<PAGE>
FREMONT MUTUAL FUNDS, INC.-REGISTERED TRADEMARK-
ANNUAL REPORT
[GRAPHIC]
OCTOBER 31, 1997
FREMONT FUNDS-Registered Trademark- [LOGO]
<PAGE>
FREMONT FUNDS
A MESSAGE FROM MICHAEL H. KOSICH, PRESIDENT OF FREMONT MUTUAL FUNDS
[PHOTO OF MIKE KOSICH]
MIKE KOSICH
Dear Fellow Shareholder:
Fiscal 1997 was an exciting year for Fremont Funds. We introduced one
new Fund, Fremont U.S. Small Cap Fund, under the leadership of David Kern of
Kern Capital Management LLC. If the name sounds familiar, it is because
David is the son of Bob Kern, who has done such an outstanding job managing
Fremont U.S. Micro-Cap Fund. David's credentials as a small cap equities
analyst and portfolio manager are impressive with 11 years' professional
experience for companies like Founders Asset Management and Delaware
Management. We believe this is a terrific addition to the Fremont Mutual
Funds family.
We are also in the final developmental stage for two new funds to be
offered in the next couple of months. The Fremont Real Estate Securities
Fund will invest primarily in Real Estate Investment Trusts (REIT) with the
guidance of sub-advisor Kensington Investment Group. The Fremont Select Fund
will invest in domestic mid-cap stocks with Fremont Investment Advisors' John
Kosecoff and Debra McNeill serving as co-portfolio managers. Both are
seasoned investment professionals, having teamed up previously at RCM Capital
Management.
Once again, we are pleased to report that six of nine Fremont Funds in
operation for all of second-half fiscal 1997 exceeded their index benchmarks.
We tip our hats to Fremont Growth Fund's Ken Copa, Fremont Emerging Markets
Fund's Henry Thornton, and Fremont Bond Fund's Bill Gross for particularly
good performance relative to their respective benchmarks and peer groups.
Fremont Funds has also made progress on the shareholder services front.
Our new transfer agent, National Financial Data Services, and our
tele-services vendor, Boston Financial Data Services, are providing new and
improved shareholder statements, easier access to account information, and
more efficient exchange and transfer services. We are in the process of
scheduling seminars and publishing brochures explaining the changes in IRA
regulations that will be in effect in 1998. We believe the new Roth and
Education IRAs will offer many of our shareholders an even better way to save
for retirement.
In closing, because of the dramatic corrections in global stock markets
in late October, some perspective on our general investment philosophy is in
order. As you can probably tell from the gray hair in my photograph, I have
been in the investment business for a long time. Fremont Funds' portfolio
managers and research analysts have as well. We have seen markets go up and
we have seen them go down. We evaluate risk as aggressively as we evaluate
return potential. We are ever mindful of our mandate to preserve and enhance
the hard-earned assets you have entrusted to us.
Sincerely,
/s/Michael H. Kosich
Michael H. Kosich
December 10, 1997
<PAGE>
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. . . . . . . . . . . . . . . . . . . . . . . .10
Fremont U.S. Micro-Cap Fund. . . . . . . . . . . . . . . . . . . . . . . . .13
Fremont U.S. Small Cap Fund. . . . . . . . . . . . . . . . . . . . . . . . .15
Fremont Growth Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Fremont Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Fremont Money Market Fund. . . . . . . . . . . . . . . . . . . . . . . . . .21
Fremont California Intermediate Tax-Free Fund. . . . . . . . . . . . . . . .23
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . .25
STATEMENTS OF INVESTMENTS
Fremont Global Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Fremont International Growth Fund. . . . . . . . . . . . . . . . . . . . . .30
Fremont International Small Cap Fund . . . . . . . . . . . . . . . . . . . .32
Fremont Emerging Markets Fund. . . . . . . . . . . . . . . . . . . . . . . .35
Fremont U.S. Micro-Cap Fund. . . . . . . . . . . . . . . . . . . . . . . . .36
Fremont U.S. Small Cap Fund. . . . . . . . . . . . . . . . . . . . . . . . .38
Fremont Growth Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Fremont Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Fremont Money Market Fund. . . . . . . . . . . . . . . . . . . . . . . . . .43
Fremont California Intermediate Tax-Free Fund. . . . . . . . . . . . . . . .45
Country Diversification and Portfolio & Currency Abbreviations . . . . . . .47
COMBINED FINANCIAL STATEMENTS
Statements of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .48
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .50
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .52
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . .61
1
<PAGE>
FREMONT FUNDS
FREMONT GLOBAL FUND
THE FREMONT ASSET ALLOCATION COMMITTEE, PORTFOLIO MANAGERS FOR FREMONT GLOBAL
FUND DAVE REDO, PETE LANDINI, BOB HADDICK, SANDIE KINCHEN, AL KIRSCHBAUM
FUND PROFILE
FREMONT GLOBAL FUND OFFERS CONSERVATIVE INVESTORS A BALANCED APPROACH TO
GLOBAL INVESTING. THE FUND MANAGEMENT TEAM UNDERSTANDS THE REWARD POTENTIAL
AND PERHAPS MORE IMPORTANTLY, THE RISKS IN GLOBAL FINANCIAL MARKETS. THROUGH
COUNTRY DIVERSIFICATION, PRUDENT ALLOCATION BETWEEN STOCKS, BONDS AND CASH,
AND DISCIPLINED SECURITIES SELECTION, THE FUND SEEKS LONG-TERM TOTAL RETURNS
EQUALING AT LEAST 80% OF THE GLOBAL EQUITIES MARKETS WITH ONLY HALF 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 IS
EXAMINED TO DETERMINE THE MOST ADVANTAGEOUS MIX OF STOCKS, BONDS AND CASH.
FINALLY, INDIVIDUAL SECURITIES ARE SELECTED BASED ON INTENSIVE QUANTITATIVE
AND FUNDAMENTAL ANALYSIS. ON THE EQUITIES SIDE, FUND MANAGEMENT FAVORS LARGE
COMPANIES WITH STRONG BALANCE SHEETS AND CONSISTENT EARNINGS RECORDS.
INDIVIDUAL BONDS ARE CHOSEN BASED ON CREDIT QUALITY AND OPPORTUNISTIC
PRICING.
[PHOTO OF DAVE REDO, PETE LANDINI, AL KIRSCHBAUM, BOB HADDICK AND
SANDIE KINCHEN]
THE FREMONT ASSET ALLOCATION COMMITTEE (CLOCKWISE FROM TOP LEFT)
DAVE REDO, PETE LANDINI, AL KIRSCHBAUM, BOB HADDICK, SANDIE KINCHEN
TO OUR SHAREHOLDERS
For the six months ended October 31, 1997, Fremont Global Fund returned
6.24% xcompared to the Lipper Global Flexible Fund Average's 8.31%. For full
fiscal year 1997 ended on the same date, the Fund returned 13.01% versus the
benchmark index's 14.42%.
FREMONT GLOBAL FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF GRAPH]
11/18/88-
10/31/89* +13.71%
11/01/89-
10/31/90 -2.64%
11/01/90-
10/31/91 +18.38%
11/01/91-
10/31/92 +7.10%
11/01/92-
10/31/93 +17.51%
11/01/93-
10/31/94 +1.74%
11/01/94-
10/31/95 +12.78%
11/01/95-
10/31/96 +13.72%
11/01/96-
10/31/97 +13.01%
AVERAGE +10.44%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 5 SINCE INCEPTION
YEAR YEARS 11/18/88
13.01% 11.62% 10.44%
FREMONT GLOBAL FUND S&P500 EAFE INDEX 100% HEDGED-4638
18-NOV-88 $10,000 $10,000 $10,000 $10,000 $10,000
30-NOV-88 $10,040 $10,281 $9,966 $10,161 $10,004
31-DEC-88 $10,123 $10,467 $9,975 $10,218 $10,084
31-JAN-89 $10,415 $11,223 $10,080 $10,398 $10,141
28-FEB-89 $10,325 $10,944 $10,037 $10,451 $10,055
31-MAR-89 $10,506 $11,201 $10,081 $10,246 $10,125
30-APR-89 $10,677 $11,777 $10,282 $10,341 $10,223
31-MAY-89 $10,828 $12,254 $10,486 $9,779 $10,228
30-JUN-89 $10,878 $12,187 $10,750 $9,614 $10,317
31-JUL-89 $11,391 $13,281 $10,970 $10,822 $10,542
31-AUG-89 $11,512 $13,538 $10,829 $10,335 $10,551
30-SEP-89 $11,462 $13,485 $10,880 $10,806 $10,495
31-OCT-89 $11,371 $13,167 $11,110 $10,371 $10,489
30-NOV-89 $11,519 $13,439 $11,216 $10,893 $10,465
31-DEC-89 $11,735 $13,758 $11,247 $11,295 $10,500
31-JAN-90 $11,373 $12,835 $11,175 $10,874 $10,292
28-FEB-90 $11,331 $13,000 $11,217 $10,116 $10,138
31-MAR-90 $11,373 $13,341 $11,231 $9,062 $10,133
30-APR-90 $11,203 $13,010 $11,192 $8,990 $10,125
31-MAY-90 $11,810 $14,278 $11,438 $10,016 $10,376
30-JUN-90 $11,842 $14,180 $11,591 $9,928 $10,430
31-JUL-90 $11,927 $14,134 $11,753 $10,068 $10,471
31-AUG-90 $11,341 $12,857 $11,704 $9,090 $10,330
30-SEP-90 $10,873 $12,224 $11,795 $7,823 $10,272
31-OCT-90 $11,070 $12,179 $11,931 $9,042 $10,567
30-NOV-90 $11,349 $12,961 $12,112 $8,509 $10,740
31-DEC-90 $11,527 $13,318 $12,278 $8,647 $10,847
31-JAN-91 $11,797 $13,907 $12,403 $8,926 $11,053
28-FEB-91 $12,270 $14,902 $12,501 $9,883 $11,216
31-MAR-91 $12,315 $15,255 $12,586 $9,290 $11,221
30-APR-91 $12,371 $15,297 $12,724 $9,381 $11,276
31-MAY-91 $12,607 $15,955 $12,802 $9,479 $11,343
30-JUN-91 $12,258 $15,228 $12,811 $8,782 $11,282
31-JUL-91 $12,596 $15,940 $12,954 $9,213 $11,384
31-AUG-91 $12,810 $16,315 $13,202 $9,026 $11,531
30-SEP-91 $12,911 $16,046 $13,429 $9,535 $11,719
31-OCT-91 $13,105 $16,259 $13,582 $9,671 $11,802
30-NOV-91 $12,872 $15,604 $13,738 $9,219 $11,840
31-DEC-91 $13,676 $17,386 $14,073 $9,695 $12,051
31-JAN-92 $13,595 $17,064 $13,946 $9,488 $12,152
29-FEB-92 $13,747 $17,282 $14,001 $9,148 $12,192
31-MAR-92 $13,466 $16,945 $13,946 $8,544 $12,123
30-APR-92 $13,501 $17,440 $14,068 $8,585 $12,160
31-MAY-92 $13,773 $17,533 $14,286 $9,160 $12,292
30-JUN-92 $13,655 $17,277 $14,498 $8,726 $12,342
31-JUL-92 $13,808 $17,975 $14,786 $8,502 $12,428
31-AUG-92 $13,844 $17,612 $14,934 $9,035 $12,468
30-SEP-92 $13,964 $17,815 $15,138 $8,856 $12,673
31-OCT-92 $14,035 $17,879 $14,941 $8,392 $12,889
30-NOV-92 $14,218 $18,482 $14,884 $8,471 $12,895
31-DEC-92 $14,389 $18,722 $15,083 $8,515 $13,017
31-JAN-93 $14,450 $18,858 $15,375 $8,514 $13,154
28-FEB-93 $14,609 $19,115 $15,618 $8,771 $13,395
31-MAR-93 $14,916 $19,527 $15,681 $9,536 $13,358
30-APR-93 $14,940 $19,049 $15,806 $10,441 $13,351
31-MAY-93 $15,089 $19,558 $15,771 $10,662 $13,416
30-JUN-93 $15,212 $19,623 $16,019 $10,495 $13,666
31-JUL-93 $15,423 $19,526 $16,058 $10,863 $13,819
31-AUG-93 $15,896 $20,263 $16,313 $11,449 $14,091
30-SEP-93 $16,095 $20,114 $16,381 $11,192 $14,185
31-OCT-93 $16,493 $20,527 $16,425 $11,536 $14,369
30-NOV-93 $16,330 $20,342 $16,333 $10,528 $14,490
31-DEC-93 $17,209 $20,592 $16,408 $11,288 $14,763
31-JAN-94 $17,436 $21,284 $16,590 $12,242 $14,650
28-FEB-94 $16,944 $20,707 $16,344 $12,208 $14,362
31-MAR-94 $16,249 $19,808 $16,075 $11,683 $14,273
30-APR-94 $16,312 $20,064 $15,965 $12,178 $14,194
31-MAY-94 $16,375 $20,392 $15,976 $12,108 $14,084
30-JUN-94 $16,198 $19,887 $15,978 $12,279 $13,930
31-JUL-94 $16,514 $20,545 $16,208 $12,397 $14,026
31-AUG-94 $16,982 $21,381 $16,259 $12,691 $13,893
30-SEP-94 $16,615 $20,864 $16,109 $12,291 $13,934
31-OCT-94 $16,780 $21,344 $16,108 $12,700 $13,982
30-NOV-94 $16,447 $20,560 $16,035 $12,089 $14,163
31-DEC-94 $16,491 $20,862 $16,091 $12,166 $14,169
31-JAN-95 $16,310 $21,403 $16,362 $11,699 $14,319
28-FEB-95 $16,516 $22,231 $16,700 $11,665 $14,501
31-MAR-95 $16,877 $22,889 $16,795 $12,392 $14,821
30-APR-95 $17,238 $23,564 $17,004 $12,858 $15,059
31-MAY-95 $17,851 $24,498 $17,517 $12,705 $15,540
30-JUN-95 $18,060 $25,073 $17,635 $12,483 $15,517
31-JUL-95 $18,608 $25,908 $17,636 $13,261 $15,702
31-AUG-95 $18,568 $25,968 $17,797 $12,756 $15,813
30-SEP-95 $18,858 $27,051 $17,925 $13,004 $16,073
31-OCT-95 $18,924 $26,975 $18,124 $12,654 $16,240
30-NOV-95 $19,204 $28,161 $18,361 $13,006 $16,571
31-DEC-95 $19,669 $28,683 $18,554 $13,530 $16,710
31-JAN-96 $20,294 $29,669 $18,714 $13,586 $16,896
29-FEB-96 $20,225 $29,955 $18,495 $13,632 $16,707
31-MAR-96 $20,294 $30,244 $18,401 $13,921 $16,869
30-APR-96 $20,725 $30,688 $18,336 $14,326 $17,034
31-MAY-96 $20,865 $31,480 $18,321 $14,063 $17,162
30-JUN-96 $21,006 $31,599 $18,516 $14,141 $17,304
31-JUL-96 $20,458 $30,203 $18,571 $13,728 $17,420
31-AUG-96 $20,727 $30,840 $18,586 $13,759 $17,662
30-SEP-96 $21,392 $32,576 $18,844 $14,125 $18,019
31-OCT-96 $21,520 $33,474 $19,178 $13,980 $18,314
30-NOV-96 $22,474 $36,005 $19,431 $14,536 $18,655
31-DEC-96 $22,416 $35,291 $19,307 $14,349 $18,685
31-JAN-97 $22,856 $37,497 $19,382 $13,847 $18,913
28-FEB-97 $23,019 $37,790 $19,419 $14,074 $19,034
31-MAR-97 $22,498 $36,236 $19,285 $14,125 $18,964
30-APR-97 $22,892 $38,400 $19,512 $14,200 $19,146
31-MAY-97 $23,876 $40,739 $19,674 $15,124 $19,236
30-JUN-97 $24,615 $42,564 $19,853 $15,958 $19,557
31-JUL-97 $25,872 $45,951 $20,256 $16,216 $19,854
31-AUG-97 $24,631 $43,376 $20,155 $15,005 $19,896
30-SEP-97 $25,624 $45,752 $20,389 $15,845 $20,226
31-OCT-97 $24,319 $44,224 $20,615 $14,627 $20,366
S&P 500 INDEX
($44,224)
FREMONT GLOBAL FUND
($24,319)
LEHMAN BROS. INTERMEDIATE GOVT./ CORP. BOND INDEX
($20,615)
SALOMON NON-U.S. GOVT. BOND INDEX (CURRENCY HEDGED)
($20,336)
MSCI EAFE INDEX
($14,627)
* 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>
FREMONT FUNDS
FREMONT GLOBAL FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF MAP]
CANADA 2.7%
EUROPE 19.6%
JAPAN 3.6%
UNITED STATES 63.6%
PACIFIC RIM 6.5%
EMERGING MARKETS -
LATIN AMERICA 1.4%
EMERGING MARKETS -
OTHER 2.6%
In second fiscal half 1997, the Fund's bias toward U.S. equities proved
helpful as the Standard & Poor's 500 Index outperformed most of its global
counterparts. Within the U.S. stock market, our overweighting in value
sectors like financial services, energy and utilities, and underweighting in
more richly priced growth sectors like technology and consumer non-durables
also helped returns, particularly during the market's late October
correction. Our decision in late summer to eliminate positions in Latin
American Brady Bonds at a handsome profit also proved timely as these bonds
were hit hard in October when currency turmoil in Southeast Asia unsettled
Latin American debt markets. On the negative side, remaining emerging
markets stock and bond positions gave back much of the gains achieved earlier
in the second fiscal half.
As is shown by the Fund's fully invested status, (as of October 31, cash
reserves are just 2%), our favorable outlook for global financial markets has
not changed since we last wrote you in our 1997 Semi-Annual Report. Most
global economies continue to grow at moderate and sustainable rates.
Inflation is low and perhaps, heading lower. Corporate earnings are
generally good. In short, the positive economic backdrop for global
financial assets remains intact.
The currency crisis in Southeast Asia that rattled global financial
markets in late October is likely to restrain economic growth in the region
and hurt sales and earnings of American and European companies doing a lot of
business there. However, we expect the U.S. economy to remain quite healthy
and for developed European economies to gain momentum in the year ahead. In
addition, the economic slowdown in Southeast Asia is likely to further reduce
global inflation and encourage even more favorable monetary policies
throughout the world--a plus for stocks and bonds.
In the U.S. stock market, we remain biased toward financial services,
energy and utility stocks. Demographics point to increasing savings and
investment rates, which should continue to propel earnings for insurance and
stock brokerage/asset management companies. We still use more energy
globally than we produce, indicating a favorable long-term trend for energy
prices and energy company profits. Utilities, one of the few sectors of the
U.S. stock market still offering investors attractive yields, should perform
better as concern over deregulation wanes with financially strong,
well-managed utility companies demonstrating they can prosper in the new
competitive environment. (CONTINUED ON PAGE 4)
3
<PAGE>
FREMONT FUNDS
THE CHANGING FREMONT GLOBAL FUND ASSET MIX
<TABLE>
<CAPTION>
ASSET MIX ASSET MIX ASSET MIX
10/31/97 10/31/96 10/31/95
<S> <C> <C> <C>
ASSET CLASS
STOCKS
U.S. 48% 30% 35%
FOREIGN 21% 22% 35%
---- ---- ----
TOTAL STOCKS 69% 52% 70%
---- ---- ----
BONDS
U.S. 14% 6% 10%
FOREIGN 15% 16% 15%
---- ---- ----
TOTAL BONDS 29% 22% 25%
---- ---- ----
CASH RESERVES 2% 26% 5%
- --------------------------------------------------------------------------
TOTAL 100% 100% 100%
</TABLE>
In Europe, we like the German, U.K. and Nordic markets, and have been
focusing on dominant market share companies that can preserve profit margins
and meet or exceed earnings projections. In Southeast Asia, we are
concentrated in Hong Kong and Singapore, with modest positions in Malaysia,
Indonesia and the Philippines. We are almost out of Thailand entirely. We
remain underweighted in Japan, whose own internal economic problems are
likely to be compounded by those of its smaller regional neighbors. Our
exposure in Latin America and Eastern Europe remains very small, a reflection
of our reluctance to invest in unseasoned and highly volatile stock markets.
On the fixed income side, we remain overweighted in "Anglo" bonds, (U.S.,
Canada, the U.K. and Australia), which have high "real rates" of return, (the
spread between yield and prevailing inflation rates). As mentioned before,
we sold our Latin American Brady bond positions preserving some substantial
profits that would have otherwise been eroded by the sharp sell-off in
October. We believe our remaining Latin American bond positions, primarily
shorter duration Mexican government and corporate debt, will serve us well in
the year ahead.
Since we continue to like U.S. stocks, and in particular the financial
services sector, we will briefly discuss a couple of current portfolio
holdings in this sector. Bear in mind, we may change our perspective on
these securities if they become more fully valued or fail to live up to our
fundamental expectations. TRAVELERS GROUP, INC., the big insurance and stock
brokerage/asset management company, just got bigger with its recent
acquisition of Salomon Brothers, the blue chip Wall Street investment firm.
The combination of Salomon Brothers and Travelers[caad 136]O other investment
operation, Smith Barney, makes the company the number two player behind
Merrill Lynch in what we believe will be the fastest-growing segment of the
financial services industry. We are projecting a 15% average annual earnings
growth rate over the next five years. If these projections prove accurate,
Travelers Group stock should continue to provide generous returns to
shareholders.
AHMANSON, a large California-based savings and loan, is now in third
place in the California bank deposit market and in second place in Southern
California. The California economy and real estate markets are thriving,
helping to improve Ahmanson's asset quality. As it consolidates its branch
system and improves operating efficiencies, financial results should improve.
We are projecting five-year average annualized earnings growth of about
12%--a good growth rate for a savings and loan. Also, with so much merger
and acquisition activity in the banking and thrift industries nationwide,
Ahmanson may be an attractive target for some of the giants in the business.
In closing, the global financial market retreat in late October has some
investors questioning the prospects for financial assets going forward. We
believe the dominant economic forces driving the financial
markets--inflation, interest rates and corporate earnings--remain quite
favorable. It may be a bumpy ride in the year ahead. However, we are
confident the Fund can continue to move forward to meet our goals.
Sincerely,
/s/ Dave Redo /s/ Pete Landini
/s/ Bob Haddick /s/ Sandie Kinchen
/s/ Al Kirschbaum
The Fremont Asset Allocation Committee
Portfolio Managers, Fremont Global Fund
4
<PAGE>
FREMONT FUNDS
FREMONT INTERNATIONAL GROWTH FUND
ANDREW L. PANG, PORTFOLIO MANAGER
FREMONT INVESTMENT ADVISORS, INC.
[PHOTO OF ANDREW PANG]
ANDREW PANG
FUND PROFILE
FREMONT INTERNATIONAL GROWTH FUND INVESTS IN INTERNATIONAL STOCKS WITH
SUPERIOR EARNINGS GROWTH POTENTIAL.
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--TO MAKE 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. IN THE STOCK SELECTION PROCESS,
THE FUND FAVORS DOMINANT MARKET SHARE COMPANIES (IN SOME CASES MONOPOLIES)
MOST LIKELY TO PRODUCE CONSISTENT EARNINGS GROWTH.
PORTFOLIO MANAGER ANDREW L. PANG TRAVELS GLOBALLY ON A REGULAR BASIS TO
MEET WITH RESEARCH ANALYSTS AND CORPORATE MANAGEMENTS TO IDENTIFY INVESTMENT
OPPORTUNITIES.
TO OUR SHAREHOLDERS,
For the six months ended October 31, 1997, the Fremont International
Growth Fund declined 3.98% compared to the Morgan Stanley Capital
International Europe, Australia, and Far East (EAFE) Index's 3.01% gain. For
the twelve months ended on the same date, the Fund declined 0.01% versus the
benchmark index's 4.63% return.
In second half fiscal 1997, the Fund benefited from its overweighting in
Europe, (56% of assets as of October 31, 1997) and its underweighting in
Japan (21% at fiscal year end). Our exodus from the Latin American markets
(approximately 6% of the portfolio in mid-summer), before the late October
meltdown allowed us to preserve earlier gains from investments in the region.
Although we had reduced the Fund's exposure in Southeast Asia in first half
fiscal 1997, our remaining positions caused a substantial drag on performance
as these markets trended lower through late summer/early fall, and collapsed
in late October. (CONTINUED ON PAGE 6)
FREMONT INTERNATIONAL GROWTH FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF GRAPH]
3/1/94-
10/31/94* +2.30%
11/01/94-
10/31/95 +0.13%
11/01/95-
10/31/96 +7.07%
11/01/96-
10/31/97 -0.01%
AVERAGE +2.55%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 3 SINCE INCEPTION
YEAR YEARS 3/1/94
- -0.01% 2.34% 2.55%
[EDGAR REPRESENTATION OF CHART]
FREMONT INT'L GROWTH FUND EAFE
01-MAR-94 $10,000 $10,000
31-MAR-94 $9,634 $9,569
30-APR-94 $9,666 $9,975
31-MAY-94 $9,676 $9,918
30-JUN-94 $9,488 $10,058
31-JUL-94 $9,718 $10,155
31-AUG-94 $10,178 $10,395
30-SEP-94 $10,031 $10,068
31-OCT-94 $10,230 $10,403
30-NOV-94 $9,739 $9,903
31-DEC-94 $9,689 $9,965
31-JAN-95 $9,020 $9,582
28-FEB-95 $9,198 $9,555
31-MAR-95 $9,386 $10,151
30-APR-95 $9,699 $10,533
31-MAY-95 $9,950 $10,407
30-JUN-95 $10,159 $10,225
31-JUL-95 $10,734 $10,862
31-AUG-95 $10,473 $10,448
30-SEP-95 $10,546 $10,652
31-OCT-95 $10,243 $10,366
30-NOV-95 $10,148 $10,654
31-DEC-95 $10,387 $11,083
31-JAN-96 $10,746 $11,129
29-FEB-96 $10,915 $11,166
31-MAR-96 $10,999 $11,403
30-APR-96 $11,431 $11,735
31-MAY-96 $11,326 $11,519
30-JUN-96 $11,516 $11,584
31-JUL-96 $10,915 $11,245
31-AUG-96 $11,104 $11,270
30-SEP-96 $11,368 $11,570
31-OCT-96 $10,967 $11,451
30-NOV-96 $11,516 $11,907
31-DEC-96 $11,738 $11,754
31-JAN-97 $11,749 $11,342
28-FEB-97 $11,770 $11,528
31-MAR-97 $11,527 $11,570
30-APR-97 $11,421 $11,631
31-MAY-97 $12,098 $12,388
30-JUN-97 $12,542 $13,071
31-JUL-97 $13,124 $13,283
31-AUG-97 $11,717 $12,291
30-SEP-97 $12,161 $12,979
31-OCT-97 $10,966 $11,982
MSCI EAFE INDEX
($11,982)
FREMONT INTERNATIONAL GROWTH FUND
($10,966)
* 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>
FREMONT FUNDS
FREMONT INTERNATIONAL GROWTH FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF MAP]
UNITED KINGDOM 8.6%
CONTINENTAL EUROPE 46.9%
UNITED STATES 12.6%
JAPAN 21.0%
HONG KONG/
SINGAPORE/MALAYSIA 4.6%
AUSTRALIA 1.1%
OTHER EMERGING MARKETS:
INCLUDING INDONESIA,
TAIWAN, SOUTH KOREA
AND THE PHILIPPINES 5.2%
Arguably the most critical issue confronting international investors
today is the impact of the currency crisis in Southeast Asia on regional
economies, Japan and Europe. Longer term, we are bullish on Southeast Asia,
which has weathered prior economic storms in the early and late 1980s and in
1993-94. Southeast Asia still has an enormous low-cost labor pool, high
savings and investment rates, and a talented and experienced business
community. Unfortunately, it also has grossly inflated property values, more
fragile banking systems, and governments who remain in a state of denial over
fiscal and monetary policies that contributed to the current economic
malaise. We believe it will take 18-24 months before these economies will
begin turning around. These nations will have to digest currency devaluation
or high interest rates, both of which will slow economic growth. When the
speculative excesses are finally purged, the "Asian Tigers" will use their
traditional strength--low cost manufacturing of a wide range of products--to
export their way out of the economic doldrums. We have eliminated many of
our positions in the region, keeping those which we believe have the least
downside risk and best long-term potential. We may do even more cutting and
paring in the months ahead. Looking out toward late 1998, we may increase
our exposure to the region if we gain confidence these economies can rebound
in 1999.
Japan is a bigger conundrum. The Japanese economy's modest export-driven
recovery is threatened by the economic problems of its regional trading
partners and 1998 GDP growth projections are being reduced from about 2.5% to
zero by Wall Street economists. There isn't much the government can do to
help. Interest rates are already negligible. The fragile banking system is
likely to become even more fragile as a result of loans to its struggling
Asian neighbors.
We are considerably more upbeat about Europe. We don't believe the
economic problems in Southeast Asia will materially slow the momentum we are
seeing in European economies. Corporate earnings are likely to be quite
healthy in 1998, and in my opinion, these markets can continue to trend
higher over the next several years. Our current favorites are the German,
U.K. and Nordic markets. We will add a note of long-term caution. Right now
investors feel good about the prospect of the new Economic Union. We think
it will happen in May 1998 with
6
<PAGE>
FREMONT FUNDS
wannabes like Spain and Italy being invited in. However, this political
victory will then become an economic battle with the likelihood of some
bloodshed as the new policies are implemented.
One of the European stocks we currently favor is the UK's COMPASS GROUP,
one of the world's largest contract caterers. Compass provides food services
to businesses, hospitals and prisons. The company's revenues should continue
to grow due to the cost efficiency of outsourcing these services. Compass
Group stock has been somewhat depressed recently as a result of what we
believe are temporary earnings and return on equity disappointments as the
company has digested recent acquisitions. Management has announced that it
has no further acquisition plans for the time being and will be focusing on
increasing the profitability of its existing businesses. We believe it will
succeed, and in the process, create value for its shareholders.
In closing, a difficult year for international investing became even more
difficult with the global market correction in October. Early gains were
largely wiped out as equities investors around the world took a big step back
to contemplate the future. In the year ahead, we are counting on the Fund's
European holdings to help propel returns. Longer term, we believe the "Asian
Miracle" will be resurrected providing added momentum for international
equities investors.
Sincerely,
/s/ Andrew L. Pang
Andrew L. Pang
Portfolio Manager
Fremont International Growth Fund
FREMONT INTERNATIONAL GROWTH FUND
SECTOR ALLOCATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF CHART]
SHORT TERM SECURITIES (12.8%)
CONSUMER DURABLES (16.6%)
OTHER (4.4%)
CONSUMER SERVICES (3.3%)
TECHNOLOGY (EQUIPMENT) (11.7%)
RAW MATERIALS (4.8%)
TRANSPORTATION (5.3%)
HEALTH CARE (5.8%)
FINANCIAL SERVICES (11.1%)
UTILITIES (6.7%)
TECHNOLOGY (SOFTWARE) (9.9%)
CAPITAL GOODS (7.6%)
7
<PAGE>
FREMONT FUNDS
FREMONT INTERNATIONAL SMALL CAP FUND
DR. GARY L. BERGSTROM, PORTFOLIO MANAGER
ACADIAN ASSET MANAGEMENT, INC.
[PHOTO OF GARY BERGSTROM]
GARY BERGSTROM
FUND PROFILE
FREMONT INTERNATIONAL SMALL CAP FUND'S INVESTMENT THESIS IS SIMPLE: EXTENSIVE
STATISTICAL EVIDENCE SHOWS THAT SUPERIOR LONG-TERM RETURNS CAN BE ACHIEVED BY
INVESTING IN FUNDAMENTALLY UNDERVALUED SMALL COMPANY STOCKS. THE FUND'S
SUB-ADVISOR, ACADIAN ASSET MANAGEMENT, INC., HAS A UNIQUE FINANCIAL DATABASE
OF OVER 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 ANALYZING THE STOCKS IN THIS EXTENSIVE GLOBAL UNIVERSE USING
NUMEROUS FUNDAMENTAL VALUATION MODELS, COUNTRY AND CURRENCY VALUATION IS
FACTORED IN, PRODUCING A RELATIVE ATTRACTIVENESS RANKING ("ALPHA RANKING")
FOR ALL STOCKS. THE FUND INVESTS IN THOSE HIGHLY RANKED STOCKS JUDGED TO HAVE
ABOVE AVERAGE PERFORMANCE POTENTIAL. APPROPRIATE PORTFOLIO DIVERSIFICATION
IS MAINTAINED TO REDUCE 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 EQUITY 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, 1997, Fremont International Small
Cap Fund declined 12.56% compared to Salomon Brothers Extended Market Index
of Europe and Pacific Countries' (EMI EPAC) 0.80% loss. For the twelve
months ended on the same date, the Fund declined 14.56% versus EMI EPAC's
4.57% loss.
Over the last seven years, international small cap stocks have materially
underperformed international large cap stocks and the U.S. equities markets.
One of the few bright spots in the otherwise gloomy scenario has been the
periodically superior performance of emerging markets equities. In fiscal
1996 and the first half of fiscal 1997, the Fund's commitment to emerg-
FREMONT INTERNATIONAL SMALL CAP FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
6/30/94-
10/31/94* -1.40%
11/01/94-
10/31/95 -7.96%
11/01/95-
10/31/96 +13.69%
11/01/96-
10/31/97 -14.56%
AVERAGE -3.71%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 3 SINCE INCEPTION
YEAR YEARS 6/30/94
- -14.56% -3.66% -3.71%
[EDGAR REPRESENTATION OF CHART]
FREMONT INTERNATIONAL SMALL CAP FUND SOLOMON EMI INDEX
30-JUN-94 $10,000 $10,000
31-JUL-94 $10,130 $10,114
31-AUG-94 $10,370 $10,221
30-SEP-94 $9,920 $9,929
31-OCT-94 $9,860 $10,109
30-NOV-94 $9,310 $9,478
31-DEC-94 $9,020 $9,605
31-JAN-95 $8,540 $9,293
28-FEB-95 $8,460 $9,157
31-MAR-95 $8,650 $9,546
30-APR-95 $8,950 $9,833
31-MAY-95 $9,180 $9,660
30-JUN-95 $9,090 $9,542
31-JUL-95 $9,600 $10,098
31-AUG-95 $9,390 $9,842
30-SEP-95 $9,430 $9,919
31-OCT-95 $9,075 $9,634
30-NOV-95 $9,004 $9,736
31-DEC-95 $9,270 $10,109
31-JAN-96 $9,870 $10,288
29-FEB-96 $10,043 $10,449
31-MAR-96 $10,236 $10,689
30-APR-96 $10,450 $11,252
31-MAY-96 $10,460 $11,160
30-JUN-96 $10,338 $11,162
31-JUL-96 $10,043 $10,740
31-AUG-96 $10,165 $10,848
30-SEP-96 $10,216 $10,909
31-OCT-96 $10,317 $10,866
30-NOV-96 $10,480 $11,045
31-DEC-96 $10,396 $10,841
31-JAN-97 $10,449 $10,607
28-FEB-97 $10,731 $10,785
31-MAR-97 $10,334 $10,642
30-APR-97 $10,082 $10,483
31-MAY-97 $10,700 $11,155
30-JUN-97 $10,983 $11,407
31-JUL-97 $10,888 $11,235
31-AUG-97 $10,313 $10,755
30-SEP-97 $10,061 $10,947
31-OCT-97 $8,815 $10,514
SALOMON BROTHERS EMI INDEX
($10,514)
FREMONT INTERNATIONAL SMALL CAP FUND
($8,815)
* 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>
FREMONT FUNDS
FREMONT INTERNATIONAL SMALL CAP FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF MAP]
CANADA 5.3%
UNITED KINGDOM 10.1%
CONTINENTAL EUROPE 14.6%
UNITED STATES 1.5%
IRELAND 1.0%
JAPAN 14.1%
HONG KONG/
SINGAPORE/MALAYSIA 8.6%
EMERGING MARKETS:
LATIN AMERICA 9.8%
OTHER EMERGING MARKETS:
INCLUDING PORTUGAL,
THAILAND, SOUTH KOREA,
TURKEY, GREECE AND OTHERS 27.6%
AUSTRALIA/
NEW ZEALAND 7.4%
ing market stocks helped us outperform the EMI EPAC benchmark. In second
half fiscal 1997 it was our undoing.
The investment outlook for international small caps has not changed since
our last report. The group continues to lag both international large cap
stocks and the U.S. equities markets.
One of the things value-oriented investors must grudgingly accept is that
undervalued stocks can sometimes remain undervalued for a considerable amount
of time. We have certainly experienced this in the international small cap
stock sector. The issue is what will happen to change that. Our extensive
research indicates that international small cap stocks generally perform
better during periods of strong global economic expansion. While the U.S.
economy has been growing at decent rates for the last five years, economies
in Europe and Japan have been quite sluggish. This is changing. We expect
renewed economic momentum to come from developed Europe and the emerging
markets in Latin America and Eastern Europe. We believe a fresh wind of
global economic growth will help pull international small cap stocks out of
the doldrums.
As is our custom, we will mention one of the Fund's portfolio holdings
that demonstrates our investment discipline. Be reminded that we reserve the
right to change our opinion on any stock in the portfolio if warranted.
CHARGEURS, a cloth manufacturer, is the kind of small consumer-oriented
company that stands to benefit from France's increasing economic prosperity.
The stock is very attractively valued with price/book and price/earnings
ratios less than half that of the French stock market. The trend in
analysts' earnings estimates is up, reflecting optimism that improving demand
domestically and overseas will support enhanced profitability in the near
future.
In closing, it has been a very difficult time for international small cap
equities. This has been compounded by the sharp corrections experienced in
the emerging markets. We believe global economic momentum will soon begin to
attract investment attention to international small cap stocks and that at
current valuations, the upside potential is considerable. We thank you for
your loyalty and going forward, hope to more fully justify your faith in our
investment process.
Sincerely,
/s/ Gary L. Bergstrom
Dr. Gary L. Bergstrom
Portfolio Manager
Fremont International Small Cap Fund
9
<PAGE>
FREMONT FUNDS
FREMONT EMERGING MARKETS FUND
HENRY L. THORNTON, PORTFOLIO MANAGER
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT (HONG KONG) LLC
[PHOTO OF HENRY THORNTON]
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 FUND SUB-ADVISOR
NICHOLAS-APPLEGATE, IS WIDELY RECOGNIZED AS AN EXPERT IN EMERGING MARKET
INVESTING. BASED IN LONDON, HENRY DRAWS ON NICHOLAS-APPLEGATE'S EXPERIENCED
TEAM OF ANALYSTS IN LONDON, HONG KONG, SINGAPORE, SAN DIEGO AND HOUSTON.
TO OUR SHAREHOLDERS,
For the six months ended October 31, 1997, the Fremont Emerging Markets
Fund declined 3.32% compared to the Morgan Stanley Capital International
Emerging Markets Free (MSCI-EMF) Index's loss of 17.53% and the IFC
Investable Index's 17.98% loss. For the twelve months ended on the same
date, the Fund gained 12.55% versus the MSCI-EMF loss of 8.48% and the IFC
Investable's 9.99% loss.
The biblical adage, "The Lord Giveth and The Lord Taketh Away" was
visited upon emerging markets investors in second-half fiscal 1997. Strong
early gains were wiped out in one difficult week in October. The currency
crisis and market meltdowns in Southeast Asia combined with a one-day
firestorm on Wall Street that fanned the flames from
FREMONT EMERGING MARKETS FUND INVESTMENT RETURNS
RETURNS
[EDGAR REPRESENTATION OF CHART]
6/24/96-
10/31/96* -3.12%
11/1/96-
10/31/97 +12.55%
AVERAGE +6.61%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 SINCE INCEPTION
YEAR 6/24/96
12.55% 6.61%
[EDGAR REPRESENTATION OF CHART]
FREMONT EMERGING MARKETS FUND
30-JUN-96 $10,000 $10,000
31-JUL-96 $9,560 $9,317
31-AUG-96 $9,760 $9,555
30-SEP-96 $9,920 $9,638
31-OCT-96 $9,688 $9,381
30-NOV-96 $9,920 $9,538
31-DEC-96 $9,901 $9,581
31-JAN-97 $10,803 $10,235
28-FEB-97 $11,167 $10,673
31-MAR-97 $10,995 $10,393
30-APR-97 $11,279 $10,411
31-MAY-97 $11,705 $10,709
30-JUN-97 $12,383 $11,282
31-JUL-97 $12,931 $11,451
31-AUG-97 $11,917 $9,994
30-SEP-97 $12,475 $10,270
31-OCT-97 $10,904 $8,585
FREMONT EMERGING MARKETS FUND
($10,904)
MSCI EMERGING MARKETS FREE INDEX
($8,535)
*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.
10
<PAGE>
FREMONT EMERGING MARKETS FUND
GEOGRAPHIC DIVERSIFICATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF MAP]
UNITED STATES 21.5%
PACIFIC RIM:
INCLUDING HONG
KONG, MALAYSIA,
AND TAIWAN 20.9%
LATIN AMERICA 32.8%
EMERGING MARKETS:
INCLUDING INDIA,
RUSSIA, POLAND,
TURKEY AND
OTHERS 24.8%
Hong Kong to Russia to Brazil, left
emerging markets investors praying for relief.
Before we sort through the emerging market ashes, let's review the fiscal
year prior to the October fire. At the close of first half fiscal 1997,
48.7% of the Fund's assets were in Asia, 27.8% in Latin America, and 4.5% in
Eastern Europe. We had about 19% in cash reserves. This asset allocation
had worked relatively well for us and the Fund had solid returns and a
substantial lead over its benchmark indices at the end of April. In late
summer, finding fewer opportunities in Asia and anticipating pressure on
these markets, we reduced our exposure to the region to approximately 24% of
the portfolio, with the remaining positions concentrated in Hong Kong,
Taiwanese and Indonesian exporters that could actually benefit from weaker
currencies. We increased the Fund's investment in Eastern Europe to about
26% of total assets, bumped up Latin America to about 35%, and kept about 15%
in cash reserves. This asset mix also worked well until late October, when
all the emerging markets got torched.
At the close of fiscal 1997, the Fund has approximately 21% of its assets
in Asia, 33% in Latin America, 25% in Eastern Europe and 21% in cash. Our
Asian investments remain concentrated in low-cost (CONTINUED ON PAGE 12)
CHANGES TO THE ASSET ALLOCATION OF THE EMERGING MARKETS FUND
(PERCENT OF PORTFOLIO)
<TABLE>
<CAPTION>
ASIA LATIN AMERICA EASTERN EUROPE CASH
<S> <C> <C> <C> <C>
APRIL 30, 1997 48.7% 27.8% 4.5% 19.0%
SEPTEMBER 15, 1997 24.0% 35.0% 26.0% 15.0%
OCTOBER 31, 1997 20.9% 32.8% 24.8% 21.5%
</TABLE>
11
<PAGE>
FREMONT FUNDS
exporters. In Latin America, investing in privatizations of essential
services companies continues to be our theme. These companies, which came to
market at reasonable valuations relative to assets and the prospects of
improving profitability in private sector hands, are back to being very cheap
again.
In Eastern Europe, we are focusing on established companies in the
energy, utilities and infrastructure industries. We are beginning to nibble
at consumer durable companies we believe can grow revenues and earnings as
the Russian and other regional economies gain momentum in 1998. A good
example is AMICA, a Polish manufacturer of cookers and refrigerators. The
company has excellent margins on its domestic sales and has proved highly
competitive exporting to the German market. Looking forward, we see strong
demand from the Russian market driving rapid sales growth. Amica has spent
heavily modernizing plant and equipment and is well positioned to grow sales
by 20-30% annually over the next few years. We are expecting net income to
grow nearly 40% per annum this year and next. We reserve the right to sell
Amica if the stock becomes more fully valued or earnings do not live up to
our expectations. Presently, we think it has an excellent opportunity to
participate in the economic revival in Eastern Europe.
Of course, the question of the day is when will it be safe to increase
our exposure in Southeast Asia. With the exception of the banking and
property sectors, whose problems will take some time to resolve, stocks look
cheap. The severely beaten down "Red Chips," (Hong Kong- and Taiwan-based
companies doing most of their business in China), are getting very tempting.
There are few inflationary pressures in the Chinese economy and the recent
reduction in interest rates may foreshadow an increase in credit quotas which
will stimulate growth. This is a very positive environment for companies
serving China, and we are in the process of prudently rebuilding positions in
the "Red Chips."
In closing, although we are disappointed at having given back our early
gains in second half fiscal 1997, we are pleased to have closed fiscal 1997
with a solid 12.55% return compared to losses for our benchmark indices.
With emerging market equities valuations now approaching levels seen at
previous market bottoms, we are encouraged by the prospects in the year ahead
and will be working diligently to take advantage of long-term investment
opportunities.
Sincerely,
/s/ Henry Thornton
Henry Thornton
Portfolio Manager
Fremont Emerging Markets Fund
12
<PAGE>
FREMONT FUNDS
FREMONT U.S. MICRO-CAP FUND
ROBERT E. KERN, PORTFOLIO MANAGER
KERN CAPITAL MANAGEMENT LLC
[PHOTO OF ROBERT E. KERN]
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 THE 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, PRESIDENT OF FUND SUB-ADVISOR KERN CAPITAL MANAGE MENT
LLC, 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, 1997, the Fremont U.S. Micro-Cap
Fund returned 28.10% compared to the Russell 2000's 27.29%. For the twelve
months ended on the same date, the Fund gained 28.80% versus the benchmark
index's 29.33%.
At the conclusion of my letter to you in the 1997 Semi-Annual Report I
said, "Unless we have one (CONTINUED ON PAGE 14)
FREMONT U.S. MICRO-CAP FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
6/30/94-
10/31/94* +3.60%
11/01/94-
10/31/95 +38.68%
11/01/95-
10/31/96 +41.46%
11/01/96-
10/31/97 +28.80%
AVERAGE +33.43%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 3 SINCE INCEPTION
YEAR YEARS 6/30/94
28.80% 36.20% 33.43%
[EDGAR REPRESENTATION OF CHART]
FREMONT U.S. MICRO-CAP FUND RUSSELL 2000 INDEX
30-JUN-94 $10,000 $10,000
31-JUL-94 $10,220 $10,164
31-AUG-94 $10,320 $10,730
30-SEP-94 $10,470 $10,694
31-OCT-94 $10,360 $10,651
30-NOV-94 $10,000 $10,221
31-DEC-94 $10,150 $10,494
31-JAN-95 $10,350 $10,362
28-FEB-95 $10,671 $10,793
31-MAR-95 $11,122 $10,978
30-APR-95 $11,392 $11,222
31-MAY-95 $11,913 $11,415
30-JUN-95 $12,495 $12,007
31-JUL-95 $13,346 $12,699
31-AUG-95 $14,188 $12,961
30-SEP-95 $14,549 $13,193
31-OCT-95 $14,368 $12,602
30-NOV-95 $15,020 $13,132
31-DEC-95 $15,635 $13,479
31-JAN-96 $16,174 $13,465
29-FEB-96 $17,250 $13,884
31-MAR-96 $17,810 $14,167
30-APR-96 $19,839 $14,925
31-MAY-96 $21,506 $15,513
30-JUN-96 $20,699 $14,876
31-JUL-96 $18,897 $13,577
31-AUG-96 $20,057 $14,365
30-SEP-96 $21,009 $14,926
31-OCT-96 $20,326 $14,696
30-NOV-96 $21,755 $15,302
31-DEC-96 $23,250 $15,701
31-JAN-97 $24,428 $16,016
28-FEB-97 $23,012 $15,627
31-MAR-97 $21,011 $14,889
30-APR-97 $20,438 $14,931
31-MAY-97 $22,979 $16,592
30-JUN-97 $24,547 $17,304
31-JUL-97 $25,466 $18,109
31-AUG-97 $26,451 $18,523
30-SEP-97 $28,559 $19,878
31-OCT-97 $26,180 $19,005
FREMONT U.S. MICRO-CAP FUND
($26,180)
RUSSELL 2000 INDEX
($19,005)
*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.
13
<PAGE>
FREMONT FUNDS
terrific fiscal second half 1997, our returns will be more modest than
the Fund's returns in each of the last two fiscal years." We did have a
very good second half, and although we didn't quite match fiscal 1995
and 1996's 40% plus returns, we were relatively pleased with the Fund's
28.8% full fiscal year gain after the flat first half.
Some comments on the events of late October are in order. Although
longer term, we believe the Fund's micro-cap stocks will succeed or fail
based on their own individual fundamental merits, they are not immune to
sharp short-term market swings on the up or down side. Our portfolio was not
a particularly safe haven in late October, when the U.S. stock market and
especially the technology group was hit by emotional selling sparked by
currency and market turmoil in Southeast Asia. We are not sure how long
emerging markets will remain under pressure, however, recent events will
probably cause global investors to refocus on U.S. equities, and in
particular successful smaller companies.
Over the last six months, we have deployed what we referred to in a
September 8, 1997 Barron's article as a "no-name offense"--investing in
companies flying well below most analysts' radar screens. By and large,
these companies have not had spectacular earnings growth over the last year
or so, but in our opinion, are well positioned to accelerate earnings down
the road. As the Fund's second fiscal half performance demonstrates, our "no
names" did well on an absolute basis. They did trail more widely followed
micro-cap stocks that really took off when the market turned in late April.
Going forward, we believe our patience and perseverance will pay off in good
absolute and relative returns.
CHANNELL COMMERCIAL, a Temecula, California-based manufacturer of
environmental enclosures for broadband telecommunications and cable
television infrastructure, is one of our "no names." Due to reduced capital
spending in the cable television industry, Channell's revenue and earnings
growth have slowed in recent years. However, with Microsoft's Bill Gates
investing some very serious money in the cable TV industry, (which he appears
to believe will ultimately be the most efficient internet access highway),
capital spending should increase substantially in the years ahead. With
telephone companies competing with cable operators for the internet
transmission supremacy, Channell Commercial's markets should experience
strong growth. As a market share leader in its business, Channell is
expected to achieve its growth goals through a combination of internal new
product development and acquisitions. We must add the caveat that we reserve
the right to change our investment opinion on this and all other stocks in
the portfolio if warranted.
Since this is the first time I am writing to you as a principal in the
Fund's new sub-advisory firm Kern Capital Management LLC, I would like to
talk a little bit about our firm's focus on small company investing. I have
had the support of many talented people over my more than 30-year
professional investment career. However, this is the first time I have been
surrounded by a team of investment professionals who have dedicated their
careers to micro-cap and small cap investing. Everyone on our team,
co-managers Judy Finger and my son, David; analysts Greg Weaver and Ted
Graham; and trader Mike Murphy are small company investment specialists. We
all look forward to serving you in the years ahead.
In closing, our team thanks you for your support. We believe selected
U.S. micro-cap stocks will continue to provide attractive long-term
investment returns.
Sincerely,
/s/ Robert E. Kern
Robert E. Kern
Portfolio Manager
Fremont U.S. Micro-Cap Fund
14
<PAGE>
FREMONT FUNDS
FREMONT U.S. SMALL CAP FUND
DAVID G. KERN, CFA, PORTFOLIO MANAGER
KERN CAPITAL MANAGEMENT LLC
[PHOTO OF DAVID KERN]
DAVID KERN
FUND PROFILE
U.S. SMALL CAP STOCKS OFFER TREMENDOUS OPPORTUNITY FOR PROFESSIONAL INVESTORS
DEDICATED TO HANDS-ON FUNDAMENTAL RESEARCH. THROUGH RIGOROUS FUNDAMENTAL
ANALYSIS, INCLUDING VISITS WITH CORPORATE MANAGEMENTS, THEIR SUPPLIERS,
CUSTOMERS AND COMPETITORS, FUND MANAGEMENT STRIVES TO IDENTIFY SMALL,
RELATIVELY UNKNOWN COMPANIES WITH THE POTENTIAL TO BECOME LARGER AND MORE
SUCCESSFUL OVER TIME.
RESEARCH IS CONCENTRATED IN INDUSTRIES WITH THE GREATEST LEVEL OF
INNOVATION SUCH AS TECHNOLOGY, HEALTH CARE, CONSUMER PRODUCTS, AND SERVICES.
THE RESEARCH PROCESS FOCUSES ON ANSWERING THREE BASIC QUESTIONS: HOW GOOD IS
A COMPANY'S TARGET MARKET; DOES MANAGEMENT HAVE AN EFFECTIVE STRATEGY TO
CAPITALIZE ON MARKET OPPORTUNITIES; AND HOW MUCH IS THE COMPANY WORTH TODAY
AND WHAT WILL IT BE WORTH TOMORROW?
PORTFOLIO MANAGER DAVID G. KERN INHERITS HIS ENTHUSIASM AND APTITUDE FOR
SMALL CAP INVESTING FROM HIS FATHER AND FELLOW PRINCIPAL IN KERN CAPITAL
MANAGEMENT LLC, ROBERT E. KERN, ONE OF THE MOST RESPECTED SMALL COMPANY
INVESTORS IN THE BUSINESS. DAVID HAS SPENT THE LAST ELEVEN YEARS HONING HIS
SKILLS AS A SMALL CAP STOCK ANALYST AND PORTFOLIO MANAGER, MOST RECENTLY
SERVING AS VICE PRESIDENT WITH FOUNDERS ASSET MANAGEMENT, INC.
WELCOME TO OUR NEW SHAREHOLDERS,
From inception on September 24, 1997 through October 31, 1997, the
Fremont U.S. Small Cap Fund declined 4.06% versus the Russell 2000 Index's
3.46% loss.
With the Fund beginning operations in the last week of September,
performance comparisons through fiscal year end 1997 don't mean very much. A
discussion of our investment strategy over this brief period is more
illuminating. Given the very strong performance of small caps off the April
lows, we began investing the Fund slowly. As market volatility increased in
October, presenting more attractively priced opportunities, we picked up the
pace. The technology sector, one of our areas of (CONTINUED ON PAGE 16)
FREMONT U.S. SMALL CAP FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
9/24/97-
10/31/97* -4.06%
GROWTH OF $10,000+
RETURN FOR
PERIODS ENDED 10/31/97
SINCE INCEPTION
9/24/97
- -4.06%
[EDGAR REPRESENTATION OF CHART]
FREMONT U.S. SMALL CAP FUND RUSSELL 2000 INDEX
23-SEP-97 $10,000 $10,000
30-SEP-97 $10,060 $10,103
31-OCT-97 $9,594 $9,659
RUSSELL 2000 INDEX
($9,659)
FREMONT SMALL CAP FUND
($9,594)
*Unannualized
+Assumes initial investment of $10,000 on inception date, September 24, 1997.
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.
15
<PAGE>
FREMONT FUNDS
expertise, got hit particularly hard during the downdraft, allowing us to
accumulate a number of excellent companies at very reasonable prices. With
18% in cash reserves at the close of fiscal 1997, the Fund is well positioned
to take advantage of additional market volatility.
To better acquaint you with our investment discipline, some background on
Kern Capital Management LLC is required. The firm is comprised of investment
specialists who have dedicated their careers to small and micro-cap
investing. We work as a team, dividing research and portfolio management
responsibilities along the lines of industry expertise. I focus on the
software sector within the technology group and the health care industry. My
father, Bob Kern, who you probably already know as the Portfolio Manager of
the Fremont U.S. Micro-Cap Fund, covers the semi-conductor, communications
and technology hardware sectors. Judy Finger, who joined us from Delaware
Management, is responsible for our consumer investments. All three of us
evaluate opportunities in the various services industries. We are supported
by two experienced and talented analysts, Greg Weaver and Ted Graham. Once
our research team uncovers an attractive investment idea, we develop an
execution strategy with our trader Mike Murphy, who has over 20 years'
experience buying and selling small stocks, to build portfolio positions. In
short, we have an extremely experienced and dedicated team searching for
tomorrow's most successful companies.
We believe Kern Capital Management has another advantage in the small cap
investing arena. Due to our extensive research in the micro-cap stock
universe, we often have a research history on successful companies that have
grown from being micro-cap stocks to small cap investment candidates. We
know the management teams. We know the companies' markets. We are not
starting from scratch in our research efforts, but rather continuing a
process that has often begun at a company's initial public offering.
Now, let's review the research process. We begin by examining financial
statements. Revenue growth is important. Gross margins give us a feel for
the value of a company's products and services to its clients. Operating
earnings tell us how much cash the company is generating before variable
non-operating expenses like interest payments and taxes are taken out. On
the balance sheet side, analysis of cash, accounts receivable, inventories
and debt help us measure a company's financial health and staying power. As
important as they are, financial statements only tell you about what has
happened in the past. To evaluate the company's future prospects, we need to
know management's plans for the future and to assess their ability to execute
their plans. For this, we have to sit across the table from them at our
offices, conferences or ideally at their own corporate headquarters, and get
answers to some hard questions. We don't rely exclusively on management's
comments. We make it a point to talk to their customers, suppliers, and
competitors to further evaluate a company's strengths and weaknesses.
One of the companies that passed our rigorous research examination is
P-COM, a manufacturer of equipment used in the wireless communications
networks around the world. I have followed P-Com since its initial public
offering in January 1995. P-Com has executed well on its business strategy
and has grown from a micro-cap to small cap company with a market
capitalization of around $870 million. The tremendous growth of wireless
networks, especially in developing countries where it is less expensive to
build wireless systems than putting wire in the ground, should continue well
into the future. The U.S. should also become a growth market for P-Com as
Personal Communications Systems (PCS) begin to get built out over the next
several years. In short, P-Com is a leader in a market with exceptional
growth potential. After the recent market sell-off, P-Com is trading at $19,
at about 28 times our 1998 earning projections of $0.65-$0.70 per share.
With a projected annual earnings growth rate of 50%, we believe that is
reasonable price to pay. Obviously, if fundamentals change, our opinion may
change as well.
In closing, I hope I have effectively articulated our investment
discipline. We thank our shareholders for their confidence in our investment
abilities and look forward to diligently applying them in the year ahead.
Sincerely,
/s/ David G. Kern
David G. Kern
Portfolio Manager
Fremont U.S. Small Cap Fund
16
<PAGE>
FREMONT FUNDS
FREMONT GROWTH FUND
W. KENT COPA, CFA, PORTFOLIO MANAGER
FREMONT INVESTMENT ADVISORS, INC.
[PHOTO OF KEN COPA]
KEN COPA
FUND PROFILE
FREMONT GROWTH FUND INVESTS PRINCIPALLY IN LARGE CAPITALIZATION U.S. STOCKS
WITH SUPERIOR EARNINGS GROWTH PROSPECTS. THE GOAL IS TO CONSISTENTLY
OUTPERFORM THE STANDARD & POOR'S 500 INDEX. 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, HOUSEHOLD PRODUCT, 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 POTENTIAL. THE STOCK SELECTION PROCESS FOCUSES
ON LEADING COMPANIES IN EACH INDUSTRY GROUP WITH CONSISTENT EARNINGS GROWTH
RECORDS AND REASONABLE VALUATIONS.
TO OUR SHAREHOLDERS,
For the six-month period ended October 31, 1997, the Fremont Growth Fund
returned 16.31% compared to the Standard & Poor's 500 Index's 15.16%. For
the 12-month period ended on the same date, the Fund gained 29.26% versus the
S&P 500's 32.11%. Fremont Growth Fund's 12-month gain materially exceeded
the Lipper Growth Fund Average's 27.28% advance.
The Fund's overweighting in financial services, energy and utilities
stocks and underweighting in technology and consumer non-durables hurt
relative performance in first fiscal half 1997, but helped us outperform the
S&P 500 benchmark in the second half, particularly during the severe market
correction in October.
While we are not market timers, some comment on the events of late
October are in order. We believe the U.S. stock market over-reacted to the
Southeast Asian currency crisis. With 30% of U.S. exports going to the
Pacific Rim, an economic slow-(CONTINUED ON PAGE 18)
FREMONT GROWTH FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
8/14/92-
10/31/92* +2.00%
11/01/92-
10/31/93 +12.80%
11/01/93-
10/31/94 +1.72%
11/01/94-
10/31/95 +28.12%
11/01/95-
10/31/96 +22.06%
11/01/96-
10/31/97 +29.26%
AVERAGE +17.96%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 5 SINCE INCEPTION
YEAR YEARS 8/14/92
29.26% 18.25% 17.96%
[EDGAR REPRESENTATION OF CHART]
FREMONT GROWTH FUND S&P 500
14-AUG-92 $10,000 $10,000
31-AUG-92 $9,899 $9,873
30-SEP-92 $10,091 $9,987
31-OCT-92 $10,200 $10,023
30-NOV-92 $10,655 $10,361
31-DEC-92 $10,822 $10,495
31-JAN-93 $10,954 $10,572
28-FEB-93 $10,843 $10,716
31-MAR-93 $11,005 $10,947
30-APR-93 $10,609 $10,679
31-MAY-93 $10,863 $10,964
30-JUN-93 $10,945 $11,000
31-JUL-93 $10,935 $10,946
31-AUG-93 $11,302 $11,359
30-SEP-93 $11,414 $11,276
31-OCT-93 $11,506 $11,507
30-NOV-93 $11,270 $11,404
31-DEC-93 $11,516 $11,544
31-JAN-94 $11,907 $11,932
28-FEB-94 $11,536 $11,608
31-MAR-94 $10,929 $11,104
30-APR-94 $11,052 $11,248
31-MAY-94 $11,093 $11,432
30-JUN-94 $10,722 $11,149
31-JUL-94 $11,155 $11,518
31-AUG-94 $11,724 $11,986
30-SEP-94 $11,476 $11,696
31-OCT-94 $11,704 $11,965
30-NOV-94 $11,335 $11,526
31-DEC-94 $11,563 $11,695
31-JAN-95 $11,609 $11,998
28-FEB-95 $11,987 $12,463
31-MAR-95 $12,307 $12,832
30-APR-95 $12,570 $13,210
31-MAY-95 $12,982 $13,733
30-JUN-95 $13,622 $14,056
31-JUL-95 $14,228 $14,524
31-AUG-95 $14,423 $14,558
30-SEP-95 $14,983 $15,164
31-OCT-95 $14,995 $15,122
30-NOV-95 $15,477 $15,787
31-DEC-95 $15,449 $16,079
31-JAN-96 $15,898 $16,633
29-FEB-96 $16,092 $16,793
31-MAR-96 $16,032 $16,954
30-APR-96 $16,517 $17,204
31-MAY-96 $17,087 $17,647
30-JUN-96 $17,184 $17,714
31-JUL-96 $16,347 $16,932
31-AUG-96 $16,638 $17,289
30-SEP-96 $17,852 $18,262
31-OCT-96 $18,303 $18,766
30-NOV-96 $19,631 $20,184
31-DEC-96 $19,326 $19,784
31-JAN-97 $20,204 $21,021
28-FEB-97 $20,326 $21,185
31-MAR-97 $19,614 $20,314
30-APR-97 $20,341 $21,527
31-MAY-97 $21,507 $22,838
30-JUN-97 $22,279 $23,861
31-JUL-97 $24,218 $25,760
31-AUG-97 $23,218 $24,317
30-SEP-97 $24,521 $25,648
31-OCT-97 $23,658 $24,792
S&P 500 INDEX
($24,792)
FREMONT GROWTH FUND
($23,658)
*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.
17
<PAGE>
FREMONT FUNDS
FREMONT GROWTH FUND
SECTOR DIVERSIFICATION AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF CHART]
SHORT TERM SECURITIES (4.7%)
ENERGY (17.4%)
OTHER (22.3%)
UTILITIES (13.4%)
RETAIL (4.3%)
CONSUMER SERVICES (4.9%)
FINANCIAL SERVICES (BANKS) (12.8%)
FINANCIAL SERVICES (OTHER) (9.2%)
TECHNOLOGY (11.0%)
down in the region will have an impact on corporate earnings going forward,
particularly for U.S.-based multi-nationals. However, our domestic economy
and the economies of our other major trading partners remain in very good
shape. There are no signs of inflation and interest rates remain at levels
that can support further economic growth.
Consequently, we expect the U.S. stock market to stabilize and then trend
higher over the next year. We are not looking for the kind of price/earnings
multiple expansion that resulted in such strong gains from 1995 through first
half 1997. But, we think earnings progress will help push the market along.
We continue to be overweighted in financial services companies (22.0%
versus the S&P 500's 15.0%), energy stocks (17.4% versus 9.0%), and utilities
(13.4% versus 9.5%). In the financial services arena, we are biased toward
insurance companies and stock brokerage/asset management firms. We do not
believe October's market turmoil will diminish the very favorable outlook for
these businesses. The "baby boomers" are in their peak earnings, savings and
investment years. This means a lot of money should continue to flow into
savings and investment products.
In our view, energy stocks also represent great value. The short-term
earnings prospects may be diminished by slowing economies in Southeast Asia,
but with economic growth accelerating in Europe and Latin America, energy
prices and energy company earnings should trend higher. Utilities stocks
have been lackluster performers primarily due to uncertainty over
deregulation in the industry. In our opinion, competition will energize the
industry, and financially strong utility companies will flourish in this new
competitive environment.
SCHLUMBERGER LTD. is best known as one of the world's largest oil service
companies. With energy prices now at levels that economically justify more
exploration and drilling activity, this business is doing quite well.
Schlumberger has also diversified into other industries with excellent growth
potential. For example, the company recently signed contracts with AFE
Testing, Inc., SiliconWare Corp, and United Micro Electronics of Japan to
supply mixed signal semiconductor testing systems for multimedia, audio and
entertainment products. If Schlumberger can duplicate its success in the oil
services business in its foray into new industries, earnings could grow even
faster than our current 19.6% five year average annual return forecasts.
While we reserve the right to change our investment opinions on all the
stocks in the portfolio, we are currently very comfortable with this holding.
In closing, we believe the U.S. stock market will trend higher over the
next several years. Volatility may continue with periodic corrections that
will test investors' resolve. We will remain focused on what we believe will
continue to be a healthy economy and on those sectors and individual stocks
likely to excel.
Sincerely,
/s/ Ken Copa
W. Kent Copa
Portfolio Manager
Fremont Growth Fund
18
<PAGE>
FREMONT FUNDS
FREMONT BOND FUND
BILL GROSS, FOUNDER AND MANAGING DIRECTOR
PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO)
[PHOTO OF BILL GROSS]
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 PACIFIC
INVESTMENT MANAGEMENT COMPANY (PIMCO), HAS 26 YEARS OF PROFESSIONAL
FIXED-INCOME INVESTMENT EXPERIENCE. IN ADDITION TO SERVING AS THE
SUB-ADVISOR TO THE FREMONT BOND FUND, PIMCO MANAGES $105 BILLION IN FIXED
INCOME INVESTMENTS FOR INSTITUTIONAL CLIENTS.
TO OUR SHAREHOLDERS
For the six-month period ended October 31, 1997, the Fremont Bond Fund
returned 7.12% compared to the 7.09% return for the Lehman Brothers Aggregate
Bond Index. For the year ended October 31, 1997, the Fremont Bond Fund
posted strong gains. The Fund's performance exceeded the benchmark by 62
basis points (0.62%), returning 9.54% versus 8.92% for the Lehman Brothers
Aggregate Index.
The strong returns of the Fund were achieved through a variety of
portfolio strategies. First, the bond market provided an attractive
environment as interest rates declined by approximately 0.4%. We (CONTINUED
ON PAGE 20)
FREMONT BOND FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
4/30/93-
10/31/93* +5.15%
11/01/93-
10/31/94 -4.42%
11/01/94-
10/31/95 +16.49%
11/01/95-
10/31/96 +8.18%
11/01/96-
10/31/97 +9.54%
AVERAGE +7.54%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 3 SINCE INCEPTION
YEAR YEARS 4/30/93
9.54% 11.34% 7.54%
FREMONT BOND FUND LEHMAN BROS
AGGREGATE BOND INDEX
30-APR-93 $10,000 $10,000
31-MAY-93 $9,963 $10,013
30-JUN-93 $10,182 $10,194
31-JUL-93 $10,198 $10,252
31-AUG-93 $10,415 $10,432
30-SEP-93 $10,481 $10,460
31-OCT-93 $10,515 $10,499
30-NOV-93 $10,366 $10,410
31-DEC-93 $10,437 $10,466
31-JAN-94 $10,585 $10,607
28-FEB-94 $10,388 $10,423
31-MAR-94 $10,147 $10,166
30-APR-94 $10,049 $10,085
31-MAY-94 $9,959 $10,083
30-JUN-94 $10,025 $10,061
31-JUL-94 $10,205 $10,261
31-AUG-94 $10,230 $10,274
30-SEP-94 $10,106 $10,123
31-OCT-94 $10,050 $10,114
30-NOV-94 $10,020 $10,091
31-DEC-94 $10,018 $10,161
31-JAN-95 $10,242 $10,362
28-FEB-95 $10,522 $10,609
31-MAR-95 $10,621 $10,674
30-APR-95 $10,823 $10,823
31-MAY-95 $11,228 $11,242
30-JUN-95 $11,299 $11,324
31-JUL-95 $11,263 $11,299
31-AUG-95 $11,397 $11,436
30-SEP-95 $11,530 $11,547
31-OCT-95 $11,707 $11,697
30-NOV-95 $11,954 $11,872
31-DEC-95 $12,146 $12,038
31-JAN-96 $12,269 $12,118
29-FEB-96 $11,935 $11,907
31-MAR-96 $11,893 $11,824
30-APR-96 $11,840 $11,757
31-MAY-96 $11,765 $11,734
30-JUN-96 $11,964 $11,891
31-JUL-96 $11,973 $11,923
31-AUG-96 $11,997 $11,903
30-SEP-96 $12,313 $12,110
31-OCT-96 $12,664 $12,379
30-NOV-96 $12,878 $12,591
31-DEC-96 $12,781 $12,474
31-JAN-97 $12,801 $12,512
28-FEB-97 $12,816 $12,543
31-MAR-97 $12,698 $12,404
30-APR-97 $12,951 $12,590
31-MAY-97 $13,075 $12,710
30-JUN-97 $13,247 $12,861
31-JUL-97 $13,650 $13,208
31-AUG-97 $13,495 $13,096
30-SEP-97 $13,695 $13,290
31-OCT-97 $13,873 $13,483
FREMONT BOND FUND
($13,873)
LEHMAN BROS. AGGREGATE BOND INDEX
($13,483)
*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.
19
<PAGE>
FREMONT FUNDS
maintained a relatively long average maturity in the portfolio, which had the
effect of accentuating the positive price gains that occurred as rates
declined. We also had a number of sector strategies in place which had a
strong positive impact overall. Throughout the year, we maintained an
emphasis on the mortgage sector. Mortgages perform very well if interest
rates remain in a narrow band, as they did in fiscal year 1997. As a result,
mortgages turned in strong performances and our emphasis on the sector
boosted performance. Corporate bonds also performed strongly. We had little
exposure to this sector, but the corporate bonds we did own were on the lower
end of the investment-grade spectrum (BBB rated) and these issues
outperformed their higher-rated counterparts. Lastly, our modest allocation
to non-U.S. bonds also proved positive.
Looking forward, we expect a continued healthy expansion of the U.S.
economy and mild inflation for the next several quarters. The consumer
represents the largest force in our economy, and we expect consumer spending
to remain strong due to steady payroll growth, high confidence levels and
gains on financial assets. Businesses will continue rapid investment in
response to competitive pressures. Advanced technology in particular remains
critical for capturing needed efficiency gains. For exports, the negatives
of a strong dollar and slowing Asian economies will be balanced by firm
demand for U.S. products in Canada, Mexico and perhaps Europe.
Steady productivity gains allow for modest increases in wages without
inflation. If wages do rise in excess of productivity, a lack of pricing
power for most businesses will cut into profit margins and pressure corporate
earnings. A strong dollar and high import penetration into the U.S. depress
domestic prices, both directly through weakness in import prices, and
indirectly via the competition of low-cost imports with domestically produced
goods.
In this environment of healthy growth with low inflation, we expect
interest rates to continue their downward trend. Therefore, we will continue
to manage the portfolio with a relatively long average maturity. We plan to
reallocate some of the more pre-payment sensitive mortgage positions into
long maturity Treasuries. While corporate bonds in general are not
attractively valued, opportunities remain in select issues. In markets
abroad, we see value in currency-hedged bonds in Australia, New Zealand,
Sweden and Finland.
We thank you for your continued support of our investing efforts and are
confident that we can continue to uncover excellent investment opportunities
for our shareholders.
Sincerely,
/s/ Bill Gross
Bill Gross
Portfolio Manager
Fremont Bond Fund
PORTFOLIO CREDIT QUALITY OF FREMONT BOND FUND
AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF CHART]
A (3%)
BBB (12%)
BB (2%)
AAA (83%)
20
<PAGE>
FREMONT FUNDS
FREMONT MONEY MARKET FUND
NORMAN GEE, PORTFOLIO MANAGER
FREMONT INVESTMENT ADVISORS, INC.
[PHOTO OF NORMAN GEE]
NORMAN GEE
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 months ended October 31, 1997, the Fremont Money Market Fund
returned 2.72% compared to the IBC Money Market First Tier Taxable Average's
2.44%. For the twelve months ended on the same date, the Fund returned 5.39%
versus the IBC's 4.88%. The Fremont Money Market Fund once again finished in
the top ten percent of comparable funds in the IBC money market fund universe.
Down 10-20 basis points (0.1-0.2%) from their peaks in March, short-term
interest rates closed fiscal 1997 about where they started a year ago. The
portfolio's higher-than-market average maturity throughout this one year time
period worked modestly in our favor. Currently, the Fund's average maturity
is around 67 days compared the benchmark index's 55 days. We expect
short-term interest rates to remain relatively flat until late first quarter
1998, at which point we believe the Federal Reserve will hike short term
rates by 25 basis points (0.25%) in response to rising wage pressure.
Toward the end of 1997, we will probably lengthen the Fund's average
maturity to take advantage of a seasonal phenomena in the money markets
called "playing the turn." Near the close of every calendar (CONTINUED ON
PAGE 22)
FREMONT MONEY MARKET FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
11/18/88-
10/31/89* +8.52%
11/01/89-
10/31/90 +7.99%
11/01/90-
10/31/91 +6.51%
11/01/91-
10/31/92 +3.73%
11/01/92-
10/31/93 +2.66%
11/01/93-
10/31/94 +3.49%
11/01/95-
10/31/96 +5.34%
11/01/94-
10/31/95 +5.84%
11/01/96-
10/31/97 +5.39%
AVERAGE +5.51%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 5 SINCE INCEPTION
YEAR YEARS 11/18/88
5.39% 4.54% 5.51%
[EDGAR REPRESENTATION OF CHART]
FREMONT MONEY MARKET FUND 90 DAY US T-BILLS IBC FIRST TIER
TAXABLE PRIME AVG.
18-NOV-88 $10,000 $10,000 $10,000
30-NOV-88 $10,027 $10,026 $10,025
31-DEC-88 $10,096 $10,093 $10,090
31-JAN-89 $10,170 $10,163 $10,159
28-FEB-89 $10,237 $10,236 $10,228
31-MAR-89 $10,315 $10,311 $10,300
30-APR-89 $10,389 $10,383 $10,377
31-MAY-89 $10,475 $10,457 $10,452
30-JUN-89 $10,552 $10,526 $10,528
31-JUL-89 $10,630 $10,592 $10,600
31-AUG-89 $10,705 $10,661 $10,670
30-SEP-89 $10,775 $10,731 $10,741
31-OCT-89 $10,852 $10,813 $10,812
30-NOV-89 $10,924 $10,887 $10,881
31-DEC-89 $10,993 $10,955 $10,949
31-JAN-90 $11,067 $11,027 $11,017
28-FEB-90 $11,132 $11,093 $11,084
31-MAR-90 $11,202 $11,168 $11,152
30-APR-90 $11,276 $11,240 $11,221
31-MAY-90 $11,350 $11,317 $11,291
30-JUN-90 $11,420 $11,390 $11,360
31-JUL-90 $11,498 $11,465 $11,429
31-AUG-90 $11,573 $11,540 $11,498
30-SEP-90 $11,640 $11,610 $11,567
31-OCT-90 $11,719 $11,682 $11,636
30-NOV-90 $11,792 $11,751 $11,704
31-DEC-90 $11,867 $11,821 $11,773
31-JAN-91 $11,941 $11,888 $11,839
28-FEB-91 $12,005 $11,946 $11,901
31-MAR-91 $12,065 $12,008 $11,959
30-APR-91 $12,134 $12,066 $12,015
31-MAY-91 $12,195 $12,124 $12,068
30-JUN-91 $12,249 $12,180 $12,121
31-JUL-91 $12,312 $12,238 $12,174
31-AUG-91 $12,369 $12,296 $12,227
30-SEP-91 $12,427 $12,350 $12,278
31-OCT-91 $12,482 $12,404 $12,328
30-NOV-91 $12,531 $12,454 $12,375
31-DEC-91 $12,584 $12,500 $12,422
31-JAN-92 $12,630 $12,543 $12,464
29-FEB-92 $12,668 $12,582 $12,502
31-MAR-92 $12,708 $12,625 $12,540
30-APR-92 $12,744 $12,666 $12,576
31-MAY-92 $12,779 $12,707 $12,612
30-JUN-92 $12,817 $12,745 $12,647
31-JUL-92 $12,852 $12,784 $12,680
31-AUG-92 $12,885 $12,819 $12,711
30-SEP-92 $12,917 $12,852 $12,741
31-OCT-92 $12,947 $12,884 $12,769
30-NOV-92 $12,978 $12,916 $12,798
31-DEC-92 $13,008 $12,951 $12,828
31-JAN-93 $13,036 $12,986 $12,857
28-FEB-93 $13,062 $13,016 $12,885
31-MAR-93 $13,093 $13,048 $12,912
30-APR-93 $13,122 $13,080 $12,939
31-MAY-93 $13,148 $13,113 $12,967
30-JUN-93 $13,178 $13,147 $12,994
31-JUL-93 $13,208 $13,181 $13,021
31-AUG-93 $13,235 $13,215 $13,049
30-SEP-93 $13,263 $13,248 $13,076
31-OCT-93 $13,291 $13,282 $13,104
30-NOV-93 $13,320 $13,315 $13,132
31-DEC-93 $13,351 $13,351 $13,161
31-JAN-94 $13,379 $13,385 $13,189
28-FEB-94 $13,406 $13,418 $13,218
31-MAR-94 $13,437 $13,455 $13,248
30-APR-94 $13,470 $13,496 $13,281
31-MAY-94 $13,512 $13,540 $13,317
30-JUN-94 $13,556 $13,586 $13,356
31-JUL-94 $13,603 $13,636 $13,397
31-AUG-94 $13,651 $13,687 $13,439
30-SEP-94 $13,701 $13,737 $13,485
31-OCT-94 $13,755 $13,794 $13,532
30-NOV-94 $13,812 $13,852 $13,582
31-DEC-94 $13,880 $13,915 $13,636
31-JAN-95 $13,943 $13,979 $13,694
28-FEB-95 $14,006 $14,041 $13,754
31-MAR-95 $14,081 $14,110 $13,816
30-APR-95 $14,145 $14,177 $13,877
31-MAY-95 $14,216 $14,247 $13,939
30-JUN-95 $14,289 $14,314 $14,000
31-JUL-95 $14,355 $14,384 $14,060
31-AUG-95 $14,423 $14,452 $14,120
30-SEP-95 $14,492 $14,517 $14,180
31-OCT-95 $14,558 $14,583 $14,239
30-NOV-95 $14,624 $14,652 $14,299
31-DEC-95 $14,695 $14,732 $14,359
31-JAN-96 $14,760 $14,800 $14,418
29-FEB-96 $14,821 $14,859 $14,474
31-MAR-96 $14,885 $14,913 $14,529
30-APR-96 $14,947 $14,977 $14,584
31-MAY-96 $15,015 $15,043 $14,640
30-JUN-96 $15,073 $15,105 $14,695
31-JUL-96 $15,139 $15,173 $14,752
31-AUG-96 $15,209 $15,242 $14,809
30-SEP-96 $15,269 $15,313 $14,867
31-OCT-96 $15,336 $15,379 $14,929
30-NOV-96 $15,403 $15,444 $14,987
31-DEC-96 $15,470 $15,513 $15,045
31-JAN-97 $15,540 $15,584 $15,104
28-FEB-97 $15,602 $15,644 $15,162
31-MAR-97 $15,666 $15,710 $15,221
30-APR-97 $15,734 $15,785 $15,286
31-MAY-97 $15,808 $15,866 $15,347
30-JUN-97 $15,875 $15,925 $15,409
31-JUL-97 $15,948 $15,996 $15,471
31-AUG-97 $16,022 $16,064 $15,533
30-SEP-97 $16,089 $16,138 $15,595
31-OCT-97 $16,162 $16,207 $15,658
U.S. 91-DAY T-BILL INDEX
($16,207)
FREMONT MONEY MARKET FUND
($16,162)
IBC FIRST TIER TAXABLE AVERAGE
($15,658)
*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.
21
<PAGE>
FREMONT FUNDS
year, corporations generally do a little financial window dressing by issuing
commercial paper to add cash to their balance sheets. To encourage buyers,
they bump up yields on paper maturing early in the next calendar year. In
late December, many money market funds will take advantage of this little
Christmas present by buying commercial paper maturing in early January. This
is reflected in the modest increase in money market yields at the turn of
every year. If we anticipate flat or declining rates, we will buy paper
maturing a little later, in the process locking in higher yields for a bit
longer. This year, we will be looking to buy commercial paper maturing in
late March. When it matures, we expect to be able to roll this paper over
into higher yielding issues spawned by the Fed rate hike we anticipate toward
the end of first quarter 1998.
We are always hunting for special situations in the money markets:
opportunities like the commercial paper issued by the U.S. subsidiary of
CHINA LIGHT & POWER, a Hong Kong-based utility providing electrical power to
mainland China. The company's commercial paper financings are generally
small and therefore, not suitable for big money market buyers who would have
to take the entire issue for it to have any material impact on their
portfolios. However, it is the kind of opportunity a Fund like ours can take
advantage of. This paper comes at very short maturities, so interest rate
risk is minimized. It yields about 10 basis points more than comparable
single A rated issues. This is one of the ways we Davids can beat the
Goliaths in the money market fund industry.
In closing, we are pleased the Fund has once again exceeded its benchmark
index and finished near the top of its taxable money market fund class. We
look forward to adding more chapters to this superior performance history.
Sincerely,
/s/ Norman Gee
Norman Gee
Portfolio Manager
Fremont Money Market Fund
22
<PAGE>
FREMONT FUNDS
FREMONT CALIFORNIA INTERMEDIATE
TAX-FREE FUND
WILLIAM M. FEENEY, PORTFOLIO MANAGER
FREMONT INVESTMENT ADVISORS, INC.
[PHOTO OF WILLIAM FEENEY]
WILLIAM 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 MANAGER'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 CURRENTLY DOES NOT INVEST IN ANY BOND BELOW A BBB RATING. FUND
MANAGEMENT ALSO STRIVES TO IDENTIFY "SPECIAL SITUATION" OPPOR TUNITIES
CREATED BY INCOMPLETE CREDIT ANALYSIS, INVESTOR MISPERCEPTION, AND MARKET
CONDITIONS.
TO OUR SHAREHOLDERS,
For the six-month period ended October 31, 1997, the Fremont California
Intermediate Tax-Free Fund returned 5.14% compared to the Lehman Brothers
Municipal 5-Year State General Obligation (GO) Index's 4.84%. For the twelve
months ended on the same date, the Fund gained 6.75% versus the benchmark
index's 6.31%.
In second-half fiscal 1997, the portfolio's nine-year average maturity
(compared to approximately 7 years for our benchmark index) worked in our
(CONTINUED ON PAGE 24)
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND INVESTMENT RETURNS
ANNUAL RETURNS
[EDGAR REPRESENTATION OF CHART]
11/16/90-
10/31/91* +9.36%
11/01/91-
10/31/92 +7.37%
11/01/92-
10/31/93 +11.37%
11/01/93-
10/31/94 -3.94%
11/01/94-
10/31/95 +12.77%
11/01/95-
10/31/96 +4.63%
11/01/96-
10/31/97 +6.75%
AVERAGE +6.82%
ANNUAL (SINCE INCEPTION)
GROWTH OF $10,000+
AVERAGE ANNUAL RETURNS FOR
PERIODS ENDED 10/31/97
1 5 SINCE INCEPTION
YEAR YEARS 11/16/90
6.75% 6.15% 6.82%
[EDGAR REPRESENTATION OF CHART]
FREMONT CA INTER TAX-FREE FUND LEHMAN MUNI 5 YR STATE G.O. INDEX
16-NOV-90 $10,000 $10,000
30-NOV-90 $10,064 $10,067 0.95%
31-DEC-90 $10,105 $10,102
31-JAN-91 $10,273 $10,250
28-FEB-91 $10,364 $10,340
31-MAR-91 $10,370 $10,313
30-APR-91 $10,467 $10,456
31-MAY-91 $10,530 $10,508
30-JUN-91 $10,496 $10,493
31-JUL-91 $10,603 $10,598
31-AUG-91 $10,737 $10,731
30-SEP-91 $10,881 $10,860
31-OCT-91 $10,936 $10,945
30-NOV-91 $10,953 $10,979
31-DEC-91 $11,187 $11,226
31-JAN-92 $11,218 $11,246
29-FEB-92 $11,222 $11,253
31-MAR-92 $11,188 $11,211
30-APR-92 $11,270 $11,306
31-MAY-92 $11,373 $11,413
30-JUN-92 $11,535 $11,572
31-JUL-92 $11,871 $11,876
31-AUG-92 $11,747 $11,787
30-SEP-92 $11,831 $11,862
31-OCT-92 $11,741 $11,821
30-NOV-92 $11,906 $11,962
31-DEC-92 $12,004 $12,049
31-JAN-93 $12,155 $12,180
28-FEB-93 $12,518 $12,495
31-MAR-93 $12,325 $12,357
30-APR-93 $12,434 $12,432
31-MAY-93 $12,460 $12,475
30-JUN-93 $12,666 $12,641
31-JUL-93 $12,629 $12,642
31-AUG-93 $12,889 $12,817
30-SEP-93 $13,069 $12,915
31-OCT-93 $13,076 $12,930
30-NOV-93 $12,964 $12,899
31-DEC-93 $13,198 $13,078
31-JAN-94 $13,354 $13,202
28-FEB-94 $13,007 $12,943
31-MAR-94 $12,664 $12,653
30-APR-94 $12,717 $12,779
31-MAY-94 $12,795 $12,854
30-JUN-94 $12,714 $12,820
31-JUL-94 $12,915 $12,954
31-AUG-94 $12,945 $13,016
30-SEP-94 $12,765 $12,920
31-OCT-94 $12,561 $12,847
30-NOV-94 $12,354 $12,750
31-DEC-94 $12,552 $12,866
31-JAN-95 $12,830 $13,001
28-FEB-95 $13,208 $13,195
31-MAR-95 $13,356 $13,323
30-APR-95 $13,382 $13,356
31-MAY-95 $13,745 $13,646
30-JUN-95 $13,652 $13,665
31-JUL-95 $13,771 $13,856
31-AUG-95 $13,920 $13,979
30-SEP-95 $13,978 $14,023
31-OCT-95 $14,165 $14,081
30-NOV-95 $14,313 $14,204
31-DEC-95 $14,421 $14,285
31-JAN-96 $14,583 $14,464
29-FEB-96 $14,519 $14,412
31-MAR-96 $14,326 $14,326
30-APR-96 $14,330 $14,299
31-MAY-96 $14,313 $14,280
30-JUN-96 $14,394 $14,366
31-JUL-96 $14,575 $14,470
31-AUG-96 $14,557 $14,489
30-SEP-96 $14,665 $14,589
31-OCT-96 $14,820 $14,732
30-NOV-96 $15,044 $14,941
31-DEC-96 $15,005 $14,906
31-JAN-97 $15,013 $14,944
28-FEB-97 $15,110 $15,050
31-MAR-97 $14,973 $14,879
30-APR-97 $15,046 $14,938
31-MAY-97 $15,279 $15,119
30-JUN-97 $15,408 $15,245
31-JUL-97 $15,738 $15,498
31-AUG-97 $15,616 $15,422
30-SEP-97 $15,787 $15,568
31-OCT-97 $15,820 $15,662
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
($15,820)
LEHMAN BROS. 5-YEAR STATE G.O. INDEX
($15,662)
*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.
23
<PAGE>
FREMONT FUNDS
PORTFOLIO CREDIT QUALITY OF FREMONT CALIFORNIA INTERMEDIATE
TAX-FREE FUND AS OF OCTOBER 31, 1997
[EDGAR REPRESENTATION OF CHART]
AA (24.9%)
A (9.8%)
AAA (65.3%)
favor as intermediate interest rates declined by approximately 50
basis points (0.5%). Our utilities holdings performed particularly well, as
fixed-income investors recognized that deregulation was not likely to have as
negative an impact as initially perceived.
With California General Obligations Bonds being upgraded from A- to AA+
by Fitch IBCA, one of the major debt rating services, and placed on a
"positive credit watch" by Moody's, we would have liked to have owned more
GOs. However, supply in the marketplace was quite limited, and the one new
issue brought to market this year, was in our opinion, a little richly
priced.
The California economy continues to improve. Year-end 1998 employment
growth is expected to come in at 3.5%, personal income growth at a robust
5.5%, and unemployment at just 6.2%. If you ignore mandated incremental
payments to public school systems (as some economists do), the State is
technically running a surplus. In general, this is good news for California
municipal bonds. Sacramento may deliver on its promise to modestly reduce
state income taxes. A significant reduction in state (or federal) income tax
rates would hurt munis. However, the proposed 1-2% reduction in state income
tax rates would hardly diminish the attractiveness of double tax-free yields
to most municipal bond investors.
Going forward, we expect interest rates to trend modestly lower and bonds
modestly higher in the year ahead. Consequently, we are maintaining the
portfolio's relatively high average maturity. Over the short term,
supply/demand factors may have as great an impact on municipal bonds as
economic trends. Bond prices have been rising on days when nervous investors
are dumping stocks and buying bonds in "a flight to quality," and then
declining when investors sell bonds to jump back into the stock market. With
new issuance down 20% this year, supply in the California municipal bond
market has been constrained. However, with the stock market rising until
quite recently, demand has been slack as well. If investors do stampede out
of stocks for more than just a day or two, demand should rise, creating a
favorable longer term supply/demand profile for bonds, including California
municipals.
In closing, we are pleased to have once again exceeded our benchmark
index. We believe favorable interest rate trends and the possibility of
increasing demand for California municipal securities will benefit the Fund
in the year ahead.
Sincerely,
/s/ William M. Feeney
William M. Feeney
Portfolio Manager
Fremont California Intermediate Tax-Free Fund
24
<PAGE>
FREMONT MUTUAL FUNDS, INC.
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 ten funds of Fremont Mutual Funds, Inc. (the Funds), including
each Fund's statement of investments in securities and net assets, as of
October 31, 1997, 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, 1997, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles 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 ten funds of Fremont Mutual Funds, Inc., as of
October 31, 1997, 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.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
December 9, 1997
25
<PAGE>
FREMONT GLOBAL FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 69.1%
BUSINESS EQUIPMENT & SERVICES 2.9%
2,800 Sodexho Alliance SA FR $ 1,391,908
143,000 Kyowa Exeo Corp. JP 1,236,551
600,000 Informatics Holdings Ltd. SG 247,540
200,000 Compass Group PLC UK 2,102,690
120,000 Hays PLC UK 1,401,346
100,000 Siebe PLC UK 1,911,688
* 103,100 American Business Information, Inc.
(Class B) US 1,340,300
67,300 Diebold, Inc. US 2,965,406
* 35,600 Federal Express Corp. US 2,376,300
59,700 First Data Corp. US 1,735,031
122,200 Waste Management, Inc. US 2,856,425
------------
19,565,185
------------
CAPITAL GOODS 2.1%
50,000 Larsen & Toubro Ltd., GDR IN 525,000
12,000 Kyocera Corp. JP 687,453
8,400 Kyocera Corp., ADR JP 979,650
60,000 Cemex SA (Class B), ADR MX 521,610
370,000 IJM Corp. Berhad MY 198,244
110,000 Cycle & Carriage Ltd. SG 481,752
20 Zardoya-Otis SP 2,396
132,000 Sandvik AB (Series B) SW 4,009,592
40,200 Caterpillar, Inc. US 2,060,250
49,300 Emerson Electric Co. US 2,585,169
58,500 Hughes Supply, Inc. US 2,040,187
------------
14,091,303
------------
CONSUMER DURABLES 5.4%
33,600 Daimler-Benz AG GM 2,280,899
26,300 Daimler-Benz AG, ADR GM 1,799,906
1,000,000 PT Astra International, Inc. ID 742,025
33,000 Murata Manufacturing Co. Ltd. JP 1,338,987
33,000 Sony Corp., ADR JP 2,784,375
50,000 Philips Electronics NV NL 3,900,436
40,000 Philips Electronics NV (New York Shares) NL 3,135,000
27,000 Autoliv, Inc. SW 1,064,812
80,000 Autoliv, Inc., SDR SW 3,202,771
51,100 Chrysler Corp. US 1,801,275
30,000 Eaton Corp. US 2,898,750
72,200 Ford Motor Co. US 3,154,237
44,800 General Motors Corp. US 2,875,600
83,300 Sturm, Ruger & Co., Inc. US 1,567,081
51,800 Whirlpool Corp. US 3,140,375
------------
35,686,529
------------
CONSUMER NON-DURABLES 2.4%
5,760 LVMH FR 975,352
440 LVMH, ADR FR 14,960
20,000 Societe BIC SA FR 1,363,640
250,000 PT Hanjaya Mandala Sampoerna ID 435,159
76,000 Cerebos Pacific Ltd. SG 193,919
108,000 Fraser & Neave Ltd. SG 541,542
* 70,777 President Enterprises, GDR TW 778,552
300,000 Unilever PLC UK 2,226,673
67,400 American Greetings Corp. (Class A) US 2,337,937
* 25,500 Blyth Industries, Inc. US 634,312
46,800 Campbell Soup Co. US 2,413,125
* 35,200 Owens-Illinois, Inc. US 1,214,400
30,200 VF Corp. US 2,699,125
------------
15,828,696
------------
CONSUMER SERVICES 3.3%
22,000 News Corp. Ltd., ADR AU 419,375
197,274 Village Roadshow Ltd. (Preferred) AU 366,806
* 30,000 ProSieben Media AG (Preferred) GM 1,484,418
35,000 Secom Co. JP 2,264,072
20,000 Sega Enterprises Ltd. JP 492,226
10,000 Sega Enterprises Ltd., ADR JP 61,528
265,000 Genting Berhad MY 741,479
70,600 Elsevier NV NL 1,105,106
7,902 Wolters Kluwer NV NL 966,814
9,953 Wolters Kluwer NV, ADR NL 1,222,633
280,000 Helicopter Line Ltd. (The) NZ 313,664
360,000 Rentokil Initial PLC UK 1,441,557
75,300 Disney (Walt) Co. US 6,193,425
* 34,900 ITT Corp. US 2,606,594
44,600 The Times Mirror Co. (Class A) US 2,413,975
------------
22,093,672
------------
ENERGY 9.1%
45,700 Amoco Corp. US 4,190,119
38,200 Atlantic Richfield Co. US 3,144,337
158,100 Chesapeake Energy Corp. US 1,551,356
59,200 Chevron Corp. US 4,909,900
80,400 Devon Energy Corp. US 3,597,900
68,500 Dresser Industries, Inc. US 2,885,562
31,900 ENSCO International, Inc. US 1,341,794
117,700 Exxon Corp. US 7,231,194
* 31,800 Falcon Drilling Co., Inc. US 1,156,725
36,800 Kerr-McGee Corp. US 2,486,300
70,000 Mobil Corp. US 5,096,875
134,700 Occidental Petroleum Corp. US 3,754,762
* 69,900 Oryx Energy Co. US 1,926,619
50,900 Phillips Petroleum Co. US 2,462,287
* 151,300 Santa Fe Energy Resources, Inc. US 1,976,356
65,800 Texaco, Inc. US 3,746,487
28,900 Tidewater, Inc. US 1,898,369
* 115,500 Ulster Petroleums Ltd. US 1,147,826
68,800 USX-Marathon Group US 2,459,600
73,700 Williams Cos., Inc. US 3,754,094
------------
60,718,462
------------
FINANCIAL SERVICES (BANKS) 8.1%
90,000 Banco de Galicia y Buenos Aires
SA de CV, ADR AR 2,181,096
200,000 Westpac Banking Corp. Ltd. AU 1,161,932
1,320,000 PT Bank Bira ID 183,079
2,905,500 PT Lippo Bank ID 805,964
150,000 Instituto Mobiliare Italiano SPA IT 1,338,638
400,000 Commerce Asset Holding Berhad MY 309,570
160,000 Malayan Banking Berhad MY 614,377
50,288 ING Groep NV NL 2,103,399
300,000 Overseas Union Bank Ltd.
(Foreign Registered) SG 999,683
* NON-INCOME PRODUCING SECURITIES
26 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT GLOBAL FUND
October 31, 1997
- --------------------------------------------------------------------------------
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (BANKS) (CONTINUED)
217,478 Overseas-Chinese Banking Corp. Ltd.
(Foreign Registered) SG $ 1,207,829
214,899 United Overseas Bank Ltd.
(Foreign Registered) SG 1,186,686
6,300 Housing & Commercial Bank, Korea SK 69,202
* 24,285 Thai Farmers Bank (Warrants 09/15/02)
(Foreign Registered) TH 8,598
129,790 HSBC Holdings PLC (Hong Kong Shares) UK 2,938,325
59,300 Ahmanson (H.F.) & Co. US 3,498,700
57,000 Banc One Corp. US 2,971,125
60,600 BankAmerica Corp. US 4,332,900
30,300 Bankers Trust New York Corp. US 3,575,400
36,000 Citicorp US 4,502,250
40,900 First Chicago NBD Corp. US 2,975,475
59,600 First Union Corp. US 2,924,125
43,200 Fleet Financial Group, Inc. US 2,778,300
59,600 NationsBank Corp. US 3,568,550
102,800 Norwest Corp. US 3,296,025
30,800 Republic New York Corp. US 3,259,025
28,000 Zions Bancorporation US 1,088,500
------------
53,878,753
------------
FINANCIAL SERVICES (OTHER) 5.1%
62,859 Lend Lease Corp. Ltd. AU 1,284,338
1,000,000 JCG Holdings Ltd. HK 443,079
10,000 Nichiei Co. Ltd. (Kyoto) JP 1,097,531
34,579 Aegon NV (New York Shares) NL 2,749,057
40,000 Credicorp Ltd. PE 717,500
130 Samsung Fire & Marine Insurance SK 34,352
49,700 Allstate Corp. US 4,121,994
67,900 American General Corp. US 3,462,900
13,900 Cigna Corp. US 2,157,975
22,300 CMAC Investment Corp. US 1,219,531
84,400 Federal Home Loan Mortgage Corp. US 3,196,650
22,700 Horace Mann Educators Corp. US 1,276,875
* 45,100 Imperial Credit Industries, Inc. US 1,133,137
52,000 Mercury General Corp. US 2,206,750
55,100 Morgan Stanley, Dean Witter,
Discover and Co. US 2,699,900
70,700 TIG Holdings, Inc. US 2,394,963
54,100 Travelers Group, Inc. US 3,787,000
------------
33,983,532
------------
HEALTH CARE 4.1%
* 62,500 Fresenius Medical Care AG, ADR GM 1,472,656
200,500 PT Dankos Laboratories ID 100,111
96,500 Grupo Casa Autrey SA de CV, ADR MX 1,652,563
1,386 Novartis AG (Registered Shares) SZ 2,162,805
260 Roche Holding AG SZ 2,276,515
75,000 Glaxo Wellcome PLC UK 1,603,406
29,300 Aetna, Inc. US 2,082,131
43,000 Baxter International, Inc. US 1,988,750
* 36,000 Biogen, Inc. US 1,206,000
72,300 Columbia HCA Healthcare Corp. US 2,042,475
* 23,400 HealthCare COMPARE Corp. US 1,257,750
* 68,600 Marquette Medical Systems, Inc. US 1,766,450
53,000 Medtronic, Inc. US 2,305,500
* 106,900 Pharmaceutical Product Development, Inc. US 1,897,475
* 20,000 Safeskin Corp. US 907,500
33,000 United Healthcare Corp. US 1,528,313
9,300 Warner-Lambert Co. US 1,331,644
------------
27,582,044
------------
MULTI-INDUSTRY 2.2%
3,085 Viag AG GM 1,437,209
770,000 Citic Pacific Ltd. HK 3,685,640
280,000 Hutchison Whampoa HK 1,937,904
1,240,000 Renong Berhad MY 1,129,454
248,000 Renong Berhad
(Convertible Loan Stock 05/21/01) MY 50,198
* 155,000 Renong Berhad (Warrants Exp. 11/21/00) MY 27,683
400,000 Sime Darby Berhad MY 571,514
1,000,000 Tan Chong Motor Holdings Berhad MY 568,537
22,500 Minnesota Mining & Manufacturing Co. US 2,058,750
53,000 TRW, Inc. US 3,034,250
------------
14,501,139
------------
RAW MATERIALS 3.1%
132,800 Broken Hill Proprietary Co. Ltd., ADR AU 2,672,600
54,000 BASF AG GM 1,854,741
61,000 Bayer AG GM 2,188,721
28,645 Hansol Paper Ltd., GDR SK 186,193
* 933 Hansol Paper Ltd., GDR SK 6,065
* 1,386 Ciba Specialty Chemicals AG
(Registered Shares) SZ 135,607
44,600 Aluminum Co. of America US 3,255,800
* 29,300 Buckeye Cellulose Corp. US 1,215,950
128,400 Calgon Carbon Corp. US 1,516,725
30,600 Dow Chemical Co. US 2,776,950
129,900 Engelhard Corp. US 2,257,013
52,900 Goodrich (B.F.) Co. US 2,357,356
------------
20,423,721
------------
RETAIL 2.7%
2,000 Carrefour SA FR 1,040,182
13,050 Hermes International FR 877,148
29,000 Ito-Yokado Co. Ltd. JP 1,441,922
24,461 Cifra SA de CV (Series A) MX 44,395
200,000 Cifra SA de CV (Series C) MX 353,433
* 59,100 Grupo Elektra SA de CV, GDR MX 1,621,556
* 26,700 Consolidated Stores Corp. US 1,064,663
* 66,400 Federated Department Stores, Inc. US 2,921,600
73,600 Hannaford Brothers Co. US 2,783,000
47,600 McDonalds Corp. US 2,133,075
65,500 Pier 1 Imports, Inc. US 1,195,375
64,200 Sears, Roebuck and Co. US 2,688,375
------------
18,164,724
------------
* NON-INCOME PRODUCING SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 27
<PAGE>
FREMONT GLOBAL FUND
October 31, 1997
- --------------------------------------------------------------------------------
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
SHELTER 1.2%
140,000 Kimberly-Clark de Mexico SA MX $ 603,463
3,200,000 C & P Homes, Inc. PH 239,887
500,000 DBS Land Ltd. SG 850,524
37,000 Armstrong World Industries, Inc. US 2,462,813
43,000 Kimberly-Clark Corp. US 2,233,313
* 38,900 Triangle Pacific Corp. US 1,273,975
------------
7,663,975
------------
TECHNOLOGY 8.9%
50,000 Nokia AB, ADR FI 4,412,500
6,000 SAP AG, ADR GM 593,625
110,000 Canon, Inc. JP 2,670,658
18,900 Hirose Electronics JP 1,233,599
40,000 Hoya Corp. JP 1,390,205
14,000 TDK Corp. JP 1,161,719
55,000 Tokyo Electron Ltd. JP 2,743,826
40,531 Samsung Electronics Ltd., GDS
(1/2 Non-Voting) SK 395,177
* 5,575 Samsung Electronics Ltd., GDS (1/2 Voting) SK 112,894
4,210 Sungmi Telecom Electronics SK 205,026
* 80,000 Synnex Technology International Corp., GDR TW 1,396,000
44,400 AMP, Inc. US 1,998,000
* 40,800 Applied Materials, Inc. US 1,361,700
* 46,100 Aspect Telecommunications Corp. US 1,106,400
35,700 Avnet, Inc. US 2,246,869
61,700 Boeing Co. US 2,953,888
83,400 Hewlett-Packard Co. US 5,144,738
74,600 International Business Machines Corp. US 7,315,463
* 83,600 Iomega Corp. US 2,241,525
* 59,700 Komag, Inc. US 1,033,556
58,700 Motorola, Inc. US 3,624,725
* 31,800 Parametric Technology Corp. US 1,403,175
* 31,600 Storage Technology Corp. US 1,854,525
14,800 Thiokol Corp. US 1,355,125
* 90,200 Ultratech Stepper, Inc. US 2,457,950
21,800 United Technologies Corp. US 1,526,000
23,200 Xerox Corp. US 1,840,050
* 98,600 Xilinx, Inc. US 3,364,725
------------
59,143,643
------------
TRANSPORTATION 1.1%
836,000 Comfort Group Ltd. SG 421,847
166,875 Keppel Corp. SG 527,475
* 9,770 Korean Air SK 76,844
240,000 British Airways PLC UK 2,342,279
43,300 Burlington Northern Sante Fe US 4,113,500
------------
7,481,945
------------
UTILITIES 7.4%
42,500 Compania de Telecomunicaciones
de Chile SA, ADR CL 1,179,375
15,000 Enersis SA, ADR CL 495,000
60,570 Hong Kong & China Gas Co. Ltd. HK 114,401
17,500 PT Indosat, ADR ID 414,531
1,020,000 Telecom Italia Mobile SPA IT 3,775,774
255 Nippon Telegraph & Telephone JP 2,162,634
400,000 Tenaga Nasional Berhad MY 857,270
44,200 Telecom of New Zealand, ADR NZ 1,721,038
97,766 Manila Electric Co. (Class B) PH 298,692
14,900 Philippine Long Distance Telephone Co. PH 368,812
50,000 Philippine Long Distance Telephone Co., ADR PH 1,212,500
70,000 Korea Electric Power Corp., ADR SK 573,125
62,830 Korea Mobile Telecommunications, ADR SK 345,565
* 118,100 AirTouch Communications, Inc. US 4,561,613
21,400 Ameritech Corp. US 1,391,000
64,900 Bell Atlantic Corp. US 5,183,888
78,900 BellSouth Corp. US 3,732,956
38,500 Coastal Corp. US 2,314,813
47,300 Consolidated Edison Co. of New York, Inc. US 1,620,025
100,300 Entergy Corp. US 2,451,081
25,300 GTE Corp. US 1,073,669
133,300 PG&E Corp. US 3,407,481
65,800 Texas Utilities Co. US 2,360,575
120,300 Unicom Corp. US 3,368,400
* 130,200 WorldCom, Inc. US 4,377,975
------------
49,362,193
------------
TOTAL STOCKS (COST $407,520,777) 460,169,516
------------
FACE AMOUNT/ISSUER/COUPON RATE/STATED MATURITY
- --------------------------------------------------------------------------------
BONDS 28.0%
CORPORATE BONDS 7.4%
US$ 3,000,000 AES China Generating Co., 10.125%, 12/15/06 3,028,409
2,000,000 Asia Pulp & Paper International Finance,
10.250%, 10/01/00 2,005,000
3,000,000 Bank of America, 6.625%, 10/15/07 3,009,210
3,000,000 Cemex SA de CV, 10.750%, 07/15/00 3,159,375
3,000,000 China Light and Power Co. Ltd., 7.500%, 04/15/06 3,167,130
4,000,000 Export-Import Bank of Korea, 7.100%, 03/15/07 3,812,920
3,000,000 Ford Brasil LTDA, 9.250%, 01/22/07 3,056,250
3,000,000 Ford Motor Credit Corp., 6.800%, 04/23/01 3,051,060
2,500,000 General Electric Capital Corp., 8.850%, 03/01/07 2,919,100
3,000,000 General Motors Acceptance Corp.,
7.500%, 07/24/00 3,097,980
3,000,000 Grupo Televisa (Callable 05/15/[email protected]),
0.00% to 05/15/01, 13.250% thereafter, 05/15/08 2,175,000
3,000,000 Guangdong Enterprises, 8.875%, 05/22/07 2,955,960
1,500,000 Korea Development Bank, 5.875%, 12/01/98 1,491,540
3,000,000 Lehman Brothers, 7.125%, 09/15/03 3,059,310
2,000,000 Perez Companc SA, 8.125%, 07/15/07 1,851,568
2,000,000 Pohang Iron & Steel Co. Ltd., 7.375%, 05/15/05 2,005,640
3,000,000 Salomon, Inc., 6.500%, 03/01/00 3,020,910
2,000,000 Wharf International Finance, 7.625%, 03/13/07 2,046,360
------------
48,912,722
------------
MORTGAGE-BACKED SECURITIES 0.2%
1,084,116 FNMA CMO, 1992-137BA REMIC,
3.500%, 01/25/17 1,053,956
------------
1,053,956
------------
* NON-INCOME PRODUCING SECURITIES
28 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT GLOBAL FUND
October 31, 1997
- --------------------------------------------------------------------------------
FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY
- --------------------------------------------------------------------------------
U.S. GOVERNMENT BONDS 3.5%
US$ 5,000,000 FHLMC, 7.115%, 11/05/12 $ 5,054,700
4,000,000 FNMA, 6.500%, 02/25/02 4,004,360
U.S. Treasury Notes
5,000,000 6.250%, 08/15/23 5,017,950
5,000,000 6.500%, 10/15/06 5,200,800
4,000,000 6.625%, 05/15/07 4,211,880
------------
23,489,690
------------
FOREIGN BONDS 16.9%
European Bank for Reconstruction
and Development
AUS$ 4,000,000 9.000%, 10/15/02 3,192,508
Government of Australia
AUS$ 4,000,000 7.500%, 07/15/05 3,091,161
AUS$ 4,000,000 8.750%, 01/15/01 3,090,067
Morgan Guaranty Trust Co.
AUS$ 4,500,000 8.000%, 04/18/01 3,376,471
European Investment Bank
CAN$ 4,000,000 7.750%, 04/22/03 3,131,761
Government of Canada
CAN$ 4,000,000 6.000%, 06/01/08 2,931,357
CAN$ 4,000,000 8.000%, 06/01/23 3,566,590
Japan Highway Public Corp.
CAN$ 2,000,000 7.875%, 09/27/02 1,564,107
Oesterreichische Kontrollbank
(Republic of Austria)
CAN$ 2,000,000 9.000%, 06/19/02 1,626,175
Republic of Finland
CAN$ 2,000,000 9.500%, 09/15/04 1,722,823
Toyko Electric Power
CAN$ 2,000,000 10.500%, 06/14/01 1,654,549
Federal Republic of Germany
DM 3,000,000 6.750%, 04/22/03 1,863,943
DM 4,500,000 6.875%, 05/12/05 2,826,905
Treuhandanstalt
DM 3,000,000 7.750%, 10/01/02 1,933,737
United Mexican States
DM 6,000,000 8.125%, 09/10/04 3,559,131
World Bank
DM 3,000,000 6.125%, 09/27/02 1,807,344
Government of Spain
ESP 480,000,000 7.900%, 02/28/02 3,595,809
ESP 500,000,000 8.400%, 04/30/01 3,768,406
ESP 480,000,000 10.300%, 06/15/02 3,924,224
Government of France
FF 20,000,000 8.500%, 11/25/02 3,980,337
Government of Ireland
IEP 2,000,000 6.500%, 10/18/01 3,109,086
IEP 2,000,000 8.000%, 08/18/06 3,388,589
Government of Netherlands
NLG 6,000,000 6.500%, 04/15/03 3,273,287
Government of Sweden
SEK 40,000,000 6.000%, 02/09/05 5,260,325
SEK 25,000,000 10.250%, 05/05/03 3,978,517
United Mexican States
L 2,000,000 12.250%, 12/03/98 3,459,804
U.K. Treasury
L 2,500,000 7.250%, 12/07/07 4,399,365
L 2,500,000 7.500%, 12/07/06 4,445,178
L 2,000,000 8.500%, 12/07/05 3,741,489
L 2,000,000 9.000%, 07/12/11 4,060,872
L 2,000,000 9.750%, 08/27/02 3,755,102
Ministry Finance Russia
US$ 3,000,000 9.250%, 11/27/01 2,835,003
Peoples Republic of China
US$ 3,000,000 6.625%, 10/28/02 2,964,419
Republic of Kazakhstan
US$ 2,000,000 8.375%, 10/02/02 1,779,666
US$ 2,000,000 9.250%, 12/20/99 1,958,536
United Mexican States
US$ 4,000,000 11.500%, 05/15/26 4,170,000
------------
112,786,643
------------
TOTAL BONDS (COST $184,948,466) 186,243,011
------------
FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY
- --------------------------------------------------------------------------------
SHORT TERM SECURITIES 4.2%
** 5,000,000 Allianz of America Finance Corp., CP,
5.770%, 11/03/97 4,998,397
8,000,000 Caisse d'Amortissement de la Dette Sociale,
CP, 5.600%, 11/03/97 7,997,511
5,000,000 Merrill Lynch & Co., Inc., CP,
5.550%, 11/03/97 4,998,458
10,000,000 Xerox Corp., CP, 5.700%, 11/03/97 9,996,834
------------
TOTAL SHORT TERM SECURITIES (COST $27,991,200) 27,991,200
------------
TOTAL INVESTMENTS (COST $620,460,443), 101.3% 674,403,727
OTHER ASSETS AND LIABILITIES, NET, (1.3)% (8,656,346)
------------
NET ASSETS, 100.0% $665,747,381
------------
------------
**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. 29
<PAGE>
FREMONT INTERNATIONAL GROWTH FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 87.2%
BUSINESS EQUIPMENT & SERVICES 2.9%
825 Sodexho Alliance SA FR $ 410,116
600,000 Informatics Holdings Ltd. SG 247,540
45,000 Compass Group PLC UK 473,105
------------
1,130,761
------------
CAPITAL GOODS 7.6%
3,000,000 PT Dynaplast ID 686,546
13,000 Kyocera Corp. JP 744,741
6,000 Mabuchi Motors Co. JP 334,248
35,000 ABB AB (Series B) SW 403,344
14,000 Sandvik AB (Series B) SW 425,260
15,000 SKF AB (Series B) SW 347,722
------------
2,941,861
------------
CONSUMER DURABLES 16.6%
1,450 Rexel SA FR 383,329
1,200 Volkswagen AG GM 710,437
28,000 Alpine Electronics, Inc. JP 316,621
15,000 Matsushita-Kotobuki Electronics JP 466,450
41,000 Murata Manufacturing Co. Ltd. JP 1,663,590
6,000 Sony Corp. JP 498,379
10,000 Philips Electronics NV (New York Shares) NL 783,750
40,000 Autoliv, Inc. SW 1,577,501
------------
6,400,057
------------
CONSUMER SERVICES 3.3%
* 15,000 ProSieben Media AG (Preferred) GM 742,209
8,000 Secom Co. JP 517,502
------------
1,259,711
------------
FINANCIAL SERVICES 11.1%
167,618 Reinsurance Australia Corp. Ltd. AU 432,802
100,000 Dao Heng Bank Group Ltd. HK 230,272
1,000,000 JCG Holdings Ltd. HK 443,079
880,000 PT Bank Bira ID 122,053
5,000 Nichiei Co. Ltd. (Kyoto) JP 548,765
14,843 Aegon NV (New York Shares) NL 1,180,025
11,288 ING Groep NV NL 472,144
72,000 Overseas Union Bank Ltd.
(Foreign Registered) SG 239,924
60,271 Overseas-Chinese Banking Corp. Ltd.
(Foreign Registered) SG 334,733
40,000 United Overseas Bank Ltd.
(Foreign Registered) SG 220,882
8,645 Kookmin Bank SK 69,876
* 3,750 Thai Farmers Bank
(Warrants 09/15/02 - Foreign Registered) TH 1,327
------------
4,295,882
------------
HEALTH CARE 5.8%
* 12,500 Fresenius Medical Care AG, ADR GM 294,531
2,000 Santen Pharmaceutical Co. JP 35,420
319 Novartis AG (Registered Shares) SZ 497,788
73 Roche Holding AG SZ 639,175
18,000 Glaxo Wellcome PLC, ADR UK 770,626
------------
2,237,540
------------
MULTI-INDUSTRY 0.1%
72,000 Renong Berhad
(Convertible Loan Stock, 4.000%, 05/21/01) MY 14,574
* 45,000 Renong Berhad (Warrants Exp. 11/21/00) MY 8,037
------------
22,611
------------
RAW MATERIALS 4.8%
9,723 Compagnie de Saint-Gobain FR 1,391,052
13,000 BASF AG GM 446,512
* 319 Ciba Specialty Chemicals AG
(Registered Shares) SZ 31,211
------------
1,868,775
------------
RETAIL 1.1%
2,200 Ito Yokado Co. Ltd., ADR JP 436,975
------------
436,975
------------
SHELTER 0.3%
1,500,000 C & P Homes, Inc. PH 112,447
------------
112,447
------------
TECHNOLOGY (EQUIPMENT) 11.7%
25,000 Nokia AB, ADR FI 2,206,250
1,100 Advantest Corp. JP 91,004
5,500 Canon, Inc., ADR JP 674,438
17,000 Hoya Corp. JP 590,837
5,658 Samsung Electronics Ltd., GDS
(1/2 Non-Voting) SK 55,166
* 169 Samsung Electronics Ltd., GDS
(1/2 Voting) SK 3,422
3,961 Sungmi Telecom Electronics SK 192,926
* 40,000 Synnex Technology International Corp., GDR TW 698,000
------------
4,512,043
------------
TECHNOLOGY (SOFTWARE) 9.9%
10,000 TT Tieto OY (Class B) FI 1,118,094
5,500 SAP AG (Preferred) GM 1,637,634
16 NTT Data Communications Systems Co. JP 764,946
20,000 Enator AB SW 317,080
------------
3,837,754
------------
TRANSPORTATION 5.3%
211,000 British Airways PLC UK 2,059,254
------------
2,059,254
------------
UTILITIES 6.7%
333,334 Telecom Italia SPA IT 2,084,688
51 Nippon Telegraph & Telephone JP 432,527
22,598 Manila Electric Co. (Class B) PH 69,037
------------
2,586,252
------------
TOTAL STOCKS (COST $31,464,694) 33,701,923
------------
* NON-INCOME PRODUCING SECURITIES
30 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT INTERNATIONAL GROWTH FUND
October 31, 1997
- --------------------------------------------------------------------------------
VALUE
SHARES/FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY (NOTE 1)
- --------------------------------------------------------------------------------
SHORT TERM SECURITIES 12.6%
1,070,825 Benchmark Diversified Assets Fund $ 1,070,825
$1,900,000 Merrill Lynch & Co., Inc., CP,
5.670%, 11/04/97 1,899,102
1,900,000 Unilever Capital Corp., CP, 5.680%, 11/03/97 1,899,401
------------
TOTAL SHORT TERM SECURITIES (COST $4,869,328) 4,869,328
------------
TOTAL INVESTMENTS (COST $36,334,022), 99.8% 38,571,251
OTHER ASSETS AND LIABILITIES, NET, 0.2% 71,698
------------
NET ASSETS, 100.0% $ 38,642,949
------------
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 31
<PAGE>
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 97.1%
BUSINESS EQUIPMENT & SERVICES 2.5%
6,000 Kyudenko Co. Ltd. JP $ 38,463
4,000 Sanki Engineering JP 33,259
5,000 Toenec Corp. JP 18,666
* 54,200 Siam Makro Public Co. Ltd.
(Foreign Registered) TH 71,369
8,933 Cowie Group PLC UK 53,357
------------
215,114
------------
CAPITAL GOODS 11.2%
5,400 Metal Manufactures Ltd. AU 7,578
7,980,000 Companhia de Acos Especiais
Itabira-Acesita BR 10,857
6,400,000 Companhia Siderurgica de Tubarao
(Preferred B) BR 81,270
18,400 Stelco, Inc. CN 141,614
* 356 Skoda Telecom Plzen AS CZ 9,252
5,300 Rautaruukki OY FI 49,553
5,000 Aida Engineering Ltd. JP 23,073
7,000 Bunka Shutter Co. Ltd. JP 25,900
10,000 Eagle Industry Co. JP 32,427
1,000 Inaba Denkisangyo Co. JP 11,225
41,000 NHK Spring Co. Ltd. JP 131,246
13,000 Pacific Industrial JP 59,558
3,000 Seirei Industry JP 7,683
2,000 Yokogawa Bridge Corp. JP 8,331
2,700 Koninklijke Hoogovens NV NL 123,326
13,400 Steel & Tube Holdings Ltd. NZ 27,520
36,000 Van Der Horst Ltd. SG 31,533
8,000 Dongkuk Steel Mill Co. SK 124,352
7,000 Poongsan Corp. SK 44,974
------------
951,272
------------
CONSUMER DURABLES 2.7%
11,615 Ciadea Transportation SA AR 22,894
100,000 Brasmotor SA (Preferred) BR 14,059
2,500 Sommer-Allibert FR 84,234
14,400 Johnson Electric Holdings Ltd. HK 39,307
36,000 Semi-Tech (Global) Ltd. HK 26,779
4,100 Toyota South Africa Ltd. SA 25,548
900 American Standard Sanitaryware
Public Co. Ltd. (Foreign Registered) TH 3,354
131,980 Arcelik AS TU 14,736
------------
230,911
------------
CONSUMER NON-DURABLES 7.5%
24,300 National Foods Ltd. AU 34,953
9,780 Rothmans Holdings Ltd. AU 48,172
5,590,000 Bombril SA (Preferred) BR 46,241
8,700,000 Ceval Alimentos SA (Preferred) BR 69,363
9,800,000 Perdigao SA (Preferred) BR 17,333
68,200 Sadia-Concordia SA Industria e
Comercio (Preferred) BR 50,725
100,000 Sao Paulo Alpargatas SA (Preferred) BR 4,345
107 Cokoladovny AS CZ 15,375
250 Deveaux SA FR 24,622
50 Fromageries Bel SA FR 35,836
1,320 Delta Dairy SA (Preferred) GR 14,211
1,100 Hellenic Sugar Industry SA GR 8,056
7,000 Lai Sun Garment (International) Ltd. HK 4,256
17,000 PT Japfa Comfeed Indonesia ID 2,829
4,000 Daito Gyorui Co. Ltd. JP 6,552
10,000 Ezaki Glico JP 70,342
* 6,000 Marudai Food Co. Ltd. JP 15,665
6,000 Guinness Anchor Berhad MY 7,037
35,000 Yeo Hiap Seng Berhad MY 33,338
400 Unicer-Uniao Cervejeira SA
(Registered Shares) PT 6,570
1,346 Foodcorp Ltd. SA 7,688
11,000 GP Batteries International Ltd.
(U.S. Dollar Shares) SG 32,117
* 2,000 Dongwon Industries Co. SK 16,166
3,410 LG International Corp. SK 18,410
3,060 Sam Yang Co. Ltd. SK 36,783
9,100 Saha Pathana Inter-Holding
Public Co. Ltd. (Foreign Registered) TH 14,017
------------
641,002
------------
CONSUMER SERVICES 1.2%
33,800 PMP Communications Ltd. AU 69,962
18,200 Sydney Harbour Casino Holdings Ltd. AU 18,517
2,600 Grammy Entertainment Public Co. Ltd.
(Foreign Registered) TH 15,374
------------
103,853
------------
ENERGY 5.3%
20,100 Caltex Australia Ltd. AU 59,092
4,500,000 Distribuidora de Produtos de Petroleo
Ipiranga SA (Preferred) BR 75,918
5,300,000 Petrobras Distribuidora SA (Preferred) BR 93,741
350 ESSO SA FR 31,689
2,000 Itochu Fuel Co. Ltd. JP 7,317
2,000 Kamei Corp. JP 17,793
46,300 Bangchak Petroleum Public Co. Ltd.
(Foreign Registered) TH 10,123
155,551 Petrol Ofisi AS TU 29,229
566,736 Turcas Petroculuk AS TU 16,669
112,200 Premier Oil PLC UK 90,703
12,700 Save Group PLC UK 23,406
------------
455,680
------------
FINANCIAL SERVICES (BANKS) 15.6%
19,400 Bank of Western Australia Ltd. AU 36,480
5,600 Westpac Banking Corp. Ltd. AU 32,534
17,200 National Bank of Canada CN 244,625
15,300 Banco Industrial Colombiano CO 54,789
14,600 Investicni A Postovni Banka CZ 87,355
500 Compagnie Financiere de CIC
et de l'Union Europeenne FR 36,372
2,198 Alpha Credit Bank (Registered Shares) GR 144,840
* 170 National Bank of Greece SA
(Registered Shares) GR 17,742
34 National Bank of Greece SA
(Registered Shares) (Rights) GR 685
* 24,696 Union Bank of the Philippines PH 12,575
6,800 Banco Pinto & Sotto Mayor SA
(Registered Shares) PT 95,905
* NON-INCOME PRODUCING SECURITIES
32 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (BANKS) (CONTINUED)
2,100 Banco Totta & Acores SA
(Registered Shares) PT $ 40,442
16,644 BPI-SGPS SA (Registered Shares) PT 372,852
* 45,000 Bangkok Bank of Commerce Public
Co. Ltd. (Foreign Registered) TH 5,925
18,000 First Bangkok City Bank Public Co. Ltd.
(Foreign Registered) TH 6,932
21,300 Krung Thai Bank Public Co. Ltd.
(Foreign Registered) TH 7,409
119,300 Siam City Bank Public Co. Ltd.
(Foreign Registered) TH 25,787
72,400 Thai Military Bank Public Co. Ltd.
(Foreign Registered) TH 28,780
1,504,443 Turkiye Garanti Bankasi AS TU 77,844
------------
1,329,873
------------
FINANCIAL SERVICES (OTHER) 7.4%
95,400 FAI Insurances Ltd. AU 38,824
2,400 London Insurance Group, Inc. CN 57,797
1,900 Suramericana de Seguros SA CO 42,450
2,750 Credit National FR 153,954
90,000 Liu Chong Hing Investment Ltd. HK 84,411
7,100 Irish Permanent PLC IR 67,749
13,000 Nippon Shinpan Co. JP 27,239
14,000 Datuk Keramat Holdings Berhad MY 9,168
6,000 MBF Capital Berhad MY 3,501
300 KAS Associatie NV NL 22,017
2,800 Phatra Thanakit Public Co. Ltd.
(Foreign Registered) TH 2,435
4,200 Jardine Lloyd Thompson Group PLC UK 11,963
31,700 Man (E D & F) Group PLC UK 109,676
------------
631,184
------------
HEALTH CARE 0.3%
5,000 Kaken Pharmaceutical JP 16,255
1,979 South African Druggists Ltd. SA 12,392
------------
28,647
------------
MULTI-INDUSTRY 4.5%
250 Chargeurs International SA FR 16,674
1,950 IVG Holding AG GM 54,394
28,000 Sime Darby (Hong Kong) Ltd. HK 19,922
9,700 Crean (James) PLC (Units) IR 18,949
19,000 Daido Hoxan, Inc. JP 48,973
2,000 Suntelephone Co. Ltd. JP 8,148
4,000 Toyota Tsusho Corp. JP 15,332
1,640 Internatio-Muller NV NL 51,931
12,000 Malbak Ltd. SA 14,008
10,000 Daewoo Corp. SK 65,285
8,900 Goode Durrant PLC UK 74,558
------------
388,174
------------
RAW MATERIALS 13.0%
14,560 Aluar Aluminio Argentina SA (Class B) AR 61,187
1,400,000 Companhia Petroquimica de Sul BR 50,159
9,300,000 Fertilizantes Fosfatados SA (Preferred) BR 36,272
* 37,500 Uniao de Industrias Petroquimicas SA
(Preferred B) BR 11,565
292,000 Shanghai Petrochemical Co. Ltd.
(Hong Kong Shares) CH 78,383
232,000 Yizheng Chemical Fibre Co. Ltd.
(Hong Kong Shares) CH 69,780
* 221 Synthesia AS CZ 1,168
400 Hellas Can Packaging SA GR 5,566
20,000 PT Chareon Pokphand Indonesia ID 2,913
31,000 Chuetsu Pulp & Paper Co. Ltd. JP 69,851
13,000 Daiken Corp. JP 51,343
5,000 Daio Paper Corp. JP 34,173
25,000 Dowa Mining Co. JP 78,781
10,000 Nippon Kayaku Co. Ltd. JP 43,901
21,000 Tokai Carbon Co. Ltd. JP 54,128
* 36,000 Empaques Ponderosa SA de CV (Series B) MX 25,791
200 DSM NV NL 17,993
1,300 Gamma Holding NV NL 69,387
49,500 Dewan Salman Fibre Ltd. PK 33,745
7,897 Avgold Ltd. SA 5,413
6,700 Trans-Natal Coal Corp. Ltd. SA 26,441
2,050 Sunkyong Ltd. SK 16,889
5,100 Lanna Lignite Public Co. Ltd.
(Foreign Registered) TH 17,993
4,500 National Petrochemical Public Co. Ltd.
(Foreign Registered) TH 2,404
152,600 Thai Petrochemical Industry Public
Co. Ltd. (Foreign Registered) TH 26,160
62,300 Tipco Asphalt Public Co. Ltd.
(Foreign Registered) TH 140,852
43,209 Cimentas Izmir Cimento Fabrikasi Turk AS TU 5,472
134,000 Petkim Petrokimya Holdings AS TU 75,174
------------
1,112,884
------------
RETAIL 8.6%
167,100 David Jones Ltd. AU 211,042
78,100 Davids Ltd. AU 35,071
36,000 Jardine International Motor Holdings Ltd. HK 26,080
2,000 Oak & Co. JP 6,003
42,000 Controladora Comercial Mexicana
SA de CV (Units) MX 41,624
2,300 Macintosh NV NL 49,577
1,674 Ellerine Holdings Ltd. SA 12,691
4,532 New Clicks Holdings Ltd. SA 5,930
12,700 East Asiatic Public Co. Ltd. (Local Shares) TH 4,102
42,100 Kwik Save Group PLC UK 218,310
1,600 Lex Service PLC UK 11,259
35,600 Somerfield PLC UK 115,415
------------
737,104
------------
SHELTER 10.5%
700 Bau Holdings AG (Preferred) AS 34,675
5,000 Brasilit SA BR 11,202
* 616 Inzenyrske a Prumyslove Stavby AS CZ 4,207
265,500 Century City International Holdings Ltd. HK 60,794
147,400 Hon Kwok Land Investment Ltd. HK 31,654
89,000 Kumagai Gumi Ltd. HK 81,746
88,000 Lai Sun Development Co. Ltd. HK 36,429
281,500 Tai Cheung Holdings Ltd. HK 136,562
100 Daito Trust Construction Co. Ltd. JP 890
* NON-INCOME PRODUCING SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33
<PAGE>
FREMONT INTERNATIONAL SMALL CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
SHELTER (CONTINUED)
4,400 Kawasho Gecoss Corp. JP $ 19,024
11,000 Misawa Homes JP 42,163
6,000 Mitsui Wood Systems, Inc. JP 27,189
8,000 SXL Corp. JP 29,933
70,000 Bandar Raya Developments Berhad MY 30,630
1,127 Koninklijke BAM Groep NV NL 70,853
3,900 NBM-Amstelland NV NL 108,483
1,100 Volker Wessels Stevin NV NL 33,308
880 Sungwon Construction Co. SK 5,180
17,700 Ch. Karnchang Public Company Ltd.
(Foreign Registered) TH 23,747
29,900 Persimmon PLC UK 106,203
------------
894,872
------------
TECHNOLOGY 1.2%
400 Kiekert AG GM 16,737
* 42,000 Nippon Carbon Co. Ltd. JP 81,018
* 1,100 Alphatec Electronics Public Co. Ltd.
(Foreign Registered) TH 553
------------
98,308
------------
TRANSPORTATION 1.9%
1,000 Compagnie Maritime Belge SA BE 76,302
5,000 Nippon Konpo Unyu Soko JP 32,011
25,000 Hai Sun Hup Group Ltd. SG 11,108
37,000 Neptune Orient Lines Ltd. SG 22,310
* 2,000 Hanjin Shipping Co. SK 16,788
------------
158,519
------------
UTILITIES 3.7%
* 741 Ceske Energeticke Zavody AS CZ 23,512
* 322 SPT Telecom AS CZ 36,977
92,000 Pakistan Telecom Corp. (Class A) PK 75,576
1,200 Electricas Reunidas de Zaragoza SA SP 45,202
29,600 Jasmine International Public Co. Ltd.
(Foreign Registered) TH 16,546
* 99,500 Thai Telephone & Communication
Public Co. Ltd. (Foreign Registered) TH 20,271
32,300 United Communication Industry
Public Co. Ltd. (Foreign Registered) TH 53,766
4,860 Wessex Water PLC UK 40,917
------------
312,767
------------
TOTAL STOCKS (COST $9,959,931) 8,290,164
------------
SHORT TERM SECURITIES 1.9%
157,222 Benchmark Diversified Assets Fund US $ 157,222
------------
TOTAL SHORT TERM SECURITIES (COST $157,222) 157,222
------------
TOTAL INVESTMENTS (COST $10,117,153), 99.0% 8,447,386
OTHER ASSETS AND LIABILITIES, NET, 1.0% 86,521
------------
NET ASSETS, 100.0% $ 8,533,907
------------
------------
* NON-INCOME PRODUCING SECURITIES
34 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT EMERGING MARKETS FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
COUNTRY VALUE
SHARES SECURITY DESCRIPTION CODE (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 78.4%
CAPITAL GOODS 4.2%
107,000 Cheung Kong Infrastructure Holding Ltd. HK $ 276,844
22,000 Mahindra & Mahindra Ltd., GDR IN 231,000
------------
507,844
------------
CONSUMER NON-DURABLES 3.6%
184,000 China Foods Holdings Ltd. HK 80,931
275,000 PT Daya Guna Samudera ID 354,716
------------
435,647
------------
CONSUMER SERVICES 9.0%
* 12,000 Danubius Hotel and Spa Co. HU 375,221
481,500 PT Sonas Topas Tourism ID 153,599
* 95,000 Corporacion Interamericana
de Entretenimiento SA (Series B) MX 563,761
------------
1,092,581
------------
ENERGY 5.7%
3,800 Lukoil Holding, ADR RU 323,238
38,000 Surgutneftegaz, ADR RU 376,325
------------
699,563
------------
FINANCIAL SERVICES 9.8%
13,500 Banco de Galicia y Buenos Aires
SA de CV, ADR AR 327,164
11,000 Banco Frances del Rio de la Plata SA, ADR AR 270,875
* 410,000 Regent Pacific Group Ltd. HK 133,926
* 15,800 Bank Handlowy W. Warszawie PO 212,178
* 177,100 ChinaTrust Commercial Bank TW 243,763
------------
1,187,906
------------
HEALTH CARE 2.6%
13,900 Ranbaxy Laboratories Ltd., GDR IN 316,920
------------
316,920
------------
MISCELLANEOUS 4.5%
* 7,400 Polish National Investment Fund PO 276,040
* 30,500 Saudi Arabia Investment Fund SR 274,500
------------
550,540
------------
MULTI-INDUSTRY 4.1%
57,000 ALFA SA de CV (Class A) MX 418,567
6,200 Sasol Ltd. SA 74,691
------------
493,258
------------
RAW MATERIALS 9.2%
* 18,500 Reliance Industries Ltd., GDR IN 388,500
35,000 Vitro SA, ADR MX 417,813
3,600,000 Aksa Akrilik Kimya Sanayii AS TU 308,824
------------
1,115,137
------------
RETAIL 2.8%
* 18,375 Amica Wronki SA PO 345,355
------------
345,355
------------
SHELTER 0.7%
177,600 MBK Properties and Development
Public Co. Ltd. (Foreign Shares) TH 65,083
* 18,250 Kingdom Construction Co. Ltd. TW 24,117
------------
89,200
------------
TECHNOLOGY 3.3%
* 770,000 Netas Northern Electric
Telekomunikasyon A.S. TU 230,665
* 10,000 Asustek Computer, Inc. TW 125,363
* 700 Compal Electronics TW 1,595
* 10,800 Hon Hai Precision Industry TW 45,712
------------
403,335
------------
TRANSPORTATION 0.6%
* 170,000 China Southern Airlines Company Ltd. CH 75,324
------------
75,324
------------
UTILITIES 18.3%
17,000 Centrais Electricas Brasileiras SA, ADR BR 370,083
1,366,000 Companhia de Saneamento Basico do
Estado de Sao Paulo BR 241,605
5,000 Telecomunicacoes Brasileiras SA, ADR BR 507,500
1,580,504 Telecomunicacoes de Sao Paulo SA
(Preferred) BR 421,468
7,200 Compania de Telecomunicaciones
de Chile SA, ADR CL 199,800
7,500 Enersis SA, ADR CL 247,500
* 7,600 Unified Energy Systems, GDR RU 237,500
------------
2,225,456
------------
TOTAL STOCKS (COST $10,933,797) 9,538,066
------------
SHARES/FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY
- -------------------------------------------------------------------------------
SHORT TERM SECURITIES 15.6%
103,472 Benchmark Diversified Assets Fund US 103,472
$1,800,000 Federal Home Loan Bank,
AN, 5.550%, 11/03/97 US 1,799,445
------------
TOTAL SHORT TERM SECURITIES (COST $1,902,917) 1,902,917
------------
TOTAL INVESTMENTS (COST $12,836,714), 94.0% 11,440,983
OTHER ASSETS AND LIABILITIES, NET, 6.0% 734,490
------------
NET ASSETS, 100.0% $ 12,175,473
------------
------------
* NON-INCOME PRODUCING SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35
<PAGE>
FREMONT U.S. MICRO-CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
VALUE
SHARES SECURITY DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 91.1%
BUSINESS EQUIPMENT & SERVICES 12.6%
* 70,000 AmeriLink Corp. $ 1,837,500
* 190,500 Armor Holdings, Inc. 2,095,500
* 71,000 Diversified Corporate Resources, Inc. 639,000
* 177,900 First Aviation Services, Inc. 1,378,725
* 17,000 Hospitality Worldwide Services 197,625
* 119,400 International Total Services, Inc. 1,746,225
* 280,600 NuCO2, Inc. 3,647,800
* 47,800 Rental Service Corp. 1,278,650
* 455,500 Richey Electronics, Inc.(a) 4,441,125
* 8,700 RWD Technologies, Inc. 195,750
* 265,700 Specialty Teleconstructors, Inc. 4,217,987
-----------
21,675,887
-----------
CAPITAL GOODS 9.8%
* 229,000 Adept Technology, Inc. 3,120,125
* 146,250 AFC Cable Systems, Inc. 4,149,844
* 124,000 AVTEAM, Inc. 1,052,063
* 244,300 Channell Commercial Corp. 3,023,213
34,700 Furon Co. 1,322,938
* 102,100 Gradall Industries, Inc. 1,595,312
* 226,300 IMPCO Technologies, Inc. 2,517,588
-----------
16,781,083
-----------
CONSUMER NON-DURABLES 2.1%
* 38,000 Authentic Specialty Foods, Inc. 470,250
11,000 Culp, Inc. 209,000
* 119,600 Royal Appliance Manufacturing Co. 941,850
* 46,000 Tefron Ltd. 882,624
* 130,000 Toymax International, Inc. 1,170,000
-----------
3,673,724
-----------
CONSUMER SERVICES 11.7%
* 65,000 Cinar Films, Inc. (Class B) 2,526,875
* 165,000 Damark International, Inc. (Class A) 1,918,125
* 44,000 Family Golf Centers, Inc. 1,177,000
* 274,012 Saga Communications, Inc. (Class A) 5,548,743
* 111,000 Servico, Inc. 1,769,062
* 122,000 UOL Publishing, Inc. 2,623,000
* 369,000 Warrantech Corp. 4,428,000
-----------
19,990,805
-----------
ENERGY 2.2%
* 28,000 KTI, Inc. 406,000
* 80,000 Offshore Logistics, Inc. 1,680,000
38,100 RPC, Inc. 1,143,000
* 28,000 Willbros Group, Inc. 546,000
-----------
3,775,000
-----------
FINANCIAL SERVICES 2.7%
33,100 PennFed Financial Services, Inc. 993,000
182,160 R&G Financial Corp. (Class B) 3,620,429
-----------
4,613,429
-----------
HEALTH CARE 12.6%
* 199,850 Advance Paradigm, Inc. $ 5,096,175
* 95,400 DAOU Systems, Inc. 2,516,175
* 230,700 Del Global Technologies Corp. 2,335,838
* 248,000 Genelabs Technologies, Inc. 961,000
* 73,000 Interpore International 684,375
* 59,000 Monarch Dental Corp. 1,069,375
* 25,500 Oacis Healthcare Holdings Corp. 146,625
* 66,600 Perclose, Inc. 1,631,700
* 86,000 PMR Corp. 1,978,000
* 37,400 ResMed, Inc. 1,047,200
* 102,600 Wesley Jessen VisionCare, Inc. 3,001,050
* 96,000 ZymeTx, Inc. 1,074,000
-----------
21,541,513
-----------
MULTI-INDUSTRY 1.0%
* 113,400 Metals USA, Inc. 1,672,650
-----------
1,672,650
-----------
RAW MATERIALS 0.9%
155,600 Northern Technologies International 1,594,900
-----------
1,594,900
-----------
RETAIL 6.8%
* 59,000 Audio Book Club, Inc. 449,875
* 90,200 Cross-Continent Auto Retailers, Inc. 890,725
* 33,000 DM Management Co. 495,000
* 238,100 Garden Ridge Corp. 3,184,588
* 206,100 Genesco, Inc. 2,614,894
* 158,800 New West Eyeworks, Inc. 1,429,200
* 20,000 S & K Famous Brands, Inc. 275,000
* 81,000 Showbiz Pizza Time, Inc. 1,721,250
* 28,000 Star Buffet, Inc. 400,750
* 26,300 Successories, Inc. 175,881
-----------
11,637,163
-----------
TECHNOLOGY (COMPONENTS) 8.6%
* 394,300 Ceradyne, Inc. 2,020,788
* 320,200 Interlink Electronics, Inc.(a) 2,441,525
* 50,000 Micrel, Inc. 1,793,750
* 146,800 Orckit Communications Ltd. 2,605,700
* 64,900 PCD, Inc. 1,314,225
* 108,000 Pericom Semiconductor Corp. 985,500
* 160,900 Semiconductor Packaging Materials Co., Inc. 1,528,550
* 256,000 Southwall Technologies, Inc. 1,984,000
-----------
14,674,038
-----------
TECHNOLOGY (EQUIPMENT) 4.4%
* 143,000 Andrea Electronics Corp. 3,003,000
* 35,100 Innova Corp. 754,650
* 40,800 PRI Automation, Inc. 1,560,600
* 65,100 Schmitt Industries, Inc. 724,238
* 151,200 Thermedics Detection, Inc. 1,587,600
-----------
7,630,088
-----------
* NON-INCOME PRODUCING SECURITIES
(a) REPRESENTS OWNERSHIP OF AT LEAST 5% OF THE VOTING SECURITIES OF THE
ISSUER AND IS, THEREFORE, AN AFFILIATE AS DEFINED IN THE INVESTMENT COMPANY
ACT OF 1940; SEE NOTE 2 OF "NOTES TO FINANCIAL STATEMENTS.
36 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT U.S. MICRO-CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
VALUE
SHARES SECURITY DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
TECHNOLOGY (SOFTWARE) 14.8%
* 176,600 Credit Management Solutions, Inc. $ 2,538,624
* 244,700 Geoworks Corp. 3,119,925
* 314,800 ISG International Software Group Ltd. 3,935,000
* 317,700 MDSI Mobile Data Solutions, Inc. 5,480,325
* 164,500 OrCAD, Inc. 1,449,656
* 357,000 Peerless Systems Corp. 4,641,000
* 129,900 Template Software, Inc. 1,396,425
* 681,400 V-One Corp.(a) 2,725,600
-----------
25,286,555
-----------
TRANSPORTATION 0.9%
* 120,000 Smithway Motor Express Corp. (Class A) 1,620,000
-----------
1,620,000
-----------
TOTAL STOCKS (COST $144,555,136) 156,166,835
-----------
FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY
- --------------------------------------------------------------------------------
SHORT TERM SECURITIES 9.3%
**$5,000,000 Allianz of America Finance Corp., CP,
5.770%, 11/03/97 4,998,397
6,000,000 Caisse d'Amortissement de la Dette Sociale,
CP, 5.750%, 11/03/97 5,998,083
5,000,000 Unilever Capital Corp., CP, 5.680%, 11/03/97 4,998,422
-----------
TOTAL SHORT TERM SECURITIES (COST $15,994,902) 15,994,902
-----------
TOTAL INVESTMENTS (COST $160,550,038), 100.4% 172,161,737
OTHER ASSETS AND LIABILITIES, NET, (0.4)% (654,683)
-----------
NET ASSETS, 100.0% $171,507,054
-----------
-----------
* NON-INCOME PRODUCING SECURITIES
** 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.
(a)REPRESENTS OWNERSHIP OF AT LEAST 5% OF THE VOTING SECURITIES OF THE ISSUER
AND IS, THEREFORE, AN AFFILIATE AS DEFINED IN THE INVESTMENT COMPANY ACT OF
1940; SEE NOTE 2 OF "NOTES TO FINANCIAL STATEMENTS."
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37
<PAGE>
FREMONT U.S. SMALL CAP FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
VALUE
SHARES SECURITY DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 82.2%
BUSINESS EQUIPMENT & SERVICES 11.6%
* 1,300 CSG Systems International, Inc. $ 50,944
* 4,500 National Data Corp. 166,219
* 8,000 NuCO2, Inc. 104,000
* 5,000 Philip Services Corp. 87,500
* 3,300 Rental Service Corp. 88,275
* 4,500 Superior Services, Inc. 120,375
-----------
617,313
-----------
CAPITAL GOODS 4.5%
* 9,000 Channell Commercial Corp. 111,375
* 1,800 Ionics, Inc. 68,963
* 3,000 Willbros Group, Inc. 58,500
-----------
238,838
-----------
CONSUMER NON-DURABLES 2.4%
* 4,000 Chicago Miniature Lamp, Inc. 128,000
-----------
128,000
-----------
CONSUMER SERVICES 4.9%
* 1,900 Cinar Films, Inc. (Class B) 73,862
* 3,500 Coach USA, Inc. 104,125
* 5,400 Servico, Inc. 86,063
-----------
264,050
-----------
ENERGY 2.0%
3,000 McDermott International, Inc. 108,937
-----------
108,937
-----------
FINANCIAL SERVICES 2.7%
2,200 Executive Risk, Inc. 144,925
-----------
144,925
-----------
HEALTH CARE 11.8%
* 5,400 Henry Schein, Inc. 177,525
4,000 Jones Medical Industries, Inc. 120,500
* 3,500 NCS HealthCare, Inc. (Class A) 81,813
* 8,500 Orthodontic Centers of America, Inc. 147,156
* 3,500 Wesley Jessen VisionCare, Inc. 102,375
-----------
629,369
-----------
RETAIL 5.7%
* 3,500 Outback Steakhouse, Inc. 94,719
* 5,000 Showbiz Pizza Time, Inc. 106,250
* 4,000 The Dress Barn, Inc. 101,500
-----------
302,469
-----------
TECHNOLOGY (COMPONENTS) 15.8%
* 6,000 HMT Technology Corp. $ 101,250
4,500 Level One Communications, Inc. 202,500
* 3,000 Micrel, Inc. 107,625
* 5,300 MMC Networks, Inc. 115,938
* 7,000 PMC-Sierra, Inc. 184,625
* 4,000 Sawtek, Inc. 136,000
-----------
847,938
-----------
TECHNOLOGY (EQUIPMENT) 11.2%
* 3,000 Andrea Electronics Corp. 63,000
* 5,500 Electromagnetic Sciences, Inc. 104,156
* 3,200 Innova Corp. 68,800
* 3,100 Integrated Process Equipment Corp. 68,781
* 6,000 P-COM, Inc. 120,750
* 3,200 PRI Automation, Inc. 122,400
* 1,400 Speedfam International, Inc. 51,975
-----------
599,862
-----------
TECHNOLOGY (SOFTWARE) 9.6%
* 4,500 Avant! Corp. 118,125
* 9,600 Geoworks Corp. 122,400
* 10,200 ISG International Software Group Ltd. 127,500
* 5,000 OrCAD, Inc. 44,062
* 8,000 Peerless Systems Corp. 104,000
-----------
516,087
-----------
TOTAL STOCKS (COST $4,644,627) 4,397,788
-----------
SHARES/FACE AMOUNT/ISSUER/DISCOUNT RATE/STATED MATURITY
- --------------------------------------------------------------------------------
SHORT TERM SECURITIES 30.5%
33,148 Benchmark Diversified Assets Fund 33,148
$1,600,000 Federal Home Loan Bank, AN, 5.550%, 11/03/97 1,599,507
-----------
TOTAL SHORT TERM SECURITIES (COST $1,632,655) 1,632,655
-----------
TOTAL INVESTMENTS (COST $6,277,282), 112.7% 6,030,443
OTHER ASSETS AND LIABILITIES, NET, (12.7)% (680,420)
-----------
NET ASSETS, 100.0% $ 5,350,023
-----------
-----------
* NON-INCOME PRODUCING SECURITIES
38 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT GROWTH FUND
October 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
VALUE
SHARES SECURITY DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
STOCKS 95.3%
BUSINESS EQUIPMENT & SERVICES 0.9%
* 19,400 American Business Information, Inc.
(Class B) $ 252,200
45,600 Waste Management, Inc. 1,065,900
-----------
1,318,100
-----------
CAPITAL GOODS 3.7%
22,600 Caterpillar, Inc. 1,158,250
25,400 Emerson Electric Co. 1,331,913
21,300 Hughes Supply, Inc. 742,838
26,200 PACCAR, Inc. 1,180,638
12,500 W.W. Grainger, Inc. 1,092,969
-----------
5,506,608
-----------
CONSUMER DURABLES 3.4%
34,000 Ford Motor Co. 1,485,375
25,400 General Motors Corp. 1,630,363
23,100 Goodyear Tire & Rubber Co. 1,446,637
26,400 Sturm, Ruger & Co., Inc. 496,650
-----------
5,059,025
-----------
CONSUMER NON-DURABLES 1.4%
14,900 Campbell Soup Co. 768,281
* 10,200 Owens-Illinois, Inc. 351,900
18,000 Quaker Oats Co. 861,750
-----------
1,981,931
-----------
CONSUMER SERVICES 4.9%
28,900 Disney (Walt) Co. 2,377,025
24,200 Gannett Co., Inc. 1,272,013
* 17,400 ITT Corp. 1,299,563
18,100 The Times Mirror Co. (Class A) 979,662
23,200 Tribune Co. 1,278,900
-----------
7,207,163
-----------
ENERGY 17.4%
20,900 Amoco Corp. 1,916,269
15,900 Atlantic Richfield Co. 1,308,769
18,800 Chesapeake Energy Corp. 184,475
32,000 Chevron Corp. 2,654,000
17,200 Devon Energy Corp. 769,700
7,600 ENSCO International, Inc. 319,675
61,400 Exxon Corp. 3,772,262
* 8,400 Falcon Drilling Company, Inc. 305,550
19,200 Kerr-McGee Corp. 1,297,200
36,800 Mobil Corp. 2,679,500
43,800 Occidental Petroleum Corp. 1,220,925
* 21,500 Oryx Energy Co. 592,594
21,600 Phillips Petroleum Co. 1,044,900
* 47,900 Santa Fe Energy Resources, Inc. 625,694
12,000 Schlumberger Ltd. 1,050,000
26,900 Tenneco, Inc. 1,208,819
34,200 Texaco, Inc. 1,947,262
9,200 Tidewater, Inc. 604,325
* 8,400 Ulster Petroleums Ltd. 83,478
22,800 Unocal Corp. 940,500
32,100 USX-Marathon Group 1,147,575
-----------
25,673,472
-----------
FINANCIAL SERVICES (BANKS) 12.8%
24,800 Ahmanson (H.F.) & Co. $ 1,463,200
19,700 Banc One Corp. 1,026,862
24,800 BankAmerica Corp. 1,773,200
10,000 Bankers Trust New York Corp. 1,180,000
15,700 Citicorp 1,963,481
16,700 First Chicago NBD Corp. 1,214,925
32,100 First Hawaiian, Inc. 1,251,900
22,000 First Union Corp. 1,079,375
22,800 Mellon Bank Corp. 1,175,625
8,100 Morgan (J.P.) & Co., Inc. 888,975
24,600 NationsBank Corp. 1,472,925
36,800 Norwest Corp. 1,179,900
12,800 Republic New York Corp. 1,354,400
22,600 Suntrust Banks, Inc. 1,464,763
8,900 Zions Bancorporation 345,988
-----------
18,835,519
-----------
FINANCIAL SERVICES (OTHER) 9.2%
23,100 Allstate Corp. 1,915,856
29,775 American General Corp. 1,518,525
16,200 Chubb Corp. 1,073,250
7,100 CMAC Investment Corp. 388,281
40,700 Federal Home Loan Mortgage Corp. 1,541,512
8,100 General Re Corp. 1,597,219
7,300 Horace Mann Educators Corp. 410,625
* 12,000 Imperial Credit Industries, Inc. 301,500
14,600 Mercury General Corp. 619,588
27,200 Morgan Stanley, Dean Witter, Discover and Co. 1,332,800
23,000 TIG Holdings, Inc. 779,125
29,300 Travelers Group, Inc. 2,051,000
-----------
13,529,281
-----------
HEALTH CARE 3.4%
15,200 Aetna, Inc. 1,080,150
18,400 Baxter International, Inc. 851,000
* 9,600 Biogen, Inc. 321,600
38,300 Columbia HCA Healthcare Corp. 1,081,975
* 5,500 HealthCare COMPARE Corp. 295,625
* 21,700 Marquette Medical Systems, Inc. 558,775
7,000 Medtronic, Inc. 304,500
* 31,400 Pharmaceutical Product Development, Inc. 557,350
-----------
5,050,975
-----------
MULTI-INDUSTRY 1.2%
7,500 Minnesota Mining & Manufacturing Co. 686,250
19,400 TRW, Inc. 1,110,650
-----------
1,796,900
-----------
RAW MATERIALS 4.0%
19,100 Aluminum Co. of America 1,394,300
* 7,800 Buckeye Cellulose Corp. 323,700
40,700 Calgon Carbon Corp. 480,769
15,700 Dow Chemical Co. 1,424,775
60,100 Engelhard Corp. 1,044,238
26,000 Goodrich (B.F.) Co. 1,158,625
-----------
5,826,407
-----------
* NON-INCOME PRODUCING SECURITIES
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39
<PAGE>
FREMONT GROWTH FUND
October 31, 1997
- --------------------------------------------------------------------------------
VALUE
SHARES SECURITY DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
RETAIL 4.3%
* 10,000 Consolidated Stores Corp. $ 398,750
* 30,700 Federated Department Stores, Inc. 1,350,800
16,200 Hannaford Brothers Co. 612,563
28,700 Penney (J.C.), Inc. 1,684,331
20,750 Pier 1 Imports, Inc. 378,688
27,400 Sears, Roebuck and Co. 1,147,375
* 24,600 Toys 'R' Us, Inc. 837,938
-----------
6,410,445
-----------
SHELTER 1.4%
16,400 Armstrong World Industries, Inc. 1,091,625
19,400 Kimberly-Clark Corp. 1,007,588
-----------
2,099,213
-----------
TECHNOLOGY 11.0%
31,100 AMP, Inc. 1,399,500
* 4,100 Applied Materials, Inc. 136,837
36,300 Boeing Co. 1,737,863
41,300 Hewlett-Packard Co. 2,547,694
35,600 International Business Machines Corp. 3,491,025
* 19,900 Iomega Corp. 533,569
* 18,700 Komag, Inc. 323,744
27,800 Motorola, Inc. 1,716,650
* 8,400 Storage Technology Corp. 492,975
5,300 Thiokol Corp. 485,281
* 30,000 Ultratech Stepper, Inc. 817,500
11,500 United Technologies Corp. 805,000
15,300 Xerox Corp. 1,213,481
* 15,600 Xilinx, Inc. 532,350
-----------
16,233,469
-----------
TRANSPORTATION 2.9%
* 16,300 AMR Corp. 1,897,931
14,600 Burlington Northern Sante Fe 1,387,000
17,000 Union Pacific Corp. 1,041,250
-----------
4,326,181
-----------
UTILITIES 13.4%
* 85,300 AirTouch Communications, Inc. 3,294,713
40,600 AT&T Corp. 1,986,863
40,824 Bell Atlantic Corp. 3,260,817
39,600 BellSouth Corp. 1,873,574
20,000 Coastal Corp. 1,202,500
48,300 Entergy Corp. 1,180,330
39,900 GPU, Inc. 1,443,880
51,500 PG&E Corp. 1,316,468
28,300 Texas Utilities Co. 1,015,262
54,000 Unicom Corp. 1,512,000
* 51,000 WorldCom, Inc. 1,714,874
-----------
19,801,281
-----------
TOTAL STOCKS (COST $116,954,511) 140,655,970
-----------
SHORT TERM SECURITIES 4.3%
238,048 Benchmark Diversified Assets Fund $ 238,048
$5,900,000 Caisse d'Amortissement de la Dette Sociale,
CP, 5.750%, 11/03/97 5,898,115
+ 20,000 U.S. Treasury Bill, 4.440%, 12/18/97 19,884
+ 170,000 U.S. Treasury Bill, 4.925%, 12/18/97 168,895
-----------
TOTAL SHORT TERM SECURITIES (COST $6,324,942) 6,324,942
-----------
TOTAL INVESTMENTS (COST $123,279,453), 99.6% 146,980,912
OTHER ASSETS AND LIABILITIES, NET, 0.4% 660,497
-----------
NET ASSETS, 100.0% $147,641,409
-----------
-----------
* NON-INCOME PRODUCING SECURITIES
+ ON DEPOSIT WITH BROKER FOR INITIAL MARGIN ON FUTURES CONTRACTS (NOTE 1).
40 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT BOND FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
IN SECURITIES AND NET ASSETS
COUPON MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
BONDS 89.6%
FIXED RATE AND ADJUSTABLE RATE MORTGAGE SECURITIES 41.9%
<S> <C> <C> <C> <C> <C>
$ 425,115 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 01/01/26 $ 419,138
191,502 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 03/01/26 188,809
231,493 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 04/01/26 228,238
278,283 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 04/01/26 274,371
547,262 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 04/01/26 539,568
200,621 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 6.500% 05/01/26 197,801
547,279 FHLMC. . . . . . . . . . . . . . . . . . . . . . . 8.250% 08/01/17 575,896
4,000,000 FHLMC Gold TBA . . . . . . . . . . . . . . . . . . 6.500% 12/11/27 3,932,500
796,360 FNMA ARM . . . . . . . . . . . . . . . . . . . . . 7.974% 11/01/23 834,689
640,855 FNMA . . . . . . . . . . . . . . . . . . . . . . . 8.500% 05/01/25 671,892
1,818,486 GNMA . . . . . . . . . . . . . . . . . . . . . . . 6.000% 01/15/24 1,754,275
4,173,004 GNMA . . . . . . . . . . . . . . . . . . . . . . . 6.000% 01/15/24 4,025,655
44,992 GNMA . . . . . . . . . . . . . . . . . . . . . . . 6.500% 02/15/24 44,458
906,044 GNMA . . . . . . . . . . . . . . . . . . . . . . . 6.500% 03/15/24 895,285
38,964 GNMA . . . . . . . . . . . . . . . . . . . . . . . 6.500% 06/15/24 38,501
5,000,000 GNMA I TBA . . . . . . . . . . . . . . . . . . . . 8.000% 11/19/27 5,189,844
3,500,000 GNMA I TBA . . . . . . . . . . . . . . . . . . . . 8.500% 11/19/27 3,670,625
2,925,582 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 6.000% 11/20/26 2,989,286
2,531,543 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 6.500% 10/20/25 2,606,849
344,233 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 6.875% 11/20/24 353,292
1,444,042 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 7.000% 03/20/24 1,486,085
3,693,808 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 7.000% 08/20/25 3,786,090
3,038,071 GNMA II ARM. . . . . . . . . . . . . . . . . . . . 7.125% 08/20/23 3,129,543
-----------
37,832,690
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS 26.6%
542,470 Collateralized Mortgage Securities Corp.
CMO, J-5Z, REMIC . . . . . . . . . . . . . . . . 7.985% 05/01/17 553,525
1,620,541 FHLMC CMO, 1018 0Z, PAC-1 (11) REMIC . . . . . . . 7.000% 11/15/20 1,641,950
211,951 FNMA CMO, 1990-53G, PAC REMIC. . . . . . . . . . . 8.000% 12/25/18 212,877
15,000,000 FNMA CMO, 1992-131KA, PAC(11) REMIC. . . . . . . . 8.000% 01/25/22 16,204,650
200,000 FNMA CMO, 1993-11J, PAC REMIC. . . . . . . . . . . 7.500% 02/25/08 210,932
1,000,000 Morgan Stanley Mortgage Trust CMO, 40-8,
PAC (11) REMIC . . . . . . . . . . . . . . . . . 7.000% 07/20/21 1,011,596
236,725 Resolution Trust Corp. CMO, 1992-M4 A1 REMIC . . . 8.000% 09/25/21 238,242
621,501 Ryland Mortgage Securities Corp. CMO,
1993-8-A, REMIC. . . . . . . . . . . . . . . . . 8.082% 09/25/23 636,456
339,404 Saxon Mortgage Securities Corp. CMO, 1992-1 A1,
ARM REMIC. . . . . . . . . . . . . . . . . . . . 8.056% 09/25/22 347,889
3,000,000 Securitized Asset Sales, lnc. CMO, 1993-2A9,
PAC (11) REMIC . . . . . . . . . . . . . . . . . 6.200% 07/25/08 2,972,790
------------
24,030,907
------------
CORPORATE BONDS 14.0%
** 829,000 Delta Air Lines, Inc. (Sinking Fund Bond). . . . . 9.450% 02/14/06 938,320
** 1,667,000 Delta Air Lines, Inc. (Sinking Fund Bond). . . . . 9.450% 02/26/06 1,863,206
2,000,000 Imperial Chemical PLC (callable 09-05-98 @ 100). . 5.781% 12/05/98 1,958,600
3,000,000 Salomon, Inc., FRN . . . . . . . . . . . . . . . . 5.799% 08/04/98 2,999,808
500,000 Salomon, Inc.. . . . . . . . . . . . . . . . . . . 6.625% 02/17/98 500,700
2,000,000 Time Warner, Inc.. . . . . . . . . . . . . . . . . 7.450% 02/01/98 2,005,700
225,000 Time Warner, Inc.. . . . . . . . . . . . . . . . . 7.975% 08/15/04 238,815
450,000 Time Warner, Inc.. . . . . . . . . . . . . . . . . 8.110% 08/15/06 484,439
450,000 Time Warner, Inc.. . . . . . . . . . . . . . . . . 8.180% 08/15/07 491,769
1,000,000 United Airlines. . . . . . . . . . . . . . . . . . 10.670% 05/01/04 1,191,308
-----------
12,672,665
-----------
FOREIGN BONDS 3.9%
NZ$ 1,500,000 Government of New Zealand. . . . . . . . . . . . . 8.000% 04/15/04 997,471
NZ$ 1,300,000 Government of New Zealand. . . . . . . . . . . . . 10.000% 03/15/02 906,142
US$ 1,920,000 Republic of Argentina, FRN
(Callable Semiannually in March or
September @ 100) . . . . . . . . . . . . . . . . 6.688% 03/31/05 1,636,800
-----------
3,540,413
-----------
</TABLE>
** 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. 41
<PAGE>
FREMONT BOND FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SHARES/ COUPON MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
STRIPPED MORTGAGE SECURITIES 0.1%
<S> <C> <C> <C> <C>
$ 1,987,564 FNMA Interest Only, 1994-27WB, PAC-1 REMIC. . . . . . . 6.500% 06/25/14 $ 70,199
1,536 FNMA Principal Only, G93-12B, PAC (11) REMIC. . . . . . 0.000% 02/25/23 1,528
-----------
71,727
-----------
U.S. GOVERNMENT BONDS 3.1%
2,750,000 U.S. Treasury Bond. . . . . . . . . . . . . . . . . . . 6.250% 08/15/23 2,759,872
-----------
2,759,872
-----------
TOTAL BONDS (COST $78,319,624) 80,908,274
-----------
OTHER SECURITIES 0.6%
20,000 Long Island Lighting Co. (Convertible Preferred Stock). . . . . . . . . . . . . . 499,375
-----------
499,375
-----------
TOTAL OTHER SECURITIES (COST $486,000) 499,375
-----------
DISCOUNT
SHARES/FACE AMOUNT ISSUER RATE
- -------------------------------------------------------------------------------------------------------------------
SHORT TERM SECURITIES 22.9%
<S> <C> <C> <C> <C>
787,174 Benchmark Diversified Assets Fund . . . . . . . . . . . . . . . . . . . . . . . . . 787,174
$ 600,000 Du Pont (E.I.) de Nemours & Co.,CP. . . . . . . . . . . 5.500% 11/24/97 597,892
#2,000,000 FHLMC, AN . . . . . . . . . . . . . . . . . . . . . . . 5.950% 06/19/98 1,999,395
1,800,000 FHLMC, DN . . . . . . . . . . . . . . . . . . . . . . . 5.500% 12/17/97 1,787,350
2,300,000 International Business Machines Credit Corp.,CP . . . . 5.500% 11/19/97 2,293,675
1,800,000 KFW International Finance, CP . . . . . . . . . . . . . 5.500% 12/15/97 1,787,900
3,500,000 National Rural Utilities Cooperative Finance Corp.,CP . 5.490% 11/14/97 3,493,061
300,000 Procter & Gamble, CP. . . . . . . . . . . . . . . . . . 5.500% 12/22/97 297,663
1,100,000 Procter & Gamble, CP. . . . . . . . . . . . . . . . . . 5.520% 11/18/97 1,097,133
1,400,000 Queensland Treasury Corp., CP . . . . . . . . . . . . . 5.520% 11/03/97 1,399,571
1,100,000 Sweden, Kingdom of, CP. . . . . . . . . . . . . . . . . 5.480% 11/25/97 1,095,981
**2,000,000 Tampa Electric Company, CP. . . . . . . . . . . . . . . 5.500% 11/19/97 1,994,500
1,800,000 Wisconsin Electric Power Co., CP. . . . . . . . . . . . 5.500% 11/06/97 1,798,625
+ 100,000 U.S. Treasury Bill. . . . . . . . . . . . . . . . . . . 4.940% 02/05/98 98,683
+ 185,000 U.S. Treasury Bill. . . . . . . . . . . . . . . . . . . 5.020% 02/05/98 182,522
-----------
TOTAL SHORT TERM SECURITIES (COST $20,711,125) 20,711,125
-----------
TOTAL INVESTMENTS (COST $99,516,749), 113.1% 102,118,774
OTHER ASSETS AND LIABILITIES, NET, (13.1)% (11,816,809)
-----------
NET ASSETS, 100.0% $90,301,965
-----------
-----------
</TABLE>
** 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 RATE INDICATED FOR THESE SECURITIES IS THE STATED COUPON RATE.
+ ON DEPOSIT WITH BROKER FOR INITIAL MARGIN ON FUTURES CONTRACTS (NOTE 1).
42 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT MONEY MARKET FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
DISCOUNT MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 84.8%
<S> <C> <C> <C> <C>
$ 5,000,000 A.I. Credit Corp. . . . . . . . . . . . . . . . . . . . 5.480% 01/06/98 $ 4,949,767
5,000,000 Abbey National North America Corp.. . . . . . . . . . . 5.540% 01/14/98 4,943,061
5,000,000 Abbott Laboratories . . . . . . . . . . . . . . . . . . 5.480% 12/31/97 4,954,333
5,000,000 Air Products and Chemicals, Inc.. . . . . . . . . . . . 5.520% 11/10/97 4,993,100
5,000,000 Akzo Nobel, Inc.. . . . . . . . . . . . . . . . . . . . 5.500% 12/01/97 4,977,083
**5,000,000 Allianz of America Finance Corp.. . . . . . . . . . . . 5.520% 12/10/97 4,970,100
5,000,000 American Express Credit Corp. . . . . . . . . . . . . . 5.500% 12/22/97 4,961,042
5,000,000 American General Finance Corp.. . . . . . . . . . . . . 5.510% 11/20/97 4,985,460
5,000,000 Ameritech Capital Funding . . . . . . . . . . . . . . . 5.500% 12/18/97 4,964,097
5,000,000 Archer Daniels Midland Co.. . . . . . . . . . . . . . . 5.520% 12/18/97 4,963,967
5,000,000 Associates Corp. of North America . . . . . . . . . . . 5.510% 11/18/97 4,986,990
5,000,000 AT&T Corp.. . . . . . . . . . . . . . . . . . . . . . . 5.470% 02/13/98 4,920,989
5,000,000 B.B.V. Finance (Delaware), Inc. . . . . . . . . . . . . 5.500% 11/05/97 4,996,944
**5,000,000 Banc One Corp.. . . . . . . . . . . . . . . . . . . . . 5.540% 12/15/97 4,966,144
5,000,000 Bell Atlantic Financial Corp. . . . . . . . . . . . . . 5.480% 11/24/97 4,982,494
5,000,000 Boral Industries, Inc.. . . . . . . . . . . . . . . . . 5.510% 11/17/97 4,987,756
5,000,000 British Columbia, Province of . . . . . . . . . . . . . 5.470% 11/25/97 4,981,767
**1,780,000 BTR Dunlop Finance, Inc.. . . . . . . . . . . . . . . . 5.570% 12/02/97 1,771,462
**3,220,000 BTR Dunlop Finance, Inc.. . . . . . . . . . . . . . . . 5.550% 12/04/97 3,203,618
5,000,000 C.I.T. Group Holdings, Inc. . . . . . . . . . . . . . . 5.530% 03/20/98 4,893,240
5,000,000 Caisse d'Amortissement de la Dette Sociale. . . . . . . 5.480% 12/19/97 4,963,467
5,000,000 Canadian Wheat Board. . . . . . . . . . . . . . . . . . 5.460% 11/20/97 4,985,592
**5,000,000 Cargill Financial Services Corp.. . . . . . . . . . . . 5.500% 03/11/98 4,900,694
5,000,000 Chevron UK Investment PLC . . . . . . . . . . . . . . . 5.510% 11/21/97 4,984,694
**5,000,000 China Light & Power Company Ltd.. . . . . . . . . . . . 5.550% 11/06/97 4,996,146
5,000,000 Columbia University, Trustees of. . . . . . . . . . . . 5.540% 02/18/98 4,916,131
5,000,000 Consolidation Coal Co.. . . . . . . . . . . . . . . . . 5.520% 11/20/97 4,985,433
5,000,000 Deutsche Bank Financial, Inc. . . . . . . . . . . . . . 5.500% 11/10/97 4,993,125
5,000,000 Disney (Walt) Co. . . . . . . . . . . . . . . . . . . . 5.500% 12/22/97 4,961,042
5,000,000 Eastman Kodak . . . . . . . . . . . . . . . . . . . . . 5.600% 11/20/97 4,985,222
5,000,000 Electricite de France . . . . . . . . . . . . . . . . . 5.460% 11/17/97 4,987,867
5,000,000 Electricity Corp. of New Zealand Ltd. . . . . . . . . . 5.530% 02/11/98 4,921,658
5,000,000 Ford Motor Credit Corp. . . . . . . . . . . . . . . . . 5.500% 11/06/97 4,996,181
5,000,000 General Electric Capital Corp.. . . . . . . . . . . . . 5.550% 02/09/98 4,922,917
5,000,000 Golden Peanut Co. . . . . . . . . . . . . . . . . . . . 5.510% 11/21/97 4,984,694
5,000,000 Goldman Sachs & Co. . . . . . . . . . . . . . . . . . . 5.680% 11/14/97 4,989,744
**5,000,000 Guinness PLC. . . . . . . . . . . . . . . . . . . . . . 5.510% 12/11/97 4,969,389
**5,000,000 Hancock, John Capital Corp. . . . . . . . . . . . . . . 5.480% 11/07/97 4,995,433
5,000,000 Heinz (H.J.) & Co.. . . . . . . . . . . . . . . . . . . 5.520% 12/05/97 4,973,933
5,000,000 Hitachi America Ltd.. . . . . . . . . . . . . . . . . . 5.540% 01/20/98 4,938,444
5,000,000 International Business Machines Credit Corp.. . . . . . 5.480% 11/18/97 4,987,061
5,000,000 John Deere Capital Corp.. . . . . . . . . . . . . . . . 5.480% 11/12/97 4,991,628
5,000,000 Lucent Technologies, Inc. . . . . . . . . . . . . . . . 5.470% 11/04/97 4,997,721
5,000,000 McCormick & Co. Inc.. . . . . . . . . . . . . . . . . . 5.490% 11/07/97 4,995,425
5,000,000 MEC Finance USA, Inc. . . . . . . . . . . . . . . . . . 5.550% 11/07/97 4,995,375
5,000,000 Merrill Lynch & Co., Inc. . . . . . . . . . . . . . . . 5.590% 04/06/98 4,878,883
5,000,000 MetLife Funding, Inc. . . . . . . . . . . . . . . . . . 5.540% 11/21/97 4,984,611
5,000,000 Mitsubishi Electric Finance America, Inc. . . . . . . . 5.580% 01/14/98 4,942,650
5,000,000 Mitsubishi International Corp.. . . . . . . . . . . . . 5.500% 11/04/97 4,997,708
5,000,000 Mitsui & Co. (U.S.A.), Inc. . . . . . . . . . . . . . . 5.560% 01/09/98 4,946,717
5,000,000 Morgan (J.P.) & Co., Inc. . . . . . . . . . . . . . . . 5.660% 11/25/97 4,981,133
5,000,000 Novartis Finance Corp.. . . . . . . . . . . . . . . . . 5.500% 11/10/97 4,993,125
5,000,000 PACCAR Financial Corp.. . . . . . . . . . . . . . . . . 5.500% 11/21/97 4,984,722
**5,000,000 Panasonic Finance, Inc. . . . . . . . . . . . . . . . . 5.550% 03/06/98 4,903,646
5,000,000 Penney (J.C.) Funding Corp. . . . . . . . . . . . . . . 5.500% 12/04/97 4,974,792
**5,000,000 Queen's Health Systems. . . . . . . . . . . . . . . . . 5.550% 02/12/98 4,920,604
5,000,000 Rabobank Nederland. . . . . . . . . . . . . . . . . . . 5.500% 11/03/97 4,998,472
**5,000,000 Rexam PLC . . . . . . . . . . . . . . . . . . . . . . . 5.510% 11/19/97 4,986,225
</TABLE>
** 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. 43
<PAGE>
FREMONT MONEY MARKET FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
DISCOUNT MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
<S> <C> <C> <C> <C>
$ 5,000,000 Sharp Electronics Corp. . . . . . . . . . . . . . . . . 5.620% 12/19/97 $ 4,962,533
5,000,000 Sonoco Products Co. . . . . . . . . . . . . . . . . . . 5.500% 01/06/98 4,949,583
**5,000,000 Sony Capital Corp.. . . . . . . . . . . . . . . . . . . 5.500% 11/03/97 4,998,472
**5,000,000 Southern Co.. . . . . . . . . . . . . . . . . . . . . . 5.500% 12/16/97 4,965,625
**5,000,000 St. Paul Cos., Inc. . . . . . . . . . . . . . . . . . . 5.480% 12/18/97 4,964,228
5,000,000 Stanford, Leland Junior University. . . . . . . . . . . 5.480% 04/07/98 4,880,506
5,000,000 Sweden, Kingdom of. . . . . . . . . . . . . . . . . . . 5.550% 04/02/98 4,882,833
5,000,000 Swedish Export Credit Corp. . . . . . . . . . . . . . . 5.530% 01/07/98 4,948,540
5,000,000 Swiss Re Financial Products . . . . . . . . . . . . . . 5.550% 01/27/98 4,932,938
5,000,000 Toronto Dominion Holdings USA, Inc. . . . . . . . . . . 5.500% 11/13/97 4,990,833
5,000,000 Toshiba International Finance PLC (UK). . . . . . . . . 5.530% 11/26/97 4,980,799
5,000,000 Toyota Motor Credit Corp. . . . . . . . . . . . . . . . 5.480% 11/14/97 4,990,106
5,000,000 Unilever Capital Corp.. . . . . . . . . . . . . . . . . 5.680% 11/03/97 4,998,422
5,000,000 USAA Capital Corp.. . . . . . . . . . . . . . . . . . . 5.540% 03/18/98 4,894,586
5,000,000 Wool International. . . . . . . . . . . . . . . . . . . 5.480% 02/10/98 4,923,128
5,000,000 Xerox Corp. . . . . . . . . . . . . . . . . . . . . . . 5.500% 12/10/97 4,970,207
5,000,000 Yale University . . . . . . . . . . . . . . . . . . . . 5.550% 01/15/98 4,942,187
------------
TOTAL COMMERCIAL PAPER (COST $367,341,244) 367,341,244
------------
COUPON
SHARES/FACE AMOUNT ISSUER RATE
- -------------------------------------------------------------------------------------------------------------------
OTHER SHORT TERM SECURITIES 15.1%
484,824 Benchmark Diversified Assets Fund . . . . . . . . . . . . . . . . . . . . . . . . . 484,824
$ 5,000,000 Bayerische Landesbank Girozentrale, Eurodollar Note . . 7.750% 12/19/97 5,012,100
5,000,000 Bayerische Vereinsbank Aktiengesellschaft, YCD. . . . . 5.820% 11/12/97 5,000,046
5,000,000 Berliner Handels-und Frankfurt Bank, Eurodollar TD. . . 5.875% 11/24/97 5,000,000
5,000,000 Federal Farm Credit Banks Funding Corp., AN . . . . . . 5.900% 04/01/98 4,994,527
10,000,000 Federal Home Loan Bank, AN. . . . . . . . . . . . . . . 5.805% 08/20/98 9,998,126
10,000,000 Federal Home Loan Bank, AN. . . . . . . . . . . . . . . 5.893% 10/02/98 10,000,000
10,000,000 Federal Home Loan Bank, AN. . . . . . . . . . . . . . . 5.700% 02/25/98 10,000,000
5,000,000 Royal Bank of Canada, YCD . . . . . . . . . . . . . . . 5.780% 12/11/97 5,000,533
5,000,000 Student Loan Marketing Association, AN. . . . . . . . . 5.630% 12/24/97 5,000,000
5,000,000 Swiss Bank Corp., YCD . . . . . . . . . . . . . . . . . 5.730% 03/17/98 5,000,719
------------
TOTAL OTHER SHORT TERM SECURITIES
(COST $65,490,875) 65,490,875
------------
TOTAL INVESTMENTS (COST $432,832,119), 99.9% 432,832,119
OTHER ASSETS AND LIABILITIES, NET, 0.1% 320,038
------------
NET ASSETS, 100.0% $433,152,157
------------
------------
</TABLE>
** 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.
44 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
COUPON MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 91.1%
<S> <C> <C> <C> <C>
$ 1,000,000 City of Anaheim, Public Finance Authority Revenue
Bond, Anaheim Electric Utility Projects . . . . . . . 5.600% 10/01/16 $ 1,022,330
1,000,000 California State Dept. of Veterans Affairs,
Home Purchase Revenue 1991 Ser. A . . . . . . . . . . 6.450% 08/01/00 1,041,210
500,000 California State Dept. of Water Resources,
Central Valley Project Revenue. . . . . . . . . . . . 4.800% 12/01/07 506,450
1,000,000 California State Dept. of Water Resources,
Central Valley Project Revenue Ser. H . . . . . . . . 6.400% 12/01/00 1,073,250
1,000,000 California State Public Works Board, Lease Revenue
Dept. of Corrections, Prison D. . . . . . . . . . . . 5.100% 06/01/06 1,031,340
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 1,068,730
1,000,000 Contra Costa Transportation Authority, Sales Tax
Revenue 1991 Ser. A . . . . . . . . . . . . . . . . . 6.400% 03/01/01 1,073,000
1,000,000 Contra Costa Water Authority, Water Treatment
Revenue Refunding 1993 Ser. A (FGIC Insured). . . . . 5.300% 10/01/05 1,051,310
1,000,000 Contra Costa Water District, Water Revenue Ser. F
(FGIC Insured). . . . . . . . . . . . . . . . . . . . 5.250% 10/01/08 1,035,700
1,000,000 East Bay CA MUD, Water System Subordinated
Revenue Ser. 1994 . . . . . . . . . . . . . . . . . . 8.500% 06/01/98 1,027,410
1,000,000 City of Fairfield, Water Revenue (AMBAC Insured). . . . 5.250% 04/01/14 1,008,750
1,225,000 City of Industry, Urban Development Agency Tax
Allocation (MBIA Insured) . . . . . . . . . . . . . . 5.250% 05/01/12 1,249,463
1,000,000 City of Irvine, Assessment District No. 89-10,
Limited Obligation Refunding Improvement
(MBIA Insured). . . . . . . . . . . . . . . . . . . . 4.200% 09/02/05 971,190
1,000,000 City of Los Angeles, 1990 Solid Waste Collection
Project COP Revenue . . . . . . . . . . . . . . . . . 6.400% 11/01/97 1,000,000
1,000,000 City of Los Angeles, Convention & Exhibition Center
Authority, Lease Revenue Bonds Refunding Ser. A . . . 5.200% 08/15/09 1,026,320
1,500,000 City of Los Angeles, Wastewater System Revenue
Ser. A (MBIA Insured) . . . . . . . . . . . . . . . . 5.000% 12/01/11 1,510,770
1,000,000 City of Los Angeles, Wastewater System Revenue
Ser. B (MBIA Insured) . . . . . . . . . . . . . . . . 5.700% 06/01/23 1,024,030
1,000,000 Los Angeles County Public Works Finance Authority,
Lease Revenue Ser. B (MBIA Insured) . . . . . . . . . 5.250% 09/01/09 1,039,320
750,000 Los Angeles County Sanitation District Finance
Authority, 1993 Ser. A. . . . . . . . . . . . . . . . 5.250% 10/01/06 786,578
1,000,000 Los Angeles Dept. of Water & Power, Electric
Plant Revenue . . . . . . . . . . . . . . . . . . . . 4.700% 10/15/06 1,009,370
1,000,000 Los Angeles Dept. of Water & Power, Electric
Plant Revenue Refunding . . . . . . . . . . . . . . . 5.500% 09/01/07 1,059,240
1,000,000 Los Angeles Dept. of Water & Power, Waterworks
Revenue Refunding . . . . . . . . . . . . . . . . . . 5.625% 04/15/08 1,058,230
1,000,000 Metropolitan Water District of Southern California,
Waterworks GO Refunding 1993 Ser. A . . . . . . . . . 5.250% 03/01/05 1,053,360
1,000,000 Modesto High School District, 1993 GO Refunding
(FGIC Insured). . . . . . . . . . . . . . . . . . . . 5.300% 08/01/04 1,054,390
1,000,000 Modesto Irrigation District Finance Authority,
Domestic Water Project Revenue 1992 Ser. A
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 5.650% 09/01/03 1,071,060
1,000,000 M-S-R Public Power Agency, San Juan Project
Revenue Ser. F. . . . . . . . . . . . . . . . . . . . 5.650% 07/01/03 1,069,260
1,000,000 Northern California Power Agency, Geothermal
Project #3 Revenue Ser. A . . . . . . . . . . . . . . 5.600% 07/01/06 1,040,280
1,000,000 Orange County Transportation Authority,
Measure M Sales Tax Revenue First Ser. 1992 . . . . . 6.000% 02/15/06 1,098,390
1,000,000 Orange County Transportation Authority,
Measure M Sales Tax Revenue Second Senior Ser.
1994 (FGIC Insured) . . . . . . . . . . . . . . . . . 5.000% 02/15/08 1,031,600
500,000 Orange County Water District, COP 1990 Project A. . . . 6.500% 08/15/98 510,615
500,000 City of Pasadena, Electric Works Revenue Ser. 1990. . . 6.500% 08/01/99 522,440
500,000 City of Pasadena, GO Refunding Police and Jail
Building 1993 . . . . . . . . . . . . . . . . . . . . 5.000% 06/01/07 509,805
1,000,000 Rancho Cucamonga RDA, 1994 Tax Allocation Refunding
(MBIA Insured). . . . . . . . . . . . . . . . . . . . 5.000% 09/01/07 1,027,990
1,000,000 City of Riverside, Electric Revenue 1991. . . . . . . . 6.100% 10/01/00 1,056,100
1,000,000 City of Riverside, Electric Revenue Refunding 1993. . . 5.000% 10/01/06 1,028,930
1,000,000 City of Riverside, Electric Revenue Refunding 1993
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 5.000% 10/01/13 991,300
1,000,000 Sacramento County Sanitation District Finance
Authority, Revenue Bond (MBIA Insured). . . . . . . . 5.000% 12/01/08 1,019,940
1,000,000 Sacramento County Sanitation District Finance
Authority, Revenue Bond (MBIA Insured). . . . . . . . 5.125% 12/01/13 997,240
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45
<PAGE>
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
October 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SHARES/ COUPON MATURITY VALUE
FACE AMOUNT ISSUER RATE DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
<S> <C> <C> <C> <C>
$ 1,000,000 Sacramento MUD, Electric Revenue 1991 Ser. Y. . . . . . 6.250% 09/01/00 $ 1,060,740
2,000,000 Sacramento MUD, Electric Revenue 1997 Ser. L. . . . . . 5.125% 07/01/15 1,998,240
1,000,000 San Bernardino County Transportation Authority,
Sales Tax Revenue 1992 Ser. A (FGIC Insured). . . . . 6.000% 03/01/03 1,082,170
1,000,000 City and County of San Francisco International
Airport, Revenue Second Ser. Issue 1
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 6.100% 05/01/03 1,089,380
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 1,061,520
1,000,000 City and County of San Francisco RDA, Tax
Allocation 1997 Ser. B . . . . . . . . . . . . . . . 5.700% 08/01/14 1,019,160
1,000,000 City and County of San Francisco Sewer,
Revenue Refunding Ser. 1992 (AMBAC Insured) . . . . . 5.800% 10/01/05 1,076,020
1,000,000 City of San Jose, Finance Authority (Convention
Center Refunding Project) 1993 Ser. C
(MBIA Insured). . . . . . . . . . . . . . . . . . . . 5.750% 09/01/03 1,063,460
1,000,000 Santa Margarita/Dana Point Authority Orange County,
Revenue Bond Ser. A . . . . . . . . . . . . . . . . . 5.375% 08/01/04 1,056,930
1,000,000 Santa Monica-Malibu Unified School District,
Public School Facilities Reconstruction Projects. . . 5.500% 08/01/18 1,000,530
1,000,000 Southern California Public Power Authority,
Mead-Phoenix Project Revenue 1994 Ser. A
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 4.750% 07/01/09 995,510
1,000,000 Southern California Public Power Authority,
Mead-Phoenix Project Revenue 1994 Ser. A
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 4.750% 07/01/08 1,004,170
1,000,000 Southern California Public Power Authority,
Palo Verde Power Projects Revenue 1993 Ser. A . . . . 5.100% 07/01/06 1,055,980
500,000 City of Stockton, 1990 Wastewater System Project
COP (AMBAC Insured) . . . . . . . . . . . . . . . . . 6.700% 09/01/98 512,020
500,000 City of Stockton, 1990 Wastewater System Project
COP (AMBAC Insured) . . . . . . . . . . . . . . . . . 6.800% 09/01/99 517,275
1,000,000 University of California, Housing System Revenue
1993 Ser. A (MBIA Insured). . . . . . . . . . . . . . 5.500% 11/01/08 1,055,560
500,000 University of California, Research Facilities
Revenue 1995 Ser. C (AMBAC Insured) . . . . . . . . . 5.100% 09/01/07 517,255
1,000,000 West & Central Basin Finance Authority,
West Basin Water Revenue Refunding Project
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 5.125% 08/01/06 1,039,780
1,000,000 City of Whittier, Solid Waste Revenue Ser. A
(AMBAC Insured) . . . . . . . . . . . . . . . . . . . 5.375% 08/01/14 1,012,790
1,500,000 Yucaipa School Facilities Finance Authority,
1995 Sweetwater Refunding (MBIA Insured). . . . . . . 6.000% 09/01/10 1,587,240
------------
TOTAL MUNICIPAL BONDS (COST $55,820,663) 58,562,421
------------
SHORT TERM SECURITIES 7.7%
2,863,529 Provident Institutional Fund: Municipal Fund
for California Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,863,529
$ 2,100,000 Marin County, Tax and Revenue Anticipation Notes,
1997 Ser. L . . . . . . . . . . . . . . . . . . . . . 4.500% 07/31/98 2,112,137
------------
TOTAL SHORT TERM SECURITIES (COST $4,973,903) 4,975,666
------------
TOTAL INVESTMENTS (COST $60,794,566), 98.8% 63,538,087
OTHER ASSETS AND LIABILITIES, NET, 1.2% 771,347
------------
NET ASSETS, 100.0% $ 64,309,434
------------
------------
</TABLE>
46 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Country Diversification, Portfolio Abbreviations and Currency Abbreviations
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
COUNTRY COUNTRY INT'L INT'L EMERGING U.S. U.S. MONEY CALIF
CODE NAME GLOBAL GROWTH SMALL CAP MARKETS MICRO-CAP SMALL CAP GROWTH BOND MARKET TAX-FREE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AR ARGENTINA 0.3% - 1.0% 4.9% - - - - - -
AS AUSTRIA - - 0.4% - - - - - - -
AU AUSTRALIA 2.9% 1.1% 7.1% - - - - - - -
BE BELGIUM - - 0.9% - - - - - - -
BR BRAZIL - - 6.8% 12.7% - - - - - -
CH CHINA - - 1.7% - - - - - - -
CL CHILE 0.3% - - 3.7% - - - - - -
CN CANADA 2.7% - 5.3% - - - - - - -
CO COLOMBIA - - 1.2% - - - - - - -
CZ CZECH REPUBLIC - - 2.2% - - - - - - -
FI FINLAND 0.7% 8.6% 0.6% - - - - - - -
FR FRANCE 1.5% 5.7% 4.6% - - - - - - -
GM GERMANY 3.6% 9.9% 0.8% - - - - - - -
GR GREECE - - 2.3% - - - - - - -
HK HONG KONG 0.9% 1.8% 6.4% 4.7% - - - - - -
HU HUNGARY - - - 3.1% - - - - - -
ID INDONESIA 0.4% 2.1% 0.1% 4.2% - - - - - -
IN INDIA 0.1% - - 7.7% - - - - - -
IR IRELAND 1.0% - 1.0% - - - - - - -
IT ITALY 0.8% 5.4% - - - - - - - -
JP JAPAN 3.6% 21.0% 14.1% - - - - - - -
MX MEXICO 0.7% - 0.8% 11.5% - - - - - -
MY MALAYSIA 0.8% 0.1% 1.0% - - - - - - -
NL NETHERLANDS 2.8% 6.3% 6.5% - - - - - - -
NO NORWAY - - - - - - - - - -
NZ NEW ZEALAND 0.3% - 0.3% - - - - 2.2% - -
PE PERU 0.1% - - - - - - - - -
PH PHILIPPINES 0.3% 0.5% 0.2% - - - - - - -
PK PAKISTAN - - 1.3% - - - - - - -
PO POLAND - - - 6.8% - - - - - -
PT PORTUGAL - - 6.0% - - - - - - -
RU RUSSIA - - - 7.7% - - - - - -
SA SOUTH AFRICA - - 1.3% 0.6% - - - - - -
SG SINGAPORE 1.0% 2.7% 1.2% - - - - - - -
SK SOUTH KOREA 0.3% 0.8% 4.1% - - - - - - -
SP SPAIN 1.8% - 0.8% - - - - - - -
SR SAUDI ARABIA - - - 2.2% - - - - - -
SW SWEDEN 2.6% 8.0% - - - - - - - -
SZ SWITZERLAND 0.7% 3.0% - - - - - - - -
TH THAILAND - - 5.8% 0.6% - - - - - -
TU TURKEY - - 2.6% 4.4% - - - - - -
TW TAIWAN 0.3% 1.8% - 3.7% - - - - - -
UK UNITED KINGDOM 5.9% 8.6% 10.1% - - - - - - -
US UNITED STATES 63.6% 12.6% 1.5% 21.5% 100.0% 100.0% 100.0% 97.8% 100.0% 100.0%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
</TABLE>
PORTFOLIO ABBREVIATIONS
ADR American Depository Receipt
AMBAC American Municipal Bond Assurance Corp.
AN Agency Note
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
COP Certificates of Participation
CP Commercial Paper
DN Discount Note
FGIC Financial Guaranty Insurance Corp.
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
FRN Floating Rate Note
GDR Global Depository Receipt
GDS Global Depository Shares
GNMA Government National Mortgage Association
GO General Obligation
MBIA Municipal Bond Investor Assurance Corp.
MUD Municipal Utility District
PAC Planned Amortization Class
RDA Redevelopment Agency
REMIC Real Estate Mortgage Investment Conduit
SDR Swedish Depository Receipt
TBA To Be Announced
TD Time Deposit
YCD Yankee Certificate of Deposit
CURRENCY ABBREVIATIONS
AUS$ Australian Dollar
CAN$ Canadian Dollar
DM German Deutschemark
ESP Spanish Peseta
FF French Franc
IEP Irish Punt
NLG Netherlands Guilder
NZ$ New Zealand Dollar
SEK Swedish Krona
L British Pound
US$ US Dollar
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47
<PAGE>
FREMONT MUTUAL FUNDS, INC.
October 31, 1997
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
(ALL NUMBERS IN THOUSANDS EXCEPT NET ASSET VALUE PER SHARE)
<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 $ 620,460 $ 36,334 $ 10,117 $ 12,837
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Investments in securities at value (Note 1) 674,404 38,571 8,447 11,441
Cash -- -- 71 91
Dividends and interest receivable 5,186 55 38 12
Receivable for securities sold 5,888 -- -- 500
Receivable from management company -- -- -- 26
Receivable from sale of fund shares 121 85 11 159
Variation margin receivable -- -- -- --
Unrealized appreciation on foreign currency
contracts (Note 1) 818 -- -- --
Prepaid expense 3 -- -- --
Unamortized organization costs (Note 3) -- -- -- 14
----------- ----------- ----------- -----------
TOTAL ASSETS 686,420 38,711 8,567 12,243
----------- ----------- ----------- -----------
LIABILITIES:
Bank overdraft 2,065 -- -- --
Liabilities for options written (Note 4) -- -- -- --
Dividends payable to shareholders 448 -- 17 19
Payable for securities purchased 14,191 -- -- --
Payable to management company -- -- -- --
Payable for fund shares redeemed 420 15 4 5
Unrealized depreciation on foreign currency
contracts (Note 1) 2,952 -- -- 2
Accrued expenses:
Investment advisory, administrative,
distribution and shareholder servicing fees 458 53 12 21
Other 139 -- -- 21
----------- ----------- ----------- -----------
TOTAL LIABILITIES 20,673 68 33 68
----------- ----------- ----------- -----------
NET ASSETS $ 665,747 $ 38,643 $ 8,534 $ 12,175
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net assets consist of:
Paid in capital $ 600,973 $ 36,067 $ 10,140 $ 13,425
Undistributed net investment income (loss) 2,452 (50) 6 --
Unrealized appreciation (depreciation) on
investments 53,943 2,237 (1,670) (1,396)
Unrealized appreciation (depreciation) on
foreign currency
contracts and other assets and liabilities (2,088) (1) 3 (9)
Accumulated net realized gain 10,467 390 55 155
----------- ----------- ----------- -----------
NET ASSETS $ 665,747 $ 38,643 $ 8,534 $ 12,175
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SHARES OF CAPITAL STOCK OUTSTANDING 47,023 3,725 1,037 1,271
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSET VALUE PER SHARE $ 14.16 $ 10.37 $ 8.23 $ 9.58
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
48 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
U.S. U.S.
MICRO-CAP SMALL CAP GROWTH BOND
FUND FUND FUND FUND
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities at cost $ 160,550 $ 6,277 $ 123,279 $ 99,517
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Investments in securities at value (Note 1) 172,162 6,030 146,981 102,119
Cash -- -- -- 25
Dividends and interest receivable 11 1 220 631
Receivable for securities sold 5,620 -- 99 4,891
Receivable from management company -- 10 1 --
Receivable from sale of fund shares 1,848 13 603 1,262
Variation margin receivable -- -- 84 33
Unrealized appreciation on foreign currency
contracts (Note 1) -- -- -- 25
Prepaid expense -- -- 1 --
Unamortized organization costs (Note 3) -- 16 -- 1
----------- ----------- ----------- -----------
TOTAL ASSETS 179,641 6,070 147,989 108,987
----------- ----------- ----------- -----------
LIABILITIES:
Bank overdraft 596 -- -- --
Liabilities for options written (Note 4) -- -- -- 1
Dividends payable to shareholders 1,336 -- 56 20
Payable for securities purchased 4,120 687 -- 18,514
Payable to management company -- 16 -- --
Payable for fund shares redeemed 1,774 -- 157 3
Unrealized depreciation on foreign currency
contracts (Note 1) -- -- -- 65
Accrued expenses:
Investment advisory, administrative,
distribution and shareholder servicing fees 308 10 89 32
Other -- 7 46 50
----------- ----------- ----------- -----------
TOTAL LIABILITIES 8,134 720 348 18,685
----------- ----------- ----------- -----------
NET ASSETS $ 171,507 $ 5,350 $ 147,641 $ 90,302
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net assets consist of:
Paid in capital $ 151,467 $ 5,595 $ 120,757 $ 86,604
Undistributed net investment income (loss) -- 2 69 198
Unrealized appreciation (depreciation) on
investments 11,612 (247) 23,611 3,027
Unrealized appreciation (depreciation) on
foreign currency contracts and other assets
and liabilities -- -- -- (12)
Accumulated net realized gain 8,428 -- 3,204 485
----------- ----------- ----------- -----------
NET ASSETS $ 171,507 $ 5,350 $ 147,641 $ 90,302
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SHARES OF CAPITAL STOCK OUTSTANDING 7,558 559 9,868 8,824
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSET VALUE PER SHARE $ 22.69 $ 9.57 $ 14.96 $ 10.23
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
CALIFORNIA
MONEY MARKET INTERMEDIATE
FUND TAX-FREE
FUND
--------------------------------------
<S> <C> <C>
ASSETS:
Investments in securities at cost $ 432,832 $ 60,795
----------- -----------
----------- -----------
Investments in securities at value (Note 1) 432,832 63,538
Cash 500 34
Dividends and interest receivable 1,573 807
Receivable for securities sold -- --
Receivable from management company -- --
Receivable from sale of fund shares 195 11
Variation margin receivable -- --
Unrealized appreciation on foreign currency
contracts (Note 1) -- --
Prepaid expense 20 --
Unamortized organization costs (Note 3) -- --
----------- -----------
TOTAL ASSETS 435,120 64,390
----------- -----------
----------- -----------
LIABILITIES:
Bank overdraft -- --
Liabilities for options written (Note 4) -- --
Dividends payable to shareholders 8 28
Payable for securities purchased -- --
Payable to management company -- --
Payable for fund shares redeemed 1,812 --
Unrealized depreciation on foreign currency -- --
contracts (Note 1)
Accrued expenses:
Investment advisory, administrative,
distribution and shareholder servicing fees 84 19
Other 64 34
----------- -----------
TOTAL LIABILITIES 1,968 81
----------- -----------
NET ASSETS $ 433,152 $ 64,309
----------- -----------
----------- -----------
Net assets consist of:
Paid in capital $ 433,152 $ 61,537
Undistributed net investment income (loss) -- --
Unrealized appreciation (depreciation) on
investments -- 2,743
Unrealized appreciation (depreciation) on
foreign currency contracts and other assets
and liabilities -- --
Accumulated net realized gain -- 29
----------- -----------
NET ASSETS $ 433,152 $ 64,309
----------- -----------
----------- -----------
SHARES OF CAPITAL STOCK OUTSTANDING 433,152 5,851
----------- -----------
----------- -----------
NET ASSET VALUE PER SHARE $ 1.00 $ 10.99
----------- -----------
----------- -----------
</TABLE>
49
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
(ALL NUMBERS IN THOUSANDS)
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
GLOBAL GROWTH SMALL CAP
FUND FUND FUND
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 14,116 $ 161 $ 18
Dividends 8,387 596 326
--------- --------- ---------
TOTAL INCOME* 22,503 757 344
--------- --------- ---------
EXPENSES:
Investment advisory and administrative fees (Note 2) 4,812 618 149
Shareholder servicing fees (Note 2) 123 -- --
Custody fees 137 -- --
Distribution fees (Note 2) -- -- --
Accounting fees 166 -- --
Audit and legal fees 42 -- --
Directors' fees (Note 2) 8 -- --
Registration fees 64 -- --
Interest expense (Note 1) -- -- --
Other 96 -- --
--------- --------- ---------
TOTAL EXPENSES BEFORE REDUCTIONS 5,448 618 149
Expenses waived and/or reimbursed by Advisor (Note 2) -- -- --
--------- --------- ---------
TOTAL NET EXPENSES 5,448 618 149
--------- --------- ---------
NET INVESTMENT INCOME (LOSS) 17,055 139 195
--------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments 26,415 390 107
Transactions in written options -- -- --
Foreign currency transactions 7,073 (356) (4)
Net unrealized appreciation (depreciation) on:
Investments 26,358 (193) (1,782)
Translation of assets and liabilities in
foreign currencies (1,161) (1) 2
--------- --------- ---------
Net realized and unrealized gain (loss) from
investments and foreign currency 58,685 (160) (1,677)
--------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 75,740 $ (21) $ (1,482)
--------- --------- ---------
--------- --------- ---------
</TABLE>
* Net of foreign taxes withheld of $374 for Fremont Global Fund, $67 for
Fremont International Growth Fund, $29 for Fremont International Small Cap
Fund and $11 for Fremont Emerging Markets Fund.
# Period from September 24, 1997 (commencement of operations) to
October 31, 1997.
50 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
EMERGING U.S. U.S.
MARKETS MICRO-CAP SMALL CAP GROWTH
FUND FUND FUND# FUND
----------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 87 $ 1,755 $ 18 $ 259
Dividends 138 182 -- 2,511
--------- --------- --------- ---------
TOTAL INCOME* 225 1,937 18 2,770
--------- --------- --------- ---------
EXPENSES:
Investment advisory and administrative fees (Note 2) 112 3,050 6 786
Shareholder servicing fees (Note 2) 31 -- 3 58
Custody fees 27 -- 1 21
Distribution fees (Note 2) 24 -- 1 --
Accounting fees 15 -- 1 35
Audit and legal fees 17 -- 2 64
Directors' fees (Note 2) 8 -- 1 8
Registration fees 15 -- 2 39
Interest expense (Note 1) -- -- -- --
Other 9 -- 1 17
--------- --------- --------- ---------
TOTAL EXPENSES BEFORE REDUCTIONS 258 3,050 18 1,028
Expenses waived and/or reimbursed by Advisor (Note 2) (232) (32) (10) --
--------- --------- --------- ---------
TOTAL NET EXPENSES 26 3,018 8 1,028
--------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS) 199 (1,081) 10 1,742
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments 1,568 20,401 5 8,013
Transactions in written options -- -- -- --
Foreign currency transactions (189) -- -- --
Net unrealized appreciation (depreciation) on:
Investments (1,352) 11,176 (247) 19,122
Translation of assets and liabilities in
foreign currencies (9) -- -- --
--------- --------- --------- ---------
Net realized and unrealized gain (loss) from
investments and foreign currency 18 31,577 (242) 27,135
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 217 $ 30,496 $ (232) $ 28,877
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
CALIFORNIA
INTERMEDIATE
BOND MONEY MARKET TAX-FREE
FUND FUND FUND
-------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 5,278 $ 21,922 $ 3,185
Dividends 35 -- --
--------- --------- ---------
TOTAL INCOME* 5,313 21,922 3,185
--------- --------- ---------
EXPENSES:
Investment advisory and administrative fees (Note 2) 416 1,427 313
Shareholder servicing fees (Note 2) 31 80 29
Custody fees 25 32 8
Distribution fees (Note 2) -- -- --
Accounting fees 31 92 29
Audit and legal fees 24 24 26
Directors' fees (Note 2) 8 8 8
Registration fees 18 76 6
Interest expense (Note 1) 11 -- --
Other 11 29 3
--------- --------- ---------
TOTAL EXPENSES BEFORE REDUCTIONS 575 1,768 422
Expenses waived and/or reimbursed by Advisor (Note 2) (114) (590) (126)
--------- --------- ---------
TOTAL NET EXPENSES 461 1,178 296
--------- --------- ---------
NET INVESTMENT INCOME (LOSS) 4,852 20,744 2,889
--------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments 1,197 -- 29
Transactions in written options 71 -- --
Foreign currency transactions 458 -- --
Net unrealized appreciation (depreciation) on:
Investments 713 -- 1,043
Translation of assets and liabilities in
foreign currencies (199) -- --
--------- --------- ---------
Net realized and unrealized gain (loss) from
investments and foreign currency 2,240 -- 1,072
--------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 7,092 $ 20,744 $ 3,961
--------- --------- ---------
</TABLE>
51
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(ALL NUMBERS IN THOUSANDS)
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL GROWTH
FUND FUND
------------------------ --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97 10/31/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 17,055 $ 14,179 $ 139 $ (72)
Net realized gain (loss) from investments
and transactions in written options 26,415 66,431 390 2,386
Net realized gain (loss) from foreign
currency transactions 7,073 3,714 (356) (123)
Net unrealized appreciation (depreciation)
on investments 26,358 (16,097) (193) 370
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies (1,161) (967) (1) (1)
--------- --------- --------- ---------
Net increase (decrease) in net assets
from operations 75,740 67,260 (21) 2,560
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (22,567) (15,978) -- (25)
Net realized gains (86,397) (19,405) (103) --
--------- --------- --------- ---------
Total distributions to shareholders (108,964) (35,383) (103) (25)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 381,253 86,354 18,693 7,454
Payments for shares redeemed (360,553) (62,547) (15,302) (6,897)
Reinvested dividends 106,121 34,111 103 25
--------- --------- --------- ---------
Net increase in net assets
from capital share transactions 126,821 57,918 3,494 582
--------- --------- --------- ---------
Net increase (decrease) in net assets 93,597 89,795 3,370 3,117
Net assets at beginning of period 572,150 482,355 35,273 32,156
--------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 665,747 $ 572,150 $ 38,643 $ 35,273
--------- --------- --------- ---------
--------- --------- --------- ---------
Undistributed net investment income (loss)
included in net assets, end of period $ 2,452 $ 2,242 $ (50) $ --
--------- --------- --------- ---------
--------- --------- --------- ---------
CAPITAL TRANSACTIONS IN SHARES:
Sold 25,640 5,890 1,654 728
Redeemed (24,185) (4,265) (1,330) (647)
Reinvested dividends 7,698 2,372 9 2
--------- --------- --------- ---------
Net increase from capital share
transactions 9,153 3,997 333 83
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
# Period from June 24, 1996 (commencement of operations) to October 31, 1996.
* Period from September 24, 1997 (commencement of operations) to
October 31, 1997.
52 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP EMERGING MARKETS
FUND FUND
------------------------ ------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97 10/31/96#
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 195 $ 102 $ 199 $ 39
Net realized gain (loss) from investments
and transactions in written options 107 273 1,568 (85)
Net realized gain (loss) from foreign
currency transactions (4) (72) (189) (5)
Net unrealized appreciation (depreciation)
on investments (1,782) 329 (1,352) (44)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies 2 2 (9) --
--------- --------- --------- ---------
Net increase (decrease) in net assets
from operations (1,482) 634 217 (95)
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (212) (37) (24) (26)
Net realized gains (257) -- (1,322) --
--------- --------- --------- ---------
Total distributions to shareholders (469) (37) (1,346) (26)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 4,033 5,840 19,897 3,982
Payments for shares redeemed (3,192) (1,489) (11,691) (115)
Reinvested dividends 430 21 1,326 26
--------- --------- --------- ---------
Net increase in net assets
from capital share transactions 1,271 4,372 9,532 3,893
--------- --------- --------- ---------
Net increase (decrease) in net assets (680) 4,969 8,403 3,772
Net assets at beginning of period 9,214 4,245 3,772 --
--------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 8,534 $ 9,214 $ 12,175 $ 3,772
--------- --------- --------- ---------
--------- --------- --------- ---------
Undistributed net investment income (loss)
included in net assets, end of period $ 6 $ 27 $ -- $ 7
--------- --------- --------- ---------
--------- --------- --------- ---------
CAPITAL TRANSACTIONS IN SHARES:
Sold 401 583 1,730 401
Redeemed (319) (149) (990) (12)
Reinvested dividends 47 2 139 3
--------- --------- --------- ---------
Net increase from capital share
transactions 129 436 879 392
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
U.S. MICRO-CAP U.S. SMALL CAP
FUND FUND
---------------------------- --------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97*
--------- --------- ---------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (1,081) $ (233) $ 10
Net realized gain (loss) from investments
and transactions in written options 20,401 5,347 5
Net realized gain (loss) from foreign
currency transactions -- -- --
Net unrealized appreciation (depreciation)
on investments 11,176 (512) (247)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies -- -- --
--------- --------- ---------
Net increase (decrease) in net assets
from operations 30,496 4,602 (232)
--------- --------- ---------
Distributions to shareholders from:
Net investment income -- -- (8)
Net realized gains (16,002) (323) (5)
--------- --------- ---------
Total distributions to shareholders (16,002) (323) (13)
--------- --------- ---------
From capital share transactions:
Proceeds from shares sold 410,139 162,320 5,582
Payments for shares redeemed (369,757) (72,224) --
Reinvested dividends 14,150 314 13
--------- --------- ---------
Net increase in net assets
from capital share transactions 54,532 90,410 5,595
--------- --------- ---------
Net increase (decrease) in net assets 69,026 94,689 5,350
Net assets at beginning of period 102,481 7,792 --
--------- --------- ---------
NET ASSETS AT END OF PERIOD $ 171,507 $ 102,481 $ 5,350
--------- --------- ---------
--------- --------- ---------
Undistributed net investment income (loss)
included in net assets, end of period $ -- $ -- $ 2
--------- --------- ---------
--------- --------- ---------
CAPITAL TRANSACTIONS IN SHARES:
Sold 18,493 8,425 558
Redeemed (16,801) (3,768) --
Reinvested dividends 644 21 1
--------- --------- ---------
Net increase from capital share
transactions 2,336 4,678 559
--------- --------- ---------
--------- --------- ---------
</TABLE>
53
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(ALL NUMBERS IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH BOND
FUND FUND
------------------------ ------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97 10/31/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 1,742 $ 511 $ 4,852 $ 5,390
Net realized gain (loss) from investments
and transactions in written options 8,013 17,602 1,268 (216)
Net realized gain from foreign currency transactions -- -- 458 97
Net unrealized appreciation (depreciation) on
investments 19,122 (4,559) 713 277
Net unrealized appreciation (depreciation) on
translation of assets and liabilities
in foreign currencies -- -- (199) 170
--------- --------- --------- ---------
Net increase in net assets from operations 28,877 13,554 7,092 5,718
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (1,783) (409) (4,965) (5,648)
Net realized gains (22,466) (3,509) (173) (1,968)
--------- --------- --------- ---------
Total distributions to shareholders (24,249) (3,918) (5,138) (7,616)
From capital share transactions:
Proceeds from shares sold 100,616 31,462 38,603 17,733
Payments for shares redeemed (60,351) (25,983) (25,784) (39,028)
Reinvested dividends 24,124 3,877 4,952 7,427
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital share transactions 64,389 9,356 17,771 (13,868)
--------- --------- --------- ---------
Net increase (decrease) in net assets 69,017 18,992 19,725 (15,766)
Net assets at beginning of period 78,624 59,632 70,577 86,343
--------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 147,641 $ 78,624 $ 90,302 $ 70,577
--------- --------- --------- ---------
--------- --------- --------- ---------
Undistributed net investment income included in
net assets, end of period $ 69 $ 111 $ 198 $ 3
--------- --------- --------- ---------
--------- --------- --------- ---------
CAPITAL TRANSACTIONS IN SHARES:
Sold 7,058 2,314 3,846 1,778
Redeemed (4,276) (1,945) (2,580) (3,985)
Reinvested dividends 1,851 301 495 748
--------- --------- --------- ---------
Net increase from capital share transactions 4,633 670 1,761 1,459
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
54 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA
MONEY MARKET INTERMEDIATE
FUND TAX-FREE FUND
------------------------ ------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/97 10/31/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 20,744 $ 15,629 $ 2,889 $ 2,476
Net realized gain (loss) from investments
and transactions in written options -- -- 29 45
Net realized gain from foreign currency transactions -- -- -- --
Net unrealized appreciation (depreciation) on
investments -- -- 1,043 (192)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities
in foreign currencies -- -- -- --
--------- --------- --------- ---------
Net increase in net assets from operations 20,744 15,629 3,961 2,329
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (20,744) (15,269) (2,889) (2,476)
Net realized gains -- -- (45) (120)
--------- --------- --------- ---------
Total distributions to shareholders (20,744) (15,629) (2,934) (2,596)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 872,518 308,477 15,727 2,286
Payments for shares redeemed (789,399) (293,546) (6,190) (3,403)
Reinvested dividends 20,381 15,409 2,589 2,227
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital share transactions 103,500 30,340 12,126 1,110
--------- --------- --------- ---------
Net increase (decrease) in net assets 103,500 30,340 13,153 843
Net assets at beginning of period 329,652 299,312 51,156 50,313
--------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 433,152 $ 329,652 $ 64,309 $ 51,156
--------- --------- --------- ---------
--------- --------- --------- ---------
Undistributed net investment income included in
net assets, end of period $ -- $ -- $ -- $ --
--------- --------- --------- ---------
--------- --------- --------- ---------
CAPITAL TRANSACTIONS IN SHARES:
Sold 872,518 308,477 1,446 210
Redeemed (789,399) (293,546) (568) (315)
Reinvested dividends 20,381 15,409 238 206
--------- --------- --------- ---------
Net increase from capital share transactions 103,500 30,340 1,116 101
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
55
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL FUND YEAR ENDED OCTOBER 31
----------------------------------------------------
SELECTED PER SHARE DATA 1997 1996 1995 1994 1993
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.11 $14.24 $13.13 $13.17 $11.52
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .45 .39 .40 .26 .32
Net realized and unrealized gain (loss) 1.31 1.49 1.24 (.03) 1.67
------ ------ ------ ------ ------
Total investment operations 1.76 1.88 1.64 .23 1.99
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.52) (.44) (.50) (.14) (.26)
From net realized gains (2.19) (.57) (.03) (.13) (.08)
------ ------ ------ ------ ------
Total distributions (2.71) (1.01) (.53) (.27) (.34)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.16 $15.11 $14.24 $13.13 $13.17
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 13.01% 13.72% 12.78% 1.74% 17.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $665,747 $572,150 $482,355 $453,623 $186,325
Ratio of expenses to average net assets .85% .87% .88% .95% .99%
Ratio of net investment income to average net assets 2.66% 2.66% 2.98% 2.47% 2.89%
Portfolio turnover rate 48% 71% 83% 52% 40%
Average commission rate paid** $ .0149 $ .0238 -- -- --
* Annualized
** Disclosure not required for years prior to 1996.
<CAPTION>
INTERNATIONAL GROWTH FUND YEAR ENDED OCTOBER 31 PERIOD FROM
--------------------------------- MARCH 1, 1994 TO
SELECTED PER SHARE DATA 1997 1996 1995 OCTOBER 31, 1994
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.40 $ 9.72 $ 9.79 $ 9.57
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .02 (.02) .10 .02
Net realized and unrealized gain (loss) (.02) .71 (.09) .20
------ ------ ------ ------
Total investment operations -- .69 .01 .22
------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income -- (.01) (.08) --
From net realized gains (.03) -- -- --
------ ------ ------ ------
Total distributions (.03) (.01) (.08) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.37 $10.40 $ 9.72 $ 9.79
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN (.01)% 7.07% 0.13% 2.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $38,643 $35,273 $32,156 $29,725
Ratio of expenses to average net assets 1.50% 1.50% 1.50% 1.50%*
Ratio of net investment income (loss) to average net assets .34% (.20)% 1.19% .35%*
Portfolio turnover rate 95% 74% 32% 44%*
Average commission rate paid** $.0173 $.0150 -- --
</TABLE>
* Annualized
** Disclosure not required for years prior to 1996.
56 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP FUND YEAR ENDED OCTOBER 31 PERIOD FROM
--------------------------------- MARCH 1, 1994 TO
SELECTED PER SHARE DATA 1997 1996 1995 OCTOBER 31, 1994
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.15 $ 9.00 $ 9.86 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .14 .14 .10 (.01)
------ ------ ------ ------
Net realized and unrealized gain (loss) (1.58) 1.08 (.88) (.13)
------ ------ ------ ------
Total investment operations (1.44) 1.22 (.78) (.14)
------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.21) (.07) (.08) --
From net realized gains (.27) -- -- --
------ ------ ------ ------
Total distributions (.48) (.07) (.08) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 8.23 $10.15 $ 9.00 $ 9.86
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN (14.56)% 13.69%# (7.96)%# (1.40)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 8,534 $ 9,214 $ 4,245 $ 1,768
Ratio of net expenses to average net assets(a) (b) 1.50% 1.81% 2.06% 2.50%*
Ratio of gross expenses to average net assets(a) (b) 1.50% 2.50% 2.50% 2.50%*
Ratio of net investment income (loss) to average net assets 1.97% 1.61% 1.67% (0.28)%*
Portfolio turnover rate 56% 74% 96% --
Average commission rate paid** $ .0005 $ .0003 -- --
* Annualized
** Disclosure not required for years prior to 1996.
(a) See Note 2 of "Notes to Financial Statements."
(b) Management fees were voluntarily waived from February 1, 1995 to
October 31, 1996.
# Total return would have been lower had the advisor not waived expenses.
<CAPTION>
YEAR PERIOD FROM
EMERGING MARKETS FUND ENDED JUNE 24, 1996 TO
OCTOBER 31, 1997 OCTOBER 31, 1996
SELECTED PER SHARE DATA ---------------- ----------------
<S> <C> <C>
FOR ONE SHARE OUTSTANDING DURING THE PERIOD
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.62 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .17 .10
Net realized and unrealized gain (loss) 1.03 (.41)
------ ------
Total investment operations 1.20 (.31)
------ ------
LESS DISTRIBUTIONS
From net investment income (.06) (.07)
From net realized gains (1.18) --
------ ------
Total distributions (1.24) (.07)
------ ------
NET ASSET VALUE, END OF PERIOD $ 9.58 $ 9.62
------ ------
------ ------
TOTAL RETURN# 12.55% (3.12)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 12,175 $ 3,772
Ratio of net expenses to average net assets(a) .26% --
Ratio of gross expenses to average net assets(a) 2.63% 4.95%*
Ratio of net investment income to average net assets 2.04% 3.32%*
Portfolio turnover rate 208% 20%*
Average commission rate paid $ .0038 $ .0063
</TABLE>
* Annualized
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 57
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. MICRO-CAP FUND YEAR ENDED OCTOBER 31 PERIOD FROM
------------------------------------------ JUNE 30, 1994 TO
SELECTED PER SHARE DATA 1997 1996 1995 OCTOBER 31, 1994
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $19.63 $14.34 $10.34 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.10) (.04) (.05) .02
Net realized and unrealized gain 5.60 5.83 4.05 .34
------ ------ ------ ------
Total investment operations 5.50 5.79 4.00 .36
------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income -- -- -- (.02)
From net realized gains (2.44) (.50) -- --
------ ------ ------ ------
Total distributions (2.44) (.50) -- (.02)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.69 $19.63 $14.34 $10.34
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN 28.80%# 41.46%# 38.68%# 3.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $171,507 $102,481 $ 7,792 $ 2,052
Ratio of net expenses to average net assets(a) 1.88% 1.96% 2.04% 2.50%*
Ratio of gross expenses to average net assets(a) 1.90% 2.22% 2.50% 2.50%*
Ratio of net investment income (loss) to average net assets (.67)% (.51)% (.67)% .68%*
Portfolio turnover rate 125% 81% 144% 129%*
Average commission rate paid** $.0505 $.0541 -- --
* Annualized
** Disclosure not required for years prior to 1996.
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived expenses.
<CAPTION>
PERIOD FROM
SEPTEMBER 24, 1997
U.S. SMALL CAP FUND TO OCTOBER 31, 1997
-------------------
<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 .02
Net realized and unrealized loss (.42)
------
Total investment operations (.40)
------
LESS DISTRIBUTIONS
From net investment income (.02)
From net realized gains (.01)
------
Total distributions (.03)
------
NET ASSET VALUE, END OF PERIOD $ 9.57
------
------
TOTAL RETURN# (4.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 5,350
Ratio of net expenses to average net assets(a) 1.50%*
Ratio of gross expenses to average net assets(a) 3.32%*
Ratio of net investment income to average net assets 1.81%*
Portfolio turnover rate 8%
Average commission rate paid $ .0543
</TABLE>
* Annualized
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
58 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND YEAR ENDED OCTOBER 31
--------------------------------------------------------------------
SELECTED PER SHARE DATA 1997 1996 1995 1994 1993
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.02 $13.06 $10.46 $11.25 $10.08
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .20 .10 .13 .21 .13
Net realized and unrealized gain (loss) 3.43 2.65 2.74 (.02) 1.16
------ ------ ------ ------ ------
Total investment operations 3.63 2.75 2.87 .19 1.29
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.22) (.08) (.17) (.18) (.12)
From net realized gains (3.47) (.71) (.10) (.80) --
------ ------ ------ ------ ------
Total distributions (3.69) (.79) (.27) (.98) (.12)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.96 $15.02 $13.06 $10.46 $11.25
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN 29.26% 22.06% 28.12%# 1.72%# 12.80%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 147,641 $ 78,624 $ 59,632 $ 27,244 $ 42,306
Ratio of net expenses to average net assets(a) .85% .92% .97% .94% .87%
Ratio of gross expenses to average net assets(a) .85% .92% 1.01% 1.08% 1.02%
Ratio of net investment income to average net assets 1.44% .75% 1.02% 1.31% 1.19%
Portfolio turnover rate 48% 129% 108% 55% 44%
Average commission rate paid** $.0467 $.0429 -- -- --
** Disclosure not required for years prior to 1996.
(a) Administrative fees were voluntarily waived from August 14, 1992 to
March 31, 1995.
# Total return would have been lower had the advisor not waived expenses.
<CAPTION>
BOND FUND YEAR ENDED OCTOBER 31 PERIOD FROM
---------------------------------------- APRIL 30, 1993 TO
SELECTED PER SHARE DATA 1997 1996 1995 1994 OCTOBER 31, 1993
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.99 $10.13 $ 9.29 $10.27 $10.04
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .67 .67 .65 .53 .27
Net realized and unrealized gain (loss) .25 .11 .83 (.98) .24
------ ------ ------ ------ ------
Total investment operations .92 .78 1.48 (.45) .51
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.66) (.70) (.64) (.53) (.27)
From net realized gains (.02) (.22) -- -- (.01)
------ ------ ------ ------ ------
Total distributions (.68) (.92) (.64) (.53) (.28)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.23 $ 9.99 $10.13 $ 9.29 $10.27
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN# 9.54% 8.18% 16.49% (4.42)% 5.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 90,302 $ 70,577 $ 86,343 $ 64,244 $ 11,738
Ratio of net expenses to average net assets(a) .61% .68% .60% .66% .50%*
Ratio of gross expenses to average net assets(a) .76% .83% .75% 1.04% 1.23%*
Ratio of net investment income to average net assets 6.40% 6.82% 6.69% 5.76% 5.35%*
Portfolio turnover rate 191% 154% 21% 205% 13%*
</TABLE>
* Annualized
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived expenses.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 59
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Financial Highlights - October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUND YEAR ENDED OCTOBER 31
-------------------------------------------------------------------
SELECTED PER SHARE DATA 1997 1996 1995 1994 1993
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .05 .05 .06 .03 .03
------ ------ ------ ------ ------
Total investment operations .05 .05 .06 .03 .03
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.05) (.05) (.06) (.03) (.03)
------ ------ ------ ------ ------
Total distributions (.05) (.05) (.06) (.03) (.03)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN# 5.39% 5.34% 5.84% 3.49% 2.66%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $433,152 $329,652 $299,312 $224,439 $24,207
Ratio of net expenses to average net assets(a) .30% .31% .30% .46% .67%
Ratio of gross expenses to average net assets(a) .45% .46% .45% .61% .82%
Ratio of net investment income to average net assets 5.26% 5.22% 5.70% 4.02% 2.62%
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived expenses.
<CAPTION>
CALIFORNIA INTERMEDIATE TAX-FREE FUND YEAR ENDED OCTOBER 31
------------------------------------------------------------------
SELECTED PER SHARE DATA 1997 1996 1995 1994 1993
FOR ONE SHARE OUTSTANDING DURING THE PERIOD ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.80 $10.86 $10.13 $11.10 $10.55
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .51 .52 .53 .53 .55
Net realized and unrealized gain (loss) .20 (.03) .73 (.97) .62
------ ------ ------ ------ ------
Total investment operations .71 .49 1.26 (.44) 1.17
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
From net investment income (.51) (.52) (.53) (.53) (.55)
From net realized gains (.01) (.03) -- -- (.07)
------ ------ ------ ------ ------
Total distributions (.52) (.55) (.53) (.53) (.62)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.99 $10.80 $10.86 $10.13 $11.10
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN# 6.75% 4.63% 12.77% (3.94)% 11.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $ 64,309 $ 51,156 $ 50,313 $ 58,305 $ 59,716
Ratio of net expenses to average net assets(a) .49% .51% .50% .51% .50%
Ratio of gross expenses to average net assets(a) .69% .73% .72% .71% .71%
Ratio of net investment income to average net assets 4.72% 4.86% 5.08% 4.94% 5.05%
Portfolio turnover rate 6% 6% 18% 21% 26%
</TABLE>
(a) See Note 2 of "Notes to Financial Statements."
# Total return would have been lower had the advisor not waived expenses.
60 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
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 eleven series, ten of which are covered by this report:
<TABLE>
<CAPTION>
<S> <C>
- the GLOBAL FUND - the BOND FUND
- the INTERNATIONAL GROWTH FUND - the MONEY MARKET FUND
- the INTERNATIONAL SMALL CAP FUND - the CALIFORNIA INTERMEDIATE TAX-FREE FUND
- the EMERGING MARKETS FUND (THE CALIFORNIA INTERMEDIATE TAX-FREE FUND IS AVAILABLE
- the U.S. MICRO-CAP FUND ONLY TO RESIDENTS OF ARIZONA, CALIFORNIA, COLORADO, NEVADA,
- the U.S. SMALL CAP FUND NEW MEXICO, OREGON, TEXAS, UTAH AND WASHINGTON)
- the GROWTH FUND
</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
closing values of such securities on their respective exchanges or the
most recent price available where no closing value is available.
Securities in the 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 Global Fund, the
International Growth Fund, the International Small Cap Fund and the
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 as amended. 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
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.
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.
61
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
- --------------------------------------------------------------------------------
F. FOREIGN CURRENCY TRANSLATION
The market values of foreign securities, currency holdings, and other
assets and liabilities of the Global Fund, the International Growth
Fund, the International Small Cap Fund, the Emerging Markets Fund and
the 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 Global Fund and the 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. When required, the Funds will
segregate assets in an amount sufficient to cover obligations under
the hedge 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.
At October 31, 1997, the underlying values for open foreign currency
contracts were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
TO RECEIVE FOREIGN SETTLEMENT INITIAL APPRECIATION
(TO DELIVER) CURRENCY DATE VALUE CURRENT VALUE (DEPRECIATION)
----------- ------------------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL FUND
(18,000,000) Australian Dollar 11/17/97 $(13,105,800) $ (12,625,740) $ 480,060
(22,500,000) Canadian Dollar 11/17/97 (16,323,273) (15,985,790) 337,483
(46,700,000) German Deutschemark 11/17/97 (25,819,650) (27,102,316) (1,282,666)
(16,500,000) British Pound 11/17/97 (26,345,880) (27,596,250) (1,250,370)
(4,300,000) Irish Punt 11/17/97 (6,412,160) (6,450,430) (38,270)
(69,000,000) Swedish Krona 11/17/97 (8,804,389) (9,184,692) (380,303)
-------------
$ (2,134,066)
-------------
-------------
EMERGING MARKETS FUND
(31,174,842,500) Turkish Lira 11/03/97 $ (337,312) $ (339,595) $ (2,283)
-------------
$ (2,283)
-------------
-------------
BOND FUND
1,130,000 Canadian Dollar 03/11/98 $ 831,494 $ 807,374 $ (24,120)
(592,000) German Deutschemark 12/11/97 (329,255) (343,866) (14,611)
1,425,000 New Zealand Dollar 12/04/97 911,629 884,996 (26,633)
(3,036,000) New Zealand Dollar 12/04/97 (1,910,859) (1,885,508) 25,351
-------------
$ (40,013)
-------------
-------------
</TABLE>
62
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
- --------------------------------------------------------------------------------
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 against changes
in prevailing levels of stock values and interest rate risks.
At October 31, 1997, the underlying values for open futures contracts
were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
CONTRACTS EXPIRATION INITIAL CURRENT APPRECIATION
TO BUY DATE VALUE VALUE (DEPRECIATION)
------ ---- ----- ----- --------------
<S> <C> <C> <C> <C> <C>
GROWTH FUND
S&P 500 Index 6 Dec 97 $ 2,806,560 $ 2,772,000 $ (34,560)
S&P 500 Index 2 Dec 97 980,270 924,000 (56,270)
-------------
$ (90,830)
-------------
-------------
BOND FUND
5 yr. U.S. Treasury Note 50 Dec 97 $ 5,323,438 $ 5,420,313 $ 96,875
5 yr. U.S. Treasury Note 20 Dec 97 2,130,625 2,168,125 37,500
10 yr. U.S. Treasury Note 25 Dec 97 2,725,000 2,793,750 68,750
30 yr. U.S. Treasury Bond 50 Dec 97 5,868,750 5,923,437 54,687
30 yr. U.S. Treasury Bond 40 Dec 97 4,611,250 4,738,750 127,500
-------------
$ 385,312
-------------
-------------
</TABLE>
At October 31, 1997, $190,000 and $285,000 par value of U.S. Treasury
Bills for the Growth Fund and Bond Fund, respectively, were held by
brokers to satisfy the initial margin requirements related to these
contracts.
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
which is included in interest income. For the year ended
October 31, 1997, transactions in securities lending resulted in fee
income to the Global Fund, the International Growth Fund, the
International Small Cap Fund, the Emerging Markets Fund, the U.S.
Micro-Cap Fund and the Growth Fund of $172,765, $27,157, $5,182,
$1,227, $38,953 and $14,276, respectively.
The market value of the securities on loan and the collateral balance
held by the Funds as of October 31, 1997 were as follows:
MARKET VALUE COLLATERAL VALUE
------------ ----------------
Global Fund $ 65,826,774 $ 67,203,049
International Growth Fund 2,274,124 2,410,019
International Small Cap Fund 618,343 649,158
Emerging Markets Fund 276,201 291,448
U.S. Micro-Cap Fund 22,174,524 22,183,435
Growth Fund 9,727,403 9,899,085
J. REVERSE REPURCHASE AGREEMENTS
During the year ended October 31, 1997, the 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.
63
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
- --------------------------------------------------------------------------------
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. 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>
Global Fund 0.60% on all net assets 0.15% on all net assets
International Growth Fund 1.50% on all net assets --
International Small Cap Fund 1.50% on all net assets --
Emerging Markets Fund* 1.00% on all net assets 0.15% on all net assets
U.S. Micro-Cap Fund* 2.50% on first $30 million --
2.00% on next $70 million --
1.50% on balance over $100 million --
U.S. Small Cap Fund* 1.00% on all net assets 0.15% on all net assets
Growth Fund 0.50% on all net assets 0.15% on all net assets
Bond Fund* 0.40% on all net assets 0.15% on all net assets
Money Market Fund* 0.30% on first $50 million 0.15% on all net assets
0.20% on balance over $50 million --
California Intermediate Tax-Free Fund* 0.40% on first $25 million 0.15% on all net assets
0.35% on next $25 million --
0.30% on next $50 million --
0.25% on next $50 million --
0.20% on balance over $150 million --
</TABLE>
* The Advisor has voluntarily waived and/or reimbursed some of its fees
for these Funds. Except for the U.S. Small Cap Fund, all fees waived
in the past will not be recouped in the future. The waivers are
voluntary and they may be changed in the future.
For the Emerging Markets Fund, the Advisor voluntarily waived
advisory, 12b-1 and administrative fees and reimbursed all other
operating expenses from June 24, 1996 to September 18, 1997, after
which the Advisor limited the total operating expenses to 1.50% of
average net assets. For the year ended October 31, 1997, the Advisor
waived and/or reimbursed fees and expenses of $231,939 for the
Emerging Markets Fund.
For the U.S. Micro-Cap Fund, the Advisor is voluntarily limiting the
advisory fee to a reduced rate of no greater than 1.98% of average net
assets. For the year ended October 31, 1997, the Advisor waived
advisory fees of $32,138 for the U.S. Micro-Cap Fund.
For the U.S. Small Cap Fund, the Advisor is voluntarily limiting the
Funds total operating expenses to 1.50% of average net assets. The
Fund may reimburse the Advisor for any reductions in the Advisor's
fees during the three years following that reduction if such
reimbursement is requested by the Advisor, if such reimbursement can
be achieved within the foregoing expense limit, and if the Board of
Directors approves the reimbursement at the time of the request as not
inconsistent with the best interests of the Fund. The Advisor
generally seeks to reimburse the oldest reductions and waivers before
payment of fees and expenses for the current year. Because of these
substantial contingencies, the potential reimbursements will be
accounted for as contingent liabilities that are not recordable on the
balance sheet of the Fund until payment is probable. For the period
ended October 31, 1997, the Advisor has reimbursed expenses subject to
recoupment of $10,033.
For the Bond Fund and the Money Market Fund, the Advisor is
voluntarily waiving the administrative fee in its entirety. For the
year ended October 31, 1997, the Advisor waived administrative fees of
$113,536 and $590,176, respectively, for the Bond Fund and the Money
Market Fund.
For the California Intermediate Tax-Free Fund, the Advisor is
voluntarily reducing the advisory and administrative fees to 0.30% and
0.005% of average net assets, respectively. For the year ended
October 31, 1997, the Advisor waived advisory and administrative fees
of $37,500 and $88,645, respectively, for the California Intermediate
Tax-Free Fund.
64
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
- --------------------------------------------------------------------------------
Ratios of expenses have been disclosed both before and after the
impact of these various waivers and/or reimbursements 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 International
Growth Fund, the International Small Cap Fund and the 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
Emerging Markets Fund and the U.S. Small Cap Fund have adopted a plan
of distribution under which the Funds may directly incur or reimburse
the Advisor for certain distribution-related expenses. The maximum
amount the Funds are obligated to pay the Advisor is 0.25% of their
respective average net assets. Payments have been waived by the
Advisor in their entirety for the Emerging Markets Fund through
September 18 ,1997.
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,
1997, 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 year ended October 31, 1997
were $321,205, excluding funds under a unitary fee arrangement.
AFFILIATED COMPANY TRANSACTIONS
Investments in portfolio companies, 5% or more of whose outstanding
voting securities are held by a Fund, are defined in the Investment
Act of 1940 as affiliated companies. The U.S. Micro-Cap Fund had
investments in such affiliated companies. A summary of transactions
for each issuer who is an affiliate during the year ended October 31,
1997, follows ($ in thousands):
<TABLE>
<CAPTION>
SHARE AGGREGATE AGGREGATE NET SHARE
BALANCE PURCHASE SALES REALIZED BALANCE VALUE
ISSUER 10/31/96 COST COST (LOSS) INCOME 10/31/97 10/31/97
- ------ -------- --------- --------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interlink Electronics, Inc. - $ 2,592 $ 193 $ (46) $ - 320,200 $ 2,442
Richey Electronics, Inc. 253,900 2,538 608 (146) - 455,500 4,441
V-One Corp. 140,000 3,515 - - - 681,400 2,726
------------------------------------------------------ ----------
$ 8,645 $ 801 $ (192) $ - $ 9,609
------------------------------------------------------ ----------
------------------------------------------------------ ----------
</TABLE>
OTHER RELATED PARTIES
At October 31, 1997, Fremont Investors, Inc. and its affiliated
companies including their employee retirement plans, its principal
shareholder and members of his family, including trusts, owned
directly or indirectly the following approximate percentages of the
various Funds:
% OF SHARES OUTSTANDING
-----------------------
Global Fund 61%
International Growth Fund 85%
International Small Cap Fund 30%
Emerging Markets Fund 60%
U.S. Micro-Cap Fund 6%
U.S. Small Cap Fund 90%
Growth Fund 61%
Bond Fund 81%
Money Market Fund 77%
California Intermediate Tax-Free Fund 71%
Certain officers and/or directors of the Funds are also officers
and/or directors of the Advisor and/or Fremont Investors, Inc. None
of the officers and/or directors so affiliated receive compensation
for services as officers and/or directors of the Funds
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).
65
<PAGE>
FREMONT MUTUAL FUNDS, INC.
Notes to Financial Statements - October 31, 1997
- --------------------------------------------------------------------------------
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, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES PROCEEDS
------------- -------------
<S> <C> <C>
LONG-TERM SECURITIES EXCLUDING U.S. GOVERNMENT SECURITIES:
Global Fund $ 416,795,412 $ 259,359,299
International Growth Fund 36,033,006 36,534,258
International Small Cap Fund 6,273,213 5,366,978
Emerging Markets Fund 23,020,007 16,332,458
U.S. Micro-Cap Fund 195,696,968 159,824,287
U.S. Small Cap Fund 4,886,457 246,892
Growth Fund 92,019,628 55,147,560
Bond Fund 22,961,350 33,410,168
California Intermediate Tax-Free Fund 14,563,011 3,510,000
LONG-TERM U.S. GOVERNMENT SECURITIES:
Global Fund $ 33,015,161 $ 17,595,127
Bond Fund 118,716,919 100,517,666
</TABLE>
Transactions in written put and call options for the year ended October
31, 1997 for the Bond Fund were as follows:
<TABLE>
<CAPTION>
AMOUNT OF PREMIUMS NUMBER OF CONTRACTS
------------------ -------------------
<S> <C> <C>
Options outstanding at October 31, 1996 $ 70,996 50
Options sold 41,625 50
Options cancelled in closing purchase transactions -- --
Options expired prior to exercise (70,996) (50)
Options exercised -- --
--------- ---------
Options outstanding at October 31, 1997 $ 41,625 50
--------- ---------
--------- ---------
The following written options were outstanding at October 31, 1997:
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
NAME OF ISSUER CONTRACTS PRICE DATE VALUE
-------------- --------- -------- ---------- -----
<C> <C> <C> <C> <C>
PUT OPTIONS: Chicago Mercantile Exchange Dec 97 Eurodollar Futures 50 93.75 12/15/97 $ 625
</TABLE>
The Bond Fund received premiums of $41,625 on these contracts and has an
unrealized gain of $41,000. 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, 1997, 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>
Global Fund $ 621,573,262 $ 90,046,031 $ (37,215,566) $ 52,830,465
International Growth Fund 36,383,619 6,641,580 (4,453,948) 2,187,632
International Small Cap Fund 10,308,150 905,015 (2,765,779) (1,860,764)
Emerging Markets Fund 12,866,480 330,081 (1,755,578) (1,425,497)
U.S. Micro-Cap Fund 160,714,159 23,553,625 (12,106,047) 11,447,578
U.S. Small Cap Fund 6,277,282 86,259 (333,098) (246,839)
Growth Fund 123,319,987 26,395,779 (2,734,854) 23,660,925
Bond Fund 99,516,749 2,791,181 (189,156) 2,602,025
Money Market Fund 432,832,119 -- -- --
California Intermediate Tax-Free Fund 60,794,566 2,743,521 -- 2,743,521
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