 13,218 9,430 29,810
Reverse repurchase agreement (Note 1) -- -- 3,580,000 -- --
Payable for securities purchased 192,651 66,286 3,395,508 -- --
Payable to management company -- -- -- -- --
Payable for fund shares redeemed 295,019 21,995 10,988 1,257,181 5,174
Unrealized depreciation on foreign currency contracts -- -- 103,271 -- --
Accrued expenses:
Investment advisory and administrative fees 164,055 42,666 23,386 59,270 13,162
Shareholder servicing fees -- 3,500 2,900 6,500 2,700
Custody fees -- 9,183 4,909 8,718 2,683
Accounting fees -- 4,400 5,200 14,600 5,000
Audit and legal fees -- 14,515 14,515 14,515 14,515
Other payables -- 18,878 45,912 11,368 15,150
------------ ------------ ------------ ------------ ------------
Total liabilities 18,478,897 7,072,611 7,209,807 1,381,582 88,194
------------ ------------ ------------ ------------ ------------
NET ASSETS $102,480,951 $ 78,624,112 $ 70,577,063 $329,651,919 $ 51,156,044
============ ============ ============ ============ ============
Net assets consist of:
Paid in capital $ 96,935,718 $ 56,367,681 $ 68,832,392 $329,651,919 $ 49,410,725
Undistributed net investment income (loss) -- 110,727 2,647 -- --
Unrealized appreciation (depreciation) on
investments 435,723 4,488,635 2,355,038 -- 1,700,228
Unrealized appreciation (depreciation) on
foreign currency contracts and other assets
and liabilities -- -- 146,976 -- --
Accumulated net realized gain (loss) 5,109,510 17,657,069 (759,990) -- 45,091
------------ ------------ ------------ ------------ ------------
NET ASSETS $102,480,951 $ 78,624,112 $ 70,577,063 $329,651,919 $ 51,156,044
============ ============ ============ ============ ============
SHARES OF CAPITAL STOCK OUTSTANDING 5,221,792 5,234,734 7,063,078 329,651,919 4,734,699
============ ============ ============ ============ ============
NET ASSET VALUE PER SHARE $ 19.63 $ 15.02 $ 9.99 $ 1.00 $ 10.80
============ ============ ============ ============ ============
</TABLE>
47
<PAGE> 54
FREMONT MUTUAL FUNDS, INC.
Year Ended October 31, 1996
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL EMERGING
GLOBAL GROWTH SMALL CAP MARKETS
FUND FUND FUND FUND#
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 13,445,282 $ 47,149 $ 27,548 $ 33,460
Dividends 5,348,548 430,157 189,712 5,177
------------ ------------ ------------ ---------
TOTAL INCOME* 18,793,830 477,306 217,260 38,637
------------ ------------ ------------ ---------
EXPENSES:
Investment advisory and administrative fees (Note 2) 3,997,557 548,887 158,372 13,322
Shareholder servicing fees (Note 2) 98,552 -- -- 2,346
Custody fees 172,041 -- -- 4,800
Distribution fees (Note 2) -- -- -- 2,896
Accounting fees 164,882 -- -- 3,900
Audit and legal fees 40,962 -- -- 8,600
Directors' fees (Note 2) 2,564 -- -- 888
Registration fees 38,904 -- -- 16,453
Interest expense (Note 1) -- -- -- --
Other 99,659 -- -- 4,498
------------ ------------ ------------ ---------
TOTAL EXPENSES BEFORE REDUCTIONS 4,615,121 548,887 158,372 57,703
Expenses waived and/or reimbursed by Advisor -- -- (43,633) (57,703)
------------ ------------ ------------ ---------
TOTAL NET EXPENSES 4,615,121 548,887 114,739 --
------------ ------------ ------------ ---------
NET INVESTMENT INCOME (LOSS) 14,178,709 (71,581) 102,521 38,637
------------ ------------ ------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments 66,430,845 2,385,592 272,776 (84,620)
Transactions in written options -- -- -- --
Foreign currency transactions 3,713,517 (123,314) (72,383) (5,125)
Net increase (decrease) in unrealized appreciation
(depreciation) on:
Investments (16,096,541) 370,380 328,876 (43,840)
Translation of assets and liabilities in foreign currencies (966,466) (1,146) 1,815 11
------------ ------------ ------------ ---------
Net realized and unrealized gain (loss) from investments
and foreign currency 53,081,355 2,631,512 531,084 (133,574)
------------ ------------ ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 67,260,064 $ 2,559,931 $ 633,605 $ (94,937)
============ ============ ============ =========
</TABLE>
* Net of foreign taxes withheld of $337,033 for Fremont Global Fund, $46,245
for Fremont International Growth Fund, $16,217 for Fremont International
Small Cap Fund, $642 for Fremont Emerging Markets Fund and $1,088 for
Fremont Growth Fund.
# Period from June 24, 1996 (commencement of operations) to October 31, 1996.
The accompanying notes are an integral part of these financial statements.
48
<PAGE> 55
<TABLE>
<CAPTION>
CALIFORNIA
U.S. INTERMEDIATE
MICRO-CAP GROWTH BOND MONEY MARKET TAX-FREE
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 614,218 $ 163,469 $5,890,821 $16,549,182 $2,736,364
Dividends 42,612 971,413 35,250 -- --
------------ ------------ ---------- ----------- ----------
TOTAL INCOME* 656,830 1,134,882 5,926,071 16,549,182 2,736,364
------------ ------------ ---------- ----------- ----------
EXPENSES:
Investment advisory and administrative fees (Note 2) 1,008,115 443,609 435,345 1,099,021 267,175
Shareholder servicing fees (Note 2) -- 33,455 26,248 51,860 25,428
Custody fees -- 20,188 23,506 26,179 7,717
Distribution fees (Note 2) -- -- -- -- --
Accounting fees -- 26,561 33,958 84,164 29,134
Audit and legal fees -- 21,948 23,915 24,877 24,541
Directors' fees (Note 2) -- 2,564 2,564 2,564 2,564
Registration fees -- 21,573 12,290 36,857 2,809
Interest expense (Note 1) -- -- 53,283 -- --
Other -- 54,162 44,020 43,395 12,075
------------ ------------ ---------- ----------- ----------
TOTAL EXPENSES BEFORE REDUCTIONS 1,008,115 624,060 665,129 1,368,917 371,443
Expenses waived and/or reimbursed by Advisor (118,286) -- (118,652) (448,972) (111,434)
------------ ------------ ---------- ----------- ----------
TOTAL NET EXPENSES 889,829 624,060 536,477 919,945 260,009
------------ ------------ ---------- ----------- ----------
NET INVESTMENT INCOME (LOSS) (232,999) 510,822 5,389,594 15,629,237 2,476,355
------------ ------------ ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments 5,347,629 17,602,434 (239,275) -- 44,827
Transactions in written options -- -- 23,043 -- --
Foreign currency transactions -- -- 96,978 -- --
Net increase (decrease) in unrealized appreciation
(depreciation) on:
Investments (512,157) (4,559,067) 276,789 -- (192,443)
Translation of assets and liabilities in foreign
currencies -- -- 170,440 -- --
------------ ------------ ---------- ----------- ----------
Net realized and unrealized gain (loss) from
investments and foreign currency 4,835,472 13,043,367 327,975 -- (147,616)
------------ ------------ ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 4,602,473 $ 13,554,189 $5,717,569 $15,629,237 $2,328,739
============ ============ ========== =========== ==========
</TABLE>
49
<PAGE> 56
FREMONT MUTUAL FUNDS, INC.
October 31, 1996
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL GROWTH
FUND FUND
----------------------- -------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/96 10/31/95 10/31/96 10/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 14,178,709 $ 13,562,581 $ (71,581) $ 348,359
Net realized gain (loss) from investments and transactions in
written options 66,430,845 23,444,879 2,385,592 (948,173)
Net realized gain (loss) from foreign currency transactions 3,713,517 (435,755) (123,314) (53,746)
Net unrealized appreciation (depreciation) on investments (16,096,541) 18,907,997 370,380 601,879
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies (966,466) (44,605) (1,146) (47)
------------ ------------- ------------ ------------
Net increase (decrease) in net assets from operations 67,260,064 55,435,097 2,559,931 (51,728)
------------ ------------- ------------ ------------
Distributions to shareholders from:
Net investment income (15,978,412) (16,914,918) (25,060) (269,553)
Net realized gains (19,404,727) (1,140,840) -- --
------------ ------------- ------------ ------------
Total distributions to shareholders (35,383,139) (18,055,758) (25,060) (269,553)
------------ ------------- ------------ ------------
From capital share transactions:
Proceeds from shares sold 86,354,528 110,900,850 7,454,198 4,286,553
Payments for shares redeemed (62,546,779) (136,942,988) (6,897,361) (1,803,707)
Reinvested dividends 34,110,706 17,395,011 25,025 269,162
------------ ------------- ------------ ------------
Net increase (decrease) in net assets from capital share
transactions 57,918,455 (8,647,127) 581,862 2,752,008
------------ ------------- ------------ ------------
Net increase in net assets 89,795,380 28,732,212 3,116,733 2,430,727
Net assets at beginning of period 482,354,856 453,622,644 32,156,013 29,725,286
------------ ------------- ------------ ------------
NET ASSETS AT END OF PERIOD** 572,150,236 $ 482,354,856 $ 35,272,746 $ 32,156,013
=========== ============= ============ ============
CAPITAL TRANSACTIONS IN SHARES:
Sold 5,889,696 8,368,781 727,743 433,837
Redeemed (4,265,461) (10,326,949) (647,428) (188,969)
Reinvested dividends 2,372,436 1,282,980 2,541 27,727
------------ ------------- ------------ ------------
Net increase (decrease) in capital share transactions 3,996,671 (675,188) 82,856 272,595
=========== ============= ============ ============
</TABLE>
** Net assets at October 31, 1996 and October 31, 1995, respectively, include
undistributed net investment income (loss) of $204,471 and $2,004,174 for
Fremont Global Fund, $73,404 and $170,045 for Fremont International Growth
Fund, $75,473 and $9,448 for Fremont International Small Cap Fund, $12,521
and $ -- for Fremont Emerging Markets Fund, $(232,999) and $ -- for Fremont
U.S. Micro-Cap Fund, and $110,727 and $9,309 for Fremont Growth Fund.
# Period from June 24, 1996 (commencement of operations) to October 31, 1996.
The accompanying notes are an integral part of these financial statements.
50
<PAGE> 57
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP EMERGING MARKETS
FUND FUND
---------------------- ----------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/96 10/31/95 10/31/96
-------- -------- --------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 102,521 $ 45,740 $ 38,637
Net realized gain (loss) from investments and transactions in written options 272,776 (21,568) (84,620)
Net realized gain (loss) from foreign currency transactions (72,383) (14,440) (5,125)
Net unrealized appreciation (depreciation) on investments 328,876 (203,902) (43,840)
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies 1,815 10,337 11
------------ ---------- ----------
Net increase (decrease) in net assets from operations 633,605 (183,833) (94,937)
------------ ---------- ----------
Distributions to shareholders from:
Net investment income (36,496) (35,036) (26,116)
Net realized gains -- -- --
------------ ---------- ----------
Total distributions to shareholders (36,496) (35,036) (26,116)
------------ ---------- ----------
From capital share transactions:
Proceeds from shares sold 5,840,661 2,849,192 3,982,064
Payments for shares redeemed (1,489,319) (172,610) (115,175)
Reinvested dividends 20,865 19,578 25,913
------------ ---------- ----------
Net increase (decrease) in net assets from capital share transactions 4,372,207 2,696,160 3,892,802
------------ ---------- ----------
Net increase in net assets 4,969,316 2,477,291 3,771,749
Net assets at beginning of period 4,244,859 1,767,568 --
------------ ---------- ----------
NET ASSETS AT END OF PERIOD** $ 9,214,175 $4,244,859 $3,771,749
============ ========== ==========
CAPITAL TRANSACTIONS IN SHARES:
Sold 583,448 308,867 401,191
Redeemed (149,348) (18,867) (11,901)
Reinvested dividends 2,288 2,175 2,631
------------ ---------- ----------
Net increase (decrease) in capital share transactions 436,388 292,175 391,921
============ ========== ==========
</TABLE>
<TABLE>
<CAPTION>
U.S. MICRO-CAP GROWTH
FUND FUND
----------------------- ------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/96 10/31/95 10/31/96 10/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (232,999) $ (25,196) $ 510,822 $ 398,651
Net realized gain (loss) from investments and transactions in
written options 5,347,629 347,186 17,602,434 3,482,283
Net realized gain (loss) from foreign currency transactions -- -- -- --
Net unrealized appreciation (depreciation) on investments (512,157) 888,690 (4,559,067) 6,445,736
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies -- -- -- --
------------ ----------- ------------ ------------
Net increase (decrease) in net assets from operations 4,602,473 1,210,680 13,554,189 10,326,670
------------ ----------- ------------ ------------
Distributions to shareholders from:
Net investment income -- -- (409,404) (505,139)
Net realized gains (323,213) -- (3,508,522) (241,849)
------------ ----------- ------------ ------------
Total distributions to shareholders (323,213) -- (3,917,926) (746,988)
------------ ----------- ------------ ------------
From capital share transactions:
Proceeds from shares sold 162,319,610 6,143,180 31,461,523 32,879,457
Payments for shares redeemed (72,224,013) (1,614,127) (25,982,666) (10,815,329)
Reinvested dividends 313,977 -- 3,876,573 744,451
------------ ----------- ------------ ------------
Net increase (decrease) in net assets from capital share
transactions 90,409,574 4,529,053 9,355,430 22,808,579
------------ ----------- ------------ ------------
Net increase in net assets 94,688,834 5,739,733 18,991,693 32,388,261
Net assets at beginning of period 7,792,117 2,052,384 59,632,419 27,244,158
------------ ----------- ------------ ------------
NET ASSETS AT END OF PERIOD** $102,480,951 $ 7,792,117 $ 78,624,112 $ 59,632,419
============ =========== ============ ============
CAPITAL TRANSACTIONS IN SHARES:
Sold 8,424,985 462,168 2,313,441 2,872,926
Redeemed (3,767,440) (117,136) (1,944,975) (981,267)
Reinvested dividends 20,793 -- 301,367 68,568
------------ ----------- ------------ ------------
Net increase (decrease) in capital share transactions 4,678,338 345,032 669,833 1,960,227
============ =========== ============ ============
</TABLE>
51
<PAGE> 58
FREMONT MUTUAL FUNDS, INC.
October 31, 1996
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BOND
FUND
----------------------
YEAR YEAR
ENDED ENDED
----- -----
10/31/96 10/31/95
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 5,389,594 $ 4,585,884
Net realized gain (loss) from investments and transactions in written options (216,232) 2,230,265
Net realized gain (loss) from foreign currency transactions 96,978 82,647
Net unrealized appreciation (depreciation) on investments 276,789 3,540,395
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies 170,440 (23,464)
------------ ------------
Net increase in net assets from operations 5,717,569 10,415,727
------------ ------------
Distributions to shareholders from:
Net investment income (5,647,913) (4,531,238)
Net realized gains (1,968,201) --
------------ ------------
Total distributions to shareholders (7,616,114) (4,531,238)
------------ ------------
From capital share transactions:
Proceeds from shares sold 17,733,366 25,537,155
Payments for shares redeemed (39,028,358) (13,731,939)
Reinvested dividends 7,427,929 4,408,916
------------ ------------
Net increase (decrease) in net assets from capital share transactions (13,867,063) 16,214,132
------------ ------------
Net increase (decrease) in net assets (15,765,608) 22,098,621
Net assets at beginning of period 86,342,671 64,244,050
------------ ------------
NET ASSETS AT END OF PERIOD** $ 70,577,063 $ 86,342,671
============ ============
CAPITAL TRANSACTIONS IN SHARES:
Sold 1,778,229 2,579,889
Redeemed (3,985,015) (1,429,749)
Reinvested dividends 747,888 454,805
------------ ------------
Net increase (decrease) in capital share transactions (1,458,898) 1,604,945
============ ============
</TABLE>
** For Fremont Bond Fund, net assets at October 31, 1996 and October 31, 1995,
include undistributed net investment income (loss) of $(171,773) and
$86,546, respectively. There was no undistributed net investment income for
Fremont Money Market Fund or Fremont California Intermediate Tax-Free Fund
at October 31, 1996 nor at October 31, 1995.
The accompanying notes are an integral part of these financial statements.
52
<PAGE> 59
<TABLE>
<CAPTION>
CALIFORNIA
MONEY MARKET INTERMEDIATE TAX-FREE
FUND FUND
------------------------- -------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/96 10/31/95 10/31/96 10/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 15,629,237 $ 16,288,897 $ 2,476,355 $ 2,782,365
Net realized gain (loss) from investments and transactions in
written options -- -- 44,827 119,954
Net realized gain (loss) from foreign currency transactions -- -- -- --
Net unrealized appreciation (depreciation) on investments -- -- (192,443) 3,671,361
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies -- -- -- --
------------ ------------ ------------ ------------
Net increase in net assets from operations 15,629,237 16,288,897 2,328,739 6,573,680
------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income (15,629,237) (16,288,897) (2,476,355) (2,782,365)
Net realized gains -- -- (119,954) (4,639)
------------ ------------ ------------ ------------
Total distributions to shareholders (15,629,237) (16,288,897) (2,596,309) (2,787,004)
------------ ------------ ------------ ------------
From capital share transactions:
Proceeds from shares sold 308,476,828 297,387,013 2,285,491 2,822,896
Payments for shares redeemed 293,545,954) (238,529,846) (3,402,568) (17,111,368)
Reinvested dividends 15,409,433 16,015,143 2,227,490 2,510,108
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from capital share
transactions 30,340,307 74,872,310 1,110,413 (11,778,364)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 30,340,307 74,872,310 842,843 (7,991,688)
Net assets at beginning of period 299,311,612 224,439,302 50,313,201 58,304,889
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD** $329,651,919 $ 299,311,612 $ 51,156,044 $ 50,313,201
============ ============= ============ ============
CAPITAL TRANSACTIONS IN SHARES:
Sold 308,476,828 297,387,013 210,037 270,058
Redeemed (293,545,954) (238,529,846) (315,379) (1,629,211)
Reinvested dividends 15,409,433 16,015,143 206,265 239,479
------------ ------------ ------------ ------------
Net increase (decrease) in capital share transactions 30,340,307 74,872,310 100,923 (1,119,674)
============ ============= ============ ============
</TABLE>
53
<PAGE> 60
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1996
GLOBAL FUND
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31
----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $14.24 $13.13 $13.17 $11.52 $11.25
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .39 .40 .26 .32 .39
Net realized and unrealized gain (loss) 1.49 1.24 (.03) 1.67 .40
------ ------ ------ ------ ------
Total investment operations 1.88 1.64 .23 1.99 .79
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.44) (.50) (.14) (.26) (.40)
From net realized gains (.57) (.03) (.13) (.08) (.11)
Total distributions -- (.53) -- -- (.01)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD (1.01) $14.24 (.27) (.34) (.52)
$15.11 $13.13 $13.17 $11.52
====== ====== ====== ======
TOTAL RETURN 13.72% 12.78%
RATIOS AND SUPPLEMENTAL DATA 1.74% 17.51% 7.10%
Net assets, end of period (000s omitted) $572,150 $482,355 $453,623 $186,325 $101,839
Ratio of expenses to average net assets .87% .88% .95% .99% 1.09%
Ratio of net investment income (loss) to average net assets 2.66% 2.98% 2.47% 2.89% 3.41%
Portfolio turnover rate 71% 83% 52% 40% 50%
Average commission rate paid $.0238 -- -- -- --
</TABLE>
INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31 PERIOD FROM
---------------------- MARCH 1, 1994 TO
1996 1995 OCTOBER 31, 1994
---- ---- ----------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $9.72 $9.79 $9.57
----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.02) .10 .02
Net realized and unrealized loss .71 (.09) .20
----- ----- -----
Total investment operations .69 .01 .22
----- ----- -----
LESS DISTRIBUTIONS
From net investment income (.01) (.08) --
From net realized gains -- -- --
----- ----- -----
Total distributions (.01) (.08) --
NET ASSET VALUE, END OF PERIOD $10.40 $9.72 $9.79
====== ===== =====
TOTAL RETURN 7.07% 0.13% 2.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $35,273 $32,156 $29,725
Ratio of expenses to average net assets(a) 1.50% 1.50% 1.50%*
Ratio of net investment income (loss) to average net assets(a) -.20% 1.19% .35%*
Portfolio turnover rate 74% 32% 44%*
Average commission rate paid $.0150 -- --
</TABLE>
* Annualized
The accompanying notes are an integral part of these financial statements.
54
<PAGE> 61
INTERNATIONAL SMALL CAP FUND
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31 PERIOD FROM
---------------------- JUNE 30, 1994 TO
1996 1995 OCTOBER 31, 1994
---- ---- ----------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $9.00 $9.86 $10.00
----- ----- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) .14 .10 (.01)
Net realized and unrealized gain 1.08 (.88) (.13)
----- ----- ------
Total investment operations 1.22 (.78) (.14)
----- ----- ------
LESS DISTRIBUTIONS
From net investment income (.07) (.08) --
From net realized gains -- -- --
----- ----- ------
Total distributions (.07) (.08) --
----- ----- ------
NET ASSET VALUE, END OF PERIOD $10.15 $9.00 $9.86
====== ===== =====
TOTAL RETURN # 13.69% -7.96% -1.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $9,214 $4,245 $1,768
Ratio of expenses to average net assets(a) 1.81% 2.06% 2.50%*
Ratio of net investment income (loss) to average net assets(a) 1.61% 1.67% -.28%*
Portfolio turnover rate 74% 96% --
Average commission rate paid $.0003 -- --
</TABLE>
* Annualized
(a) Management fees have been voluntarily waived from February 1, 1995 onwards.
If fees had been charged fully, net investment income (loss) per share,
ratio of expenses to average net assets and ratio of net investment income
(loss) to average net assets would have been $.08, 2.50% and 0.92%,
respectively, for the year ended October 31, 1996, and $.07, 2.50% and
1.23%, respectively, for the year ended October 31, 1995.
# Total return would have been lower had the advisor not waived expenses.
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Period from
June 24, 1996 to
October 31, 1996
----------------
<S> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .10
Net realized and unrealized loss (.41)
Total investment operations (.31)
LESS DISTRIBUTIONS
From net investment income (.07)
From net realized gains --
Total distributions (.07)
NET ASSET VALUE, END OF PERIOD $9.62
TOTAL RETURN # -3.12%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $3,772
Ratio of expenses to average net assets(a) 0.00%*
Ratio of net investment income to average net assets(a) 3.32%*
Portfolio turnover rate 20%*
Average commission rate paid $.0063
</TABLE>
* Annualized
(a) Management fees and all other expenses have been voluntarily waived or
reimbursed from June 24, 1996 onwards. If fees had been charged fully, net
investment income (loss) per share, ratio of expenses to average net assets
and ratio of net investment income (loss) to average net assets would have
been -$.05, 4.95% and -1.63%, respectively, for the period ended October 31,
1996.
# Total return would have been lower had the advisor not waived or reimbursed
expenses.
The accompanying notes are an integral part of these financial statements.
55
<PAGE> 62
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1996
U.S. MICRO-CAP FUND
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31 Period from
----------------------------------- June 30, 1994 to
1996 1995 October 31, 1994
------------- ------------- ----------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.34 $ 10.34 $ 10.00
------------- ------------- -------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(a) (.04) (.05) .02
Net realized and unrealized gain 5.83 4.05 .34
------------- ------------- -------------
Total investment operations 5.79 4.00 .36
------------- ------------- -------------
LESS DISTRIBUTIONS
From net investment income -- -- (.02)
From net realized gains (.50) -- --
------------- ------------- -------------
Total distributions (.50) -- (.02)
------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $ 19.63 $ 14.34 $ 10.34
============= ============= =============
TOTAL RETURN # 41.46% 38.68% 3.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 102,481 $ 7,792 $ 2,052
Ratio of expenses to average net assets(a) 1.96% 2.04% 2.50%*
Ratio of net investment income (loss) to average net assets(a) -.51% -.67% .68%*
Portfolio turnover rate 81% 144% 129%*
Average commission rate paid $ .0541 -- --
</TABLE>
*Annualized
(a) Management fees have been voluntarily waived from February 1, 1995 onwards.
If fees had been charged fully, net investment income (loss) per share, ratio
of expenses to average net assets and ratio of net investment income (loss) to
average net assets would have been -$.06, 2.22% and -.77%, respectively, for
the year ended October 31, 1996, and -$.08, 2.50% and -1.13%, respectively,
for the year ended October 31, 1995.
# Total return would have been lower had the advisor not waived expenses.
GROWTH FUND
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31
-------------------------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.06 $ 10.46 $ 11.25 $ 10.08
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .10 .13 .21 .13
Net realized and unrealized gain (loss) 2.65 2.74 (.02) 1.16
Total investment operations 2.75 2.87 .19 1.29
LESS DISTRIBUTIONS
From net investment income (.08) (.17) (.18) (.12)
From net realized gains (.71) (.10) (.80) --
Total distributions (.79) (.27) (.98) (.12)
NET ASSET VALUE, END OF PERIOD $ 15.02 $ 13.06 $ 10.46 $ 11.25
TOTAL RETURN # 22.06% 28.12% 1.72% 12.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 78,624 $ 59,632 $ 27,244 $ 42,306
Ratio of expenses to average net assets(a) .92% .97% .94% .87%
Ratio of net investment income to average net assets(a) .75% 1.02% 1.31% 1.19%
Portfolio turnover rate 129% 108% 55% 44%
Average commission rate paid $ .0429 -- -- --
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 14, 1992 TO
OCTOBER 31, 1992
----------------
<S> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.92
----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .02
Net realized and unrealized gain (loss) .18
----------
Total investment operations .20
----------
LESS DISTRIBUTIONS
From net investment income (.04)
From net realized gains --
----------
Total distributions (.04)
NET ASSET VALUE, END OF PERIOD $ 10.08
==========
Total Return # 2.00%*
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 32,388
Ratio of expenses to average net assets(a) .94%*
Ratio of net investment income to average net assets(a) 1.08%*
Portfolio turnover rate 49%*
Average commission rate paid --
</TABLE>
* Annualized
(a) Management and other expenses charged since the Fund's inception have been
phased-in over time. If fees had been charged fully, net investment income
per share, ratio of expenses to average net assets, and ratio of net
investment income to average net assets would have been $.12, 1.01% and
.98%, respectively, for the year ended October 31, 1995; $.19, 1.08% and
1.17%, respectively, for the year ended October 31, 1994; $.11, 1.02% and
1.04%, respectively, for the year ended October 31, 1993; and $.02, 1.18%
and 0.84%, respectively, for the period from August 14, 1992 to October 31,
1992.
# Total return would have been lower had the advisor not waived expenses.
The accompanying notes are an integral part of these financial statements.
56
<PAGE> 63
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1996
BOND FUND
<TABLE>
<CAPTION>
Years Ended October 31 Period from
----------------------------------- April 30, 1993 to
1996 1995 1994 October 31, 1993
---- ---- ---- ----------------
SELECTED PER SHARE DATA
for one share outstanding during the period
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.13 $ 9.29 $ 10.27 $ 10.04
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .67 .65 .53 .27
Net realized and unrealized gain (loss) .11 .83 (.98) .24
---------- ---------- ---------- ----------
Total investment operations .78 1.48 (.45) .51
---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
From net investment income (.70) (.64) (.53) (.27)
From net realized gains (.22) -- -- (.01)
---------- ---------- ---------- ----------
Total distributions (.92) (.64) (.53) (.28)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.99 $ 10.13 $ 9.29 $ 10.27
========== ========== ========== ==========
TOTAL RETURN # 8.18% 16.49% -4.42% 5.15%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 70,577 $ 86,343 $ 64,244 $ 11,738
Ratio of expenses to average net assets(a) .68%* .60% .66% .50%*
Ratio of net investment income to average net assets(a) 6.82%* 6.69% 5.76% 5.35%*
Portfolio turnover rate 154%* 21% 205% 13%*
*Annualized
(a) Management and other expenses charged since the Fund's inception have been
phased in over time. If fees had been charged fully, net investment income
per share, ratio of expenses to average net assets and ratio of net
investment income to average net assets would have been $.66, .83% and
6.67%, respectively, for the year ended October 31, 1996; $.64, .75% and
6.54%, respectively, for the year ended October 31, 1995; $.50, 1.04% and
5.38%, respectively, for the year ended October 31, 1994; and $.23, 1.23%
and 4.62%, respectively, for the period from April 30, 1993 to October 31,
1993.
# Total return would have been lower had the advisor not waived expenses.
MONEY MARKET FUND
57
Years Ended October 31
---------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .05 .06 .03 .03 .04
--------- --------- --------- --------- ---------
Total investment operations .05 .06 .03 .03 .04
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
From net investment income (.05) (.06) (.03) (.03) (.04)
--------- --------- --------- --------- ---------
Total distributions (.05) (.06) (.03) (.03) (.04)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN# 5.34% 5.84% 3.49% 2.66% 3.73%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 329,652 $ 299,312 $ 224,439 $ 24,207 $ 31,832
Ratio of expenses to average net assets(a) .31% .30% .46% .67% .70%
Ratio of net investment income to average net assets 5.22% 5.70% 4.02% 2.62% 3.70%
</TABLE>
*Annualized
(a) Administrative fees have been voluntarily waived from April 1, 1990
onwards. If fees had been charged fully, net investment income per share,
ratio of expenses to average net assets and ratio of net investment income
to average net assets would have been $.05, .46% and 5.07%, respectively,
for the year ended October 31, 1996; $.06, .45% and 5.55%, respectively,
for the year ended October 31, 1995; $.03, .61% and 3.87%, respectively,
for the year ended October 31, 1994; $.03, .82% and 2.47%, respectively,
for the year ended October 31, 1993; $.04, .85% and 3.55%, respectively,
for the year ended October 31, 1992.
# Total return would have been lower had the advisor not waived expenses.
The accompanying notes are an integral part of these financial statements.
57
<PAGE> 64
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1996
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE TAX-FREE FUND
Years Ended October 31
------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
for one share outstanding during the period
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.86 $ 10.13 $ 11.10 $ 10.55 $ 10.39
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .52 .53 .53 .55 .57
Net realized and unrealized gain (loss) (.03) .73 (.97) .62 .19
---------- ---------- ---------- ---------- ----------
Total investment operations .49 1.26 (.44) 1.17 .76
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
From net investment income (.52) (.53) (.53) (.55) (.57)
From net realized gains (.03) -- -- (.07) (.03)
---------- ---------- ---------- ---------- ----------
Total distributions (.55) (.53) (.53) (.62) (.60)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.80 $ 10.86 $ 10.13 $ 11.10 $ 10.55
========== ========== ========== ========== ==========
TOTAL RETURN # 4.63% 12.77% -3.94% 11.37% 7.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 51,156 $ 50,313 $ 58,305 $ 59,716 $ 44,305
Ratio of expenses to average net assets(a) .51% .50% .51% .50% .54%
Ratio of net investment income to average net assets(a) 4.86% 5.08% 4.94% 5.05% 5.38%
Portfolio turnover rate 6% 18% 21% 26% 18%
</TABLE>
(a) Management and other expenses charged since the Fund's inception have been
phased-in over time. If fees had been charged fully, net investment income
per share, ratio of expenses to average net assets, and ratio of net
investment income to average net assets would have been $.50, .73% and
4.64%, respectively, for the year ended October 31, 1996; $.51, .72% and
4.86%, respectively, for the year ended October 31, 1995; $.51, .71% and
4.74%, respectively, for the year ended October 31, 1994; $.53, .71% and
4.84%, respectively, for the year ended October 31, 1993; and $.54, .83%
and 5.09%, respectively, for the year ended October 31, 1992.
# Total return would have been lower had the advisor not waived expenses. 58
The accompanying notes are an integral part of these financial statements.
58
<PAGE> 65
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Fremont Mutual Funds, Inc. (the Corporation) is an open-end, diversified
investment company authorized to issue ten billion shares of $.0001 par
value capital stock. These shares are currently offered in nine series:
<TABLE>
<S> <C>
- the FREMONT GLOBAL FUND - the FREMONT GROWTH FUND
- the FREMONT INTERNATIONAL GROWTH FUND - the FREMONT BOND FUND
- the FREMONT INTERNATIONAL SMALL CAP FUND - the FREMONT MONEY MARKET FUND
- the FREMONT EMERGING MARKETS FUND - the FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
- the FREMONT U.S. MICRO-CAP FUND (the Fremont California Intermediate Tax-Free Fund is
available only to residents of Arizona, California, Colorado,
Nevada, New Mexico, Oregon, Texas, Utah and Washington)
</TABLE>
Each of the Funds maintains a totally separate investment portfolio.
Significant accounting policies followed by the Funds are summarized below.
The policies are in conformity with generally accepted accounting
principles for investment companies.
A. SECURITY VALUATION
Investments, including options, are stated at value based on recorded
closing sales on a national securities exchange or, in the absence of a
recorded sale, at the mean between the last reported bid and asked
prices or at fair value as determined by the Board of Directors.
Short-term notes and similar securities are included in investments at
amortized cost, which approximates value. Securities which are
primarily traded on foreign exchanges are generally valued at the
preceding closing values of such securities on their respective
exchanges or the most recent price available where no closing value is
available.
Securities in the Fremont Money Market Fund have a remaining maturity
of not more than 397 days and its entire portfolio has a weighted
average maturity of not more than 90 days. As such, all of the Fund's
securities are valued at amortized cost, which approximates value. If
the Fund's portfolio had a remaining weighted average maturity of
greater than 90 days the portfolio would be stated at value based on
recorded closing sales on a national securities exchange or, in the
absence of a recorded sale, at the mean between the bid and asked
prices.
B. SECURITY TRANSACTIONS
Security transactions are accounted for as of trade date. Realized
gains and losses on security transactions are determined on the basis
of specific identification for both financial statement and federal
income tax purposes.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Dividends are recorded on the ex-dividend date, except that certain
dividends from foreign securities in the Fremont Global Fund, the
Fremont International Growth Fund, the Fremont International Small Cap
Fund and the Fremont Emerging Markets Fund are recorded when the Fund
is informed of the ex-dividend date. Interest income and estimated
expenses are accrued daily. Bond discount and premium are amortized as
required by the Internal Revenue Code. Distributions to shareholders
are recorded on the ex-dividend date. The Corporation accounts for the
assets of each Fund separately and allocates general expenses of the
Corporation to each Fund based upon the relative net assets of each
Fund or the nature of the services performed and their applicability to
each Fund.
D. INCOME TAXES
The Funds' policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all taxable income and net capital gains, if any, to
shareholders. Therefore, no income tax provision is required. Each Fund
is treated as a separate entity in the determination of compliance with
the Internal Revenue Code and distributes taxable income and net
realized gains, if any, in accordance with schedules described in their
respective Prospectuses. The portfolio of Fremont California
Intermediate Tax-Free Fund is composed solely of issues that qualify
for tax-exempt status for both Federal and State of California income
tax purposes.
Income dividends and capital gain distributions paid to shareholders
are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles and, therefore,
may differ from the information presented in the financial statements.
These differences are generally referred to as "book/tax" differences
and are primarily due to differing treatments for foreign currency
transactions, losses deferred due to wash sale rules, classification of
gains/losses related to paydowns and certain futures and options
transactions.
Permanent book/tax differences causing payments to shareholders of
income dividends which are in excess of the net investment income
reported in the financial statements will result in reclassification of
such excess to paid in capital from undistributed net investment
income. Temporary book/tax differences, which will reverse in
subsequent periods, will not be reclassified and will remain in
undistributed net investment income. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
59
<PAGE> 66
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
For Federal income tax purposes, certain funds have capital loss
carryovers at October 31, 1996. Capital loss carryovers result when a
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 carryovers expire in eight years. The
following funds have capital loss carryovers at October 31, 1996 which
expire in the years indicated.
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRES IN
---- ------ ----------
<S> <C> <C>
Emerging Markets $84,620 2004
Bond 242,923 2004
</TABLE>
Until such capital loss carryovers are offset or expire, it is unlikely
that the Board of Directors will authorize a distribution of any net
realized gains.
E. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles 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 amounts of
income and expense during the reporting period. Actual results could
differ from those estimates.
F. FOREIGN CURRENCY TRANSLATION
The market values of foreign securities, currency holdings, and other
assets and liabilities of the Fremont Global Fund, the Fremont
International Growth Fund, the Fremont International Small Cap Fund,
the Fremont Emerging Markets Fund and the Fremont Bond Fund are
translated to U.S. dollars based on the daily exchange rates. Purchases
and sales of securities, income and expenses are translated at the
exchange rate on the transaction date. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred.
For those Funds which are allowed by the terms of their respective
prospectuses to invest in securities and other transactions denominated
in foreign currencies, currency gain (loss) will occur when such
securities and transactions are translated into U.S. dollars.
Certain transactions which result in realized currency gain (loss) are
reported on the Statements of Operations as Net Realized Gain (Loss)
from Foreign Currency Transactions. These are: currency gain (loss)
from the sale or maturity of forward currency contracts and from the
disposition of foreign currency; and the realization of currency
fluctuations between trade and settlement dates on security
transactions and between accrual and receipt dates on net investment
income.
Realized currency gain (loss) from the sale, maturity or disposition of
foreign securities is not separately reported from the economic or
market component of the gain (loss) and is included under the caption
Net Realized Gain (Loss) from Investments. Activity related to foreign
currency futures and options on foreign currency is, likewise, reported
under this heading, as these instruments are used to hedge the foreign
currency risks associated with investing in foreign securities.
Consistent with the method of reporting realized currency gain (loss),
unrealized currency gain (loss) on investments is not separately
reported from the underlying economic or market component, but included
under the caption Net Unrealized Appreciation (Depreciation) on
Investments. Unrealized currency gain (loss) on other net assets is
reported under Net Unrealized Appreciation (Depreciation) on
Translation of Assets and Liabilities in Foreign Currencies.
G. FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract is an obligation to purchase or
sell a currency against another currency at a future date and price as
agreed upon by the parties. These contracts are traded over-the-counter
and not on organized commodities or securities exchanges. Losses may
arise due to changes in the value of the foreign currencies or if the
counterparty does not perform under the contract.
The Funds may and do use forward foreign currency contracts to
facilitate the settlement of foreign securities. A commitment by a Fund
to purchase a currency forward allows the Fund to have the local
currency on hand to settle foreign security purchases on the payment
date. Likewise, a commitment to sell a currency forward allows the Fund
to take the foreign currency proceeds from the sale of foreign
securities and exchange it for U.S. dollars at a predetermined price.
In addition, the Fremont Global Fund and the Fremont Bond Fund use such
contracts to manage their respective currency exposure. Contracts to
receive generally are used to acquire exposure to foreign currencies,
while contracts to deliver are used to hedge a fund's investments
against currency fluctuations. A contract to receive or deliver can
also be used to offset a previous contract.
The market risk involved in these contracts is in excess of the amounts
reflected in the Funds' Statements of Assets and Liabilities since only
the change in the underlying values is reflected (as an asset if
appreciated or as a liability if depreciated) and not the actual
underlying values.
60
<PAGE> 67
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
At October 31, 1996 the underlying values for open foreign currency contracts
were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT TO RECEIVE INITIAL CURRENT APPRECIATION
DATE (TO DELIVER) VALUE VALUE (DEPRECIATION)
---- ------------ ----- ----- --------------
GLOBAL FUND
<S> <C> <C> <C> <C> <C>
Danish Krone ........ 11/08/96 35,000,000 $ 5,979,840 $ 6,009,306 $ 29,466
British Pound ....... 11/08/96 (4,600,000) (7,186,580) (7,482,820) (296,240)
Canadian Dollar ..... 11/08/96 (22,000,000) (16,264,971) (16,442,451) (177,480)
Danish Krone ........ 11/08/96 (54,800,000) (9,380,349) (9,408,856) (28,507)
Dutch Guilder ....... 11/08/96 (6,500,000) (3,783,910) (3,819,934) (36,024)
French Franc ........ 11/08/96 (41,000,000) (7,930,367) (8,003,279) (72,912)
German Deutschemark . 11/08/96 (25,000,000) (16,329,197) (16,472,294) (143,097)
Irish Punt .......... 11/08/96 (6,000,000) (9,597,600) (9,762,600) (165,000)
Italian Lira ........ 11/08/96 (9,300,000,000) (6,109,377) (6,116,811) (7,434)
Swedish Krona ....... 11/08/96 (49,000,000) (,392,321) (7,444,659) (52,338)
---------
$(949,566)
=========
EMERGING MARKETS FUND
Thai Bhat ............ 11/01/96 (95,040) $ (3,726) $ (3,726) --
Thai Bhat ............ 11/04/96 (458,140) (17,945) (17,956) $ (11)
---------
$ (11)
=========
BOND FUND
German Deutschemark .. 01/16/97 3,600,000 $ 2,470,152 $ 2,390,279 $ (79,873)
German Deutschemark .. 01/16/97 2,516,000 1,663,691 1,670,540 6,849
Canadian Dollar ...... 01/21/97 (1,000,000) (744,574) (749,401) (4,827)
Canadian Dollar ...... 05/01/97 (1,000,000) (737,463) (753,636) (16,173)
German Deutschemark .. 12/09/96 (591,840) (420,565) (391,999) 28,566
German Deutschemark .. 01/16/97 (6,116,000) (4,274,233) (4,060,819) 213,414
New Zealand Dollar ... 11/15/96 (3,036,000) (2,138,255) (2,140,653) (2,398)
---------
$ 145,558
=========
</TABLE>
H. FUTURES
A futures contract is an agreement between two parties to buy or sell a
security or financial interest at a set price on a future date and is
standardized and exchange-traded. Upon entering into such a contract,
the purchaser is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the
exchange on which the contract is traded. Pursuant to the contract, the
purchaser agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in value of the contract. Such receipts
or payments are known as "variation margin" and are recorded by the
purchaser as unrealized gains or losses. When the contract is closed,
the purchaser records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the
value at the time it was closed. The Funds use futures contracts to
hedge foreign currency and interest rate risks.
At October 31, 1996, the Fremont Bond Fund had the following futures
contracts outstanding:
<TABLE>
<CAPTION>
CONTRACTS EXPIRATION INITIAL CURRENT NET UNREALIZED
TO BUY DATE VALUE VALUE APPRECIATION
------ ---- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
5 yr. U.S. Treasury Note 70 Dec 96 $7,379,531 $7,506,406 $126,875
10 yr. U.S. Treasury Note 25 Dec 96 2,675,000 2,740,625 65,625
30 yr. U.S. Treasury Bond 40 Dec 96 4,320,000 4,520,000 200,000
--------
$392,500
========
</TABLE>
At October 31, 1996, $355,000 par value of U.S. Treasury Bills were
held by brokers to satisfy the initial margin requirements related to
these contracts.
61
<PAGE> 68
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
I. SECURITIES LENDING
All the Funds are authorized to make loans of their portfolio
securities to broker-dealers or to other institutional investors up to
33-1/3% of their respective net assets. The borrower must maintain with
the Funds' custodian collateral consisting of cash, cash equivalents or
U.S. Government securities equal to at least 100% of the value of the
borrowed securities, plus any accrued but unpaid distributions. The
collateral is invested in a money market fund that meets the criteria
of Section 2(a)-7 of the 1940 Act.
The Funds receive a portion of the income earned on the collateral. For
the year ended October 31, 1996, transactions in securities lending
resulted in fee income to the Fremont Global Fund, the Fremont
International Growth Fund, the Fremont International Small Cap Fund,
the Fremont Emerging Markets Fund, the Fremont U.S. Micro-Cap Fund and
the Fremont Growth Fund of $69,874, $13,799, $1,549, $74, $18,035 and
$5,372, respectively.
The market value of the securities on loan and the collateral balance
held by the Funds as of October 31, 1996 were as follows:
<TABLE>
<CAPTION>
MARKET VALUE COLLATERAL VALUE
------------ ----------------
<S> <C> <C>
Fremont Global Fund ................ $34,688,544 $34,883,640
Fremont International Growth Fund .. 3,982,079 4,004,476
Fremont International Small Cap Fund 218,562 219,791
Fremont Emerging Markets Fund ...... 70,920 71,319
Fremont U.S. Micro-Cap Fund ........ 17,727,466 17,827,172
Fremont Growth Fund ................ 6,852,646 6,891,188
</TABLE>
J. REVERSE REPURCHASE AGREEMENTS
During the year ended October 31, 1996, the Fremont Bond Fund entered
into reverse repurchase agreements with certain brokers. Reverse
repurchase agreements involve the sale of a portfolio-eligible security
by the Fund, coupled with an agreement to repurchase the security at a
specified date and price. Reverse repurchase agreements involve the
risk that the market value of securities pledged as collateral may
decline below the repurchase price of the securities sold by the Fund
which it is obligated to repurchase.
Such transactions are accounted for as a borrowing by the Fund and are
subject to the Fund's overall restriction on borrowing under which it
must maintain asset coverage of at least 300%.
The difference between the selling price and the repurchase price is
accounted for as interest expense. At October 31, 1996, outstanding
reverse repurchase agreements for the Fremont Bond Fund, which were
collateralized by mortgage-backed securities issued by the Government
National Mortgage Association, were as follows:
<TABLE>
<CAPTION>
AMOUNT OF REVERSE INTEREST MATURITY COST OF VALUE OF
COUNTERPARTY REPURCHASE AGREEMENTS RATE DATE COLLATERAL COLLATERAL
------------ --------------------- ---- ---- ---------- ----------
<S> <C> <C> <C> <C> <C>
Morgan Stanley $3,580,000 5.570% 11/21/96 $3,612,127 $3,722,757
</TABLE>
2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
INVESTMENT ADVISOR
The Funds each have entered into an investment management agreement with
Fremont Investment Advisors, Inc. (the Advisor), a wholly owned subsidiary
of Fremont Investors, Inc. (formerly The Fremont Group, Inc.). Under these
agreements, the Advisor supervises and implements each Fund's investment
activities and provides administrative services as necessary to conduct
Fund business. For its advisory and administrative services, the Advisor
receives a fee based on the average daily net assets of the Funds as
described below.
<TABLE>
<CAPTION>
ADVISORY FEE ADMINISTRATIVE FEE
<S> <C> <C>
Fremont Global Fund .60% on all net assets .15% on all net assets
Fremont International Growth Fund 1.50% on all net assets --
Fremont International Small Cap Fund (*) 2.50% on first $30 million --
2.00% on next $70 million --
1.50% on balance over $100 million --
Fremont Emerging Markets Fund (*) 1.00% on all net assets .15% on all net assets
Fremont U.S. Micro-Cap Fund (*) 2.50% on first $30 million --
2.00% on next $70 million --
1.50% on balance over $100 million --
Fremont Growth Fund .50% on all net assets .15% on all net assets
</TABLE>
62
<PAGE> 69
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
<TABLE>
<S> <C> <C>
Fremont Bond Fund (*) .40% on all net assets .15% on all net assets
Fremont Money Market Fund (*) .30% on first $50 million .15% on all net assets
.20% on balance over $50 million
Fremont California Intermediate .40% on first $25 million .15% on all net assets
Tax-Free Fund (*) .35% on next $25 million
.30% on next $50 million
.25% on next $50 million
.20% on balance over $150 million
</TABLE>
(*) The Advisor has voluntarily waived and/or reimbursed some of its fees
for these Funds. All fees waived in the past will not be recouped in the
future and, as these waivers are voluntary, they may be changed in the
future.
For the Fremont International Small Cap Fund and the Fremont U.S.
Micro-Cap Fund, the Advisor is voluntarily limiting the advisory fee to
a reduced rate of 1.50% and 1.98% of net assets, respectively.
For the Fremont Emerging Markets Fund, the Advisor is voluntarily
waiving advisory, 12b-1 and administrative fees and reimbursing all
other operating expenses until further notice.
For the Fremont Bond Fund and the Fremont Money Market Fund, the
Advisor is voluntarily waiving the administrative fee in its entirety.
For the Fremont California Intermediate Tax-Free Fund, the advisory and
administrative fees are charged at voluntarily reduced rates of .30%
and .005% of net assets, respectively.
Selected per share data and operating ratios have been disclosed both
before and after the impact of these various waivers under each Fund's
Financial Highlights table.
Under the terms of the Advisory agreements, the Advisor receives a single
management fee (i.e., a unitary fee) from the Fremont International Growth
Fund, the Fremont International Small Cap Fund and the Fremont U.S.
Micro-Cap Fund, and is obligated to pay all expenses of these Funds except
extraordinary expenses (as determined by a majority of the disinterested
directors) and interest, brokerage commissions, and other transaction
charges relating to the investing activities of those Funds.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fremont Emerging Markets Fund has adopted a plan of distribution under
which the Fund may directly incur or reimburse the Advisor for certain
distribution-related expenses. The maximum amount the Fund is obligated to
pay the Advisor is 0.25% of net assets. Payments have been waived by the
Advisor in their entirety since the Fund began operations and it is
anticipated that the Advisor will continue voluntarily waiving such
payments until further notice.
Each Fund is also required to comply with the limitations set forth in the
laws, regulations, and administrative interpretations of the states in
which it is registered. For the year ended October 31, 1996, no
reimbursements were required or made to any Fund by the Advisor to comply
with these limitations.
Under the terms of a shareholder services agreement with the Advisor,
effective July 1, 1996, the Funds pay the Advisor for transfer agent
services on a per shareholder account basis, subject to a monthly minimum
per Fund as well as out-of-pocket expenses. Total costs incurred by the
Funds in aggregate for the period July 1, 1996 through October 31, 1996
were $97,341, excluding funds under a unitary fee arrangement.
OTHER RELATED PARTIES
At October 31, 1996, Fremont Investors, Inc. and its affiliated companies
including their employee retirement plans, its principal shareholder,
Stephen D. Bechtel, Jr., and members of his family, including trusts, owned
directly or indirectly the following approximate percentages of the various
Funds:
<TABLE>
<CAPTION>
% OF SHARES OUTSTANDING
-----------------------
<S> <C>
Fremont Global Fund 62%
Fremont International Growth Fund 84%
Fremont International Small Cap Fund 35%
Fremont Emerging Markets Fund 91%
Fremont U.S. Micro-Cap Fund 6%
Fremont Growth Fund 65%
Fremont Bond Fund 88%
Fremont Money Market Fund 82%
Fremont California Intermediate Tax-Free Fund 65%
</TABLE>
Certain officers and/or directors of the Funds are also officers and/or
directors of the Advisor and/or Fremont Investors, Inc.
3. ORGANIZATION COSTS
Costs incurred by each Fund, if any, in connection with its organization
have been deferred and are amortized on a straight-line basis over a period
of five years (60 months).
63
<PAGE> 70
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1996
4. PURCHASES AND SALES/MATURITIES OF INVESTMENT SECURITIES
Aggregate purchases and aggregate proceeds from sales and maturities of
securities for the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES PROCEEDS
--------- --------
<S> <C> <C>
LONG TERM SECURITIES EXCLUDING U.S. GOVERNMENT SECURITIES:
Fremont Global Fund $310,032,957 $381,291,526
Fremont International Growth Fund 26,941,395 26,194,733
Fremont International Small Cap Fund 8,700,793 4,404,248
Fremont Emerging Markets Fund 2,882,203 119,220
Fremont U.S. Micro-Cap Fund 106,347,944 29,339,100
Fremont Growth Fund 90,939,257 84,017,213
Fremont Bond Fund 5,692,873 14,997,373
Fremont California Intermediate Tax-Free Fund 2,955,196 3,095,906
LONG TERM U.S. GOVERNMENT SECURITIES:
Fremont Global Fund $ 4,027,412 $ 16,093,607
Fremont Bond Fund 114,345,636 98,849,763
</TABLE>
Transactions in written put and call options for the year ended October 31,
1996 for the Fremont Bond Fund were as follows:
<TABLE>
<CAPTION>
AMOUNT OF PREMIUMS NUMBER OF CONTRACTS
------------------ -------------------
<S> <C> <C>
Options outstanding at October 31, 1995 $ 23,748 70
Options sold 70,996 50
Options cancelled in closing purchase transactions -- --
Options expired prior to exercise (23,748) (70)
Options exercised -- --
-------- ----
Options outstanding at October 31, 1996 $ 70,996 50
======== ====
</TABLE>
The following written options were outstanding at October 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
NAME OF ISSUER CONTRACTS PRICE DATE VALUE
-------------- --------- ----- ---- -----
<S> <C> <C> <C> <C> <C>
PUT OPTIONS: CME June 97 Eurodollar Futures 50 93.5 06/16/97 $10,000
</TABLE>
CME - Chicago Mercantile Exchange
The Bond Fund received premiums of $70,996 on these contracts and has an
unrealized gain of $60,996. The total notional value underlying these
contracts is $50,000,000.
5. PORTFOLIO CONCENTRATIONS
Although each Fund has a diversified investment portfolio, there are
certain investment concentrations of risk which may subject each Fund more
significantly to economic changes occurring in certain segments or
industries.
6. UNREALIZED APPRECIATION (DEPRECIATION) - TAXBASIS
At October 31, 1996, the cost of securities for Federal income tax purposes
and the gross aggregate unrealized appreciation and/or depreciation based
on that cost were as follows:
<TABLE>
<CAPTION>
GROSS AGGREGATE UNREALIZED
--------------------------
COST APPRECIATION DEPRECIATION NET
---- ------------ ------------ ---
<S> <C> <C> <C> <C>
Fremont Global Fund $542,076,336 $39,491,784 $(11,906,181) $ 27,585,603
Fremont International Growth Fund 32,567,672 6,022,606 (3,592,690) 2,429,916
Fremont International Small Cap Fund 9,056,967 798,803 (686,499) 112,304
Fremont Emerging Markets Fund 3,838,200 188,480 (232,320) (43,840)
Fremont U.S. Micro-Cap Fund 101,238,120 10,665,019 (10,263,709) 401,310
Fremont Growth Fund 73,848,505 5,843,674 (1,358,059) 4,485,615
Fremont Bond Fund 74,533,471 2,446,860 (545,318) 1,901,542
Fremont Money Market Fund 328,565,325 -- -- --
Fremont California Intermediate Tax-Free Fund 48,752,558 1,807,498 (107,270) 1,700,228
</TABLE>
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FREMONT FUNDS[LOGO]
50 Beale Street, Suite 100
San Francisco, CA 94105
