FREMONT MUTUAL FUNDS, INC.
ANNUAL REPORT
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October 31, 1998
Fremont [LOGO]
Funds
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A message from Michael H. Kosich, president of Fremont Mutual Funds, Inc.
[PHOTO]
Dear Fellow Shareholder:
In the second half of fiscal 1998, we were reminded that the stock market
goes down, as well as up. Neophyte investors who have never experienced a sharp
market correction may be comparing their last two mutual fund statements and
wringing their hands over a decline in their net worth. A more rational response
would be to dig in their files and compare their most recent fund statement with
one from just two or three years ago. They will be amazed at how much money
they've made even after the stock market's second-half decline. Such perspective
contributes to a better frame of mind and discourages the kind of impulsive
behavior that can jeopardize one's financial future.
The simple fact is that over the 71-year period in which accurate
statistics are available, U.S. stock returns have been nearly double that of any
other domestic asset class. This period includes the Great Depression, numerous
recessions, three wars and countless political crises here and abroad.
Some misguided souls may think they can time the stock market --
consistently selling at the top and buying at the bottom. Good luck! Extensive
studies have revealed that market timing adds little or no value to the
long-term investment process. With few exceptions, the overwhelming majority of
market timers bat .500 at best, and in the process generate lots of additional
commission costs and capital gains tax liabilities. Also, because a large
percentage of total market advances come in compressed periods of time, being
caught sitting on the sidelines can substantially diminish long-term equities
returns.
Our advice to investors concerned by the stock market's second-half fiscal
1998 decline is to re-evaluate their investment objectives and asset allocation.
Those with a shorter-term investment time horizon may want to shift some money
from stocks to bonds or money market funds. Those with a longer-term perspective
may want to take this opportunity to increase exposure to stocks that are now
more reasonably priced.
In closing, it's been a tough six months for equities investors. The stock
market will periodically retreat, causing a degree of financial pain and raising
concerns over the future productivity of stock investing. Experienced investors
take market declines in stride, realizing the long-term rewards of equities
investing more than compensate for the short-term risks.
Sincerely,
/s/ Michael H. Kosich
Michael H. Kosich
December 15, 1998
This report, including the statements of investments and financial statements,
is submitted for the general information of the shareholders of Fremont Mutual
Funds, Inc. This report is not authorized for distribution and may not be used
as sales literature, unless preceded or accompanied by a prospectus.
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TABLE OF CONTENTS
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Fund Profiles and Letters to Shareholders
Fremont Global Fund ...................................................... 2
Fremont International Growth Fund ........................................ 4
Fremont International Small Cap Fund ..................................... 6
Fremont Emerging Markets Fund ............................................ 8
Fremont U.S. Micro-Cap Fund .............................................. 10
Fremont U.S. Small Cap Fund .............................................. 12
Fremont Select Fund ...................................................... 14
Fremont Growth Fund ...................................................... 16
Fremont Real Estate Securities Fund ...................................... 18
Fremont Bond Fund ........................................................ 20
Fremont Money Market Fund ................................................ 22
Fremont California Intermediate Tax-Free Fund ............................ 24
Report of Independent Accountants ........................................ 26
Statements of Investments in Securities and Net Assets
Fremont Global Fund ...................................................... 27
Fremont International Growth Fund ........................................ 33
Fremont International Small Cap Fund ..................................... 35
Fremont Emerging Markets Fund ............................................ 36
Fremont U.S. Micro-Cap Fund .............................................. 37
Fremont U.S. Small Cap Fund .............................................. 38
Fremont Select Fund ...................................................... 39
Fremont Growth Fund ...................................................... 40
Fremont Real Estate Securities Fund ...................................... 42
Fremont Bond Fund ........................................................ 43
Fremont Money Market Fund ................................................ 46
Fremont California Intermediate Tax-Free Fund ............................ 48
Notes to Statements of Investments in Securities and Net Assets,
Portfolio Abbreviations & Currency Abbreviations ........................ 50
Country Diversification .................................................. 51
Combined Financial Statements
Statements of Assets and Liabilities ..................................... 52
Statements of Operations ................................................. 56
Statements of Changes in Net Assets ...................................... 60
Financial Highlights ..................................................... 64
Notes to Financial Statements ............................................ 70
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FREMONT GLOBAL FUND
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Fremont Asset Allocation Committee, Portfolio Managers, Fremont Global Fund:
Dave Redo, Bob Haddick, Sandie Kinchen, Al Kirschbaum & Pete Landini
[PHOTO]
Clockwise, from top left: Dave Redo, Pete Landini, Al Kirschbaum, Bob Haddick,
Sandie Kinchen
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FUND PROFILE
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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 to maximize total return
(including income and capital gains) while reducing risk by investing in
multiple categories of U.S. and foreign securities.
The Fund's 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, the portfolio
managers select individual securities based on intensive quantitative and
fundamental analysis.
To Our Shareholders,
For the six months ended October 31, 1998, Fremont Global Fund declined 6.17%
compared to the Lipper Global Flexible Fund Average's 5.94% loss. For the twelve
months ended on the same date, the Fund returned 3.62% compared to the benchmark
index's 4.39% gain.
In the equities portion of the portfolio, fiscal 1998 performance benefited
from an overweighting in Europe, an underweighting in Japan, and very limited
exposure in troubled emerging market Asia and Latin America. Our bias to
traditional value sectors in the U.S. stock market restrained relative returns
as growth stocks outperformed value stocks by a wide margin.
In the fixed income portion of the portfolio, U.S., European, and
Anglo-Asian holdings (Australia and New Zealand) performed well. Our focus on
quality was rewarded as investors responded to global economic uncertainty by
gravitating to the most secure credits. Our higher average portfolio duration
also enhanced returns as interest rates fell. Relatively modest
dollar-denominated emerging market bond positions declined substantially due to
currency and economic turmoil in those regions.
Today, we would describe the global economy as a machine that is squeaking,
grinding and giving off sparks, but still chugging along. A highly qualified pit
crew composed of central bankers and international financial agencies is
standing by, ready to make the repairs necessary to keep the machine moving
forward. We are anticipating a slow growth global economy with the possibility
of the U.S. dipping into a brief contraction in 1999. With the exception of a
modest underweighting in U.S. stocks, our current asset allocation is neutral
with 40% in U.S. equities, 20% in foreign stocks, 38% in global bonds, and 2% in
cash.
In the U.S. stock market, we continue to favor value-oriented stocks, which
we believe will produce better results in the year ahead. The Fund's foreign
stock component remains overweighted in core country Europe (65%) and
underweighted in developed Asia including Japan (17%). The balance is 5% in
Canada, and 5% in emerging markets, with the remain-
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GROWTH OF $10,000 (1)
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10/31/98
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S&P 500 INDEX $53,949
FREMONT GLOBAL FUND $25,200
SALOMON NON-US GOVT. BOND INDEX (CURRENCY HEDGED) $23,009
LEHMAN BROS. INTERMEDIATE GOVT./CORP. BOND INDEX $22,491
MSCI EAFE INDEX $16,038
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 5 YEARS SINCE INCEPTION (11/18/88)
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3.62% 8.85% 9.73%
ANNUAL RETURNS TOP TEN HOLDINGS
11/18/88-10/31/89* +13.71% S&P 500 Futures,
11/01/89-10/31/90 -2.64% 357 Contracts, Exp. Dec. '98 .......... 15.0%
11/01/90-10/31/91 +18.38% Government of France 8.500%, 10/25/19 ... 1.2%
11/01/91-10/31/92 +7.10% Government of Spain, 6.000%, 01/31/08 ... 1.0%
11/01/92-10/31/93 +17.51% Xilinx, Inc. ............................ 0.9%
11/01/93-10/31/94 +1.74% Deutschland Republic, 5.625%, 01/04/28 .. 0.9%
11/01/94-10/31/95 +12.78% Caisse D'Amort Dette, 5.125%, 10/25/08 .. 0.9%
11/01/95-10/31/96 +13.72% U.S. Treasury Note, 6.500%, 10/15/06 .... 0.9%
11/01/96-10/31/97 +13.01% U.S. Treasury Note, 6.250%, 8/15/23 ..... 0.8%
11/01/97-10/31/98 +3.62% Government of Sweden,
6.000%, 02/09/05 ...................... 0.8%
Federal Farm Credit Bank
6.300%, 12/03/13 ...................... 0.8%
TOTAL ......................... 23.2%
*Unannualized (1) 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 Salomon Non-U.S. Government Bond Index
(currency hedged), the Lehman Bros. Intermediate Government/Corporate Bond
Index, or the Morgan Stanley Capital International EAFE Index.
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2 FREMONT MUTUAL FUNDS
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ing in cash. We have increased our allocation in Japan from 7% to 14%, believing
that internal pressure (the necessity of bank reform) and external pressure (the
loss of international economic prestige) will spur the Japanese government to
take meaningful steps to get the economy back on its feet. Japan is still a
"have and have not" market. We are investing in the "haves"--pharmaceutical,
pre-fab housing, discount retailing, and export companies--and avoiding the
"have nots," most notably financial stocks.
Our fixed income outlook is changing. Core country European government
bonds have performed well for us, but at current prices already fully reflect
the benefits expected from economic union. So, we are gravitating to high
quality corporate credits that we believe are now better bargains. Single
A-rated intermediate maturity Greek government bonds also look attractive,
yielding 4% more than comparable German bonds. We believe this spread will
narrow as the government takes steps to qualify for second round inclusion in
European economic union.
As is our custom, we will detail a
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FREMONT GLOBAL FUND
GEOGRAPHIC DIVERSIFICATION AS OF 10/31/98
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CANADA 7.0%
UNITED STATES 8.8%
EMERGING MARKETS LATIN AMERICA 2.8%
EMERGING MARKETS OTHER 1.7%
EUROPE 56.1%
JAPAN 15.4%
PACIFIC RIM 8.2%
current portfolio holding that demonstrates our investment discipline. France's
Suez Lyonnaise des Eaux is a leading electricity and natural gas distributor,
water purification, and waste water treatment company serving utilities around
the globe. Having utilities companies as primary customers during a period of
slowing economic growth translates into stable earnings. However, Suez is not
just a secure earnings story. It is a legitimate growth company as well.
Growth is coming from global change in utilities industries. Water
utilities around the world are being privatized. Suez is taking part through
joint ventures with local partners. Suez modernizes plant and equipment and its
local partners assume operational responsibilities--managing facilities more
cost efficiently than prior government owner/operators and making money in the
process. In addition, the deregulation of European utilities industries will
commence on January 1, 1999. This should allow Suez, one of the largest and most
cost-efficient electricity and natural gas distributors, to broaden its customer
base. We think Suez will grow earnings by 18% in 1998 and at mid-teen rates over
the next several years. Trading at 26 times 1998 earnings estimates, Suez is not
a raging P/E bargain. Priced at just 10 times cash flow projections and at a 20%
discount to our appraisal of its asset value, it remains attractive.
In closing, the global economy is decelerating, but we believe it will
stabilize on a slow growth path. We think equities will follow the same track,
providing more modest returns than we have enjoyed in recent years. Slower
economic growth should restrain inflation, and interest rates may continue to
trend lower--a plus for the fixed income portion of the portfolio. The Fund has
a neutral asset allocation and we are counting on our stock and bond picking
disciplines to enhance returns.
Sincerely,
/s/ Dave Redo /s/ Pete Landini
/s/ Robert J. Haddick /s/ Sandie Kinchen
/s/ Al Kirschbaum
Fremont Asset Allocation Committee
Portfolio Managers
FREMONT MUTUAL FUNDS 3
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FREMONT INTERNATIONAL GROWTH FUND
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Nilly Sikorsky
Portfolio Manager
Capital Guardian Trust Company
Portfolio Management Team
[PHOTO]
Portfolio Management Team: Nilly Sikorsky, David I. Fisher, Hartmut Giesecke,
Nancy J. Kyle, Robert Ronus, John McIlwraith, Lionel M. Sauvage, Rudolf M.
Staehlin & Richard N. Havas
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FUND PROFILE
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Under the stewardship of Capital Guardian Trust Company (CGTC), the Fremont
International Growth Fund is a diversified portfolio of international equities
believed to have superior capital appreciation potential. CGTC's parent company,
The Capital Group Companies, has one of the investment industry's most extensive
and successful global research networks.
CGTC employs a multiple portfolio manager system. Nine individual portfolio
managers and the collective research analyst team are each given a portion of
the portfolio's assets to manage. The investment styles of the portfolio
managers vary. However, they have a common investment objective: superior
long-term returns versus the same benchmark index over a market cycle.
To Our Shareholders,
For the six- and twelve-month periods ended October 31, 1998, the Fremont
International Growth Fund declined 9.54%, and gained 0.80%, compared to the
Morgan Stanley Capital International Europe, Australia, and Far East (EAFE)
Index's 5.02% loss, and 9.65% gain, for the same periods.
Let's begin by reviewing what has transpired since CGTC began managing the
portfolio on March 2, 1998. Our bias toward Europe, where approximately 60% of
the Fund's assets resided, proved beneficial as European stock markets outpaced
most other international equities exchanges. The portfolio's underweighting in
bank stocks was a curse in early 1998, when they were leading the markets, but a
blessing in August and September, when they collapsed. Our underweighting in
energy stocks softened the blow from falling oil prices. We were penalized by
our underweighting in very large cap stocks ($50 billion market capitalizations
and higher)--the best performing capitalization sector in virtually every
equities market worldwide.
Now, let's take a tour of the portfolio starting in Europe, where stock
markets went through two distinct phases--excessive bullishness through early
July, followed by excessive bearishness into mid October. In the first phase,
enthusiasm for the new Euro, blind faith in the "religion of restructuring," and
the prospects for a market windfall from new private pension funds fueled a
strong rally. In the second phase, investors stampeded to the exits as they
became convinced global economic turmoil would derail European economies. We are
now back at square one.
We were not swept up in the euphoria that characterized the first phase. We
believe that over the short term, the introduction of the Euro could squeeze
profit margins as companies seek pricing equilibrium. We doubt America's
restructuring religion will take hold in Europe, where tax laws often reduce the
economic benefit of corporate transactions. Substantial capital inflows from new
private pension plans are years away from having much broad impact on the
markets. Nor were we swept away by the gloom and doom that defined the second
phase. The world's problems may
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GROWTH OF $10,000 (1)
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10/31/98
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MSCI EAFE INDEX $13,137
FREMONT INTERNATIONAL GROWTH FUND $11,054
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 3 YEARS SINCE INCEPTION (3/1/94)
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0.80% 2.57% 2.17%
ANNUAL RETURNS TOP TEN HOLDINGS
03/01/94-10/31/94* +2.30% Nokia Corp. ADR ...................... 3.5%
11/01/94-10/31/95 +0.13% Zeneca Group PLC ..................... 2.2%
11/01/95-10/31/96 +7.07% Telefonica SA ........................ 2.2%
11/01/96-10/31/97 -0.01% Telefonos de Mexico (Class L), ADR ... 2.1%
11/01/97-10/31/98 +0.80% Astra AB, ADR ........................ 1.9%
Reuters Group, ADR ................... 1.7%
Mannesmann AG ........................ 1.7%
Deutsche Telekom ..................... 1.6%
Holderbank Financiere ................ 1.6%
Peugot SA ............................ 1.5%
TOTAL ...................... 20.0%
*Unannualized (1) 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.
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4 FREMONT MUTUAL FUNDS
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restrain European economic growth, but not end it. Our constructive attitude to
European stocks was, and still is, based on our belief that European economies
can continue to grow at a respectable pace and that selected companies can
continue to increase earnings. Our one nagging concern is that with left of
center governments in the four largest and most influential European countries,
looser fiscal and monetary policies may result in some inflationary pressure.
Moving over to Asia, where 24% of the portfolio's assets were invested as
of 10/31/98, we are relatively bullish on the short-term prospects for selected
Japanese stocks. With all of Japan's well-publicized economic problems,
investors have lost sight of the fact that the Japanese have, by far, the
highest savings rate in the world. The liquidity to get the economy moving again
is in place. Now that there seems to be a political consensus to address
problems in the banking sector, the Japanese consumer may regain confidence and
help get the economy back on its feet. Emerging market Asia is still a mixed
bag, with Korea and Thailand seeing light at the
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FREMONT INTERNATIONAL GROWTH FUND
GEOGRAPHIC DIVERSIFICATION AS OF 10/31/98
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[GRAPHIC OMITTED]
CANADA 7.0%
UNITED STATES 8.8%
EMERGING MARKETS LATIN AMERICA 2.8%
EMERGING MARKETS OTHER 1.7%
EUROPE 56.1%
JAPAN 15.4%
PACIFIC RIM 8.2%
end of the tunnel and Malaysia and Indonesia still in the dark.
Finally, our "new world" investments (Canada and Latin America) have fared
relatively poorly due primarily to weakening currencies. We believe we are
positioned in high quality companies with excellent prospects. Some currency
stability should help these stocks recover in the year ahead.
Sony, the Japanese consumer electronics giant, provides a good illustration
of the kind of stock I favor. Sony has a 13% return on equity, more than double
that of most Japanese companies. At the close of this reporting period, Sony
stock was selling at 17 times trailing earnings--well below the Japanese
market's P/E, and at just 2 times book value--assigning virtually no value to
one of the world's great brand names. Why is Sony so cheap? I suspect it is a
combination of concern over future prospects for the company's big video game
business and the strengthening yen. We believe consumer confidence in America
and Europe will remain high as will demand for Sony's video game products. We
also know that Sony has a good record hedging currencies and believe it is less
vulnerable than many anticipate to shifting currency values. What is Sony stock
worth? In view of the company's ROE, which is more than 6 times Japan's 2% bond
yields, I believe Sony should trade at 3 times book value--about a 50% premium
above its current price.
In closing, fiscal 1998 started with a bang and ended with a whimper. We
are not market timers and won't make any predictions for international equities
markets in the year ahead. We will say that equities markets rarely match the
best or worst of consensus investor expectations. We will continue to work
diligently in our corners of the world to identify and invest in great companies
selling at reasonable prices.
Sincerely,
Nilly Sikorsky and Capital Guardian
Trust Company's Portfolio
Management Team
FREMONT MUTUAL FUNDS 5
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FREMONT INTERNATIONAL SMALL CAP FUND
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Bruce B. Bee
Portfolio Manager
Bee & Associates, Inc.
[PHOTO]
Bruce B. Bee
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FUND PROFILE
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The Fremont International Small Cap Fund is a concentrated global portfolio of
small cap equities believed to be undervalued relative to growth prospects and
intrinsic value measurements.
Through intensive fundamental analysis and "kick the tires" research, Fund
management seeks to identify a few extraordinary small companies with the
potential to grow much larger. Value--as determined by traditional measurements
like price/earnings, price/cash flow and price/book value ratios, cross border
comparisons, and the analysis of transactions within the target company's
industry--is a primary consideration in the stock selection process.
Founded in 1989, sub-advisor Bee & Associates, Inc., manages money for
prestigious private clients including the Rockefeller Family Fund, Dartmouth
College, and Pfizer. Chief Investment Officer Bruce Bee has been investing in
international equities since 1980.
To Our Shareholders,
As of this report, we are changing the comparative index for the Fremont
International Small Cap Fund. The existing index, the Salomon Brothers Extended
Market Index of Europe and Pacific Countries (EMI-EPAC), will be replaced by the
Morgan Stanley Capital International Europe, Australia and Far East (MSCI EAFE)
Small Cap Index. This index more closely matches the holdings of the Fund. Both
of these indices are presented in the graph below.
For the six and twelve months ended October 31, 1998, the Fremont
International Small Cap Fund declined 16.39% and 16.76%, respectively. This is
compared with declines of 15.12% and 12.18% for the MSCI EAFE Small Cap Index,
and declines of 10.15% and 0.87% for the Salomon Brothers Extended Market Index
of Europe and Pacific Countries (EMI-EPAC) during these two periods.
In second half fiscal 1998, global market turmoil sent international small
cap investors to the exits. Sharp declines--often on little volume--indicated
there were panicked sellers and few buyers to provide liquidity. Fundamentals
didn't seem to matter. To wit, the overwhelming majority of our portfolio
holdings met or exceeded our earnings growth estimates, yet finished the year
lower.
Our Asian investments (Hong Kong and Singapore) were hit particularly hard
as Japan's problems created even more economic uncertainty in the region. Our
European investments held up well until European markets followed the U.S.
market lower in August-September. Switzerland and the U.S. were the portfolio's
bright spots, with all three of our Swiss holdings gaining and one of the Fund's
largest holdings, U.S.-based Physio-Control International, being acquired by
Medtronics.
In our semi-annual letter, we detailed our investment methodology. We told
you we would build a concentrated portfolio of small companies with above
average earnings growth rates, a high return on equity, and low price/earnings
and price/book value ratios. We've done just that. At the
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GROWTH OF $10,000 (1)
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10/31/98
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SALOMON BROTHERS EMI INDEX $10,423
FREMONT INTERNATIONAL SMALL CAP FUND $7,338
MSCI EAFE SMALL CAP INDEX $6,891
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 3 YEARS SINCE INCEPTION (6/30/94)
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- -16.76% -6.83% -6.89%
ANNUAL RETURNS TOP TEN HOLDINGS
06/30/94-10/31/94* -1.40% Electronic Resources Ltd. .............. 7.7%
11/01/94-10/31/95 -7.96% Technomatix Technologies Ltd. .......... 7.6%
11/01/95-10/31/96 +13.69% The Selecta Group ...................... 6.4%
11/01/96-10/31/97 -14.56% Orbotech Ltd. .......................... 6.1%
11/01/97-10/31/98 -16.76% PublicGroupe SA ........................ 5.4%
Investec-Consultoria Internacional SA .. 5.2%
Hung Hing Printing Group ............... 4.8%
Nobel Biocare .......................... 4.6%
Stratec Holding AG ..................... 4.6%
McBride PLC ............................ 4.6%
TOTAL .......................... 57.0%
*Unannualized (1) Assumes 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 or the Morgan
Stanley Europe, Australia and Far East (MSCI EAFE) Small Cap Index.
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6 FREMONT MUTUAL FUNDS
<PAGE>
close of this fiscal year, the portfolio held 20 stocks, had a projected one
year average earnings growth rate of 25%, an average ROE of 29%, an average P/E
of 10, and an average P/B of 2.25. In addition, it had a 2.26% yield, an unusual
bonus for a small cap portfolio. At the close of this fiscal year, 60% of
portfolio assets were invested in Europe, 12% in Asia, 14% in Israel, 4% in
Canada, and 2% in the U.S. The remaining 8% was in cash.
Let me give you an example of the kind of companies we own. Orbotech Ltd.
is an Israeli manufacturer of optical inspection equipment used by printed
circuit board makers. As circuits on boards have become smaller and the layers
of boards have increased, manual inspection is no longer possible. Orbotech's
equipment detects flaws in small circuits, saving money for circuit board
producers. The company is the technological leader and has a 65% worldwide share
in this business. Orbotech is actually benefiting from Asian currency
devaluation and the shift of printed circuit board production to the Far East.
We
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FREMONT INTERNATIONAL SMALL CAP FUND
GEOGRAPHIC DIVERSIFICATION AS OF 10.31.98
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[GRAPHIC OMITTED]
CANADA 3.8%
UNITED STATES 10.3%
EMERGING MARKETS OTHER 0.1%
EUROPE 59.5%
MIDDLE EAST 13.8%
PACIFIC RIM 12.5%
believe earnings will grow from the $2.50 per share reported in 1997 to $2.85
in 1998 and $3.30 in 1999. At the close of this reporting period, Orbotech had a
return on equity in the high 20's, and was trading at just over 9 times our 1998
earnings projections and at less than 2 times book value. We met with
management, like their growth strategies and believe they can effectively
execute them. Why is the stock so cheap? Orbotech has been lumped in with the
semi-conductor equipment manufacturers, a business that is much more cyclical
and has been under a great deal more pressure recently. As Orbotech's earnings
progress, we believe the stock will overcome its identity crisis, and move
substantially higher.
Looking ahead, we are encouraged by the global markets recovery in late
October and believe that the international economic picture is brightening.
However, we are not market forecasters and won't make any predictions. We will
continue to opportunistically invest in small companies worldwide that we
believe have big futures. Over the long term, we are confident our selective,
research driven investment discipline will reward shareholders.
Sincerely,
/s/ Bruce B. Bee
Bruce B. Bee
Portfolio Manager
FREMONT MUTUAL FUNDS 7
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FREMONT EMERGING MARKETS FUND
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Henry Thornton
Portfolio Manager
Nicholas-Applegate Capital Management
[PHOTO]
Henry Thornton
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FUND PROFILE
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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 International
Group 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- and twelve-month periods ended October 31, 1998, the Fremont
Emerging Markets Fund declined 38.96% and 37.59% compared to the Morgan Stanley
Capital International Emerging Markets Free (MSCI-EMF) Index's 33.41% and 30.99%
losses and the IFC Investable Index's 31.43%, and 28.97% fall.
In second-half fiscal 1998, emerging market investors had no place to hide.
Japan's recession and the falling yen aborted the recovery of Southeast Asian
economies and stock markets. The collapse of the Russian ruble brought down
European emerging markets. Commodity deflation and currency pressure jeopardized
Latin American economies, sending markets plummeting.
Are we witnessing the death of emerging market investing or death rattle of
this severe bear market? If one believes the current economic problems of
emerging market nations will result in large scale social and political unrest,
or if we see rigid capital controls and a return to economic isolationism, the
game may be over. If one believes, as we do, that many emerging market nations
can dig themselves out of their current economic holes, we may be approaching a
historic bottom for this asset class. This is not to say that emerging markets
will recover quickly or uniformly. We are being cautious and selective in
allocating assets to countries and individual securities. We will also be
patient, waiting for the dust to clear and investors to regain confidence in
these markets.
Let's sift through the emerging market rubble starting in Asia. With Japan
mired in recession, the Asian economic recovery will be slower than we had
anticipated. How will it unfold? Thailand, the earliest and most severe casualty
in the region, may serve as a model. Thailand now has both current account and
capital account surpluses--exports exceed imports, and some investment capital
is slowly flowing back in. Thai corporations are using these surpluses to repay
foreign debt and re-establish international credibility. The cost of overnight
money in Thailand has dropped from in excess of 20% to around 7%. Liquidity is
returning to the system and the Thai economy is
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
FREMONT EMERGING MARKETS FUND $6,805
MSCI EMERGING MARKETS FREE $5,594
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 2 YEARS SINCE INCEPTION (6/24/96)
- ---------------------------------------------
- -37.59% -16.20% -15.10%
ANNUAL RETURNS TOP TEN HOLDINGS
06/24/96-10/31/96* -3.12% Shinawatra Computer Public Co. Ltd. .... 5.5%
11/01/96-10/31/97 +12.55% Telefonos de Mexico CL, ADR ............ 4.4%
11/01/97-10/31/98 -37.59% Hana Microelectronics Public Co. Ltd. .. 4.0%
Compal Electronics ..................... 3.7%
Dar Al-Dawa Development
and Investment ....................... 3.7%
South Africa Breweries Ltd. ............ 3.6%
Sasol Ltd. ............................. 3.4%
Cheung Kong Infastructure
Holding Ltd. ......................... 3.1%
Corp. Interamericana de
Entretenimiento SA ................... 3.0%
China Telecom Ltd. ..................... 2.8%
TOTAL ........................ 37.2%
*Unannualized (1) Assumes initial 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.
- --------------------------------------------------------------------------------
8 FREMONT MUTUAL FUNDS
<PAGE>
showing signs of life. The stock market, which is generally a leading economic
indicator, has rallied, increasing our confidence that the Thai economy is on
the mend.
Our investment in Shinawatra Computer demonstrates our faith in the Thai
economy and our investment discipline. Shinawatra is a telecommunications
holding company whose largest subsidiary, Advance, the nation's leading cellular
telephone operator, also trades independently on the Thai market. Thailand's
cellular penetration is low, demand remains relatively stable and should get
stronger as the domestic economy recovers. Shinawatra's balance sheet is debt
heavy, but comfortably covered by strong and stable cash flows. We might have
bought Advance on its own fundamental merits. Instead, we bought the parent
Shinawatra at a discount to Advance's market price and got some other attractive
telecommunications assets for free. Shinawatra has survived Thailand's economic
catastrophe. It should prosper in its recovery.
Each of the Asian Tigers has sufficiently different economic
characteris-
- --------------------------------------------------------------------------------
FREMONT EMERGING MARKETS FUND
GEOGRAPHIC DIVERSIFICATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
UNITED STATES .................... 19.6%
EMERGING MARKETS LATIN AMERICA ... 13.3%
EMERGING MARKETS OTHER ........... 8.8%
EMERGING MARKETS EUROPE .......... 8.2%
MIDDLE EAST ...................... 11.7%
EMERGING MARKETS ASIA ............ 31.8%
PACIFIC RIM ...................... 6.6%
tics for me to generalize on the timing of a region-wide recovery. But two
things are helping--the yen's recent strength and lower U.S. interest rates. The
former may prove somewhat short-lived, but we believe the latter will keep a lid
on the dollar and help stabilize currencies throughout the region, a critical
first step toward economic recovery. When this recovery begins, we believe it
will be led by the early cycle manufacturing and utilities companies that we
favor in the portfolio.
In European emerging markets, recovery will be dependent on the strength of
the German economy. Although the collapse of the ruble sparked the sell-off in
Eastern European markets, Germany, not Russia, is these nations' largest and
most important trading partner. If the German economy can continue to grow at a
respectable pace, its eastern neighbors' economies will also advance. Our
defensive posture in Europe--utilities, pharmaceuticals and telecommunications
stocks--helped somewhat over the last six months. Going forward, we may be a
little more aggressive by buying some of the small beaten down manufacturers
that will benefit most from an economic upturn.
We are less optimistic about Latin American economies and stock markets.
The U.S. is determined to preserve Latin American currencies. We will know soon
enough whether they will succeed. However, Latin American economies are driven
by commodities exports. With global commodity deflation, they will find it more
difficult to sustain economic growth even if the U.S. helps protect currencies.
In closing, while it may look like the end of the world for emerging market
investing, we believe it is the end of a punishing bear market. It will take
courage, but we believe it is time to begin taking advantage of some incredible
fundamental bargains.
Sincerely,
/s/ Henry Thornton
Henry Thornton
Portfolio Manager
FREMONT MUTUAL FUNDS 9
<PAGE>
- --------------------------------------------------------------------------------
FREMONT U.S. MICRO-CAP FUND
- --------------------------------------------------------------------------------
Robert E. Kern, Jr.
Portfolio Manager
Kern Capital Management LLC
[PHOTO]
Robert E. Kern, Jr.
- ------------
FUND PROFILE
- ------------
The U.S. micro-cap stock 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 manager, Robert E. Kern, Jr., is nationally recognized as a
pioneer and leading practitioner of micro-cap research and portfolio management.
To Our Shareholders,
For the six and twelve months ended October 31, 1998, the Fremont U.S. Micro-Cap
Fund declined 26.92% and 23.45%, respectively, compared to the Russell 2000's
21.20% and 11.84% losses over the same time period.
In mid-April, small company stocks hit an air pocket formed by a global
economic crisis in confidence. Small and micro-cap stocks fell as investors
initially flocked to large cap stocks and ultimately sought the shelter of U.S.
Treasuries. The S&P 500's 26% peak-to-trough correction was modest in comparison
to the Russell 2000's 37% slide from its April high to early October bottom.
During the second half of fiscal 1998, we experienced price declines in all
five of our portfolio sectors-- technology, health care, services, consumer, and
special situations. Losers outpaced winners by a wide margin. Stocks that
reported disappointing earnings were taken out and shot. In general, those that
met our earnings expectations were only beaten up. That's what happens during
severe market downturns. In a more normal market environment, we would expect
earnings shortfalls to be punished. Conversely, we would anticipate rewards from
portfolio holdings that met their earnings expectations. However, through much
of this fiscal year, reporting good earnings gains was not good enough to propel
stock prices.
Our investment team's strategy during difficult periods in the stock market
is to consolidate the number of portfolio holdings and focus on those that we
believe will be among the first to attract investor interest when confidence
improves. When the stock market rallied in October, this strategy again proved
successful as the Fund's gain of 12.9% ranked it among the best performing
micro-cap funds during October.
We also altered our sector allocation. Technology now represents 29%,
consumer stocks 19%, health care 10%, service companies 11%, and special
situations 7%. That leaves 24% in cash, most of which came in from new
shareholders and
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
FREMONT U.S. MICRO-CAP FUND $20,041
RUSSELL 2000 INDEX $16,754
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 3 YEARS SINCE INCEPTION (6/30/94)
- ---------------------------------------------
- -23.45% 11.73% 17.39%
ANNUAL RETURNS TOP TEN HOLDINGS
06/30/94-10/31/94* +3.60% Orckit Communications Ltd. .......... 4.9%
11/01/94-10/31/95 +38.68% Cytyc Corp. ......................... 4.0%
11/01/95-10/31/96 +41.46% MDSI Mobile Data Solutions, Inc. .... 3.8%
11/01/96-10/31/97 +28.80% Cinar Films, Inc. (Class B) ......... 2.6%
11/01/97-10/31/98 -23.45% New Era of Networks, Inc. ........... 2.6%
IMPCO Technologies, Inc. ............ 2.5%
Micrel, Inc. ........................ 2.4%
TSI International Software Ltd. ..... 2.3%
Anaren Microwave, Inc. .............. 2.1%
Quicksilver, Inc. ................... 1.8%
TOTAL ..................... 29.0%
*Unannualized (1) 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.
- --------------------------------------------------------------------------------
10 FREMONT MUTUAL FUNDS
<PAGE>
additional contributions from existing shareholders in late October. We are
pleased by the confidence shareholders have in our investment abilities and
delighted to have this "dry powder" to build up existing positions and take
advantage of evolving opportunities in the micro-cap stock market.
Let me give you an example. MDSI Mobile Data Solutions, Inc., is the
leading worldwide systems provider for automating mobile field service crews in
the utilities and telecommunications industries. Utilizing wireless
communications, the global positioning system (GPS), and low-cost portable
computers, MDSI reports the location and progress of maintenance and repair
crews to its client companies' central offices, thereby materially enhancing
productivity and reducing cost. MDSI stumbled in its initial efforts to serve
the taxi dispatch business, losing money on a large contract with a London taxi
company. However, its utilities, telecommunications, and cable television
markets are thriving, as shown by a 31% increase in revenues, 53% rise in
earnings, and
- --------------------------------------------------------------------------------
FREMONT U.S. MICRO-CAP FUND
MARKET CAPITALIZATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
$750M - 1,000M (1.7%)
$500M - 749M (11.3%)
$250M - 499M (21.3%)
$100M - 249M (31.6%)
LESS THAN $100M (34.1%)
35% increase in backlog during the third quarter of 1998.
On October 26, 1998, MDSI announced a joint marketing venture with the
Vantive Corporation, a leader in the front office enterprise software business.
MDSI will be the "Mr. Outside"--relaying information from the field--to
Vantive's "Mr. Inside"--correlating field service data and adjusting manpower
and scheduling. We think the synergy in these two leading companies' services
will increase market penetration for both and help further energize MDSI's
earnings growth. We have been patient long-term investors and think our patience
will soon be rewarded.
After posting a +152.7% total return over the prior three fiscal years, the
Fund took a step back in fiscal 1998 and experienced a decline of 23.4%.
Recently, smaller company stocks rebounded strongly from an extreme oversold
level. Whether this represents a major market turn or merely a rally is
uncertain. However, we are secure in our belief that the Fund portfolio contains
many leading innovative companies, which will reward investors in the future.
Sincerely,
/s/ Robert E. Kern, Jr.
Robert E. Kern, Jr.
Portfolio Manager
FREMONT MUTUAL FUNDS 11
<PAGE>
- --------------------------------------------------------------------------------
FREMONT U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
David G. Kern, CFA
Portfolio Manager
Kern Capital Management LLC
[PHOTO]
David G. Kern, CFA
- ------------
FUND PROFILE
- ------------
U.S. small cap stocks offer tremendous opportunity to 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 attractive is
the business; how strong is management; and how much is the company worth?
Portfolio Manager David G. Kern, CFA, is a principal of Kern Capital
Management LLC, a firm dedicated to small and micro-cap company research and
portfolio management.
To Our Shareholders,
For the six and twelve months ended October 31, 1998, the Fremont U.S. Small Cap
Fund declined 18.85% and 7.29%, versus the Russell 2000 Index's 21.20% and
11.84% losses over the same time periods.
We are pleased to have outperformed the Russell 2000 Index during a rising
small cap market in first-half fiscal 1998, and during a falling market through
most of the second half. We credit this success to our stock picking--investing
in truly innovative companies in the technology, health care, consumer, and
services industries.
In late summer, as investors worried about a potential bear market for the
Dow and S&P 500, small cap stocks were already experiencing one. The Russell
2000 lost 37% of its value from its April high to early October bottom--a bear
market by anyone's definition. Selling extended to virtually all industry groups
and even companies with excellent track records were being dumped. Many fine
companies in our portfolio sold off as small cap investors rushed to the exits.
While bear markets are painful, they give portfolio managers the
opportunity to upgrade the quality of their holdings by selling some holdings
and building up positions in those companies in which they have the greatest
degree of confidence. In the midst of this year's small cap stock bear market,
we believed it was critical to focus the portfolio in those stocks we believed
would lead the market recovery. We trimmed the portfolio from 48 to 39 stocks
and adjusted our sector weightings. Judging from the Fund's October
performance--up 11.29% compared to the Russell 2000's 5.22% gain--our strategy
has paid off. A secondary benefit is that we booked sufficient losses so that we
will be reporting no capital gains in fiscal 1998--something we think our
shareholders will appreciate.
Let's detail several of the portfolio holdings that helped the Fund rally
so strongly in October and we believe can continue to perform well. The senior
citizen assisted living group sold off as investors worried that the shutdown of
the capital markets would limit financing options and restrain growth. We bought
industry leader Sunrise Assisted Living after analyzing the company's cash flow
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
FREMONT U.S. SMALL CAP FUND $8,895
RUSSELL 2000 INDEX $8,515
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR SINCE INCEPTION (9/24/97)
- -----------------------------------
- -7.29% -10.09%
ANNUAL RETURNS TOP TEN HOLDINGS
09/24/97-10/31/97* -4.06% Metzler Group, Inc. ................... 6.8%
11/01/97-10/31/98 -7.29% Orthodontic Centers of America, Inc. .. 5.1%
Cytyc Corp. ........................... 4.6%
TeleTech Holdings, Inc. ............... 4.5%
New Era of Networks, Inc. ............. 4.5%
Nova Corp. ............................ 4.2%
Cinar Films, Inc. (Class B) ........... 4.1%
Foodmaker, Inc. ....................... 3.7%
Orckit Communications Ltd. ............ 3.3%
Crown Castle International Corp. ...... 3.1%
TOTAL ....................... 43.9%
*Unannualized (1) 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.
- --------------------------------------------------------------------------------
12 FREMONT MUTUAL FUNDS
<PAGE>
and determining it could finance growth internally.
Assisted living communities serve senior citizens who can no longer live
independently, but do not need the kind of comprehensive care provided by
nursing homes. With the aging of America, this is a great growth business.
Sunrise operates 74 assisted living communities in 13 states and has another 56
communities in various stages of development. It is in the process of acquiring
a competitor with 39 facilities in 10 states and another 18 in development.
Sunrise is a financially strong, superbly managed company well positioned in a
terrific growth business--in short, exactly the kind of company we look for.
Sunrise stock is up smartly from our entry point, but is still reasonably priced
for a company that we estimate can grow earnings well in excess of our 20-25%
hurdle rate.
The internet is the wave of the future. But, at this stage, it is difficult
to separate tomorrow's big winners from the many highly touted companies that
will ultimately fail. It reminds us of the personal computer manufacturing
business in its infancy.
- --------------------------------------------------------------------------------
FREMONT U.S. SMALL CAP FUND
MARKET CAPITALIZATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
$100m - 249m (6.5%)
less than $100m (5.7%)
$1,500m - 2,999m (6.7%)
$1,000m - 1,499m (15.3%)
$750m - 999m (11.5%)
$500m - 749m (40.0%)
$250m - 499m (14.3%)
You knew PCs would make it big, but if you would have bought the stocks of all
the manufacturers--all those that eventually failed in addition to the ultimate
winners like Compaq and Dell--you probably would have lost money. However, if
you would have bought Microsoft, the clear industry leader in providing
operating systems and software for all the PC manufacturers, you would have made
a fortune.
Today, there are lots of promising internet commerce companies to chose
from. However, it is hard to predict which internet sites/companies will have
long-term staying power. Yet, valuations infer they will all succeed. We are
searching for tomorrow's Microsoft, i.e., technologies and/or companies that
will serve all internet companies. Internet commerce depends on security
platforms that provide customer authentication, privacy and transaction
validation. Verisign allows companies to outsource this critical capability and
Entrust provides the tools that enable companies to build this capability
internally. We know not all internet companies will succeed in what promises to
be a highly competitive business. We are confident companies like Verisign and
Entrust, that will provide security for existing and future participants in the
industry, will benefit from what will become an enormous internet commerce
market.
In closing, we are encouraged by the small cap stock market's strong
October rally. But, one month does not a reversal in trend make. While we are
cautious regarding worldwide economic and market trends, we are confident we
have built a portfolio of great small companies that will become much larger and
more successful.
Sincerely,
/s/ David G. Kern
David G. Kern, CFA
Portfolio Manager
FREMONT MUTUAL FUNDS 13
<PAGE>
- --------------------------------------------------------------------------------
FREMONT SELECT FUND
- --------------------------------------------------------------------------------
John B. Kosecoff, Debra McNeill, CFA,
& Jeffrey J. Embersits
Portfolio Co-Managers
Fremont Investment Advisors, Inc.
[PHOTO]
John B. Kosecoff
- ------------
FUND PROFILE
- ------------
The Fremont Select Fund seeks long-term capital appreciation by investing
primarily in stocks of established medium-sized growth companies. Under normal
market conditions, the Fund expects to hold no more than 30 stocks representing
at least 80% of its total assets.
Great growth companies trading at opportunistic prices are rare finds.
Through intensive fundamental research and disciplined stock picking, Fremont
Select Fund managers strive to build and maintain a concentrated portfolio of
these investment gems. Due to its stock specific, concentrated portfolio
approach, the Fund's day-to-day volatility may exceed the market averages.
However, fund management believes that selective investment in sound growth
companies will reward investors with superior long-term returns.
To our Shareholders,
For the six months ended October 31, 1998, the Fremont Select Fund declined
22.82% compared to the Russell Mid-Cap Index's 10.61% loss. From inception on
December 31, 1997, through October 31, 1998, the Fremont Select Fund declined
19.94%, compared to a 0.70% loss for the benchmark index.
Today's market psychology is in sharp contrast to a year ago, when
investment pundits had a "Goldilocks" global outlook and Federal Reserve
Chairman Alan Greenspan's foremost concern was that an overheated U.S. economy
might stir up inflation. In October 1997, the Asian Flu was just a cough and we
were celebrating Russia's new market economy. By April, the severity of Asia's
economic problems, the near collapse of the Russian financial structure,
commodities deflation, and a slowing U.S. economy dramatically altered the
investment landscape and small and mid-cap stocks began to slide. The S&P 500
held up well because of large cap stock liquidity, the strong performance of a
small handful of market favorites, and the influence of defensive groups like
utilities and telecommunications stocks. Small and mid-cap growth stocks hit
their worst skid in August as highly leveraged hedge funds unraveled.
The Select Fund's concentrated portfolio sustained damage in four areas.
Early in the year, our energy services holdings fell as oil prices declined to
12-year lows. In mid-year, portfolio holdings in cyclical groups (aerospace and
packaging) and interest rate sensitive industries (real estate and auto
insurance) sold off as investors began anticipating an economic slowdown.
Finally, two of our consolidation plays (companies growing through acquisition),
were slammed as they experienced difficulty digesting several recent
acquisitions. On the plus side, our health care investments posted good gains,
our financial services positions held up relatively well, and we benefited from
the takeover of two of our portfolio holdings.
During this challenging period for mid-cap growth stocks, we have put each
of our portfolio holdings back under the research microscope and met again with
corporate manage-
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
RUSSELL MID-CAP INDEX $9,930
FREMONT SELECT FUND $8,006
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
SINCE INCEPTION (12/31/97)
- --------------------------
-19.94%*
ANNUAL RETURNS TOP TEN HOLDINGS
12/31/97-10/31/98* -19.94% Xilinx, Inc. ........................ 8.4%
Ligand Pharmaceuticals .............. 8.0%
Equifax, Inc. ....................... 6.6%
Meridith Corp. ...................... 4.9%
Consolidated Stores Corp. ........... 4.8%
Mercury General Corp. ............... 4.7%
Biogen, Inc. ........................ 4.5%
NCR Corp. ........................... 3.5%
CMAC Investment Corp. ............... 3.2%
Weatherford International, Inc. ..... 3.2%
TOTAL ..................... 51.8%
*Unannualized (1) Assumes initial investment of $10,000 on inception date,
December 31, 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 Mid-Cap Index or the S&P 500 Index.
- --------------------------------------------------------------------------------
14 FREMONT MUTUAL FUNDS
<PAGE>
ments. We are pleased to report that the overwhelming majority of portfolio
companies are meeting our strategic and operating expectations. Although the
market may not yet recognize their merits, we are confident these stocks will be
appraised more adequately in the future. Several are suffering what we believe
to be temporary problems, and we have added to our positions at what we believe
to be truly opportunistic prices. Those few companies that appear to have lost
their way, have been eliminated from the portfolio.
We can't predict when mid-cap growth stocks will attract a larger and more
appreciative audience. We may have to see the market leaders--a handful of
mega-cap market darlings that have been responsible to a big percentage of the
market's gains--fall from favor before investors gravitate to what we can
quantify as much better bargains in the mid-cap sector and our portfolio.
To demonstrate our investment discipline, let's discuss Consolidated
Stores, a stock that is well down from our original purchase price. Consolidated
Stores is one of our consolida-
- --------------------------------------------------------------------------------
FREMONT SELECT FUND
SECTOR DIVERSIFICATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
TECHNOLOGY (17.4%)
SHORT-TERM SECURITIES (17.4%)
OTHER (8.9%)
CONSUMER SERVICES (7.5%)
BUSINESS EQUIPMENT AND SERVICES (9.1%)
ENERGY (10.0%)
FINANCIAL SERVICES (12.9%)
HEALTH CARE (16.8%)
tion plays. Over the 32 years its been in business, Consolidated has done a
terrific job consolidating the "close-out" merchandise industry--buying other
retailers' close-out merchandise for pennies on the dollar, marking it up, and
selling to consumers at prices well under comparable merchandise at mass
merchants like Wal-Mart and K-mart.
Close-out retailing is a great business, with 50% margins--two to three
times higher than traditional discounters. In 1996, Consolidated doubled its
size with the acquisition of KB Toys and McFrugals, its largest competitor.
Consolidated's acquisition record has been impressive and they now dominate the
business with 2,300 stores nationwide. They have had a difficult time digesting
these most recent acquisitions, but we believe that they will turn the corner
within three months.
We are forecasting 20% or better earnings growth over the next two years,
with earnings growth rates slowing to a more than respectable low to mid-teens
thereafter. Although the stock has bounced from its recent lows, it is still
trading at just 11 times our 1999 earnings estimate of $1.85 per
share--approximately half the S&P 500's multiple. If Consolidated meets our
earnings expectations, we think the stock will move significantly higher.
In closing, it's been a difficult year for mid-cap stocks, and all the more
so for our concentrated Select Fund portfolio. We are sticking to our investment
philosophy of long-term capital appreciation by buying superior growth companies
at out-of-favor prices. And, we are keeping to our research discipline of tire
kicking and making sure the fundamental numbers add up. We trust this tried and
true method will more adequately reward shareholders in the year ahead.
Sincerely,
/s/ John Kosecoff /s/ Debra McNeill
/s/ Jeffrey J. Embersits
John Kosecoff, Debra McNeill
& Jeffrey J. Embersits
Portfolio Co-Managers
FREMONT MUTUAL FUNDS 15
<PAGE>
- --------------------------------------------------------------------------------
FREMONT GROWTH FUND
- --------------------------------------------------------------------------------
W. Kent Copa, CFA, Debra McNeill, CFA & Peter Landini
Portfolio Co-Managers
Fremont Investment Advisors, Inc.
[PHOTO]
W. Kent Copa, CFA
- ------------
FUND PROFILE
- ------------
The Fremont Growth Fund invests principally in large capitalization U.S. stocks.
The goal is to outperform the Standard & Poor's 500 and the average of its large
cap growth stock fund peer group.
Superior earnings growth generally translates into superior stock
performance. However, stocks with excellent earnings records often trade at high
valuations and unanticipated earnings disappointments can result in sharp
declines. In short, reward potential is accompanied by a somewhat higher level
of risk. With the help of quantitative analysis, the portfolio management team
seeks to identify stocks with superior earnings growth prospects trading at more
reasonable valuations. The goal is to build a diversified portfolio with
favorable risk/reward characteristics.
Portfolio Co-Managers Ken Copa, Debra McNeill and Peter Landini have a
combined 33 years of professional investment experience.
To Our Shareholders,
For the six-month period ended October 31, 1998, the Fremont Growth Fund
declined 8.52% compared to the Standard & Poor's 500 Index's 0.41% and the
Lipper Growth Fund Average's 6.59% losses. For the twelve-month period ended on
the same date, the Fund gained 7.30% compared to the S&P 500's 21.99% and the
Lipper Growth Fund Average's 9.61% returns.
In fiscal 1998, the Fund's overweighting in traditional value sectors
restrained returns relative to the S&P 500 and its peer group benchmark. Our
energy holdings were hit hard early in the year as oil prices plummeted to
12-year lows. Several bank stock positions, which had performed well in the
first half, were chopped in half in late summer, as international economic
turmoil resulted in unanticipated trading losses and disappointing earnings.
Electric utilities stocks held up reasonably well during the recent market
correction, but underperformed for the year. Our holdings in the
telecommunication, auto, and business equipment sectors performed quite well.
Our value posture was in response to traditional growth stocks'
historically high valuations. High growth stock valuations got even higher
during the market's rise in first half 1998, and uncharacteristically, growth
stocks outperformed value stocks during the market's sharp summer correction in
the second half as well. In hindsight, value was simply not the place to be, as
is evidenced by the almost unprecedented twelve-month performance differential
between the S&P 500/Barra Growth Index (+ 31.8%) and its Value Index counterpart
(+11.7%).
At Fremont, we strive to make good things better. With the help of Donald
Farrar, one of the pioneers and leading developers of investment systems, we
have adjusted our stock selection model. The process is designed to isolate
stocks with favorable earnings trends, rising consensus earnings expectations,
and low valuations based on current stock price relative to future income and
earnings growth. The portfolio turnover rate is expected to be well below the
industry average, reducing capital gains tax obligations for shareholders.
The enhanced strategy, which we integrated at the beginning of August,
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
S&P 500 INDEX $30,243
FREMONT GROWTH FUND $25,384
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 5 YEARS SINCE INCEPTION (8/14/92)
- ---------------------------------------------
7.30% 17.15% 16.18%
ANNUAL RETURNS TOP TEN HOLDINGS
08/14/92-10/31/92* +2.00% Ford Motor Co. ....................... 3.1%
11/01/92-10/31/93 +12.80% General Electric ..................... 2.7%
11/01/93-10/31/94 +1.72% Microsoft Corp. ...................... 2.7%
11/01/94-10/31/95 +28.12% Philip Morris Cos. Inc. .............. 2.0%
11/01/95-10/31/96 +22.06% AT&T Corp. ........................... 1.8%
11/01/96-10/31/97 +29.26% Exxon Corp. .......................... 1.7%
11/01/97-10/31/98 +7.30% Pfizer, Inc. ......................... 1.6%
Wal-Mart Stores, Inc. ................ 1.6%
Merck & Co. .......................... 1.5%
Intel Corp. .......................... 1.5%
TOTAL ...................... 20.2%
*Unannualized (1) Assumes initial investment of $10,000 on inception date,
August 14, 1992. Performance data illustrated is historical. Past performance is
not predictive of future performance. Share price and return will vary so that a
gain or loss may be realized when shares are sold. All performance figures
assume reinvestment of dividends. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the S&P 500 Index.
- --------------------------------------------------------------------------------
16 FREMONT MUTUAL FUNDS
<PAGE>
has refined the portfolio's core growth focus. Recent statistics show a
portfolio with an average 5-year annual projected earnings growth rate of 16.5%
versus the S&P 500's 13.7%, and an average price/earnings ratio of 19.2 compared
to the S&P's 25.6. Stocks currently favored are in the telecommunications,
healthcare, computer software, and discount retailing sectors.
Let us give you two examples. The pending merger of AT&T with
TeleCommunications Inc., and joint venture with British Telecom will give it a
strong foothold in virtually every telecommunications business. Following the
TCI merger, the new AT&T will be able to provide approximately one-third of all
U.S. homes with long distance, high speed internet access, and home
entertainment services--all in one attractive package. AT&T is also in talks
with Time Warner, another cable television giant, about a joint venture that
would allow AT&T to provide the same kind of bundled services to their cable
customers. In addition, AT&T's 50/50 international telecommunications services
joint venture with British Telecom should help it make further inroads overseas.
Fore-
- --------------------------------------------------------------------------------
FREMONT GROWTH FUND
SECTOR DIVERSIFICATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
TECHNOLOGY (15.5%)
SHORT-TERM SECURITIES (15.7%)
(OF THIS, 16.0% IS INVESTED IN
S&P 500 FUTURES CONTRACTS)
OTHER (27.2%)
RETAIL (5.5%)
HEALTH CARE (10.1%)
UTILITIES (11.9%)
FINANCIAL SERVICES (14.1%)
casts indicate about a 10% annual earnings growth rate for AT&T over the next
several years. Positive free cash flow and $7 billion in cash provide AT&T with
ample resources to grow earnings per share via opportunistic acquisitions and
share repurchase. If everything comes together for AT&T, we think the consensus
forecasts will prove conservative.
Until relatively recently, Wal-Mart has been in Wall Street's doghouse,
primarily because management disappointed investors with its first negative
quarterly earnings comparison for its landmark 100th quarter. Since the
disappointing quarter, earnings have grown at an average of 16.6%. We think
Wal-Mart can increase earnings by 15 to 18% annually over the next five years.
With the economy slowing, we think discount retailers will do particularly well
in the year ahead as economic uncertainty creates more price-sensitive shoppers.
That may be one of the reasons analysts have been increasing their earnings
estimates for Wal-Mart. In addition, Wal-Mart is now introducing smaller, 40,000
square foot "neighborhood" stores, which bring its legendary merchandising
skills from out on the highway right into town centers. Presently, they have
three test "neighborhood" stores. If the format works as well as management
anticipates, the new format should help sustain Wal-Mart's high earnings growth
rate.
In closing, value trailed growth in fiscal 1998 and the Fund's value bias
hampered returns relative to its benchmarks. Looking forward, our strategy
modifications have enhanced our focus on core growth at a reasonable price. Our
research shows it can help us meet our objectives of superior risk-adjusted
long-term performance.
Sincerely,
/s/ Ken Copa /s/ Debra McNeill
/s/ Peter Landini
W. Kent Copa, Debra McNeill,
& Peter Landini
Portfolio Co-Managers
FREMONT MUTUAL FUNDS 17
<PAGE>
- --------------------------------------------------------------------------------
FREMONT REAL ESTATE SECURITIES FUND
- --------------------------------------------------------------------------------
John Kramer and Paul Gray
Portfolio Co-Managers
Kensington Investment Group
[PHOTO]
John Kramer
- ------------
FUND PROFILE
- ------------
The commercial real estate industry is in the early stages of a major
transformation. Privately held real estate empires are being replaced by
financially strong, well-managed, publicly traded companies, that buy, sell and
manage commercial property throughout the U.S. In the process, stock market
investors are being given an unprecedented opportunity to participate in an
industry that has generated enormous wealth.
Portfolio Co-Managers John Kramer and Paul Gray monitor macro-economic
trends, supply/demand dynamics and industry fundamentals in allocating assets to
real estate securities (primarily Real Estate Investment Trusts or REITs) in
different commercial sectors including office, apartment, retail, hotel and
industrial.
Individual securities selection is based on the analysis of corporate
managements' acquisition, development and operating records; earnings and
dividend growth potential; and valuation relative to other publicly traded real
estate companies.
To our Shareholders.
For the six-month period ended October 31, 1998, the Fremont Real Estate
Securities Fund declined 18.28%, compared to the National Association of Real
Estate Investment Trusts(R) (NAREIT) Composite Index's 14.75% loss. From
inception on December 31, 1997, through October 31, 1998, the Fund declined
18.78% versus the benchmark index's 17.80% loss. The Fund's modest
underperformance relative to its benchmark over these time periods resulted
largely from our concentration in smaller capitalization REITs which lagged
larger real estate companies and the index during the last several months of
fiscal 1998.
In response to global economic uncertainty, investors have been running
away from risk--real and imagined. Increased commercial construction activity is
perceived to have added substantial risk to real estate investing. Like generals
fighting the last war, investors have looked back to the late 1980's--a period
in which overbuilding resulted in high vacancy rates, and rapidly falling cash
flows and property values--and retreated from real estate securities.
In our opinion, it is very different this time around. In the late 1980's,
flush with easy bank credit, most commercial real estate sectors became severely
overbuilt. New construction as a percentage of inventory reached double-digit
levels. The cranes didn't start coming down until a substantial glut had already
developed. In 1997-98, new construction as a percentage of inventory was only
about 2%. With 90% plus occupancy rates, this is a prudent level of new
development. Credit markets have gone through a severe tightening in recent
months. New construction has virtually ceased, substantially diminishing the
risk of any excess capacity developing over the next several years. Considering
the fact that bankruptcy is about the only way to get out of paying a commercial
real estate lease, barring a rather severe recession, real estate company cash
flows, dividends, and
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
NAREIT COMPOSITE INDEX $8,220
FREMONT REAL ESTATE SECURITIES FUND $8,122
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
SINCE INCEPTION (12/31/97)
- --------------------------
-18.78%*
ANNUAL RETURNS TOP TEN HOLDINGS
12/31/97-10/31/98* -18.78% Malan Realty Investors, Inc. ......... 4.3%
Glimcher Realty Trust ................ 4.2%
Pacific Gulf Properties, Inc. ........ 4.1%
Lexford Residential Trust ............ 4.1%
Prentiss Properties Trust ............ 4.0%
American Industrial Properties REIT .. 4.0%
Highwoods Properties Co. ............. 3.2%
IRT Property Co. ..................... 3.0%
Kranzco Realty Trust ................. 3.0%
Wellsford Real Properties, Inc. ...... 3.0%
TOTAL ...................... 36.9%
*Unannualized (1) Assumes initial investment of $10,000 on inception date,
December 31, 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 National Association of Real Estate Investments Trusts(R)
(NAREIT) Composite Index.
- --------------------------------------------------------------------------------
18 FREMONT MUTUAL FUNDS
<PAGE>
property values would appear quite secure. Nevertheless, today you can buy the
stocks of high quality commercial real estate companies for about 20% less than
they were selling for eight months ago.
Real estate stocks are now historically cheap relative to almost any
benchmark. The dividend yield relative to 10-year Treasury Bonds is at its
highest since 1991. Dividends as a percentage of cash flow is as low as it has
been for ten years, indicating current dividend payments are quite secure. Cash
flow yield (cash flow/stock price) is well below historic standards. Finally,
quality real estate companies are selling at 10-20% discounts to break up value,
as opposed to the traditional premium. If there were more liquidity in the
system, today's low prices would probably spawn a substantial wave of
acquisitions and leveraged buyouts.
Let us give you an example of one of the securities in our portfolio.
Highwoods is a REIT with high quality, primarily suburban office proper-
- --------------------------------------------------------------------------------
FREMONT REAL ESTATE SECURITIES FUND
SECTOR DIVERSIFICATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
REIT (OFFICE) (16.3%)
SHORT-TERM SECURITIES (15.0%)
REIT (OTHER) (16.1%)
NON-REIT (DIVERSIFIED) (3.0%)
REIT (HOTELS) (6.1%)
REIT (REGIONAL MALLS) (6.2%)
REIT (DIVERSIFIED) (11.0%)
REIT (APARTMENTS) (12.2%)
REIT (COMMUNITY CENTERS) (14.1%)
ties throughout the Southeast. Occupancy rates are high and cash flow is robust.
The stock yields about 8%--about 3.5% above 10-year Treasuries. The dividend
payout is only about 75% of cash flow, indicating the dividend is quite secure.
Highwoods stock is trading at just 8.5 times calendar 1998 earnings and 7.6
times our 1999 earnings forecast. We are projecting an annual earnings growth
rate of 10-12%, pretty good for a REIT. We suggest a secure 8% yield from a
stock capable of double digit earnings growth and trading at only about
one-third of the market multiple is a legitimate bargain.
Real estate securities are cheap. This doesn't mean they can't get cheaper.
Undervalued securities can become more undervalued during periods when investor
perception defies fundamental logic. However, we believe as we look back 12-18
months from now, this will have been an excellent time to invest in real estate
securities and/or real estate securities funds.
In closing, real estate securities have suffered in what has become a risk
averse world. We think the commercial real estate industry is in very good shape
today and has avoided the mistakes that have raised investor concerns. Going
forward, as investors realize their perceptions have not been consistent with
the realities in the industry, we expect good returns.
Sincerely,
/s/ John Kramer /s/ Paul Gray
John Kramer and Paul Gray
Portfolio Co-Managers
FREMONT MUTUAL FUNDS 19
<PAGE>
- --------------------------------------------------------------------------------
FREMONT BOND FUND
- --------------------------------------------------------------------------------
Bill Gross
Portfolio Manager
Founder & Managing Director
Pacific Investment Management
Company (PIMCO)
[PHOTO]
Bill Gross
- ------------
FUND PROFILE
- ------------
The 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. Second, consistent performance is
achieved by avoiding extreme swings in portfolio maturity/duration.
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 over $148 billion in fixed income investments for institutional
clients.
To Our Shareholders
For the six-month period ended October 31, 1998, the Fremont Bond Fund returned
6.86%, compared to a 5.55% return for the Lehman Brothers Aggregate Bond Index,
an outperformance of 131 basis points (1.31%). For the year ended October 31,
1998, the Fremont Bond Fund posted strong gains. The Fund's performance exceeded
the benchmark by 97 basis points (0.97%), returning 10.31% versus 9.34% for the
Lehman Brothers Aggregate Index.
The Fund's strong returns were achieved through a variety of portfolio
strategies. First, the bond market provided an attractive environment during the
last twelve months as interest rates declined by approximately 1.24%. This
decline benefited the Fundperformance as we maintained a long average maturity
in the portfolio, which reaped positive price gains as rates moved lower.
Overall, sector strategies implemented during the year also enhanced the Fund's
returns. The Treasury sector was one of the best performing bond market sectors
as investors sought the safety of U.S. government bonds. As a result, our
underweighting of Treasuries detracted from the Fund's relative returns. The
mortgage sector posted weak returns during the fiscal year as a surge in
mortgage prepayments led to lower returns. Throughout the year we maintained an
emphasis in the mortgage sector which detracted from the Fund's returns.
Corporate bonds performed poorly due to investor worries about declining
profits. The Fund's allocation to corporate bonds was limited--which served to
enhance returns versus the Lehman Brothers Aggregate Bond Index. Lastly, the
Fund's modest allocation to non-U.S. bonds, including a small position in
emerging markets, detracted somewhat from returns. Emerging market issues
suffered during the year but gained back some of their losses at fiscal
year-end. Offsetting some of these losses, however, was an exposure to Australia
and New Zealand which performed well during the year.
Market Outlook
There is widespread evidence that the financial market uncertainty which began
in Asia over a year ago has now
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
FREMONT BOND FUND $15,303
LEHMAN BROS. AGGREGATE BOND INDEX $14,740
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 5 YEARS SINCE INCEPTION (4/30/93)
- ---------------------------------------------
10.31% 7.80% 8.04%
ANNUAL RETURNS TOP TEN HOLDINGS
04/30/93-10/31/93* +5.15% 5-yr. U.S. Treasury Bond Futures,
11/01/93-10/31/94 -4.42% 325 contracts, Exp. Dec. '98 ....... 16.2%
11/01/94-10/31/95 +16.49% 30-yr. U.S. Treasury Note Futures,
11/01/95-10/31/96 +8.18% 177 contracts, Exp. Dec. '98 ....... 9.9%
11/01/96-10/31/97 +9.54% 10-yr. U.S. Treasury Note Futures,
11/01/97-10/31/98 +10.31% 168 contracts, Exp. Dec '98 ........ 8.8%
FNMA CMO, 8.000%, 01/25/22 ........... 7.0%
FNMA TBA, 6.000%, 01/14/29 ........... 6.4%
FNMA MTN, 6.200%, 08/12/08 ........... 4.5%
Residential Funding Mtg. Sec I 1997 .. 4.4%
EuroDollar Futures,
13 Contracts, Exp. Sept. 2001 ...... 4.1%
EuroDollar Futures,
13 Contracts, Exp. Dec. 2001 ....... 4.1%
EuroDollar Futures,
13 Contracts, Exp. March 2002 ...... 4.1%
TOTAL ...................... 69.5%
*Unannualized (1) 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.
- --------------------------------------------------------------------------------
20 FREMONT MUTUAL FUNDS
<PAGE>
spread to the United States. Economic growth will slow sharply as global
uncertainty will continue to affect U.S. capital markets, where corporate
borrowing rates have already widened substantially relative to Treasuries. Many
countries have chosen to pursue tight interest rate policies, either to defend
weak currencies or, in the case of Europe, as a prelude to EMU. Such policies
will reduce demand and slow growth worldwide. Lower Treasury yields will not
buttress corporate profits if they continue to be offset by wider borrowing
spreads. Earnings will continue to be constrained by heightened competition,
which prevents companies from raising prices. Investment spending will slow as
reduced corporate profits and lower capacity utilization provide less reason to
invest.
To be sure, the consumer continues to have ready access to credit and is
enjoying the benefit of extra cash from home refinancings. These underlying
strengths will not, however, withstand the negative effects of shrinking
corporate profits and declining employment. Consumer
- --------------------------------------------------------------------------------
FREMONT BOND FUND
PORTFOLIO CREDIT QUALITY AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
BBB 5%
BB 7%
A 9%
AAA 79%
spending, which has driven recent growth in the U.S. economy, will slow as
higher unemployment and potential stock market declines weaken confidence. These
blows to confidence will be only partially offset by further Federal Reserve
rate cuts. Inflation will be held in check as weak domestic demand in countries
outside the U.S. forces them to boost exports, which will increase competitive
pressures on U.S. companies and prevent them from raising prices.
Given a slowing economy, we expect lower rates. To benefit from this
decline in rates, we will continue to manage the portfolio with a relatively
long average maturity. Our sector strategy for the near term is cautious. It
calls for a concentration of mortgages as a prudent way to enhance yield. We
will maintain a small allocation to the investment-grade corporate sector as
earnings disappointments and market uncertainty keep yield premiums over
Treasuries high. We will retain select holdings of below-investment-grade
corporate bonds in non-cyclical industries which are better able to withstand an
economic downturn. Until global economic turmoil subsides, we will maintain only
a small allocation to currency-hedged non-U.S. markets and hold small positions
in higher-quality emerging market debt.
We thank you for your continued support and trust you have placed in us. As
always, we will continue to work hard to meet your investment needs.
Sincerely,
/s/ William H. Gross
Bill Gross
Portfolio Manager
FREMONG MUTUAL FUNDS 21
<PAGE>
- --------------------------------------------------------------------------------
FREMONT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Norman Gee
Portfolio Manager
Fremont Investment Advisors, Inc.
[PHOTO]
Norman Gee
- ------------
FUND PROFILE
- ------------
Fremont Money Market Fund invests primarily in high quality short-term debt
securities (commercial paper) issued by U.S. corporations and U.S. subsidiaries
of foreign corporations. The Fund will also take small positions in other
investment-grade short-term debt instruments such as Yankee CDs
(dollar-denominated certificates of deposit in foreign banks).
Portfolio Manager Norman Gee strives to add value through price-sensitive
trading and by identifying undervalued high quality money market securities. He
will also make conservative adjustments to the portfolio's average maturity
relative to the market in attempting to enhance total portfolio yield.
To Our Shareholders,
For the six and twelve months ended October 31, 1998, the Fremont Money Market
Fund returned 2.69% and 5.45% compared to the IBC Money Market First Tier
Taxable Average's 2.41% and 4.96%, respectively. The Fremont Money Market Fund
once again finished in the top ten percent of comparable funds in the IBC money
market fund universe.
We are accustomed to being one of the best money market funds in the
business. With stock markets collapsing worldwide in August-September, 1998, we
briefly got to be one of the best performing funds in the entire mutual fund
industry. Although it lasted just a few months, it was quite a treat for me and
the other money fund managers who have been the Rodney Dangerfields of the
business throughout this historic bull market. In the future, we may get more
respect as investors are periodically reminded of the important role money
market funds play in a diversified investment program.
In our Semi-Annual Report published in May 1998, I predicted the Federal
Reserve would continue to sit on its hands for the balance of the year. This
forecast was based on what I saw happening in the American economy. I did not
anticipate that global financial turmoil would necessitate the Fed's rate cuts
this fall. Our average maturity was longer than the average for the money market
fund universe, but had we known the Fed would be forced to respond to a global
liquidity crisis, we would have been a little longer.
Due to the important role the U.S. plays in the global economy and the way
the markets and the Fed react to changing circumstances overseas, it has become
increasingly difficult to accurately forecast short-term interest rate trends.
However, we believe we will see even lower rates in the year ahead as the Fed
continues to play the role of global financial fireman. Consequently, we have
lengthened the portfolio's average maturity to 74-75 days compared to about 56
days for the average money fund. With an inverted short term yield curve--one
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
90-DAY U.S. T-BILLS $17,070
FREMONT MONEY MARKET FUND $17,043
IBC FIRST TIER TAXABLE PRIME AVERAGE $16,434
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 5 YEARS SINCE INCEPTION (11/18/88)
- ----------------------------------------------
5.45% 5.10% 5.50%
ANNAUL RETURNS TOP TEN HOLDINGS
11/18/88-10/31/89* +8.52%
11/01/89-10/31/90 +7.99% Federal National Mortgage Association,
11/01/90-10/31/91 +6.51% Agency Note .......................... 2.8%
11/01/91-10/31/92 +3.73% Federal National Mortgage Association,
11/01/92-10/31/93 +2.66% Discount Note ........................ 2.7%
11/01/93-10/31/94 +3.49% Federal National Mortgage Association,
11/01/94-10/31/95 +5.84% Discount Note ........................ 2.1%
11/01/95-10/31/96 +5.34% Jostens, Inc. .......................... 1.7%
11/01/96-10/31/97 +5.39% Federal Home Loan Bank,
11/01/97-10/31/98 +5.45% Agency Note .......................... 1.4%
Federal Home Loan Bank,
Agency Note .......................... 1.4%
Sonoco Products, Inc. .................. 1.4%
Sony Europe Finance PLC ................ 1.4%
Deutsche Bank Financial, Inc. .......... 1.4%
Toyota Motor Credit Corp. .............. 1.4%
TOTAL ........................ 17.7%
*Unannualized (1) 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. 90-Day T-Bill Index. An investment in Fremont Money Market Fund is neither
insured nor guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the net asset value at $1.00 per share, it is possible to
lose money by investing in the Fund.
- --------------------------------------------------------------------------------
22 FREMONT MUTUAL FUNDS
<PAGE>
month paper yields about 60 basis points more than 1 year paper--we are
sacrificing some yield in return for potential price appreciation should rates
head lower. The portfolio is still "barbelled," with heavier weighting on the
short and long maturity ends.
We are always trying to add value to the money market investment process.
One of the ways we have been able to accomplish this is through investing in
dollar denominated commercial paper issued by U.S. based subsidiaries of foreign
corporations. These high quality, investment grade issues generally have a
modest yield advantage over comparable commercial paper of domestic
corporations.
Recently, we have been able to take advantage of the U.S. commercial paper
market's reluctance to invest in Japan. Everyone knows the Japanese economy is
struggling--a fact reinforced by my recent visit to the "land of the rising sun"
and meetings with Japanese government officials and corporate leaders. So
anything with a Japanese label gets marked down in
- --------------------------------------------------------------------------------
FREMONT MONEY MARKET FUND
GEOGRAPHIC DIVERSIFICATION AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
OTHER (7%)
CANADA (4%)
SWITZERLAND (5%)
NETHERLANDS (6%)
JAPAN (6%)
UNITED KINGDOM (6%)
GERMANY (9%)
UNITED STATES (57%)
the market. However, if you narrow your focus to U.S subsidiaries of the highest
quality, most diversified Japanese multi-national companies (who are positioned
to weather and perhaps, eventually benefit from the current economic malaise), I
believe you are on secure ground. We regularly buy the paper of Toyota Motor
Credit, a U.S. corporation that provides financing for Toyota dealers and
customers exclusively in the good old U.S. of A. This is AAA/Aa1 rated paper
that yields 4 basis points more than comparable credits in the market. That is
not a giant yield bonus, but one we are delighted to take advantage of.
Money market funds enjoyed their day in the sun this year. With worldwide
stock markets rallying in late October, some of our shareholders are venturing
away from the money fund shelter. We are pleased to have served them well and
are sure we will see them again soon as volatile stock markets worldwide
continue to underscore the relevance and importance of money fund investing.
Sincerely,
/s/ Norman Gee
Norman Gee
Portfolio Manager
FREMONT MUTUAL FUNDS 23
<PAGE>
- --------------------------------------------------------------------------------
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
Arno A. Rayner and William Williams
Portfolio Co-Managers
Rayner Associates, Inc.
[PHOTO]
Arno A. Rayner
- ------------
FUND PROFILE
- ------------
The Fremont California Intermediate Tax-Free Fund seeks double tax-free income
for California residents through investing in high credit quality California
municipal securities.
Portfolio Co-Managers Arno Rayner and William Williams believe active
duration management, opportunistic sector allocation, and individual security
selection can enhance municipal bond portfolio returns. Credit quality is always
first priority. The Fund holds only investment grade rated securities and
selective non-rated bonds, which after internal credit analysis are believed to
deserve an investment grade rating.
Founded in 1976, sub-advisor Rayner Associates, Inc., manages over $65
million in fixed income assets for private clients.
To Our Shareholders,
In the six- and twelve-month periods ended October 31, 1998, the Fremont
California Intermediate Tax-Free Fund returned 4.90% and 7.16%, compared to the
Lehman Brothers Municipal 5-Year State General Obligation (GO) Index's 4.43% and
6.36% gains over the same time periods.
Since we assumed portfolio management responsibility on August 1, 1998, we
can't take much credit or blame for the Fund's performance in full year fiscal
1998. It was a good year for California municipal bonds. The Califor- nia
economy was strong and although it is starting to feel the effects of Asian and
Latin American economic weakness, it should continue to grow in 1999. New job
creation is expected to be 250,000-300,000, down from 400,000 in 1998, but still
quite healthy. Unemployment is expected to hold at around 5.6%. Personal income
is expected to grow at 6%, only a modest decline from this year's 7% gain.
Housing starts are projected to increase from 132,000 to 150,000. Even with
additional school funding, we should see a 1998 budget surplus. California now
has $26 billion in tax supported debt, which represents $716 per capita or about
2.6% of personal income--a pretty healthy balance sheet. Moody's, one of the
most respected debt rating services, has acknowledged this by raising the rating
on California General Obligation Bonds (GOs) from A1 to AA3.
Even though California municipal bonds have performed well, they have not
performed nearly as well as U.S. Treasuries, which benefited from the classic
flight to quality as investors worldwide sought the safety of one of the world's
highest quality credits. To wit, at the close of this reporting period, AAA
rated 10-year California municipal bonds were yielding 4.15% compared to the
10-year Treasury Bond's 4.52%. It is rare for a top credit quality double tax
free municipal bond yield to be more than 90% of a comparable maturity Treasury,
which, of course, is subject to federal income tax. The bottom line is on an
after tax basis, California bond yields are now even more appealing relative to
Treasuries.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
10/31/98
--------
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND $16,953
LEHMAN MUNI 5-YEAR STATE G.O. INDEX $16,658
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/98
1 YEAR 5 YEARS SINCE INCEPTION (11/16/90)
- ----------------------------------------------
7.16% 5.33% 6.86%
ANNUAL RETURNS TOP TEN HOLDINGS
11/16/90-10/31/91* +9.36% Sacramento Municipal Utilities District .. 3.2%
11/01/91-10/31/92 +7.37% Yucaipa School Facilities
11/01/92-10/31/93 +11.37% Finance Authority ...................... 2.5%
11/01/93-10/31/94 -3.94% East Bay Municipal Utility District
11/01/94-10/31/95 +12.77% (EBMUD) Water System ................... 2.5%
11/01/95-10/31/96 +4.63% City of L.A., Wastewater System .......... 2.5%
11/01/96-10/31/97 +6.75% City of Industry, Urban Devel. Agency .... 2.0%
11/01/97-10/31/98 +7.16% City of Stockton, Wastewater System ...... 2.0%
Orange County Transportation Auth. ....... 1.8%
City & County of San Francisco
International Airport .................. 1.7%
California State Pubic Works Board,
Lease Revenue .......................... 1.7%
Santa Monica-Malibu Unified
School District ........................ 1.7%
TOTAL .......................... 21.6%
*Unannualized (1) 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.
- --------------------------------------------------------------------------------
24 FREMONT MUTUAL FUNDS
<PAGE>
Because California has one of the highest income tax rates in the nation,
California municipal bonds also have a big edge on out-of-state munis. We
estimate that for the highest tax bracket California resident, double tax-free
California municipals have a 40 basis point (0.4%) advantage. That means you
would have to find a comparable out-of-state municipal bond or bond fund that
yielded 40 basis points more just to break even. This is before factoring in
state income tax liability. At present, there simply aren't any. Bottom line is
California residents seeking the best after-tax yields, should buy California
municipal bonds.
We are always looking for ways to add value to the investment process.
Recently, we have been able to take advantage of a discrepancy in the pricing of
bonds in the new issue and secondary markets. We bought Berkeley Unified School
District 4.55% of 8/1/2010 at par in the secondary market. These bonds were
yielding 20-25 basis points more than comparable credit quality new issues.
- --------------------------------------------------------------------------------
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
PORTFOLIO CREDIT QUALITY AS OF 10/31/98
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
A 18.1%
AA 20.3%
AAA 61.6%
In closing, with the after-tax yields on top rated California municipal
securities historically high relative to Treasuries and the state economy and
balance sheet still in good shape, we believe high quality double tax-free
California municipal securities are now particularly compelling investments for
high income-tax bracket California residents. We believe our value added
discipline can help maximize the rewards to shareholders.
Sincerely,
/s/ Arno Rayner /s/ William Williams
Arno Rayner and William Williams
Portfolio Co-Managers
FREMONT MUTUAL FUNDS 25
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of Fremont Mutual Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments in securities and net assets, and the related
statements of operations and changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of the
funds constituting Fremont Mutual Funds, Inc., (hereafter referred to as the
"Funds") at October 31, 1998, the results of each of their operations for the
year then ended, the changes in each of their net assets and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial state-ments and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
December 9, 1998
26 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
STOCKS 44.7%
BUSINESS EQUIPMENT & SERVICES 2.2%
1,050 Flughafen Wien AG AS $ 48,049
650 VA Technologie AG AS 60,327
10,100 Laidlaw, Inc. CN 93,992
6,597 Moore Corp. Ltd. CN 74,777
2,526 Nova Corp. CN 34,808
31,374 Danisco A/S DK 1,735,133
1,100 FLS Industries A/S (Class B) DK 25,698
662 ISS International Service System A/S (Class B) DK 44,713
2,855 Tele Danmark A/S (Class B) DK 311,253
250 Kone Corp. (Class B) FI 31,309
1,000 Metra Oyj (Class B) FI 17,493
250 Linde AG GM 133,011
2,027 Getronics NV NL 84,182
10,543 Koninklijke KPN NV NL 410,172
2,220 OCE NV NL 72,093
10,368 TNT Post Group NV NL 277,799
1,000 Corticeira Amorim SA PT 13,874
1,400 INAPA-Investimentos Participacoes e Gestao SA PT 16,905
4,100 Jeronimo Martins, SGPS SA PT 176,876
11,100 Portugal Telecom SA PT 523,754
2,400 Sonae Investimentos, SGPS SA PT 101,287
600,000 Informatics Holdings Ltd. SG 190,330
4,715 Autopistas Concesionaria Espanola SA SP 77,292
5,700 Atlas Copco AB (Class A) SW 133,094
* 379 Adecco SA SZ 151,454
125,000 Misys PLC UK 872,312
46,100 Rentokil Initial PLC UK 284,099
48,800 Siebe PLC UK 203,146
* 66,000 Aspect Telecommunications Corp. US 998,250
80,600 Equifax, Inc. US 3,118,213
* 16,400 FDX Corp. US 862,025
46,200 First Data Corp. US 1,224,300
* 106,500 Harbinger Corp. US 705,563
15,600 Waste Management, Inc. US 703,950
------------
13,811,533
------------
CAPITAL GOODS 1.2%
400 Wienerberger Baustoffindustrie AG AS 83,597
3,350 Continental AG GM 88,915
1,650 Heidelberger Zement AG GM 117,016
300 MAN AG GM 98,761
6,150 Mannesmann AG GM 596,409
9,300 Siemens AG GM 565,647
29,000 CRH PLC IR 425,680
8,000 DCC PLC IR 49,983
60,000 Cemex SA (Class B), ADR MX 325,998
370,000 IJM Corp. Berhad MY 146,051
1,200 Dragados & Construcciones SA SP 35,801
1,100 Fomento de Construcciones y Contratas SA SP 57,891
* 17 Zardoya Otis (Rights) SP 89
1,300 Zardoya Otis SA SP 37,536
20,300 ABB AB (Class A) SW 214,863
7,800 ABB AB (Class B) SW 82,558
4,100 Skanska AB (Class B) SW 135,185
225 ABB AG SZ 270,073
1,391 Holderbank Financiere Glarus AG (Class B) SZ 1,553,333
25,400 Caterpillar, Inc. US 1,143,000
19,600 Emerson Electric Co. US 1,293,600
------------
7,321,986
------------
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
CONSUMER DURABLES 2.0%
2,312 Magna International, Inc. (Class A) CN $ 143,413
19,000 Valeo SA FR 1,647,260
8,700 Daimler-Benz AG GM 686,427
5,500 Volkswagen AG GM 414,329
1,800 Volkswagen AG (Preferred) GM 85,103
66,000 Waterford Wedgwood PLC IR 59,618
48,000 Murata Manufacturing Co. Ltd. JP 1,621,663
23,000 Sony Corp., ADR JP 1,515,125
7,454 Philips Electronics NV NL 397,046
11,500 Electrolux AB SW 173,359
5,200 Hennes & Mauritz AB (Class B) SW 366,925
3,500 Volvo AB (Class A) SW 73,642
8,700 Volvo AB (Class B) SW 188,075
16,200 GKN PLC UK 194,519
21,900 Chrysler Corp. US 1,053,938
27,500 Ford Motor Co. US 1,491,875
23,400 General Motors Corp. US 1,475,663
16,600 Whirlpool Corp. US 850,750
------------
12,438,730
------------
CONSUMER NON-DURABLES 2.2%
5,100 George Weston Ltd. CN 145,525
13,135 Imasco Ltd. CN 247,027
9,100 The Seagram Company Ltd. CN 299,202
866 Carlsberg A/S (Class A) DK 52,986
746 Carlsberg A/S (Class B) DK 46,355
1,500 Cultor OYJ FI 14,909
9,100 LVMH FR 1,689,438
440 LVMH, ADR FR 16,280
8,500 Societe BIC SA FR 523,973
1,000 Adidas-Saloman AG GM 121,524
18,000 Greencore Group PLC IR 70,457
13,000 Kerry Group PLC IR 164,401
7,275 Heineken NV NL 387,901
13,397 Unilever NV NL 995,029
1,400 Unicer-Uniao Cervejeira SA (Registered Shares) PT 32,496
2,900 Tabacalera SA SP 70,123
762 Nestle SA (Registered Shares) SZ 1,624,036
* 84,933 President Enterprises, GDR TW 721,930
19,200 Bass PLC UK 232,632
* 25,950 British American Tobacco PLC UK 231,685
17,300 Cadbury Schweppes PLC UK 264,762
59,335 Diageo PLC UK 640,465
47,100 Unilever PLC UK 468,202
17,800 American Greetings Corp. (Class A) US 714,225
19,300 Campbell Soup Co. US 1,028,931
15,300 Eastman Kodak Co. US 1,185,750
30,300 Fort James Corp. US 1,221,469
22,300 VF Corp. US 932,419
------------
14,144,132
------------
CONSUMER SERVICES 2.3%
22,000 News Corp. Ltd., ADR AU 600,875
15,500 The Thompson Corp. CN 382,474
3,000 Sodexho Alliance SA FR 583,454
20,000 Independent Newspapers PLC IR 79,490
20,000 Secom Co. JP 1,487,213
15,043 Elsevier NV NL 212,009
1,566 Wolters Kluwer NV NL 303,784
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 27
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
CONSUMER SERVICES (cont.)
8,800 Securitas AB SW $ 108,384
29,100 British Sky Broadcasting Group PLC UK 242,155
18,800 Granada Group PLC UK 286,145
25,200 Reed International PLC UK 208,858
26,100 Reuters Group PLC UK 268,403
23,800 Scottish & Newcastle PLC UK 290,356
* 23,500 Clear Channel Communications, Inc. US 1,070,719
111,800 Disney (Walt) Co. US 3,011,613
75,800 Meredith Corp. US 2,804,600
* 81,500 Premier Parks, Inc. US 1,808,281
12,600 The Times Mirror Co. (Class A) US 698,513
------------
14,447,326
------------
ENERGY 5.1%
1,100 OMV AG AS 103,321
535 PetroFina SA BE 198,612
5,300 Alberta Energy Co. Ltd. CN 123,735
4,419 Canadian Occidental Petroleum Ltd. CN 65,912
12,393 Imperial Oil Ltd. CN 196,906
7,900 Petro-Canada CN 101,184
3,519 Suncor Energy, Inc. CN 111,823
* 3,500 Talisman Energy, Inc. CN 77,740
9,000 Total Cie Francaise des Petroles SA (Class B) FR 1,039,834
45,850 Royal Dutch Petroleum Co. NL 2,216,210
4,700 Repsol SA SP 236,320
80,395 British Petroleum PLC UK 1,185,979
13,200 Burmah Castrol PLC UK 202,567
48,700 Amoco Corp. US 2,733,288
1,100 Atlantic Richfield Co. US 75,763
16,900 Chevron Corp. US 1,377,350
108,100 ENSCO International, Inc. US 1,452,594
44,900 Exxon Corp. US 3,199,125
29,400 Halliburton Co. US 1,056,563
15,600 Kerr-McGee Corp. US 622,050
23,300 Mobil Corp. US 1,763,519
104,300 Occidental Petroleum Corp. US 2,072,963
18,800 Pennzoil Co. US 674,450
25,000 Phillips Petroleum Co. US 1,081,250
28,500 Texaco, Inc. US 1,690,406
* 65,500 The Houston Exploration Co. US 1,162,625
16,800 Transocean Offshore, Inc. US 620,550
40,700 USX-Marathon Group US 1,330,381
* 73,500 Weatherford International, Inc. US 1,998,281
120,200 Williams Cos., Inc. US 3,297,988
------------
32,069,289
------------
FINANCIAL SERVICES (BANKS) 5.2%
4,255 Bank Austria AG AS 231,828
204,343 Westpac Banking Corp. Ltd. AU 1,241,667
2,990 Kredietbank NV BE 208,452
12,453 Bank of Nova Scotia CN 260,043
1,151 Unidanmark A/S (Class A) DK 87,801
17,750 Merita PLC (Class A) FI 95,269
8,638 Bayerische Vereinsbank AG GM 689,329
8,000 Deutsche Bank AG GM 517,775
9,600 Dresdner Bank AG GM 379,008
63,001 Allied Irish Banks PLC IR 911,726
75,000 Instituto Mobiliare Italiano SPA IT 1,154,551
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (BANKS) (cont.)
30,295 ABN Amro Holding NV NL $ 568,204
68,606 ABN Amro Holding NV, ADR NL 1,316,378
11,500 Banco Comerical Portugues SA PT 358,539
7,440 Banco Espirito Santo E Comercial De Lisboa SA PT 218,920
3,040 Banco Pinto & Sotto Mayor SA
(Registered Shares) PT 58,018
4,600 BPI-SGPS SA (Registered Shares) PT 140,477
1,200 Companhia de Seguros Tranquilidade PT 39,038
220,594 Overseas-Chinese Banking Corp. Ltd.
(Foreign Registered) SG 964,717
214,899 United Overseas Bank Ltd. (Foreign Registered) SG 1,012,614
45,900 Banco Bilbao Vizcaya SA SP 620,226
14,500 Banco Central Hispanoamericano SA SP 160,355
22,700 Banco Santander SA SP 416,514
* 11,200 Banco Santander SA (Rights) SP 80
12,400 Corporacion Bancaria de Espana SA SP 270,294
8,900 ForeningSparbanken AB (Series A) SW 241,497
15,900 Skandinaviska Enskilda Banken SW 161,152
5,900 Svenska Handelsbanken (Class A) SW 248,656
5,208 Credit Suisse Group SZ 802,609
3,712 UBS AG SZ 1,020,526
* 24,285 Thai Farmers Bank (Warrants 09/15/02) TH 3,824
20,100 Abbey National PLC UK 389,184
20,700 Barclays PLC UK 444,103
56,000 Halifax PLC UK 742,231
25,400 HSBC Holdings PLC UK 575,543
13,200 HSBC Holdings PLC (75P) UK 306,833
72,000 Lloyds TSB Group PLC UK 890,436
13,859 Royal Bank Of Scotland Group PLC UK 182,065
55,364 Bank One Corp. US 2,705,916
72,766 BankAmerica Corp. US 4,179,497
44,200 First Union Corp. US 2,563,600
28,000 Fleet Financial Group, Inc. US 1,118,250
74,200 Norwest Corp. US 2,759,313
15,800 Republic New York Corp. US 660,638
23,688 Washington Mutual, Inc. US 886,820
------------
32,804,516
------------
FINANCIAL SERVICES (OTHER) 5.1%
300 Generali Holding Vienna AG AS 70,640
1,725 Fortis AG BE 495,162
* 868 Fortis AG (Contingent Value Rights) BE 6,089
* 868 Fortis AG (VVPR Strips) BE 25
670 Groupe Bruxelles Lambert SA BE 124,168
1,100 Den Danske Bank DK 149,466
500 Pohjola Insurance Group (Class A) FI 19,978
1,500 Sampo Insurance Company Ltd. (Class A) FI 46,814
20,572 Axa FR 2,328,626
* 114 Axa-Ctf de Valeur Garant (Warrant) FR 1,438
3,950 Allianz AG GM 1,326,617
700 AMB Aachener & Muenchener Beteiligungs AG GM 107,497
750 Axa Colonia Konzern AG GM 83,888
1,500 Muenchener Rueckversicherungs-
Gesellschaft AG GM 683,797
* 60 Muenchener Rueckversicherungs-
Gesellschaft AG (New Shares) GM 27,207
24,000 Irish Life PLC IR 213,179
8,000 Irish Permanent PLC IR 115,020
* 162,000 The Nomura Securities Co. Ltd. JP 1,225,532
The accompanying notes are an integral part of these financial statements.
28 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (OTHER) (cont.)
1,100 Corporacion Mapfre SP $ 29,102
3,000 Vallehermoso SA SP 37,124
14,500 Skandia Forsakrings AB SW 185,098
285 Schweizerische Rueckversicherungs-
Gesellschaft (Swiss Registered) SZ 636,099
933 Zurich Versicherungs-Gesellschaft SZ 576,523
* 25,950 Allied Zurich PLC UK 307,031
17,500 Commercial Union PLC UK 276,609
15,600 Land Securities PLC UK 220,079
19,700 Legal & General Group PLC UK 232,589
27,400 Prudential Corp. PLC UK 359,036
26,615 Royal & Sun Alliance Insurance Group PLC UK 244,303
44,900 Allstate Corp. US 1,933,506
18,700 American General Corp. US 1,280,950
14,600 Associates First Capital Corp. US 1,029,300
13,100 Cigna Corp. US 955,481
30,300 Cincinnati Financial Corp. US 1,130,569
90,850 Citigroup, Inc. US 4,275,628
48,900 CMAC Investment Corp. US 2,047,688
21,800 Federal Home Loan Mortgage Corp. US 1,253,500
44,100 Fremont General Corp. US 2,177,438
74,700 Mercury General Corp. US 3,174,750
24,900 Morgan Stanley Dean Witter and Co. US 1,612,275
30,500 Travelers Property Casualty Corp. US 935,969
------------
31,935,790
------------
HEALTH CARE 3.5%
1,586 Nova Nordisk A/S (Class B) DK 185,257
1,650 Beiersdorf AG GM 98,761
2,500 Degussa AG GM 120,919
2,300 Merck KGaA GM 93,863
1,650 Schering AG GM 193,032
88,000 Sankyo Co. Ltd. JP 1,989,598
96,500 Grupo Casa Autrey SA de CV, ADR MX 639,313
6,396 Akzo Nobel NV NL 248,834
33,400 Astra AB (Class A) SW 542,062
10,800 Astra AB (Class B) SW 169,735
1,386 Novartis AG (Registered Shares) SZ 2,502,657
164 Roche Holding AG SZ 1,917,561
47,700 Glaxo Wellcome PLC UK 1,479,175
76,067 SmithKline Beecham PLC UK 937,551
13,400 Zeneca Group PLC UK 515,100
14,400 Baxter International, Inc. US 863,100
* 48,000 Biogen, Inc. US 3,336,000
* 27,700 Forest Laboratories, Inc. (Class A) US 1,158,206
* 267,900 Ligand Pharmaceuticals, Inc. US 2,913,413
12,700 Medtronic, Inc. US 825,500
* 43,400 Tenet Healthcare Corp. US 1,212,488
19,700 United Healthcare Corp. US 858,181
------------
22,800,306
------------
MULTI-INDUSTRY 0.6%
2,500 Kesko Oyj FI 37,273
50,000 Larsen & Toubro Ltd., GDR IN 337,500
248,000 Renong Berhad
(Convertible Loan Stock 05/21/01) MY 17,621
* 155,000 Renong Berhad (Warrants Exp. 11/21/00) MY 15,296
300 Corporacion Financiera Alba SP 37,743
36,600 Allied-Signal, Inc. US 1,425,113
8,300 Minnesota Mining & Manufacturing Co. US 664,000
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
MULTI-INDUSTRY (cont.)
20,900 TRW, Inc. US $ 1,189,994
------------
3,724,540
------------
RAW MATERIALS 2.1%
600 Boehler - Uddeholm AG AS 28,307
600 Mayr-Melnhof Karton AG AS 27,869
700 Radex-Heraklith Industriebeteiligungs AG AS 21,957
* 7,186,000 PT Dynaplast ID 415,910
2,062 Buhrmann NV NL 37,010
6,100 Sandvik AB (Class A) SW 125,608
7,700 Svenska Cellulosa AB (Class B) SW 180,781
2,135 Solvay SA BE 167,255
7,564 Alcan Aluminium Ltd. CN 190,081
9,500 Barrick Gold Corp. CN 202,075
7,010 Inco Ltd. CN 75,237
10,100 Noranda, Inc. CN 149,339
7,300 Placer Dome, Inc. CN 115,749
1,700 Potash Corp. of Saskatchewan CN 117,412
3,750 Kemira Oyj FI 30,936
3,000 Outokumpu Oyj FI 27,134
5,750 Upm-Kymmene Oyj FI 137,735
9,100 BASF AG GM 384,577
10,450 Bayer AG GM 421,728
400 Preussag AG GM 148,730
800 Thyssen AG GM 144,135
85,000 Jefferson Smurfit Group PLC IR 140,764
130,000 Sekisui Chemical Co. Ltd JP 709,650
140,000 Kimberly-Clark de Mexico SA MX 402,299
5,100 Cimpor-Cimentos de Portugal, SGPS SA PT 175,565
5,800 Portucel Industrial-Empresa
Produtora de Celulosa SA PT 38,552
31,131 Hansol Paper Ltd., GDR SK 66,153
11,600 Stora Kopparbergs Bergslags
Aktiebolag (Class A) SW 127,988
147 Alusuisse-Lonza Holding AG SZ 168,398
19,805 BOC Group PLC UK 289,676
18,000 Imperial Chemical Industries, Inc. UK 161,459
17,916 Peninsular and Oriental Steam Navigation Co. UK 187,840
31,600 Rio Tinto PLC UK 384,721
12,400 Aluminum Co. of America (Alcoa) US 982,700
* 99,800 Buckeye Technologies, Inc. US 1,996,000
81,900 Engelhard Corp. US 1,719,900
18,800 Goodrich (B.F.) Co. US 676,800
82,300 Pall Corp. US 2,078,075
------------
13,456,105
------------
RETAIL 2.9%
1,401 Delhaize - Le Lion SA BE 119,583
4,000 Carrefour SA FR 2,658,976
17,500 Etablissemets Economiques du Casino
Guicahrd-Perrachon SA FR 1,072,459
5,000 Hornbach Holding AG GM 383,918
200 Karstadt AG GM 102,056
3,150 Metro AG GM 197,113
27,000 Fyffes PLC IR 47,965
38,000 Ito-Yokado Co. Ltd. JP 2,221,363
* 200,000 Cifra SA de CV (Series C) MX 261,990
* 50,599 Cifra SA de CV (Series V) MX 68,087
118,200 Grupo Elektra SA de CV, GDR MX 539,288
11,325 Koninklijke Ahold NV NL 376,873
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 29
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
RETAIL (cont.)
16,800 Boots Company PLC UK $ 253,596
31,800 J Sainsbury PLC UK 280,987
27,700 Kingfisher PLC UK 241,515
47,300 Marks & Spencer PLC UK 350,664
107,300 Tesco PLC UK 293,142
19,000 The Great Universal Stores PLC UK 206,518
* 167,700 Consolidated Stores Corp. US 2,756,569
45,300 Dollar General Corp. US 1,081,538
36,200 McDonalds Corp. US 2,420,875
32,500 Sears, Roebuck and Co. US 1,460,469
19,000 Winn-Dixie Stores, Inc. US 644,813
------------
18,040,357
------------
SHELTER 0.3%
* 4,100 Drott AB SW 31,561
* 470 Fastighets AB Balder SW 4,402
9,200 Armstrong World Industries, Inc. US 570,400
25,200 Kimberly-Clark Corp. US 1,215,900
------------
1,822,263
------------
TECHNOLOGY 4.1%
17,200 Bombardier, Inc. (Class B) CN 203,567
322 Bang & Olufsen Holding A/S (Class B) DK 19,548
700 SAP AG (Preferred) GM 341,112
50,000 Canon, Inc. JP 947,776
62,000 Tokyo Electron Ltd. JP 2,020,030
40,531 Samsung Electronics Ltd., GDS
(1 1/42 Non-Voting) SK 349,580
5,575 Samsung Electronics Ltd., GDS (1 1/42 Voting) SK 125,438
* 50 Samsung Electronics Ltd., New GDR.
(1 1/42 Voting) SK 1,840
52,200 General Electric PLC UK 417,128
25,800 Avnet, Inc. US 1,283,550
58,900 Boeing Co. US 2,208,750
* 135,200 Hexcel Corp. US 1,478,750
5,900 International Business Machines Corp. US 875,781
* 6,400 Microsoft Corp. US 677,600
4,400 United Technologies Corp. US 419,100
7,700 Xerox Corp. US 745,938
10,000 Rohm Co. Ltd. JP 885,450
35,000 Cordant Technologies, Inc. US 1,424,063
* 36,500 Seagate Technology, Inc. US 962,688
* 135,200 Xilinx, Inc. US 6,037,525
343 Barco NV BE 91,340
* 2,200 Newbridge Networks Corp. CN 45,227
49,100 Telefonaktiebolaget LM Ericsson (Class B) SW 1,108,679
30,400 British Aerospace PLC UK 223,339
* 60,300 NCR Corp. US 2,027,588
1,000 SAP AG GM 428,053
* 14,700 Peoplesoft, Inc. US 311,456
------------
25,660,896
------------
TRANSPORTATION 0.3%
1,150 Austrian Airlines Osterreichische
Luftverkehrs AG AS 39,037
9,923 Canadian Pacific Ltd. CN 222,978
15 A/S Dampskibsselskabet Svendborg DK 163,292
25 Dampskibsselskabet af 1912 A/S DK 188,720
1,122 SAS Danmark A/S DK 15,852
8,400 Deutsche Lufthansa AG GM 185,115
* 13,000 Ryanair Holdings PLC IR 76,329
1,894 KLM Royal Dutch Air Lines NV NL 57,243
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
TRANSPORTATION (cont.)
3,600 Brisa-Auto Estradas de Portugal SA PT $ 173,664
22,500 BAA PLC UK 252,845
* 10,400 AMR Corp. US 696,800
------------
2,071,875
------------
UTILITIES 5.6%
1,250 Oesterreichische Elektrizitaetswirtschafts
AG (Class A) AS 209,997
1,112 Electrabel NPV BE 409,564
1,834 Tractebel BE 305,577
15,000 Enersis SA, ADR CL 313,125
3,043 Enbridge, Inc. CN 132,416
5,400 TELUS Corp. CN 111,187
6,800 Transalta Corp. CN 102,529
12,649 TransCanada PipeLines Ltd. CN 191,130
15,000 Lyonnaise Des Eaux-Dumez FR 2,690,159
34,500 Deutsche Telekom GM 934,462
8,500 RWE AG GM 457,376
7,550 VEBA AG GM 414,930
500 Viag AG GM 339,782
520,000 Telecom Italia Mobile SPA IT 3,022,480
125 Nippon Telegraph & Telephone Corp. (NTT) JP 980,013
97,766 Manila Electric Co. (Class B) PH 288,332
14,900 Philippine Long Distance Telephone Co. PH 356,344
21,000 EDP-Electricidade de Portugal SA PT 525,723
14,300 Endesa SA SP 361,034
2,200 Gas Natural SDG SA SP 189,787
13,400 Iberdrola SA SP 216,805
900 Sociedad General de Aguas de Barcelona SA SP 48,069
* 900 Sociedad General de Aguas de Barcelona
SA (Rights) SP 442
15,200 Telefonica SA SP 687,519
4,600 Union Electrica Fenosa SA SP 74,753
* 2,700 NetCom Systems AB (Class B) SW 101,495
55,800 BG PLC UK 367,922
89,368 British Telecommunications PLC UK 1,168,043
35,400 Cable & Wireless PLC UK 398,994
23,476 National Power PLC UK 203,507
20,900 Scottish Power PLC UK 204,960
16,800 United Utilities PLC UK 245,583
43,668 Vodafone Group PLC UK 582,800
* 22,000 AirTouch Communications, Inc. US 1,232,000
9,800 Ameritech Corp. US 528,588
53,700 AT&T Corp. US 3,342,825
29,900 BellSouth Corp. US 2,386,394
44,600 Coastal Corp. US 1,572,150
6,100 Consolidated Edison, Inc. US 305,763
67,900 Entergy Corp. US 1,952,125
* 62,600 MCI WorldCom, Inc. US 3,458,650
53,800 PG&E Corp. US 1,637,538
12,100 Texas Utilities Co. US 529,375
49,900 Unicom Corp. US 1,880,587
------------
35,462,834
------------
TOTAL STOCKS (Cost $263,438,535) 282,012,478
------------
The accompanying notes are an integral part of these financial statements.
30 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
BONDS 44.2%
CORPORATE BONDS 15.2%
US
$ 3,000,000 AES China Generating Co., 10.125%, 12/15/06 $ 1,643,204
2,000,000 American Express Bank Ltd., 5.813%, 3/19/99 1,997,800
2,000,000 Asia Pulp & Paper International Finance,
10.250%, 10/01/00 1,620,000
2,615,000 Associates Corp., 6.000%, 03/15/00 2,635,685
4,000,000 Atlantic City Electric, 7.520%, 05/19/99 4,052,560
3,820,000 Banponce Corp., 6.378%, 04/08/99 3,835,968
3,000,000 BellSouth Telecommunications, Inc.,
6.375%, 06/01/28 3,050,550
3,000,000 BP America, Inc., 5.750%, 07/30/01 3,078,750
4,000,000 Caterpillar Financial Service Corp.,
5.900%, 12/15/99 4,048,680
3,000,000 Cemex SA de CV, 10.750%, 07/15/00 3,097,500
4,000,000 CIT Group Inc., 5.875%, 12/09/99 4,031,760
4,000,000 Comdisco, Inc., 6.680%, 04/30/99 4,024,040
3,000,000 Donaldson, Lufkin & Jenrette, Inc.,
6.500%, 06/01/08 2,958,450
3,000,000 Electricity Generating Authority of Thailand,
7.000%, 10/14/08 3,000,000
4,000,000 Export-Import Bank of Korea,
7.100%, 03/15/07 3,429,680
4,000,000 Finova Capital Corp., 6.280%, 11/01/99 4,048,520
4,000,000 Ford Brasil LTDA, 9.250%, 01/22/07 3,400,000
2,500,000 General Electric Capital Corp.,
8.850%, 03/01/07 3,053,575
3,000,000 Grupo Televisa (Callable 05/15/01 @106.625),
0.000% to 05/15/01, 13.250% thereafter, 05/15/08 2,137,500
3,000,000 Guangdong Enterprises, 8.875%, 05/22/07 1,245,000
1,500,000 Korea Development Bank,
5.875%, 12/01/98 1,361,250
Lehman Brothers Holdings, Inc.,
3,000,000 7.375%, 05/15/07 3,030,000
4,000,000 6.840%, 10/07/99 4,020,120
4,000,000 Nova Gas Transmission, 7.25%, 07/06/99 4,058,920
2,000,000 Rabobank Nederland, 6.250%, 12/30/99 2,030,000
3,000,000 Salomon, Inc., 6.700%, 07/05/00 3,044,880
4,000,000 Sony Corp., 6.125% 03/04/03 4,081,880
Sunamerica, Inc.
3,250,000 6.200%, 10/31/99 3,282,403
3,000,000 6.750%, 10/01/07 3,194,370
2,100,000 Tribune Co., 5.300%, 04/17/00 2,113,272
4,000,000 Washington Mutual, Inc., 6.750%, 05/15/99 4,031,560
2,000,000 Wharf International Finance,
7.625%, 03/13/07 1,392,050
------------
96,029,927
------------
U.S. GOVERNMENT & AGENCY BONDS 6.6%
FFCB
3,000,000 5.870%, 09/02/08 3,104,070
5,000,000 6.300%, 12/03/13 5,468,750
(pound)
2,000,000 FHLB, 5.625%, 06/10/03 3,340,306
US
$ 3,000,000 FHLMC, 8.250%, 09/15/2003 3,031,410
5,000,000 FNMA, 5.750%, 02/15/08 5,196,850
U.S. Treasury Notes
5,000,000 6.000%, 02/15/26 5,458,600
5,000,000 6.250%, 08/15/23 5,595,300
5,000,000 6.500%, 10/15/06 5,608,600
4,000,000 6.625%, 05/15/07 4,541,880
------------
41,345,766
------------
Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
FOREIGN BONDS 22.4%
ATS
40,000,000 Republic of Austria, 5.625%, 07/15/07 $ 3,746,831
AUS
$ 4,000,000 Government of Australia, 7.500%, 07/15/05 2,885,365
4,000,000 New South Wales Treasury Corp., 8.000%,
03/01/08 2,974,543
4,000,000 Queensland Treasury Corp., 8.000%, 09/14/07 2,965,588
Government of Canada
CAN
$ 4,000,000 6.000%, 06/01/08 2,773,904
4,000,000 8.000%, 06/01/23 3,473,411
2,000,000 Japan Highway Public Corp., 7.875%, 09/27/02 1,406,453
2,000,000 Oesterreichische Kontrollbank (Republic of Austria),
9.000%, 06/19/02 1,457,523
2,000,000 Republic of Finland, 9.500%, 09/15/04 1,558,852
2,000,000 Tokyo Electric Power, 10.500%, 06/14/01 1,455,901
Government of France
FF
20,000,000 5.250%, 04/25/08 3,882,480
20,000,000 6.000%, 10/25/25 4,037,491
20,000,000 8.500%, 11/25/02 4,275,054
30,000,000 8.500%, 10/25/19 7,835,256
DM
9,000,000 Caisse D'Amort Dette, 5.125%, 10/25/08 5,723,625
9,000,000 Deutschland Republic, 5.625%, 01/04/28 5,791,233
Federal Republic of Germany
3,000,000 6.750%, 04/22/03 2,042,684
4,500,000 6.875%, 05/12/05 3,167,140
3,000,000 Treuhandanstalt, 7.750%, 10/01/02 2,085,127
6,000,000 United Mexican States, 8.125%, 09/10/04 3,505,139
Hellenic Republic
GRD
1,000,000,000 7.500%, 05/20/13 3,547,206
1,000,000,000 8.800%, 06/19/07 3,699,346
1,500,000,000 9.800%, 03/21/00 5,267,489
Government of Ireland
IEP
2,000,000 6.250%, 04/01/99 3,042,314
3,000,000 6.500%, 10/18/01 4,871,045
NZ
$ 4,000,000 Government of New Zealand, 6.500%, 02/15/00 2,153,303
9,000,000 International Bank of Reconstruction
& Development, 0.000%, 08/20/07 2,746,379
ESP
800,000,000 Government of Spain, 6.000%, 01/31/08 6,327,146
SEK
40,000,000 Government of Sweden, 6.000%, 02/09/05 5,543,858
(pound)
2,000,000 European Investment Bank, 6.000%, 11/26/04 3,409,756
U.K. Treasury
2,500,000 7.500%, 12/07/06 4,837,670
2,000,000 8.500%, 12/07/05 4,021,086
2,000,000 9.000%, 07/12/11 4,535,854
2,000,000 United Mexican States, 12.250%, 12/03/98 3,349,092
US
$ 3,000,000 Ontario (Province of), 7.000%, 08/04/05 3,288,750
3,000,000 Republic of Argentina, FRN, 8.399%, 08/15/99 2,872,500
Republic of Kazakhstan
2,000,000 8.375%, 10/02/02 1,400,000
2,000,000 9.250%, 12/20/99 1,740,000
2,000,000 9.250%, 12/20/99 1,740,000
2,000,000 Republic of Korea, 8.875%, 04/15/08 1,829,640
4,000,000 United Mexican States, 11.500%, 05/15/26 4,160,002
------------
141,426,036
------------
TOTAL BONDS (Cost $274,187,522) 278,801,729
------------
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 31
<PAGE>
FREMONT GLOBAL FUND
OCTOBER 31, 1998
Shares/ Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES 11.8%
790,403 SSgA Prime Money Market Fund $ 790,403
$12,500,000 Chevron UK Investment PLC, CP,
5.110%,(a) 11/13/98 12,478,708
4,000,000 Goldman Sachs Group LP, CP,
5.380%,(a) 11/03/98 3,998,804
5,000,000 Hitachi America Ltd., CP, 5.200%,(a) 11/06/98 4,996,389
10,000,000 Jostens, Inc., CP, 5.120%,(a) 11/02/98 9,998,578
17,900,000 Petrofina (Delaware), Inc., CP,
5.580%,(a) 11/02/98 17,897,226
** 4,504,000 Queen's Health Systems, Inc., CP,
5.200%,(a) 11/17/98 4,493,591
13,056,000 Xerox Corp., CP, 5.700%,(a) 11/02/98 13,053,933
U.S. Treasury Bills
+ 5,000,000 4.460%,(a) 12/17/98 4,971,506
+ 1,460,000 4.490%,(a) 12/17/98 1,451,717
+ 330,000 4.700%,(a) 12/17/98 328,092
------------
TOTAL SHORT-TERM SECURITIES (Cost $74,458,947) 74,458,947
------------
TOTAL INVESTMENTS (Cost $612,085,004), 100.7% 635,273,154
OTHER ASSETS AND LIABILITIES, NET, (0.7)% (4,108,040)
------------
NET ASSETS, 100.0% $631,165,114
============
The accompanying notes are an integral part of these financial statements.
32 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT INTERNATIONAL GROWTH FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
STOCKS 94.2%
BUSINESS EQUIPMENT & SERVICES 2.0%
180 Societe Generale de Surveillance Holdings SA
(Bearer Shares) SZ $ 127,078
11,266 Reuters Group PLC, ADR UK 683,001
------------
810,079
------------
CAPITAL GOODS 7.1%
42,000 Bombardier, Inc. (Class B) CN 496,361
3,900 Northern Telecom Ltd. CN 166,969
8,300 Siemens AG GM 504,825
7,700 Kyocera Corp. JP 340,898
14,000 Murata Manufacturing Co. Ltd. JP 472,985
35,000 ABB AB (Series B) SW 370,454
27,000 Ericsson (L.M.) Telephone Co., ADR SW 610,875
------------
2,963,367
------------
CONSUMER DURABLES 4.6%
3,800 Peugeot SA FR 634,932
5,000 Volkswagen AG GM 376,663
105,000 Nissan Motor Co. Ltd. JP 285,235
6,600 Sony Corp. JP 419,858
3,700 Philips Electronics NV (New York Shares) NL 203,038
------------
1,919,726
------------
CONSUMER NON-DURABLES 7.4%
45,000 Coca-Cola Amatil Ltd. AU 166,001
31,000 Asahi Breweries Ltd. JP 443,714
4,400 Nintendo Co. Ltd. JP 372,955
4,800 Sony Music Entertainment (Japan), Inc. JP 167,531
9,800 Heineken NV NL 522,534
700 Heineken Holding NV (Class A) NL 29,822
12,500 South Africa Breweries Ltd. SA 242,424
280 Nestle SA (Registered Shares) SZ 596,759
* 45,000 Coca-Cola Beverages PLC UK 91,755
26,000 Reckitt & Coleman PLC UK 447,728
------------
3,081,223
------------
CONSUMER SERVICES 3.1%
23,000 The Thomson Corp. CN 567,542
1,600 Canal Plus FR 388,753
7,000 ProSieben Media AG (Preferred) GM 349,154
------------
1,305,449
------------
ENERGY 6.5%
38,711 Broken Hill Proprietary Co. Ltd. AU 328,780
60,000 Woodside Petroleum Ltd. AU 316,809
* 15,000 Talisman Energy, Inc. CN 330,000
3,800 Total Cie Francaise des Petroles SA (Class B) FR 439,041
65,000 ENI SPA IT 387,141
10,400 Norsk Hydro ASA NO 452,919
30,000 British Petroleum PLC UK 442,557
------------
2,697,247
------------
FINANCIAL SERVICES 15.1%
57,000 Australia & New Zealand Banking Group Ltd. AU 325,708
12,000 Westpac Banking Corp. Ltd. AU 72,917
8,500 Westpac Banking Corp. Ltd., ADR AU 261,375
10,000 Uniao de Bancos Brasileiros SA, GDR BR 175,000
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (cont.)
3,534 Bank of Montreal CN $ 144,614
15,400 Bank of Nova Scotia CN 321,582
9,000 Canadian Imperial Bank of Commerce CN 178,891
4,000 Royal Bank of Canada CN 184,436
14,500 Newcourt Credit Group, Inc. CN 477,221
5,500 Deutsche Bank AG GM 355,970
14,800 Assicurazioni Generali SPA IT 530,703
5,300 Orix Corp. JP 380,443
30,000 The Nomura Securities Co. Ltd. JP 226,950
55,000 The Toyo Trust & Banking Co. Ltd. JP 147,991
88,000 Mitsui Marine and Fire Insurance Co. Ltd. JP 438,014
5,000 Nichiei Co. Ltd. (Kyoto) JP 404,900
6,000 Takefuji Corp. JP 320,309
6,400 Aegon NV NL 555,940
45,100 Development Bank of Singapore
(Foreign Registered) SG 283,351
42,857 Guardian Royal Exchange PLC UK 205,841
2,100 Standard Chartered PLC UK 22,378
265 Bank of Scotland UK 2,845
10,800 HSBC Holdings PLC (Hong Kong Shares) UK 247,531
------------
6,264,910
------------
HEALTH CARE 6.1%
2,700 Synthelabo FR 515,862
3,900 Astra AB (Class A) SW 63,295
46,300 Astra AB, ADR SW 761,056
164 Novartis AG (Registered Shares) SZ 296,130
24,000 Zeneca Group PLC UK 922,567
------------
2,558,910
------------
MULTI-INDUSTRY 5.3%
2,100 Lyonnaise Des Eaux-Dumez FR 376,622
14,000 Metallgesellschaft AG GM 225,998
33,000 Hutchison Whampoa HK 236,490
65,000 Swire Pacific Ltd. (Class A) HK 344,954
17,000 Gambro AB SW 187,568
59,100 Siebe PLC UK 246,023
51,600 TI Group PLC UK 310,222
35,000 Trinity PLC UK 263,283
------------
2,191,160
------------
RAW MATERIALS 5.5%
15,000 Upm-Kymmene Oyj FI 359,308
2,500 Compagnie de Saint-Gobain FR 370,404
12,000 De Beers Centenary AG, ADR SA 172,500
2,867 Holderbank Financiere Glarus AG SZ 642,863
29,700 BOC Group PLC UK 434,404
65,000 BPB PLC UK 315,999
------------
2,295,478
------------
RETAIL 5.2%
100,209 Coles Myer Ltd. AU 429,302
300 Carrefour SA FR 199,423
10,000 Jusco Co. Ltd. JP 161,616
11,220 Koninklijke Ahold NV NL 373,379
40,000 Dixons Group PLC UK 421,387
86,000 Storehouse PLC UK 251,862
120,000 Tesco PLC UK 327,839
------------
2,164,808
------------
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 33
<PAGE>
FREMONT INTERNATIONAL GROWTH FUND
OCTOBER 31, 1998
Shares/ Country Value
Face Amount Security Description Code (Note 1)
- --------------------------------------------------------------------------------
SHELTER 1.6%
66,000 Cheung Kong (Holdings) Ltd. HK $ 451,675
35,000 Mitsui Fudosan JP 232,882
------------
684,557
------------
TECHNOLOGY 10.0%
15,600 Nokia AB, ADR FI 1,451,775
300 SAP AG (Preferred) GM 146,191
6,410 Advantest Corp. JP 405,016
6,000 Hirose Electronics JP 348,162
15,000 Tokyo Electron Ltd. JP 488,717
3,000 Rohm Co. Ltd. JP 265,635
27,000 Taiyo Yuden Co. Ltd. JP 241,161
* 11,000 ASM Lithography Holding NV NL 280,500
2,710 Samsung Electronics, GDR SK 61,585
300 Telefonaktiebolaget LM Ericsson (Class B) SW 6,774
* 16,200 Taiwan Semiconductor Manufacturing
Co. Ltd., ADR TW 241,988
* 3,400 STMicroelectronics NV (New York Shares) US 206,763
------------
4,144,267
------------
UTILITIES 14.7%
10,100 Centrais Eletricas Brasileiras
SA-Eletrobras, ADR BR 109,223
* 1,010 Centrais Geradoras do Sul do Brasil SA, ADR BR 5,165
24,000 Deutsche Telekom GM 650,060
7,000 Mannesmann AG GM 678,839
200 Hong Kong Telecommunications HK 400
75,000 Telecom Italia Mobile SPA IT 435,935
73,334 Telecom Italia SPA IT 530,854
51 Nippon Telegraph & Telephone JP 399,845
9,000 Takeda Chemical Industries JP 293,229
16,000 Telefonos de Mexico SA (Class L), ADR MX 844,999
12,000 Philippine Long Distance Telephone Co., ADR PH 292,499
20,000 Telefonica SA SP 904,628
* 1,080 Swisscom AG SZ 366,845
* 25,200 COLT Telecom Group PLC UK 318,820
20,000 United Utilities PLC UK 292,358
------------
6,123,706
------------
TOTAL STOCKS (Cost $40,684,399) 39,204,887
------------
SHORT-TERM SECURITIES 4.9%
22,380 SSgA Prime Money Market Fund US 22,380
$ 2,000,000 FHLMC, DN, 5.420%,(a) 11/02/98 US 1,999,699
------------
TOTAL SHORT-TERM SECURITIES (Cost $2,022,079) 2,022,079
------------
TOTAL INVESTMENT (Cost $42,706,478), 99.1% 41,226,966
OTHER ASSETS AND LIABILITIES, NET, 0.9% 396,130
------------
NET ASSETS, 100.0% $ 41,623,096
============
The accompanying notes are an integral part of these financial statements.
34 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT INTERNATIONAL SMALL CAP FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
STOCKS 93.9%
BUSINESS EQUIPMENT & SERVICES 4.8%
700,000 Hung Hing Printing Group HK $ 271,160
------------
271,160
------------
CAPITAL GOODS 6.7%
20,000 Industria Macchine Automatiche IT 136,469
11,000 Kverneland ASA NO 242,518
------------
378,987
------------
CONSUMER DURABLES 3.8%
* 27,500 Shermag, Inc. CN 218,466
------------
218,466
------------
CONSUMER NON-DURABLES 8.3%
4,000 Van Melle NV NL 213,065
105,000 McBride PLC UK 260,940
------------
474,005
------------
CONSUMER SERVICES 21.3%
60,000 P4 Radio Hele Norge ASA NO 244,968
7,500 Investec-Consultoria Internacional SA PT 294,540
1,160 PublicGroupe SA SZ 309,036
1,650 The Selecta Group SZ 363,872
------------
1,212,416
------------
FINANCIAL SERVICES 2.5%
* 27,500 United Panam Financial Corp. US 140,938
------------
140,938
------------
HEALTH CARE 9.2%
21,500 Nobel Biocare SW 262,044
215 Stratec Holding AG SZ 262,525
------------
524,569
------------
RAW MATERIALS 7.6%
6,250 Rinol AG GM 202,161
98,000 Victrex PLC UK 229,604
------------
431,765
------------
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
TECHNOLOGY (COMPONENTS) 7.6%
615,000 Electronic Resources Ltd. SG $ 435,633
------------
435,633
------------
TECHNOLOGY (EQUIPMENT) 6.1%
* 10,000 Orbotech Ltd. IS 350,000
------------
350,000
------------
TECHNOLOGY (SOFTWARE) 16.0%
* 44,500 Lectra Systemes FR 259,877
* 30,000 Tecnomatix Technologies Ltd. IS 435,000
* 3,000 Electric Farm ASA NO 4,389
45,000 JBA Holdings PLC UK 210,862
------------
910,128
------------
TOTAL STOCKS (Cost $6,505,333) 5,348,067
------------
SHORT-TERM SECURITIES 8.0%
455,319 SSgA Prime Money Market Fund US $ 455,319
------------
TOTAL SHORT-TERM SECURITIES (Cost $455,319) 455,319
------------
TOTAL INVESTMENTS (Cost $6,960,652), 101.9% 5,803,386
OTHER ASSETS AND LIABILITIES, NET, (1.9)% (109,288)
------------
NET ASSETS, 100.0% $ 5,694,098
============
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 35
<PAGE>
FREMONT EMERGING MARKETS FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Country Value
Shares Security Description Code (Note 1)
- --------------------------------------------------------------------------------
STOCKS 76.8%
CAPITAL GOODS 3.1%
107,000 Cheung Kong Infrastructure Holding Ltd. HK $ 272,180
------------
272,180
------------
CONSUMER DURABLES 1.2%
250,000 Sawang Export Public Co. Ltd.
(Foreign Registered) TH 103,516
------------
103,516
------------
CONSUMER NON-DURABLES 5.4%
275,000 PT Daya Guna Samudera ID 165,916
16,000 South Africa Breweries Ltd. SA 310,303
------------
476,219
------------
CONSUMER SERVICES 14.1%
* 1,446,762 Telesp Celular SA (Preferred B) BR 70,343
* 1,840 Lambrakis Media Group GR 22,892
* 130,000 China Telecom (Hong Kong) Ltd. HK 244,238
* 481,500 PT Sonas Topas Tourism ID 10,838
* 229,900 Corporacion Interamericana de
Entretenimiento SA (Series B) MX 261,293
* 100,000 Shinawatra Computer Public Co. Ltd.
(Foreign Registered) TH 477,871
* 236,428 United Broadcasting Corp. (Foreign Registered) TH 149,252
------------
1,236,727
------------
ENERGY 8.5%
18,800 Petroleo Brasileiro SA, ADR BR 236,404
42,000 Shandong Huaneng Power Co. Ltd., ADR CH 215,250
60,000 Sasol Ltd. SA 293,583
------------
745,237
------------
FINANCIAL SERVICES 3.9%
* 15,400 EFG-Hermes Holdings EG 177,100
127,100 Bank Leumi Le-Israel IS 161,920
------------
339,020
------------
HEALTH CARE 7.4%
10,000 Pliva D.D., GDR CR 147,000
12,700 Ranbaxy Laboratories Ltd., GDR IN 179,705
45,050 Dar Al-Dawa Development and Investment JO 319,525
------------
646,230
------------
MULTI-INDUSTRY 3.5%
* 27,000 Mostosal-Warszawa SA PO 147,825
* 49,125 Real Africa Holdings Ltd. SA 155,431
------------
303,256
------------
RAW MATERIALS 1.2%
1,630 Titan Cement Co. SA GR 100,818
------------
100,818
------------
Shares/ Country Value
Face Amount Security Description Code (Note 1)
- --------------------------------------------------------------------------------
TECHNOLOGY 11.0%
* 19,500 ForSoft Ltd. IS $ 209,625
* 130,000 Hana Microelectronics Public Co. Ltd.
(Foreign Registered) TH 347,679
* 1,778,400 Netas Northern Electric Telekomunikasyon AS TU 39,511
* 103,000 Compal Electronics TW 320,833
* 20,000 D-Link Corp. TW 44,102
------------
961,750
------------
TRANSPORTATION 4.3%
750,000 Shenzhen Expressway Company Ltd. CH 169,475
1,060,000 Zhejiang Expressway Co. Ltd. CH 208,044
------------
377,519
------------
UTILITIES 13.2%
1,166,454 Telecomunicacoes de Sao Paulo SA (Preferred) BR 193,610
12,600 Demasz RT, GDR HU 161,280
19,600 Mahanagar Telephone Nigam Ltd., GDR IN 215,110
7,300 Telefonos de Mexico SA (Class L), ADR MX 385,532
15,400 Korea Electric Power Corp., ADR SK 196,351
------------
1,151,883
------------
TOTAL STOCKS (Cost $9,290,902) 6,714,355
------------
SHORT-TERM SECURITIES 20.2%
63,884 SSgA Prime Money Market Fund 63,884
$ 1,700,000 FHLMC, DN, 5.420%,(a) 11/2/98 1,699,744
------------
TOTAL SHORT-TERM SECURITIES (Cost $1,763,628) 1,763,628
------------
TOTAL INVESTMENTS (Cost $11,054,530), 97.0% 8,477,983
OTHER ASSETS AND LIABILITIES, NET, 3.0% 264,192
------------
NET ASSETS, 100.0% $ 8,742,175
============
The accompanying notes are an integral part of these financial statements.
36 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT U.S. MICRO-CAP FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
STOCKS 75.6%
BUSINESS EQUIPMENT & SERVICES 11.9%
* 99,000 24/7 Media, Inc. $ 1,132,313
* 113,600 AmeriLink Corp. 965,600
* 104,500 Arguss Holdings, Inc. 1,567,500
* 92,600 Building One Services Corp. 1,145,925
* 170,300 Hospitality Worldwide Services 872,788
* 235,900 Integrated Process Equipment Corp. 2,108,356
* 29,900 META Group, Inc. 717,600
* 304,100 NuCO2, Inc. 2,128,700
* 62,700 OmniAmerica, Inc. 1,246,163
* 36,500 Realty Information Group, Inc. 305,688
* 206,200 Richey Electronics, Inc. 2,074,888
------------
14,265,521
------------
CAPITAL GOODS 3.4%
* 181,300 IMPCO Technologies, Inc. 3,059,438
* 201,000 Miller Industries, Inc. 1,055,250
------------
4,114,688
------------
CONSUMER DURABLES 1.6%
127,600 Craftmade International, Inc. 1,850,200
------------
1,850,200
------------
CONSUMER NON-DURABLES 5.3%
* 30,300 The Hain Food Group, Inc. 609,788
* 204,700 JAKKS Pacific, Inc. 2,072,588
* 135,100 RARE Hospitality International, Inc. 1,621,200
* 149,500 Steven Madden Ltd. 1,037,156
* 110,400 United Retail Group, Inc. 1,035,000
------------
6,375,732
------------
CONSUMER SERVICES 7.4%
* 137,800 American Classic Voyages Co. 2,075,613
* 134,700 Blue Rhino Corp. 1,650,075
* 149,600 Cinar Films, Inc. (Class B) 3,160,300
* 90,600 Go2net, Inc. 1,993,200
------------
8,879,188
------------
ENERGY 1.5%
* 69,900 KTI, Inc. 1,467,900
* 18,500 Veritas DGC, Inc. 344,563
------------
1,812,463
------------
HEALTH CARE 10.0%
* 58,000 ArthroCare Corp. 1,029,500
* 291,200 Cytyc Corp. 4,877,600
* 17,600 GelTex Pharmaceuticals, Inc. 440,000
* 636,900 Genelabs Technologies, Inc. 1,373,316
* 227,000 Intensiva Healthcare Corp. 1,276,875
* 94,600 Monarch Dental Corp. 1,135,200
* 77,600 Perclose, Inc. 1,852,700
------------
11,985,191
------------
RAW MATERIALS 0.8%
171,600 Northern Technologies International 997,425
------------
997,425
------------
Shares/ Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
RETAIL 6.2%
115,500 J. Baker, Inc. $ 635,250
* 22,400 Media Arts Group, Inc. 285,600
* 261,600 Movie Gallery, Inc. 1,046,400
* 105,300 Quiksilver, Inc. 2,178,394
* 90,900 Rent-Way, Inc. 2,147,513
* 33,150 Successories, Inc. 99,450
* 43,200 Tractor Supply Co. 1,069,200
------------
7,461,807
------------
TECHNOLOGY (COMPONENTS) 10.0%
* 200,000 Anaren Microwave, Inc. 2,575,000
* 87,200 Micrel, Inc. 2,866,700
* 457,700 Orckit Communications Ltd. 5,892,887
* 131,400 Southwall Technologies, Inc. 706,274
------------
12,040,861
------------
TECHNOLOGY (EQUIPMENT) 2.2%
* 140,300 Proxim, Inc. 2,095,731
* 126,400 Schmitt Industries, Inc. 513,500
------------
2,609,231
------------
TECHNOLOGY (SOFTWARE) 15.3%
* 270,000 Acclaim Entertainment, Inc. 2,160,000
* 337,700 MDSI Mobile Data Solutions, Inc.(b) 4,558,950
* 63,200 New Era of Networks, Inc. 3,112,600
* 238,000 OrCAD, Inc. 1,918,873
* 120,600 Peerless Systems Corp. 829,125
* 43,586 Peregrine Systems, Inc. 1,520,061
* 87,500 TSI International Software Ltd. 2,745,312
* 561,400 V-One Corp. 1,491,218
------------
18,336,139
------------
TOTAL STOCKS (Cost $103,285,884) 90,728,446
------------
SHORT-TERM SECURITIES 30.4%
126,686 SSgA Prime Money Market Fund 126,686
$ 5,000,000 Eksportfinans ASA, CP, 5.455%,(a) 11/06/98 4,996,215
4,500,000 Goldman Sachs Group LP, CP, 5.151%,(a) 11/02/98 4,499,356
5,500,000 General Electric Capital Corp., CP,
5.164%,(a) 11/05/98 5,496,847
5,000,000 Jostens,Inc., CP, 5.121%,(a) 11/02/98 4,999,289
** 5,000,000 Koch Industries, CP, 5.202%,(a) 11/03/98 4,998,556
5,400,000 Merrill Lynch & Co., CP, 5.153%,(a) 11/04/98 5,397,682
6,000,000 Xerox Corp., CP, 5.702%,(a) 11/02/98 5,999,050
------------
TOTAL SHORT-TERM SECURITIES (Cost $36,513,681) 36,513,681
------------
TOTAL INVESTMENTS (Cost $139,799,565), 106.0% 127,242,127
OTHER ASSETS AND LIABILITIES, NET, (6.0)% (7,226,300)
------------
NET ASSETS,100.0% $120,015,827
============
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 37
<PAGE>
FREMONT U.S. SMALL CAP FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
STOCKS 85.2%
BUSINESS EQUIPMENT & SERVICES 24.8%
* 12,000 Building One Services Corp. $ 148,500
* 1,300 CSG Systems International, Inc. 70,850
* 3,400 IDT Corp. 56,525
* 4,000 Metro Networks, Inc. 146,500
* 12,000 Metzler Group, Inc. 504,000
3,400 National Data Corp. 115,175
* 10,792 Nova Corp. 311,619
* 15,500 NuCO2, Inc. 108,500
* 1,500 Rental Service Corp. 33,375
* 33,500 TeleTech Holdings, Inc. 330,813
------------
1,825,857
------------
CONSUMER NON-DURABLES 0.8%
* 4,200 Helen of Troy Ltd. 62,475
------------
62,475
------------
CONSUMER SERVICES 9.9%
* 9,750 American Classic Voyages Co. 146,859
* 14,400 Cinar Films, Inc. (Class B) 304,200
* 17,400 Foodmaker, Inc. 275,138
------------
726,197
------------
ENERGY 0.9%
* 7,200 Global Industries Ltd. 69,300
------------
69,300
------------
HEALTH CARE 14.1%
* 20,100 Cytyc Corp. 336,675
* 19,900 Orthodontic Centers of America, Inc. 376,856
* 3,000 PathoGenesis Corp. 120,000
* 4,800 Sunrise Assisted Living, Inc 206,700
------------
1,040,231
------------
RETAIL 4.7%
1,000 Burlington Coat Factory Warehouse Corp. 15,000
* 4,000 Guitar Center, Inc. 68,500
* 1,500 Media Arts Group, Inc. 19,125
* 1,200 Michaels Stores, Inc. 24,000
* 16,000 Musicland Stores Corp. 211,000
------------
337,625
------------
TECHNOLOGY (COMPONENTS) 6.4%
* 5,500 Micrel, Inc. 180,813
* 19,000 Orckit Communications Ltd. 244,625
* 1,000 PMC-Sierra, Inc. 44,875
------------
470,313
------------
Shares/ Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
TECHNOLOGY (EQUIPMENT) 1.2%
* 5,400 ANTEC Corp. $ 89,775
------------
89,775
------------
TECHNOLOGY (SOFTWARE) 17.2%
* 5,900 Axent Technologies, Inc. 148,238
* 10,800 CBT Group PLC, ADR 128,925
* 4,300 Entrust Technologies, Inc. 71,488
* 7,000 FORE Systems, Inc. 109,375
* 15,000 MDSI Mobile Data Solutions, Inc. 202,500
* 6,700 New Era of Networks, Inc. 329,975
* 6,900 Peerless Systems Corp. 47,438
* 1,900 Peregrine Systems, Inc. 66,263
* 5,300 VeriSign, Inc. 162,644
------------
1,266,846
------------
UTILITIES 5.2%
* 7,200 Calpine Corp. 160,200
* 17,500 Crown Castle International Corp. 225,310
------------
385,510
------------
TOTAL STOCKS (Cost $6,141,994) 6,274,129
------------
SHORT-TERM SECURITIES 20.9%
42,030 SSgA Prime Money Market Fund 42,030
$ 1,500,000 FHLMC, DN, 5.420%,(a) 11/02/98 1,499,774
------------
TOTAL SHORT-TERM SECURITIES (Cost $1,541,804) 1,541,804
------------
TOTAL INVESTMENTS (Cost $7,683,798), 106.1% 7,815,933
OTHER ASSETS AND LIABILITIES, NET, (6.1)% (448,864)
------------
NET ASSETS, 100.0% $ 7,367,069
============
The accompanying notes are an integral part of these financial statements.
38 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT SELECT FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
STOCKS 82.6%
BUSINESS EQUIPMENT & SERVICES 9.1%
* 4,400 Aspect Telecommunications Corp. $ 66,550
7,900 Equifax, Inc. 305,630
* 7,200 Harbinger Corp. 47,700
------------
419,880
------------
CONSUMER SERVICES 7.5%
6,100 Meredith Corp. 225,700
* 5,500 Premier Parks, Inc. 122,031
------------
347,731
------------
ENERGY 10.0%
7,500 ENSCO International, Inc. 100,781
* 7,400 The Houston Exploration Co. 131,350
2,300 Transocean Offshore, Inc. 84,956
* 5,400 Weatherford International, Inc. 146,813
------------
463,900
------------
FINANCIAL SERVICES 12.9%
4,518 ABN AMRO Holding NV, ADR (Netherlands) 86,689
3,500 CMAC Investment Corp. 146,563
2,900 Fremont General Corp. 143,188
5,100 Mercury General Corp. 216,750
------------
593,190
------------
HEALTH CARE 16.8%
* 3,000 Biogen, Inc. 208,500
* 2,100 Forest Laboratories, Inc. (Class A) 87,806
* 33,900 Ligand Pharmaceuticals 368,662
* 2,100 Universal Health Services, Inc. 107,756
------------
772,724
------------
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
RAW MATERIALS 2.3%
* 5,200 Buckeye Technologies, Inc. 104,000
------------
104,000
------------
RETAIL 6.6%
* 13,400 Consolidated Stores Corp. $ 220,263
3,500 Dollar General Corp. 83,563
------------
303,826
------------
TECHNOLOGY 17.4%
2,200 Cordant Technologies, Inc. 89,513
* 9,000 Hexcel Corp. 98,438
* 4,800 NCR Corp. 161,400
* 3,000 Peoplesoft, Inc. 63,563
* 8,700 Xilinx, Inc. 388,508
------------
801,422
------------
TOTAL STOCKS (Cost $4,478,867) 3,806,673
------------
SHORT-TERM SECURITIES 17.3%
796,931 SSgA Prime Money Market Fund 796,931
------------
TOTAL SHORT-TERM SECURITIES (Cost $796,931) 796,931
------------
TOTAL INVESTMENTS (Cost $5,275,798), 99.9% 4,603,604
OTHER ASSETS AND LIABILITIES, NET, 0.1% 6,791
------------
NET ASSETS, 100.0% $ 4,610,395
============
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 39
<PAGE>
FREMONT GROWTH FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
STOCKS 84.3%
BUSINESS EQUIPMENT & SERVICES 2.3%
* 225,900 EarthShell Corp. $ 2,075,454
71,900 Republic Services, Inc 1,572,813
------------
3,648,267
------------
CAPITAL GOODS 4.3%
30,200 Caterpillar, Inc. 1,359,000
30,400 Deere & Co. 1,075,400
49,800 General Electric Co. 4,357,500
------------
6,791,900
------------
CONSUMER DURABLES 3.1%
90,300 Ford Motor Co. 4,898,775
------------
4,898,775
------------
CONSUMER NON-DURABLES 5.2%
6,900 Anheuser Busch Cos., Inc. 410,119
* 8,800 Canandaigua Brands, Inc. (Class A) 441,100
30,300 Coca-Cola Co. 2,049,038
7,000 Eastman Kodak Co. 542,500
14,600 Pepsico, Inc. 492,750
61,800 Philip Morris Cos., Inc. 3,159,525
14,400 Procter & Gamble Co. 1,279,800
------------
8,374,832
------------
CONSUMER SERVICES 5.4%
117,400 Avado Brands, Inc. 924,525
32,800 Carnival Corp. 1,061,900
72,500 Cedar Fair, L.P. 1,798,906
62,000 Intl Game Technology 1,398,875
54,000 Royal Caribbean Cruises Ltd. 1,505,250
* 11,800 Viacom, Inc. (Class B) 706,525
33,200 Wiley (John) & Sons (Class A) 1,213,875
------------
8,609,856
------------
ENERGY 2.8%
39,100 Exxon Corp. 2,785,875
35,000 Helmerich & Payne, Inc. 833,437
17,500 Schlumberger Ltd. 918,750
------------
4,538,062
------------
FINANCIAL SERVICES (BANKS) 6.5%
20,200 Bank of New York Co., Inc 637,563
15,729 BankAmerica Corp. 903,434
9,300 First Union Corp. 539,400
16,600 Fleet Financial Group, Inc. 662,963
29,850 MBNA Corp. 680,953
14,500 Mellon Bank Corp. 871,813
36,600 Norwest Corp. 1,361,063
21,000 PNC Bank Corp. 1,050,000
* 9,900 Republic New York Corp. 413,944
16,800 Star Banc Corp. 1,270,500
5,200 Wells Fargo & Co. 1,924,000
------------
10,315,633
------------
FINANCIAL SERVICES (OTHER) 7.6%
11,800 Aetna, Inc. 880,575
30,100 Allstate Corp. 1,296,181
12,600 American International Group, Inc. 1,074,150
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (OTHER) (cont.)
9,300 Associates First Capital Corp. $ 655,650
23,300 C.I.T. Group, Inc.(Class A) 636,381
47,800 Citigroup, Inc. 2,249,588
13,900 Countrywide Credit Industries, Inc. 600,306
18,200 Federal Home Loan Mortgage Corp. 1,046,500
16,300 Federal National Mortgage Association 1,154,244
12,600 MBIA, Inc. 770,175
7,700 Merrill Lynch & Co., Inc. 456,225
11,700 Morgan Stanley, Dean Witter and Co. 757,575
17,200 Travelers Property Casualty Corp. 527,825
------------
12,105,375
------------
HEALTH CARE 10.1%
29,800 Abbott Laboratories 1,398,738
16,600 American Home Products Corp. 809,250
18,100 Bristol-Myers Squibb Co. 2,001,181
21,100 HBO & Co. 553,875
* 33,200 Healthsouth Rehabilitation Corp. 402,550
18,600 Johnson & Johnson 1,515,900
17,200 Lilly (Eli) & Co. 1,392,125
17,500 Merck & Co. 2,366,875
24,200 Pfizer, Inc. 2,596,963
11,000 Schering Plough Corp. 1,131,625
24,400 Warner-Lambert Co. 1,912,350
------------
16,081,432
------------
MULTI-INDUSTRY 0.9%
36,500 Allied-Signal, Inc. 1,421,219
------------
1,421,219
------------
RAW MATERIALS 2.8%
6,300 Dow Chemical Co. 589,838
8,100 Du Pont (E.I.) de Nemours & Co. 465,750
43,200 Reliance Steel & Aluminum 1,336,500
* 116,400 W.R. Grace & Co. 2,022,450
------------
4,414,538
------------
RETAIL 5.5%
* 17,500 Abercrombie & Fitch Co. (Class A) 694,531
15,200 Dayton-Hudson Corp. 644,100
40,500 Home Depot, Inc. 1,761,750
25,600 Lowe's Cos., Inc. 862,400
* 45,600 Papa John's International, Inc. 1,731,375
14,400 Sears, Roebuck and Co. 647,100
36,100 Wal-Mart Stores, Inc. 2,490,900
------------
8,832,156
------------
TECHNOLOGY 15.5%
32,000 Boeing Co. 1,200,000
* 29,250 Cisco Systems, Inc. 1,842,750
31,500 Compaq Computer Corp. 996,188
17,600 Computer Associates International, Inc. 693,000
* 14,900 Compuware Corp. 807,394
* 33,400 Dell Computer Corp. 2,191,875
* 25,000 Electronic Arts, Inc. 1,028,125
* 21,900 EMC Corp/Mass 1,409,813
* 28,000 Gulfstream Aerospace Corp. 1,239,000
15,400 Hewlett-Packard Co. 926,888
26,500 Intel Corp. 2,363,469
The accompanying notes are an integral part of these financial statements.
40 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT GROWTH FUND
OCTOBER 31, 1998
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
TECHNOLOGY (cont.)
14,100 International Business Machines Corp. $ 2,092,969
* 40,600 Microsoft Corp. 4,298,525
* 49,100 Oracle Systems Corp. 1,451,519
* 19,200 Sun Microsystems, Inc. 1,118,400
10,400 United Technologies Corp. 990,600
------------
24,650,515
------------
TRANSPORTATION 0.4%
22,800 Burlington Northern Sante Fe Corp. 703,949
------------
703,949
------------
UTILITIES 11.9%
* 35,400 AES Corp. 1,449,188
* 20,100 AirTouch Communications, Inc. 1,125,600
47,200 AT&T Corp. 2,938,200
26,200 Bell Atlantic Corp. 1,391,875
17,800 BellSouth Corp. 1,420,662
39,500 Coastal Corp. 1,392,374
97,100 Empire District Electric Co. 2,221,162
900 Enron Corp. 47,474
26,900 GTE Corp. 1,578,693
19,800 Lucent Technologies, Inc. 1,587,713
* 39,900 MCI WorldCom, Inc. 2,204,475
33,500 SBC Communications, Inc. 1,551,469
------------
18,908,885
------------
TOTAL STOCKS (Cost $123,233,959) 134,295,394
------------
Shares/ Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES 16.1%
86,344 SSgA Prime Money Market Fund $ 86,344
$ 7,500,000 Goldman Sachs Group LP, CP, 5.151%,(a) 11/02/98 7,498,927
7,500,000 Hitachi America Ltd., CP, 5.209%,(a) 11/12/98 7,488,083
5,700,000 Merrill Lynch & Co., CP, 5.280%,(a) 11/13/98 5,689,987
3,000,000 Petrofina (Delaware), Inc., CP, 5.582%,(a) 11/02/98 2,999,535
+ 1,863,000 U.S. Treasury Bill, 4.460%,(a) 12/17/98 1,852,383
+ 150,000 U.S. Treasury Bill, 4.520%,(a) 12/17/98 149,133
------------
TOTAL SHORT-TERM SECURITIES (Cost $25,764,392) 25,764,392
------------
TOTAL INVESTMENTS (Cost $148,998,351), 100.4% 160,059,786
OTHER ASSETS AND LIABILITIES, NET, (0.4)% (684,444)
------------
NET ASSETS, 100.0% $159,375,342
============
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 41
<PAGE>
FREMONT REAL ESTATE SECURITIES FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
- --------------------------------------------------------------------------------
STOCKS 85.0%
REITs (APARTMENTS) 12.2%
15,000 Apartment Investment & Management Co. $ 524,063
1,000 Associated Estates Realty Corp. 13,188
40,300 Berkshire Realty Company, Inc. 362,700
21,581 Equity Residential Properties Trust 906,381
76,400 Lexford Residential Trust 1,356,100
32,200 Town and Country Trust, The 485,013
19,600 Walden Residential Properties, Inc. 452,025
------------
4,099,470
------------
REITs (DIVERSIFIED) 11.0%
63,400 Aegis Realty, Inc. 586,450
156,800 Banyan Strategic Realty Trust 833,000
19,100 Boddie-Noell Properties, Inc. 219,650
20,000 Crescent Real Estate Equities Co. 501,250
68,900 Pacific Gulf Properties, Inc. 1,365,081
5,000 Vornado Realty Trust 168,438
------------
3,673,869
------------
REITs (HOTELS) 6.1%
17,400 FelCor Suite Hotels, Inc. 409,988
30,000 LaSalle Hotel Properties 348,750
105,568 Patriot American Hospitality, Inc. 936,916
40,000 Winston Hotels, Inc. 342,500
------------
2,038,154
------------
REITs (INDUSTRIAL) 4.5%
127,000 American Industrial Properties REIT 1,341,438
10,100 Prime Group Realty Trust 162,231
------------
1,503,669
------------
REITs (OFFICE/INDUSTRIAL) 4.0%
65,100 Prentiss Properties Trust 1,342,688
------------
1,342,688
------------
REITs (MORTGAGE BACKED) 1.8%
26,400 Asset Investors Corp. 367,950
17,900 Resource Asset Investment Trust 219,275
------------
587,225
------------
REITs (OFFICE) 16.3%
40,000 Brandywine Realty Trust 715,000
33,200 CarrAmerica Realty Corp. 747,000
116,900 Corporate Office Properties Trust, Inc. 891,363
18,000 Equity Office Properties Trust 432,000
39,800 G & L Realty Corp. 601,975
9,800 G & L Realty Corp. (Preferred A) 215,600
3,000 G & L Realty Corp. (Preferred B) 63,000
10,000 Great Lakes REIT, Inc. 164,375
38,000 Highwoods Properties, Inc. 1,061,625
28,500 Tower Realty Trust, Inc. 577,125
------------
5,469,063
------------
Shares/ Value
Face Amount Security Description (Note 1)
- --------------------------------------------------------------------------------
REITs (OUTLET CENTERS) 1.4%
49,800 Prime Retail, Inc. $ 482,438
------------
482,438
------------
REITs (REGIONAL MALLS) 6.2%
23,200 Commercial Net Lease Realty, Inc. 340,750
87,700 Glimcher Realty Trust 1,419,644
10,000 Simon Property Group, Inc. 299,375
------------
2,059,769
------------
REITs (SELF STORAGE) 3.7%
32,100 Sovran Self Storage, Inc. 822,563
14,600 The Rouse Co. 409,713
------------
1,232,276
------------
REITs (COMMUNITY CENTERS) 14.1%
15,300 Agree Realty Corp. 282,094
99,600 IRT Property Co. 1,020,900
68,400 Kranzco Realty Trust 1,017,450
96,300 Malan Realty Investors, Inc. 1,450,519
59,400 Ramco-Gershenson Properties Trust 931,838
------------
4,702,801
------------
REITs (TRIPLE NET LEASE) 0.7%
19,500 Lexington Corp. Properties Trust 243,750
------------
243,750
------------
NON-REITS (DIVERSIFIED) 3.0%
* 117,200 Wellsford Real Properties, Inc. 1,010,844
------------
1,010,844
------------
TOTAL STOCKS (Cost $31,642,379) 28,446,016
------------
SHORT-TERM SECURITIES 16.2%
40,917 SSgA Prime Money Market Fund 40,917
$ 5,400,000 FHLMC, DN, 5.420%,(a) 11/02/98 5,399,187
------------
TOTAL SHORT-TERM SECURITIES (Cost $5,440,104) 5,440,104
------------
TOTAL INVESTMENTS (Cost $37,082,483), 101.2% 33,886,120
OTHER ASSETS AND LIABILITIES, NET, (1.2)% (404,263)
------------
NET ASSETS, 100.0% $ 33,481,857
============
The accompanying notes are an integral part of these financial statements.
42 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT BOND FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Coupon Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
BONDS 82.8%
FIXED RATE AND ADJUSTABLE RATE MORTGAGE SECURITIES 25.0%
<S> <C> <C> <C>
$ 1,973,621 FHLMC ........................................................................ 6.000% 04/01/28 $ 1,952,030
967,318 FHLMC ........................................................................ 6.000% 06/01/28 957,036
2,218,703 FHLMC ........................................................................ 6.000% 07/01/28 2,194,431
6,868,494 FHLMC ........................................................................ 6.000% 07/01/28 6,793,353
1,482,767 FHLMC ........................................................................ 6.000% 08/01/28 1,466,546
585,085 FHLMC ........................................................................ 6.000% 08/01/28 578,684
137,204 FHLMC ........................................................................ 6.000% 08/01/28 135,702
107,021 FHLMC ........................................................................ 6.000% 08/01/28 105,850
356,867 FHLMC ........................................................................ 6.000% 08/01/28 352,963
52,918 FHLMC ........................................................................ 6.000% 08/01/28 52,339
418,891 FHLMC ........................................................................ 6.500% 01/01/26 422,422
147,019 FHLMC ........................................................................ 6.500% 03/01/26 148,259
506,431 FHLMC ........................................................................ 6.500% 04/01/26 510,701
255,896 FHLMC ........................................................................ 6.500% 04/01/26 258,054
221,580 FHLMC ........................................................................ 6.500% 04/01/26 223,448
186,408 FHLMC ........................................................................ 6.500% 05/01/26 187,980
427,572 FHLMC ........................................................................ 8.250% 08/01/17 446,184
3,900,000 FHLMC GOLD TBA ............................................................... 6.000% 12/10/28 3,854,906
800,000 FHLMC Gold TBA ............................................................... 6.000% 01/14/29 790,000
3,200,000 FHLMC GOLD TBA ............................................................... 6.500% 12/10/28 3,223,000
403,545 FNMA ......................................................................... 8.500% 05/01/25 420,317
444,428 FNMA ARM ..................................................................... 7.739% 11/01/23 452,761
15,000,000 FNMA TBA ..................................................................... 6.000% 01/14/29 14,796,094
3,928,607 GNMA ......................................................................... 6.000% 01/15/24 3,893,013
1,681,543 GNMA ......................................................................... 6.000% 01/15/24 1,666,308
39,401 GNMA ......................................................................... 6.500% 02/15/24 39,832
891,136 GNMA ......................................................................... 6.500% 03/15/24 900,885
32,106 GNMA ......................................................................... 6.500% 06/15/24 32,457
182,205 GNMA ......................................................................... 8.000% 06/15/25 188,753
180,509 GNMA II ARM .................................................................. 6.875% 04/20/21 183,697
1,044,522 GNMA II ARM .................................................................. 6.875% 03/20/24 1,057,472
1,815,363 GNMA II ARM .................................................................. 6.625% 08/20/25 1,827,232
1,232,272 GNMA II ARM .................................................................. 7.000% 10/20/25 1,244,502
295,218 GNMA II ARM .................................................................. 7.000% 11/20/24 298,132
1,840,176 GNMA II ARM .................................................................. 7.000% 11/20/26 1,859,450
3,500,000 GNMA TBA ..................................................................... 6.500% 11/18/28 3,538,828
------------
57,053,621
------------
COLLATERALIZED MORTGAGE OBLIGATIONS 25.8%
5,000,000 BA Mortgage Securities, Inc. CMO, 1998-4, PAC-1 REMIC ........................ 6.600% 08/25/28 5,044,605
500,000 Chase Mortgage Finance Corp. CMO, 1998-S6-A17 ................................ 6.750% 10/25/28 495,415
385,298 Collateralized Mortgage Securities Corp. CMO, J-5Z, REMIC .................... 7.985% 05/01/17 384,895
1,339,264 FHLMC CMO, 1018 0Z, PAC-1 (11) REMIC ......................................... 7.000% 11/15/20 1,364,555
5,301,000 FHLMC CMO, Series T-011-A5 SEQ ............................................... 6.500% 01/25/15 5,321,939
8,000,000 FHLMC CMO, Series T-011-A6 SEQ ............................................... 6.500% 09/25/18 8,368,536
15,000,000 FNMA CMO, 1992-131KA, PAC (11) REMIC ......................................... 8.000% 01/25/22 15,848,145
200,000 FNMA CMO, 1993-11J, PAC REMIC ................................................ 7.500% 02/25/08 213,175
8,000,000 GNMA CMO, 1998-15C ........................................................... 6.500% 06/20/28 7,704,952
1,000,000 Morgan Stanley Mortgage Trust CMO, 40-8, PAC (11) REMIC ...................... 7.000% 07/20/21 1,021,564
10,000,000 Residential Funding Mortgage Securities I, Inc. CMO, 1997-S17-A5 ............. 7.000% 11/25/27 10,142,470
3,000,000 Securitized Asset Sales, lnc. CMO, 1993-2A9, PAC (11) REMIC .................. 6.200% 07/25/08 3,008,432
------------
58,918,683
------------
CORPORATE BONDS 22.1%
5,000,000 Associates Corp. ............................................................. 5.750% 11/01/03 5,011,550
3,000,000 AT&T Capital Corp., FRN ...................................................... 5.675% 04/01/99 2,999,808
4,000,000 BankAmerica Corp., FRN ....................................................... 5.520% 03/05/01 3,984,840
5,000,000 Calenergy Co., Inc., (Step Bond) ............................................. 10.250% 01/15/04 5,262,500
1,000,000 Citicorp, FRN ................................................................ 5.777% 08/13/02 980,040
</TABLE>
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 43
<PAGE>
FREMONT BOND FUND
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Coupon Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (cont.)
<S> <C> <C> <C>
$ 2,000,000 Citicorp, FRN ................................................................ 5.787% 11/12/02 $ 1,958,340
785,000 Delta Air Lines, Inc. (Sinking Fund Bond) .................................... 9.450% 02/14/06 889,625
1,577,000 Delta Air Lines, Inc. (Sinking Fund Bond) .................................... 9.450% 02/26/06 1,788,444
3,000,000 Ford Motor Credit, FRN ....................................................... 5.765% 09/03/01 2,980,368
2,000,000 Ford Motor Credit, FRN ....................................................... 5.812% 02/13/03 1,980,208
3,000,000 Ford Motor Credit, FRN ....................................................... 5.813% 03/05/01 2,991,399
2,600,000 General Motors Acceptance Corp. .............................................. 5.347% 04/29/02 2,578,657
2,500,000 General Motors Acceptance Corp. .............................................. 5.787% 08/18/03 2,468,263
2,000,000 Goldman Sachs Group, FRN ..................................................... 5.897% 11/24/00 1,994,560
3,000,000 Goldman Sachs Group, FRN ..................................................... 5.917% 02/22/02 2,975,223
2,000,000 Imperial Chemical PLC ........................................................ 5.656% 12/05/98 2,000,100
800,000 Lehman Brothers Holdings, Inc. ............................................... 8.150% 05/15/00 814,080
1,000,000 Residential Reinsurance ...................................................... 9.847% 06/01/99 995,000
225,000 Time Warner, Inc. ............................................................ 7.975% 08/15/04 248,164
450,000 Time Warner, Inc. ............................................................ 8.110% 08/15/06 506,637
450,000 Time Warner, Inc. ............................................................ 8.180% 08/15/07 512,672
1,000,000 United Airlines .............................................................. 10.670% 05/01/04 1,213,012
3,000,000 Worldcom Inc. ................................................................ 9.375% 01/15/04 3,121,290
------------
50,254,780
------------
FOREIGN GOVERNMENT BONDS 5.1%
NZ
$ 1,500,000 Government of New Zealand .................................................... 8.000% 04/15/04 893,774
1,300,000 Government of New Zealand .................................................... 10.000% 03/15/02 787,133
US
$ 5,000,000 Republic of Argentina, FRN ................................................... 9.165% 04/10/05 4,350,000
1,475,800 Republic of Argentina, FRN
(Callable Semiannually in March or September @ 100) .......................... 6.188% 03/31/05 1,218,715
2,000,000 Republic of Korea ............................................................ 8.281% 04/08/00 1,860,000
3,000,000 Republic of Philippines ...................................................... 6.500% 12/01/17 2,505,000
------------
11,614,622
------------
U.S. GOVERNMENT & AGENCY BONDS 4.8%
10,000,000 FNMA, MTN .................................................................... 6.200% 08/12/08 10,315,600
2,100,000 U.S. Treasury Strips ......................................................... 5.697%(a) 08/15/19 654,276
------------
10,969,876
------------
STRIPPED MORTGAGE SECURITIES 0.0%
542,096 FNMA lnterest Only, 1994-27WB, PAC-1 REMIC ................................... 6.500% 06/25/14 5,174
------------
5,174
------------
TOTAL BONDS (Cost $186,229,892) 188,816,756
------------
OTHER SECURITIES 0.2%
50,000 Call Option on U.S. Treasury Note, 5.750%, Strike @ 97.398, Exp. 01/13/99..... 365,800
------------
365,800
------------
TOTAL OTHER SECURITIES (COST $392,969) 365,800
------------
Shares/ Discount
Face Amount Issuer Rate
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES 29.8%
6,036,278 SSgA Prime Money Market Fund........................................................................ 6,036,278
$ 5,100,000 American Express Credit Corp., CP ............................................ 5.440% 11/06/98 5,096,147
1,200,000 American Express Credit Corp., CP ............................................ 5.549% 11/10/98 1,198,353
4,800,000 American Express Credit Corp., CP ............................................ 5.270% 11/16/98 4,789,460
300,000 British Columbia, Province of, CP ............................................ 5.510% 11/09/98 299,633
2,100,000 Du Pont (EI), CP ............................................................. 5.490% 11/05/98 2,098,719
3,000,000 Du Pont (EI), CP ............................................................. 5.460% 12/04/98 2,984,985
</TABLE>
The accompanying notes are an integral part of these financial statements.
44 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT BOND FUND
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Discount Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES (CONT.)
<S> <C> <C> <C>
$ 6,000,000 Du Pont (EI), CP ............................................................. 5.170% 12/09/98 $ 5,967,257
300,000 FHLMC, DN .................................................................... 5.035% 01/22/99 296,559
400,000 Ford Motor Credit Corp., CP .................................................. 5.280% 11/13/98 399,296
2,000,000 Ford Motor Credit Corp., CP .................................................. 5.420% 01/08/98 1,979,524
1,500,000 General Electric Capital Corp., CP ........................................... 5.510% 11/02/98 1,499,770
300,000 General Electric Capital Corp., CP ........................................... 5.470% 11/04/98 299,863
600,000 General Electric Capital Corp., CP ........................................... 5.510% 11/13/98 598,898
6,600,000 General Electric Capital Corp., FRN .......................................... 5.300% 11/03/98 6,588,340
900,000 General Motors Acceptance Corp., CP .......................................... 5.250% 11/04/98 899,606
4,500,000 International Business Machines Credit Corp., CP ............................. 5.260% 11/17/98 4,489,480
1,500,000 National Rural Utilities, CP ................................................. 5.480% 11/19/98 1,495,890
2,900,000 National Rural Utilities, CP ................................................. 5.330% 12/18/98 2,879,820
1,700,000 New Center Asset, CP ......................................................... 5.530% 11/13/98 1,696,866
5,500,000 Oesterreichische, CP ......................................................... 5.335% 12/14/98 5,464,952
8,000,000 Proctor & Gamble, CP ......................................................... 5.400% 12/29/98 7,930,400
2,000,000 Shell Oil Co., CP ............................................................ 5.260% 11/18/98 1,995,032
+ 220,000 U.S. Treasury Bill ........................................................... 4.690% 12/03/98 219,083
+ 335,000 U.S. Treasury Bill ........................................................... 5.000% 12/03/98 333,512
+ 10,000 U.S. Treasury Bill ........................................................... 3.930% 02/04/99 9,896
+ 15,000 U.S. Treasury Bill ........................................................... 4.065% 02/04/99 14,839
+ 25,000 U.S. Treasury Bill ........................................................... 4.075% 02/04/99 24,731
+ 70,000 U.S. Treasury Bill ........................................................... 3.870% 03/04/99 68,992
+ 290,000 U.S. Treasury Bill ........................................................... 4.020% 03/04/99 286,017
+ 20,000 U.S. Treasury Bill ........................................................... 4.060% 03/04/99 19,723
------------
TOTAL SHORT-TERM SECURITIES (Cost $67,962,005) 67,961,921
------------
TOTAL INVESTMENTS (Cost $254,584,866), 112.8% 257,144,477
OTHER ASSETS AND LIABILITIES, NET, (12.8)% (29,143,416)
------------
NET ASSETS, 100% $228,001,061
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 45
<PAGE>
FREMONT MONEY MARKET FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Discount Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 81.0%
<S> <C> <C> <C>
$**7,500,000 ABB Treasury Center .......................................................... 5.330% 12/18/98 $ 7,447,810
10,000,000 Abbey National Bank PLC ...................................................... 5.050% 02/09/99 9,859,722
7,500,000 AEGON NV ..................................................................... 5.260% 11/04/98 7,496,713
2,500,000 AIG Funding, Inc. ............................................................ 5.250% 11/06/98 2,498,177
5,000,000 Air Products and Chemicals, Inc. ............................................. 5.480% 11/13/98 4,990,867
2,500,000 Akzo Nobel, Inc. ............................................................. 5.270% 11/10/98 2,496,706
5,000,000 Akzo Nobel, Inc. ............................................................. 5.510% 11/10/98 4,993,113
10,000,000 Akzo Nobel, Inc. ............................................................. 5.090% 01/28/99 9,875,578
10,000,000 Alcatel Alsthom, Inc. ........................................................ 5.050% 01/27/99 9,877,958
**5,000,000 Allianz of America Finance Corp. ............................................. 5.180% 01/08/99 4,951,078
5,000,000 Aluminum Co. of America ...................................................... 5.490% 11/25/98 4,981,700
5,000,000 American Express Credit Corp. ................................................ 5.450% 12/01/98 4,977,292
10,000,000 American Express Credit Corp. ................................................ 4.750% 03/22/99 9,813,958
6,500,000 American General Finance Corp. ............................................... 5.070% 12/07/98 6,467,045
5,000,000 Archer Daniels Midland Co. ................................................... 5.490% 11/10/98 4,993,138
10,000,000 Archer Daniels Midland Co. ................................................... 5.050% 02/11/99 9,856,917
7,500,000 Associates Corp. of North America ............................................ 5.470% 11/16/98 7,482,906
7,500,000 Associates First Capital Corp. ............................................... 5.060% 01/25/99 7,410,396
5,000,000 B.B.V. Finance (Delaware), Inc. .............................................. 5.470% 01/14/99 4,943,781
**5,000,000 Baker Hughes, Inc. ........................................................... 5.520% 11/12/98 4,991,567
**4,092,000 Baker Hughes, Inc. ........................................................... 5.300% 12/03/98 4,072,722
5,000,000 Banque ET Caisse D'Epargne De L'Etat ......................................... 5.480% 01/11/99 4,945,961
5,000,000 BMW US Capital Corp. ......................................................... 5.480% 11/24/98 4,982,494
7,500,000 British Columbia, Province of ................................................ 4.700% 04/06/99 7,347,250
7,500,000 British Columbia, Province of ................................................ 4.870% 04/06/99 7,341,725
**5,000,000 BTR Dunlop Finance, Inc. ..................................................... 5.500% 11/12/98 4,991,597
7,500,000 C.I.T. Group Holdings, Inc. .................................................. 4.950% 03/29/99 7,347,375
7,500,000 Caisse d'Amortissement de la Dette Sociale ................................... 5.130% 03/15/99 7,356,788
5,000,000 Canadian Wheat Board ......................................................... 5.450% 11/10/98 4,993,188
**7,500,000 Cargill Global Funding Corp. ................................................. 4.910% 04/07/99 7,339,402
10,000,000 Chevron UK Investment PLC .................................................... 5.050% 02/23/99 9,840,083
5,000,000 Clorox Co. ................................................................... 5.480% 11/23/98 4,983,256
7,500,000 Coca-Cola Co. ................................................................ 5.030% 01/12/99 7,424,550
5,000,000 Columbia University, Trustees of ............................................. 5.480% 11/05/98 4,996,956
7,500,000 Daimler-Benz North America Corp. ............................................. 5.040% 01/22/99 7,413,900
10,000,000 Deutsche Bank Financial, Inc. ................................................ 5.220% 01/05/99 9,905,750
**7,500,000 Diageo Capital PLC ........................................................... 5.180% 12/11/98 7,456,833
5,000,000 Disney (Walt) Co. ............................................................ 5.420% 12/14/98 4,967,631
5,000,000 Electricite de France ........................................................ 5.460% 12/04/98 4,974,975
5,000,000 Export Development Corp. ..................................................... 5.380% 11/20/98 4,985,803
5,000,000 Ford Motor Credit Corp. ...................................................... 5.500% 11/06/98 4,996,181
2,500,000 General Electric Capital Corp. ............................................... 5.480% 11/02/98 2,499,619
5,000,000 General Electric Capital Corp. ............................................... 5.430% 12/11/98 4,969,833
7,500,000 General Electric Capital Corp. ............................................... 4.770% 03/18/99 7,363,856
5,000,000 General Motors Acceptance Corp. .............................................. 5.480% 11/16/98 4,988,583
10,000,000 General Motors Acceptance Corp. .............................................. 5.060% 02/08/99 9,860,850
**5,000,000 Glaxo Wellcome PLC ........................................................... 5.460% 11/03/98 4,998,483
5,000,000 Golden Peanut Co. ............................................................ 5.080% 02/12/99 4,927,328
5,000,000 Goldman Sachs Group LP. ...................................................... 5.470% 11/03/98 4,998,481
**2,500,000 Great Lakes Chemical Corp. ................................................... 5.440% 11/13/98 2,495,467
**5,000,000 Great Lakes Chemical Corp. ................................................... 5.490% 11/13/98 4,990,850
5,000,000 Halifax Building Society ..................................................... 5.450% 11/02/98 4,999,243
**7,500,000 Henkel Corp. ................................................................. 5.470% 11/10/98 7,489,744
5,000,000 Hershey Foods Corp. .......................................................... 5.470% 11/12/98 4,991,643
5,000,000 International Business Machines Corp. ........................................ 5.440% 11/04/98 4,997,733
7,500,000 John Deere Capital Corp. ..................................................... 5.420% 11/13/98 7,486,450
12,500,000 Jostens, Inc. ................................................................ 5.120% 11/02/98 12,498,222
7,500,000 KFW International Finance .................................................... 5.190% 12/09/98 7,458,913
5,000,000 McCormick & Co., Inc. ........................................................ 5.460% 11/02/98 4,999,242
5,000,000 McGraw Hill .................................................................. 5.480% 11/09/98 4,993,911
5,000,000 Merrill Lynch & Co., Inc. .................................................... 5.150% 01/29/99 4,936,340
5,000,000 Merrill Lynch & Co., Inc. .................................................... 5.490% 01/29/99 4,932,138
6,000,000 Merrill Lynch & Co., Inc. .................................................... 5.030% 02/10/99 5,915,328
</TABLE>
The accompanying notes are an integral part of these financial statements.
46 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MONEY MARKET FUND
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Discount Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (cont.)
<S> <C> <C> <C>
$10,000,000 Morgan (J.P.) & Co., Inc. .................................................... 4.970% 04/01/99 $ 9,791,536
5,000,000 Morgan (J.P.) & Co., Inc. .................................................... 5.460% 12/21/98 4,962,083
5,000,000 PACCAR Financial Corp. ....................................................... 5.420% 12/03/98 4,975,911
**7,500,000 Panasonic Finance Corp. ...................................................... 5.300% 11/19/98 7,480,125
**5,000,000 PepsiCo, Inc. ................................................................ 5.460% 12/14/98 4,967,392
2,900,000 Petrofina (Delaware), Inc. ................................................... 5.580% 11/02/98 2,899,551
7,500,000 Petrofina (Delaware), Inc. ................................................... 5.350% 12/11/98 7,455,417
5,000,000 Power Authority of the State of New York (Series 3) .......................... 5.520% 11/03/98 4,998,467
**5,000,000 Queen's Health Systems, Inc. ................................................. 5.520% 11/05/98 4,996,933
**5,000,000 Queen's Health Systems, Inc. ................................................. 5.200% 11/17/98 4,988,444
**5,000,000 Queen's Health Systems, Inc. ................................................. 5.320% 11/17/98 4,988,178
7,500,000 Rabobank Nederland ........................................................... 5.120% 03/19/99 7,352,800
**5,000,000 Rio Tinto America, Inc. ...................................................... 5.400% 02/24/99 4,913,750
7,500,000 Sharp Electronics Corp. ...................................................... 5.530% 11/12/98 7,487,327
5,000,000 Siemens Capital Corp. ........................................................ 5.400% 12/14/98 4,967,750
10,000,000 Sonoco Products, Inc. ........................................................ 5.100% 11/19/98 9,974,500
**10,000,000 Sony Europe Finance PLC ...................................................... 5.250% 11/30/98 9,957,708
**7,500,000 St. Paul Cos ................................................................. 5.230% 11/04/98 7,496,731
5,000,000 Stanford, Leland Junior University ........................................... 5.400% 01/04/99 4,952,000
5,000,000 Sweden, Kingdom of ........................................................... 5.380% 12/02/98 4,976,836
7,500,000 Swedish Export Credit Corp. .................................................. 4.980% 02/26/99 7,378,613
6,076,000 Swiss Re Financial Products .................................................. 5.400% 11/17/98 6,061,418
5,000,000 Swiss Re Financial Products .................................................. 5.500% 01/27/99 4,933,542
5,000,000 Toronto Dominion Holdings USA, Inc. .......................................... 5.460% 11/23/98 4,983,317
10,000,000 Toyota Motor Credit Corp. .................................................... 5.200% 01/13/99 9,894,556
5,000,000 Toyota Motor Credit Corp. .................................................... 5.430% 02/05/99 4,927,600
**5,000,000 TRW, Inc. .................................................................... 5.500% 11/05/98 4,996,944
**7,500,000 Unilever Capital Corp. ....................................................... 5.430% 11/06/98 7,494,344
10,000,000 UBS Finance (Delaware), Inc. ................................................. 4.720% 04/19/99 9,778,657
5,000,000 Vereinsbank Financial (Delaware) ............................................. 5.420% 02/03/99 4,929,239
------------
TOTAL COMMERCIAL PAPER (Cost $580,824,768) 580,824,768
------------
Shares/ Coupon
Face Amount Issuer Rate
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER SHORT-TERM SECURITIES 17.8%
66,732 SSgA Prime Money Market Fund ....................................................................... 66,732
$ 5,000,000 Abbey National Treasury Services, Inc., MTN .................................. 5.875% 12/22/98 5,002,114
5,000,000 Bayerische Landesbank Girozentrale, YCD ...................................... 5.720% 05/06/99 4,999,306
5,000,000 Deutsche Bank NY, YCD ........................................................ 5.700% 03/30/99 4,999,022
10,000,000 FHLB, AN ..................................................................... 5.070% 10/08/99 10,000,000
10,000,000 FHLB, AN ..................................................................... 5.435% 02/02/99 9,995,870
9,000,000 FHLMC, DN (a) ................................................................ 4.930% 02/17/99 8,866,890
20,000,000 FNMA, AN ..................................................................... 5.570% 03/05/99 20,003,682
15,000,000 FNMA, DN (a) ................................................................. 5.229% 01/19/99 14,827,879
20,000,000 FNMA, DN (a) ................................................................. 5.150% 02/25/99 19,668,111
10,000,000 FNMA, DN (a) ................................................................. 4.750% 05/03/99 9,758,542
10,000,000 FNMA, DN (a) ................................................................. 5.160% 08/20/99 9,581,467
5,000,000 International Lease Finance Corp., MTN ....................................... 5.500% 01/15/99 4,997,765
5,000,000 Swiss Bank Corp., YCD ........................................................ 5.740% 06/11/99 5,000,459
------------
TOTAL OTHER SHORT-TERM SECURITIES (Cost $127,767,839) 127,767,839
------------
TOTAL INVESTMENTS (Cost $708,592,607), 98.8% 708,592,607
OTHER ASSETS AND LIABILITIES, NET, 1.2% 8,698,673
------------
NET ASSETS, 100.0% $717,291,280
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 47
<PAGE>
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
OCTOBER 31, 1998
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Coupon Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.2%
<S> <C> <C> <C>
$ 1,000,000 City of Anaheim, Public Finance Authority Revenue Bond,
Anaheim Electric Utility Projects .......................................... 5.600% 10/01/16 $ 1,053,470
500,000 Berkeley Unified School District, Revenue Refunding Ser. 1998 (FGIC Insured) . 4.550% 08/01/10 510,920
1,000,000 Big Bear Area Regional Wastewater Agency, California Revenue ................. 5.000% 04/01/10 1,059,550
1,000,000 California State Dept. of Veterans Affairs,
Home Purchase Revenue 1991 Ser. A .......................................... 6.450% 08/01/00 1,052,320
500,000 California State Dept. of Water Resources,
Central Valley Project Revenue ............................................. 4.800% 12/01/07 522,365
1,000,000 California State Dept. of Water Resources,
Central Valley Project Revenue Ser. H ...................................... 6.400% 12/01/00 1,062,610
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 1,098,110
1,000,000 California State Public Works Board,
Lease Revenue Dept. of Corrections, Prison D ............................... 5.100% 06/01/06 1,059,840
1,000,000 Contra Costa Transportation Authority,
Sales Tax Revenue 1991 Ser. A .............................................. 6.400% 03/01/01 1,066,580
1,000,000 Contra Costa Water Authority, Water Treatment Revenue
Refunding 1993 Ser. A (FGIC Insured) ....................................... 5.300% 10/01/05 1,070,420
1,000,000 Contra Costa Water District, Water Revenue
Ser. F (FGIC Insured) ...................................................... 5.250% 10/01/08 1,054,940
1,500,000 East Bay CA MUD, Water System Subordinated Revenue Ser. 1998 ................. 5.250% 06/01/14 1,582,740
1,000,000 City of Fairfield, Water Revenue (AMBAC Insured) ............................. 5.250% 04/01/14 1,038,200
1,225,000 City of Industry, Urban Development
Agency Tax Allocation (MBIA Insured) ....................................... 5.250% 05/01/12 1,296,785
1,000,000 City of Irvine, Assessment District No. 89-10,
Limited Obligation Refunding Improvement (MBIA Insured) .................... 4.200% 09/02/05 1,016,310
1,000,000 City of Los Angeles, Convention & Exhibition Center Authority,
Lease Revenue Bonds Refunding Ser. A ....................................... 5.200% 08/15/09 1,059,400
1,000,000 Los Angeles Dept. of Water & Power,
Electric Plant Revenue Refunding ........................................... 5.500% 09/01/07 1,079,290
1,000,000 Los Angeles Dept. of Water & Power, Electric Plant Revenue ................... 4.700% 10/15/06 1,045,530
1,000,000 Los Angeles Dept. of Water & Power, Waterworks Revenue Refunding ............. 5.625% 04/15/08 1,075,050
1,500,000 City of Los Angeles, Wastewater System Revenue
Ser. A (MBIA Insured) ...................................................... 5.000% 12/01/11 1,582,050
1,000,000 City of Los Angeles, Wastewater System Revenue
Ser. B (MBIA Insured) ...................................................... 5.700% 06/01/23 1,068,370
1,000,000 Los Angeles County Public Works Finance Authority,
Lease Revenue Ser. B (MBIA Insured) ........................................ 5.250% 09/01/09 1,084,930
500,000 Los Angeles County Public Works Finance Authority,
Regional Park and Open Space District, Ser. A .............................. 5.000% 10/01/04 532,480
1,000,000 Los Angeles County Public Works Finance Authority,
Regional Park and Open Space District, Ser. A .............................. 5.000% 10/01/16 1,014,680
750,000 Los Angeles County Sanitation District
Finance Authority, 1993 Ser. A ............................................. 5.250% 10/01/06 806,783
1,000,000 M-S-R Public Power Agency, San Juan Project Revenue Ser. F ................... 5.650% 07/01/03 1,085,770
1,000,000 Metropolitan Water District of Southern California,
Waterworks GO Refunding 1993 Ser. A ........................................ 5.250% 03/01/05 1,075,030
1,000,000 Modesto High School District, 1993 GO Refunding (FGIC Insured) ............... 5.300% 08/01/04 1,080,280
1,000,000 Modesto Irrigation District Finance Authority,
Domestic Water Project Revenue 1992 Ser. A (AMBAC Insured) ................. 5.650% 09/01/03 1,093,330
1,000,000 Northern California Power Agency,
Geothermal Project #3 Revenue Ser. A ....................................... 5.600% 07/01/06 1,089,550
1,000,000 Orange County Transportation Authority,
Measure M Sales Tax Revenue First Ser. 1992 ................................ 6.000% 02/15/06 1,131,080
1,000,000 Orange County Transportation Authority, Measure M Sales Tax
Revenue Second Senior Ser. 1994 (FGIC Insured) ............................. 5.000% 02/15/08 1,068,500
500,000 City of Pasadena, GO Refunding Police and Jail Building 1993 ................. 5.000% 06/01/07 526,630
500,000 City of Pasadena, Electric Works Revenue Ser. 1990 ........................... 6.500% 08/01/99 513,720
1,000,000 Rancho Cucamonga RDA, 1994 Tax Allocation
Refunding (MBIA Insured) ................................................... 5.000% 09/01/07 1,059,550
1,000,000 City of Riverside, Electric Revenue Refunding 1993 ........................... 5.000% 10/01/06 1,062,070
1,000,000 City of Riverside, Electric Revenue
Refunding 1993 (AMBAC Insured) ............................................. 5.000% 10/01/13 1,016,730
315,000 City of Riverside, Electric Revenue Refunding ................................ 6.100% 10/01/00 331,415
685,000 City of Riverside, Electric Revenue .......................................... 6.100% 10/01/00 720,236
1,000,000 Sacramento MUD, Electric Revenue 1991 Ser. Y ................................. 6.250% 09/01/00 1,052,850
2,000,000 Sacramento MUD, Electric Revenue 1997 Ser. L ................................. 5.125% 07/01/15 2,066,480
1,000,000 Sacramento County Sanitation District Finance Authority,
Revenue Bond (MBIA Insured) ................................................ 5.000% 12/01/08 1,054,510
1,000,000 Sacramento County Sanitation District Finance Authority,
Revenue Bond (MBIA Insured) ................................................ 5.125% 12/01/13 1,025,020
</TABLE>
The accompanying notes are an integral part of these financial statements.
48 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT CALIFORNIA INTERMEDIATE TAX-FREE FUND
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Coupon Maturity Value
Face Amount Issuer Rate Date (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (cont.)
<S> <C> <C> <C>
$ 1,000,000 San Bernardino County Transportation Authority,
Sales Tax Revenue 1992 Ser. A (FGIC Insured) ............................... 6.000% 03/01/03 $ 1,092,010
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 1,054,340
1,000,000 City and County of San Francisco International Airport,
Revenue Second Ser. Issue 1 (AMBAC Insured) ................................ 6.100% 05/01/03 1,098,330
1,000,000 City and County of San Francisco Sewer,
Revenue Refunding Ser. 1992 (AMBAC Insured) ................................ 5.800% 10/01/05 1,088,460
1,000,000 City and County of San Francisco RDA,
Tax Allocation 1997 Ser. B ................................................. 5.700% 08/01/14 1,043,930
1,000,000 City of San Jose, Finance Authority (Convention Center
Refunding Project) 1993 Ser. C (MBIA Insured) .............................. 5.750% 09/01/03 1,071,140
500,000 San Jose-Santa Clara Water Financing Authority, Sewer Revenue ................ 5.250% 11/15/12 527,455
1,000,000 Santa Margarita/Dana Point Authority Orange County,
Revenue Bond Ser. A ........................................................ 5.375% 08/01/04 1,082,520
1,000,000 Santa Monica-Malibu Unified School District,
Public School Facilities Reconstruction Projects ........................... 5.500% 08/01/18 1,097,890
1,000,000 Southern California Public Power Authority,
Palo Verde Power Projects Revenue 1993 Ser. A .............................. 5.100% 07/01/06 1,051,950
1,000,000 Southern California Public Power Authority,
Mead-Phoenix Project Revenue 1994 Ser. A (AMBAC Insured) ................... 4.750% 07/01/09 1,036,690
1,000,000 Southern California Public Power Authority,
Mead-Phoenix Project Revenue 1994 Ser. A (AMBAC Insured) ................... 4.750% 07/01/08 1,042,020
1,250,000 City of Stockton, Wastewater System Project Ser. A ........................... 4.125% 09/01/06 1,269,200
1,000,000 University of California, Housing System
Revenue 1993 Ser. A (MBIA Insured) ......................................... 5.500% 11/01/08 1,080,250
500,000 University of California, Research Facilities
Revenue 1995 Ser. C (AMBAC Insured) ........................................ 5.100% 09/01/07 532,995
1,000,000 West & Central Basin Finance Authority,
West Basin Water Revenue Refunding Project (AMBAC Insured) ................. 5.125% 08/01/06 1,068,590
1,000,000 City of Whittier, Solid Waste Revenue Ser. A (AMBAC Insured) ................. 5.375% 08/01/14 1,061,700
1,500,000 Yucaipa School Facilities Finance Authority,
1995 Sweetwater Refunding (MBIA Insured) ................................... 6.000% 09/01/10 1,617,884
------------
TOTAL MUNICIPAL BONDS (Cost $58,600,595) 62,863,828
------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES 0.6%
352,182 Provident Institutional Fund: Municipal Fund for California Investors, Inc. ........................ 352,182
------------
TOTAL SHORT-TERM SECURITIES (Cost $352,182) 352,182
------------
TOTAL INVESTMENTS (Cost $58,952,777), 98.8% 63,216,010
OTHER ASSETS & LIABILITIES, NET, 1.2% 795,423
------------
NET ASSETS, 100.0% $ 64,011,433
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 49
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO STATEMENTS OF INVESTMENTS IN SECURITIES AND NET ASSETS
The following footnotes and abbreviations are a reference point for the
Statements of Investments in Securities and Net Assets on pages 27 through 49.
* Non-income producing security
** These transactions 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 discount rate or yield to maturity at the date of acquisition.
(b) 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."
+ On deposit with broker for initial margin on futures contracts (Note 1).
PORTFOLIO ABBREVIATIONS
ADR American Depository Receipt
AMBAC American Municipal Bond Assurance Corp.
AN Agency Note
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
CP Commercial Paper
DN Discount Note
FGIC Financial Guaranty Insurance Corp.
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
FRN Floating Rate Note
FSB Federal Savings Bank
GDR Global Depository Receipt
GDS Global Depository Shares
GNMA Government National Mortgage Association
GO General Obligation
MBIA Municipal Bond Investor Assurance Corp.
MTN Medium Term Note
MUD Municipal Utility District
PAC Planned Amortization Class
RDA Redevelopment Agency
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
STRIPS Separate Trading of Interest and Principal Securities
TBA To Be Announced
YCD Yankee Certificate of Deposit
CURRENCY ABBREVIATIONS
ATS Austrian Schilling
AUS$ Australian Dollar
CAN$ Canadian Dollar
DM German Deutschemark
ESP Spanish Peseta
FF French Franc
GRD Greek Drachma
IEP Irish Punt
NZ$ New Zealand Dollar
SEK Swedish Krona
(pound) British Pound
US$ U.S. Dollar
The accompanying notes are an integral part of these financial statements.
50 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO STATEMENTS OF INVESTMENTS IN SECURITIES AND NET ASSETS
COUNTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Country Country International International Emerging
Code Name Global Growth Small Cap Markets Select Bond
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AR Argentina - - - - - 2.4%
AS Austria 0.7% - - - - -
AU Australia 1.7% 4.2% - - - -
BE Belgium 0.3% - - - - -
BR Brazil - 0.7% - 5.9% - -
CH China - - - 6.8% - -
CL Chile 0.1% - - - - -
CN Canada 2.7% 7.0% 3.8% - - 0.1%
CR Croatia - - - 1.7% - -
CZ Czech Republic - - 0.1% - - -
DK Denmark 0.5% - - - - -
EG Egypt - - - 2.0% - -
FI Finland 0.1% 4.4% - - - -
FR France 5.3% 7.2% 4.7% - - -
GM Germany 4.7% 6.4% 3.6% - - -
GR Greece 2.1% - - 1.5% - -
HK Hong Kong - 2.5% 4.8% 6.0% - -
HU Hungary - - - 1.9% - -
ID Indonesia 0.1% - - 2.1% - -
IN India 0.1% - - 4.5% - -
IR Ireland 1.7% - - - - -
IS Israel - - 13.8% 6.0% - -
IT Italy 0.7% 4.6% - - - -
JO Jordan - - - 3.7% - -
JP Japan 2.3% 15.4% - - - -
MX Mexico 0.3% 2.1% - 7.4% - -
NL Netherlands 1.1% 4.8% 3.7% - 1.9% -
NO Norway - 1.1% 8.7% - - -
NZ New Zealand 0.7% - - - - 0.7%
PH Philippines 0.1% 0.7% - - - 1.1%
PO Poland - - - 2.6% - -
PT Portugal 0.4% - 5.2% - - -
SA South Africa - 1.0% - 8.8% - -
SG Singapore 0.3% 0.7% 7.7% 0.1% - -
SK South Korea 0.4% 0.2% - 2.3% - 0.8%
SP Spain 1.6% 2.2% - - - -
SW Sweden 1.6% 4.9% 4.6% - - -
SZ Switzerland 1.8% 5.0% 16.5% - - -
TH Thailand - - - 12.4% - -
TU Turkey - - - 0.5% - -
TW Taiwan 0.1% 0.6% - 4.2% - -
UK United Kingdom 6.6% 15.5% 12.5% - - -
US United States 61.9% 8.8% 10.3% 19.6% 98.1% 94.9%
----- ----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== =====
</TABLE>
The Fremont Funds not listed above include 100% domestic securities in their
respective portfolios.
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 51
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1998
STATEMENT OF ASSETS AND LIABILITIES
(All numbers in thousands except net asset value per share)
<TABLE>
<CAPTION>
International International Emerging U.S.
Global Growth Small Cap Markets Micro-Cap
Fund Fund Fund Fund Fund
-------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C>
Investments in securities at cost $ 612,085 $ 42,706 $ 6,961 $ 11,055 $ 139,800
========= ========= ========= ========= =========
Investments in securities at value (Note 1) 635,273 41,227 5,803 8,478 127,242
Cash -- 18 -- -- --
Dividends and interest receivable 7,862 227 30 52 11
Receivable for securities sold 2 9 -- 221 19
Receivable from sale of fund shares 1,956 522 4 42 1,836
Variation margin receivable 776 -- -- -- --
Unrealized appreciation on foreign currency contracts (Note 1) 452 54 -- -- --
Unamortized organization costs (Note 3) -- -- -- 10 --
--------- --------- --------- --------- ---------
Total assets 646,321 42,057 5,837 8,803 129,108
--------- --------- --------- --------- ---------
Liabilities:
Bank overdraft 2 -- -- 49 --
Payable for securities purchased 1,411 17 135 -- 7,033
Payable to management company -- 10 2 1 --
Payable for fund shares redeemed 1,433 -- -- 1 1,888
Unrealized depreciation on foreign currency contracts (Note 1) 11,721 362 -- -- --
Accrued expenses:
Investment advisory, administrative and distribution fees 391 45 6 10 171
Other 198 -- -- -- --
--------- --------- --------- --------- ---------
Total liabilities 15,156 434 143 61 9,092
--------- --------- --------- --------- ---------
Net assets $ 631,165 $ 41,623 $ 5,694 $ 8,742 $ 120,016
========= ========= ========= ========= =========
Net assets consist of:
Paid in capital $ 566,964 $ 39,537 $ 8,986 $ 16,335 $ 138,766
Undistributed net investment income (loss) 10,476 258 12 -- --
Unrealized appreciation (depreciation) on investments 29,527 (1,479) (1,157) (2,577) (12,557)
Unrealized depreciation on foreign currency
contracts and other assets and liabilities (11,120) (303) 1 3 --
Accumulated net realized gain (loss) 35,318 3,610 (2,148) (5,019) (6,193)
--------- --------- --------- --------- ---------
Net assets $ 631,165 $ 41,623 $ 5,694 $ 8,742 $ 120,016
========= ========= ========= ========= =========
Shares of capital stock outstanding 44,669 4,027 865 1,483 7,344
========= ========= ========= ========= =========
Net asset value per share $ 14.13 $ 10.34 $ 6.58 $ 5.89 $ 16.34
========= ========= ========= ========= =========
<CAPTION>
U.S. Real Estate
Small Cap Select Growth Securities
Fund Fund Fund Fund
------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments in securities at cost $ 7,684 $ 5,276 $ 148,998 $ 37,082
========= ========= ========= =========
Investments in securities at value (Note 1) 7,816 4,604 160,060 33,886
Cash 66 -- -- 4
Dividends and interest receivable 6 4 191 130
Receivable for securities sold 135 -- -- 95
Receivable from sale of fund shares 1 3 250 227
Variation margin receivable -- -- 222 --
Unrealized appreciation on foreign currency contracts (Note 1) -- -- -- --
Unamortized organization costs (Note 3) 13 5 -- 9
--------- --------- --------- ---------
Total assets 8,037 4,616 160,723 34,351
--------- --------- --------- ---------
Liabilities:
Bank overdraft -- -- 1 --
Payable for securities purchased 662 -- -- 711
Payable to management company 1 1 -- 20
Payable for fund shares redeemed -- -- 1,199 103
Unrealized depreciation on foreign currency contracts (Note 1) -- -- -- --
Accrued expenses:
Investment advisory, administrative and distribution fees 7 5 84 35
Other -- -- 64 --
--------- --------- --------- ---------
Total liabilities 670 6 1,348 869
--------- --------- --------- ---------
Net assets $ 7,367 $ 4,610 $ 159,375 $ 33,482
========= ========= ========= =========
Net assets consist of:
Paid in capital $ 8,100 $ 5,761 $ 126,895 $ 40,715
Undistributed net investment income (loss) -- -- 299 216
Unrealized appreciation (depreciation) on investments 132 (672) 12,663 (3,196)
Unrealized depreciation on foreign currency
contracts and other assets and liabilities -- -- -- --
Accumulated net realized gain (loss) (865) (479) 19,518 (4,253)
--------- --------- --------- ---------
Net assets $ 7,367 $ 4,610 $ 159,375 $ 33,482
========= ========= ========= =========
Shares of capital stock outstanding 830 580 10,241 4,194
========= ========= ========= =========
Net asset value per share $ 8.87 $ 7.95 $ 15.56 $ 7.98
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
52 and 53 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1998
STATEMENT OF ASSETS AND LIABILITIES (CONT.)
(All numbers in thousands except net asset value per share)
<TABLE>
<CAPTION>
California
Intermediate
Bond Money Market Tax-Free
Fund Fund Fund
----------------------------------------
Assets:
<S> <C> <C> <C>
Investments in securities at cost $ 254,585 $ 708,593 $ 58,953
========= ========= =========
Investments in securities at value (Note 1) 257,144 708,593 63,216
Cash 3,628 -- 126
Dividends and interest receivable 1,544 1,115 754
Receivable for securities sold 38,074 -- --
Receivable from sale of fund shares 125 13,373 --
Prepaid expense 16 34 --
--------- --------- ---------
Total assets 300,531 723,115 64,096
--------- --------- ---------
Liabilities:
Dividends payable to shareholders 16 8 29
Payable for securities purchased 68,850 -- --
Payable to management company 1 -- --
Payable for fund shares redeemed 2,941 5,538 --
Variation margin payable 526 -- --
Unrealized depreciation on foreign currency contracts (Note 1) 41 -- --
Accrued expenses:
Investment advisory, administrative and distribution fees 89 125 16
Other 66 153 40
--------- --------- ---------
Total liabilities 72,530 5,824 85
--------- --------- ---------
Net assets $ 228,001 $ 717,291 $ 64,011
========= ========= =========
Net assets consist of:
Paid in capital $ 221,410 $ 717,291 $ 59,729
Undistributed net investment income 257 -- --
Unrealized appreciation on investments 4,063 -- 4,263
Unrealized depreciation on foreign currency
contracts and other assets and liabilities (161) -- --
Accumulated net realized gain 2,432 -- 19
--------- --------- ---------
Net assets $ 228,001 $ 717,291 $ 64,011
========= ========= =========
Shares of capital stock outstanding 21,841 717,291 5,691
========= ========= =========
Net asset value per share $ 10.44 $ 1.00 $ 11.25
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
54 FREMONT MUTUAL FUNDS
<PAGE>
This page left blank intentionally.
FREMONT MUTUAL FUNDS 55
<PAGE>
FREMONT MUTUAL FUNDS, INC.
YEAR ENDED OCTOBER 31, 1998
STATEMENT OF OPERATIONS
(All numbers in thousands)
<TABLE>
<CAPTION>
International International Emerging U.S.
Global Growth Small Cap Markets Micro-Cap
Fund Fund Fund Fund Fund
------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C> <C>
Interest $ 17,401 $ 244 $ 32 $ 101 $ 1,018
Dividends 7,164 582 119 235 40
-------- -------- -------- -------- --------
Total income* 24,565 826 151 336 1,058
-------- -------- -------- -------- --------
Expenses:
Investment advisory and administrative fees (Note 2) 5,062 512 90 155 2,861
Shareholder servicing fees 163 17 15 35 --
Custody fees 190 26 16 23 --
Distribution fees (Note 2) -- 71 7 33 --
Accounting fees 171 16 10 16 --
Audit and legal fees 40 14 11 19 --
Directors' fees (Note 2) 4 2 2 6 --
Registration fees 20 11 7 13 --
Other 91 1 1 16 --
-------- -------- -------- -------- --------
Total expenses before reductions 5,741 670 159 316 2,861
Earned credits (Note 2) (12) -- -- -- --
Expenses waived and/or reimbursed by Advisor (Note 2) -- (59) (65) (113) --
-------- -------- -------- -------- --------
Total net expenses 5,729 611 94 203 2,861
-------- -------- -------- -------- --------
Net investment income (loss) 18,836 215 57 133 (1,803)
-------- -------- -------- -------- --------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain (loss) from:
Investments 38,842 3,620 (1,915) (4,995) (6,096)
Foreign currency transactions 560 83 (52) (180) --
Net unrealized appreciation (depreciation) on:
Investments (24,416) (3,717) 513 (1,181) (24,169)
Translation of assets and liabilities in foreign currencies (9,032) (301) (2) 12 --
-------- -------- -------- -------- --------
Net realized and unrealized gain (loss) from investments
and foreign currency 5,954 (315) (1,456) (6,344) (30,265)
-------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations $ 24,790 $ (100) $ (1,399) $ (6,211) $(32,068)
======== ======== ======== ======== ========
<CAPTION>
U.S. Real Estate
Small Cap Select Growth Securities
Fund Fund# Fund Fund#
-----------------------------------------------
Investment Income:
<S> <C> <C> <C> <C>
Interest $ 60 $ 29 $ 677 $ 163
Dividends 2 21 2,703 835
-------- -------- -------- --------
Total income* 62 50 3,380 998
-------- -------- -------- --------
Expenses:
Investment advisory and administrative fees (Note 2) 73 42 1,065 191
Shareholder servicing fees 20 15 121 36
Custody fees 12 5 24 12
Distribution fees (Note 2) 16 11 -- 48
Accounting fees 11 9 43 12
Audit and legal fees 21 11 21 11
Directors' fees (Note 2) 6 3 4 3
Registration fees 11 4 27 20
Other 12 1 39 13
-------- -------- -------- --------
Total expenses before reductions 182 101 1,344 346
Earned credits (Note 2) (1) -- (7) (1)
Expenses waived and/or reimbursed by Advisor (Note 2) (86) (42) -- (135)
-------- -------- -------- --------
Total net expenses 95 59 1,337 210
-------- -------- -------- --------
Net investment income (loss) (33) (9) 2,043 788
-------- -------- -------- --------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain (loss) from:
Investments (865) (479) 19,371 (4,253)
Foreign currency transactions -- -- -- --
Net unrealized appreciation (depreciation) on:
Investments 379 (672) (10,948) (3,196)
Translation of assets and liabilities in foreign currencies -- -- -- --
-------- -------- -------- --------
Net realized and unrealized gain (loss) from investments
and foreign currency (486) (1,151) 8,423 (7,449)
-------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations $ (519) $ (1,160) $ 10,466 $ (6,661)
======== ======== ======== ========
</TABLE>
*Net of foreign taxes withheld of $227 for the Global Fund, $70 for the
International Growth Fund, $13 for the International Small Cap Fund and $20 for
the Emerging Markets Fund.
#Period from December 31, 1997 (commencement of operations) to October 31, 1998.
The accompanying notes are an integral part of these financial statements.
56 AND 57 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
YEAR OCTOBER 31, 1998
STATEMENT OF OPERATIONS (CONT.)
(All numbers in thousands)
<TABLE>
<CAPTION>
California
Intermediate
Bond Money Market Tax-Free
Fund Fund Fund
--------------------------------------
Investment Income:
<S> <C> <C> <C>
Interest $ 8,848 $ 30,335 $ 3,288
Dividends 20 -- --
-------- -------- --------
Total income 8,868 30,335 3,288
-------- -------- --------
Expenses:
Investment advisory and administrative fees (Note 2) 745 1,938 333
Shareholder servicing fees 47 142 25
Custody fees 21 41 8
Accounting fees 39 110 30
Audit and legal fees 23 22 25
Directors' fees (Note 2) 4 4 4
Registration fees 29 107 6
Interest expense (Note 1) 77 -- --
Other -- 16 11
-------- -------- --------
Total expenses before reductions 985 2,380 442
Earned credits (Note 2) (16) (1) (2)
Expenses waived by Advisor (Note 2) (154) (809) (133)
-------- -------- --------
Total net expenses 815 1,570 307
-------- -------- --------
Net investment income 8,053 28,765 2,981
-------- -------- --------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain from:
Investments 4,373 -- 19
Transactions in written options 42 -- --
Foreign currency transactions 518 -- --
Net unrealized appreciation (depreciation) on:
Investments 1,035 -- 1,520
Translation of assets and liabilities in foreign currencies (148) -- --
-------- -------- --------
Net realized and unrealized loss from investments
and foreign currency 5,820 -- 1,539
-------- -------- --------
Net increase in net assets resulting from operations $ 13,873 $ 28,765 $ 4,520
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
58 FREMONT MUTUAL FUNDS
<PAGE>
This page left blank intentionally.
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 59
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1998
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS International Growth
For the Years Ended October 31, 1998 and 1997 Global Fund Fund
(All numbers in thousands) ---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Increase (decrease) in net assets:
From operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 18,836 $ 17,055 $ 215 $ 139
Net realized gain (loss) from investments
and transactions in written options 38,842 26,415 3,620 390
Net realized gain (loss) from foreign currency transactions 560 7,073 83 (356)
Net unrealized appreciation (depreciation) on investments (24,416) 26,358 (3,717) (193)
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies (9,032) (1,161) (301) (1)
--------- --------- --------- ---------
Net increase (decrease) in net assets from operations 24,790 75,740 (100) (21)
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (11,426) (22,567) -- --
Net realized gains (13,937) (86,397) (390) (103)
--------- --------- --------- ---------
Total distributions to shareholders (25,363) (108,964) (390) (103)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 357,906 381,253 37,476 18,693
Payments for shares redeemed (416,588) (360,553) (34,395) (15,302)
Reinvested dividends 24,673 106,121 389 103
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital share transactions (34,009) 126,821 3,470 3,494
--------- --------- --------- ---------
Net increase (decrease) in net assets (34,582) 93,597 2,980 3,370
Net assets at beginning of period 665,747 572,150 38,643 35,273
--------- --------- --------- ---------
Net assets at end of period $ 631,165 $ 665,747 $ 41,623 $ 38,643
========= ========= ========= =========
Undistributed net investment income (loss) included
in net assets, end of period $ 10,476 $ 2,452 $ 257 $ (50)
========= ========= ========= =========
Capital transactions in shares:
Sold 25,153 25,640 3,452 1,654
Redeemed (29,228) (24,185) (3,190) (1,330)
Reinvested dividends 1,721 7,698 40 9
--------- --------- --------- ---------
Net increase (decrease) from capital share transactions (2,354) 9,153 302 333
========= ========= ========= =========
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS International Small Cap Emerging Markets
For the Years Ended October 31, 1998 and 1997 Fund Fund
(All numbers in thousands) ---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Increase (decrease) in net assets:
From operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 57 $ 195 $ 133 $ 199
Net realized gain (loss) from investments
and transactions in written options (1,915) 107 (4,995) 1,568
Net realized gain (loss) from foreign currency transactions (52) (4) (180) (189)
Net unrealized appreciation (depreciation) on investments 513 (1,782) (1,181) (1,352)
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies (2) 2 12 (9)
--------- --------- --------- ---------
Net increase (decrease) in net assets from operations (1,399) (1,482) (6,211) 217
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income (210) (212) -- (24)
Net realized gains (77) (257) (179) (1,322)
--------- --------- --------- ---------
Total distributions to shareholders (287) (469) (179) (1,346)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 6,320 4,033 12,790 19,897
Payments for shares redeemed (7,741) (3,192) (10,012) (11,691)
Reinvested dividends 267 430 179 1,326
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital share transactions (1,154) 1,271 2,957 9,532
--------- --------- --------- ---------
Net increase (decrease) in net assets (2,840) (680) (3,433) 8,403
Net assets at beginning of period 8,534 9,214 12,175 3,772
--------- --------- --------- ---------
Net assets at end of period $ 5,694 $ 8,534 $ 8,742 $ 12,175
========= ========= ========= =========
Undistributed net investment income (loss) included
in net assets, end of period $ 12 $ 6 $ -- $ --
========= ========= ========= =========
Capital transactions in shares:
Sold 863 401 1,570 1,730
Redeemed (1,073) (319) (1,377) (990)
Reinvested dividends 38 47 19 139
--------- --------- --------- ---------
Net increase (decrease) from capital share transactions (172) 129 212 879
========= ========= ========= =========
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS U.S. Micro-Cap U.S. Small Cap
For the Years Ended October 31, 1998 and 1997 Fund Fund
(All numbers in thousands) ---------------------- ----------------------
1998 1997 1998 1997*
--------- --------- --------- ---------
Increase (decrease) in net assets:
From operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ (1,803) $ (1,081) $ (33) $ 10
Net realized gain (loss) from investments
and transactions in written options (6,096) 20,401 (865) 5
Net realized gain (loss) from foreign currency transactions -- -- -- --
Net unrealized appreciation (depreciation) on investments (24,169) 11,176 379 (247)
Net unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies -- -- -- --
--------- --------- --------- ---------
Net increase (decrease) in net assets from operations (32,068) 30,496 (519) (232)
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income -- -- (2) (8)
Net realized gains (8,525) (16,002) -- (5)
--------- --------- --------- ---------
Total distributions to shareholders (8,525) (16,002) (2) (13)
--------- --------- --------- ---------
From capital share transactions:
Proceeds from shares sold 209,089 410,139 6,554 5,582
Payments for shares redeemed (227,375) (369,757) (4,018) --
Reinvested dividends 7,388 14,150 2 13
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital share transactions (10,898) 54,532 2,538 5,595
--------- --------- --------- ---------
Net increase (decrease) in net assets (51,491) 69,026 2,017 5,350
Net assets at beginning of period 171,507 102,481 5,350 --
--------- --------- --------- ---------
Net assets at end of period $ 120,016 $ 171,507 $ 7,367 $ 5,350
========= ========= ========= =========
Undistributed net investment income (loss) included
in net assets, end of period $ -- $ -- $ -- $ 2
========= ========= ========= =========
Capital transactions in shares:
Sold 10,749 18,493 672 558
Redeemed (11,337) (16,801) (401) --
Reinvested dividends 374 644 -- 1
--------- --------- --------- ---------
Net increase (decrease) from capital share transactions (214) 2,336 271 559
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
60 and 61 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Real Estate
Select Securities Bond
STATEMENT OF CHANGES IN NET ASSETS Fund Growth Fund Fund Fund
For the Years Ended October 31, 1998 and 1997 ---------- ------------------------ ---------- ----------
(All numbers in thousands) 1998# 1998 1997 1998# 1998
---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets:
From operations:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ (9) $ 2,043 $ 1,742 $ 788 $ 8,053
Net realized gain (loss) from investments
and transactions in written options (479) 19,371 8,013 (4,253) 4,415
Net realized gain from foreign currency transactions -- -- -- -- 518
Net unrealized appreciation (depreciation) on investments (672) (10,948) 19,122 (3,196) 1,035
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies -- -- -- -- (148)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets from operations (1,160) 10,466 28,877 (6,661) 13,873
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from:
Net investment income -- (1,813) (1,783) (572) (8,128)
Net realized gains -- (3,057) (22,466) -- (2,852)
---------- ---------- ---------- ---------- ----------
Total distributions to shareholders -- (4,870) (24,249) (572) (10,980)
---------- ---------- ---------- ---------- ----------
From capital share transactions:
Proceeds from shares sold 5,897 150,855 100,616 48,481 234,884
Payments for shares redeemed (127) (149,496) (60,351) (8,253) (110,815)
Reinvested dividends -- 4,779 24,124 487 10,737
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from capital share transactions 5,770 6,138 64,389 40,715 134,806
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets 4,610 11,734 69,017 33,482 137,699
Net assets at beginning of period -- 147,641 78,624 -- 90,302
---------- ---------- ---------- ---------- ----------
Net assets at end of period $ 4,610 $ 159,375 $ 147,641 $ 33,482 $ 228,001
========== ========== ========== ========== ==========
Undistributed net investment income (loss)
included in net assets, end of period $ -- $ 299 $ 69 $ 216 $ 257
========== ========== ========== ========== ==========
Capital transactions in shares:
Sold 593 9,485 7,058 5,047 22,744
Redeemed (13) (9,426) (4,276) (915) (10,770)
Reinvested dividends -- 314 1,851 62 1,043
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from capital share transactions 580 373 4,633 4,194 13,017
========== ========== ========== ========== ==========
<CAPTION>
Bond Money Market California Intermediate
STATEMENT OF CHANGES IN NET ASSETS Fund Fund Tax-Free Fund
For the Years Ended October 31, 1998 and 1997 ---------- ------------------------ ------------------------
(All numbers in thousands) 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets:
From operations:
Net investment income (loss) $ 4,852 $ 28,765 $ 20,744 $ 2,981 $ 2,889
Net realized gain (loss) from investments
and transactions in written options 1,268 -- -- 19 29
Net realized gain from foreign currency transactions 458 -- -- -- --
Net unrealized appreciation (depreciation) on investments 713 -- -- 1,520 1,043
Net unrealized depreciation on translation of
assets and liabilities in foreign currencies (199) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets from operations 7,092 28,765 20,744 4,520 3,961
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from:
Net investment income (4,965) (28,765) (20,744) (2,981) (2,889)
Net realized gains (173) -- -- (29) (45)
---------- ---------- ---------- ---------- ----------
Total distributions to shareholders (5,138) (28,765) (20,744) (3,010) (2,934)
---------- ---------- ---------- ---------- ----------
From capital share transactions:
Proceeds from shares sold 38,603 1,514,353 872,518 4,170 15,727
Payments for shares redeemed (25,784) (1,258,495) (789,399) (8,717) (6,190)
Reinvested dividends 4,952 28,281 20,381 2,739 2,589
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from capital share transactions 17,771 284,139 103,500 (1,808) 12,126
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets 19,725 284,139 103,500 (298) 13,153
Net assets at beginning of period 70,577 433,152 329,652 64,309 51,156
---------- ---------- ---------- ---------- ----------
Net assets at end of period $ 90,302 $ 717,291 $ 433,152 $ 64,011 $ 64,309
========== ========== ========== ========== ==========
Undistributed net investment income (loss)
included in net assets, end of period $ 198 $ -- $ -- $ -- $ --
========== ========== ========== ========== ==========
Capital transactions in shares:
Sold 3,846 1,514,353 872,518 376 1,446
Redeemed (2,580) (1,258,495) (789,399) (783) (568)
Reinvested dividends 495 28,281 20,381 247 238
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from capital share transactions 1,761 284,139 103,500 (160) 1,116
========== ========== ========== ========== ==========
</TABLE>
# Period from September 24, 1997 (commencement of operations) to October 31,
1997.
The accompanying notes are an integral part of these financial statements.
62 and 63 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
<TABLE>
<CAPTION>
GLOBAL FUND Year Ended October 31
- ---------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data 1998 1997 1996 1995 1994
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.16 $ 15.11 $ 14.24 $ 13.13 $ 13.17
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income .34 .45 .39 .40 .26
Net realized and unrealized gain (loss) .17 1.31 1.49 1.24 (.03)
--------- --------- --------- --------- ---------
Total investment operations .51 1.76 1.88 1.64 .23
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.25) (.52) (.44) (.50) (.14)
From net realized gains (.29) (2.19) (.57) (.03) (.13)
--------- --------- --------- --------- ---------
Total distributions (.54) (2.71) (1.01) (.53) (.27)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 14.13 $ 14.16 $ 15.11 $ 14.24 $ 13.13
========= ========= ========= ========= =========
Total Return 3.62% 13.01% 13.72% 12.78% 1.74%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 631,165 $ 665,747 $ 572,150 $ 482,355 $ 453,623
Ratio of expenses to average net assets .85% .85% .87% .88% .95%
Ratio of net investment income to average net assets 2.80% 2.66% 2.66% 2.98% 2.47%
Portfolio turnover rate 75% 48% 71% 83% 52%
<CAPTION>
INTERNATIONAL GROWTH FUND Year Ended October 31 Period from
- ------------------------------------------------------------------------------------------------------------- 3/1/94 to
Selected Per Share Data 1998 1997 1996 1995 10/31/94
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.37 $ 10.40 $ 9.72 $ 9.79 $ 9.57
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income (loss) .05 .02 (.02) .10 .02
Net realized and unrealized gain (loss) .03 (.02) .71 (.09) .20
--------- --------- --------- --------- ---------
Total investment operations .08 -- .69 .01 .22
--------- --------- --------- --------- ---------
Less Distributions
From net investment income -- -- (.01) (.08) --
From net realized gains (.11) (.03) -- -- --
--------- --------- --------- --------- ---------
Total distributions (.11) (.03) (.01) (.08) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.34 $ 10.37 $ 10.40 $ 9.72 $ 9.79
========= ========= ========= ========= =========
Total Return .80%2 -0.01% 7.07% 0.13% 2.30%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 41,623 $ 38,643 $ 35,273 $ 32,156 $ 29,725
Ratio of net expenses to average net assets 1 1.50% 1.50% 1.50% 1.50% 1.50%*
Ratio of gross expenses to average net assets 1 1.65% -- -- -- --
Ratio of net investment income (loss)
to average net assets .53% .34% -.20% 1.19% .35%*
Portfolio turnover rate 106% 95% 74% 32% 30%
</TABLE>
1 See Note 2 of "Notes to Financial Statements."
2 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
*Annualized
The accompanying notes are an integral part of these financial statements.
64 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP FUND Year Ended October 31 Period from
- ------------------------------------------------------------------------------------------------------------- 6/30/94 to
Selected Per Share Data 1998 1997 1996 1995 10/31/94
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.23 $ 10.15 $ 9.00 $ 9.86 $ 10.00
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income (loss) .04 .14 .14 .10 (.01)
Net realized and unrealized gain (loss) (1.40) (1.58) 1.08 (.88) (.13)
--------- --------- --------- --------- ---------
Total investment operations (1.36) (1.44) 1.22 (.78) (.14)
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.21) (.21) (.07) (.08) --
From net realized gains (.08) (.27) -- -- --
--------- --------- --------- --------- ---------
Total distributions (.29) (.48) (.07) (.08) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 6.58 $ 8.23 $ 10.15 $ 9.00 $ 9.86
========= ========= ========= ========= =========
Total Return -16.76%2 -14.56% 13.69%2 -7.96%2 -1.40%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 5,694 $ 8,534 $ 9,214 $ 4,245 $ 1,768
Ratio of net expenses to average net assets 1 1.50% 1.50% 1.81% 2.06% 2.50%*
Ratio of gross expenses to average net assets 1 2.55% 1.50% 2.50% 2.50% 2.50%*
Ratio of net investment income (loss)
to average net assets .91%* 1.97% 1.61% 1.67% -0.28%*
Portfolio turnover rate 148% 56% 74% 96% --
</TABLE>
1 See Note 2 of "Notes to Financial Statements." Management fees were
voluntarily waived from February 1, 1995 to October 31, 1996.
2 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
*Annualized
<TABLE>
<CAPTION>
EMERGING MARKETS FUND Year Ended October 31 Period from
- --------------------------------------------------------------------------------- 6/30/96 to
Selected Per Share Data 1998 1997 10/31/96
for one share outstanding during the period --------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.58 $ 9.62 $ 10.00
--------- --------- ---------
Income from Investment Operations
Net investment income .09 .17 .10
Net realized and unrealized gain (loss) (3.64) 1.03 (.41)
--------- --------- ---------
Total investment operations (3.55) 1.20 (.31)
--------- --------- ---------
Less Distributions
From net investment income -- (.06) (.07)
From net realized gains (.14) (1.18) --
--------- --------- ---------
Total distributions (.14) (1.24) (.07)
--------- --------- ---------
Net asset value, end of period $ 5.89 $ 9.58 $ 9.62
========= ========= =========
Total Return 1 -37.59% 12.55% -3.12%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 8,742 $ 12,175 $ 3,772
Ratio of net expenses to average net assets 2 1.50% .26% --
Ratio of gross expenses to average net assets 2 2.34% 2.63% 4.95%*
Ratio of net investment income to average net assets .99% 2.04% 3.32%*
Portfolio turnover rate 135% 208% 7%
</TABLE>
1 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
2 See Note 2 of "Notes to Financial Statements."
*Annualized
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 65
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
<TABLE>
<CAPTION>
U.S. MICRO-CAP FUND Year Ended October 31 Period from
- ------------------------------------------------------------------------------------------------------------- 6/30/94 to
Selected Per Share Data 1998 1997 1996 1995 10/31/94
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.69 $ 19.63 $ 14.34 $ 10.34 $ 10.00
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income (loss) (.25) (.10) (.04) (.05) .02
Net realized and unrealized gain (4.86) 5.60 5.83 4.05 .34
--------- --------- --------- --------- ---------
Total investment operations (5.11) 5.50 5.79 4.00 .36
--------- --------- --------- --------- ---------
Less Distributions
From net investment income -- -- -- -- (.02)
From net realized gains (1.24) (2.44) (.50) -- --
--------- --------- --------- --------- ---------
Total distributions (1.24) (2.44) (.50) -- (.02)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 16.34 $ 22.69 $ 19.63 $ 14.34 $ 10.34
========= ========= ========= ========= =========
Total Return -23.45% 28.80%2 41.46%2 38.68%2 3.60%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 120,016 $ 171,507 $ 102,481 $ 7,792 $ 2,052
Ratio of net expenses to average net assets 1 1.94% 1.88% 1.96% 2.04% 2.50%*
Ratio of gross expenses to average net assets 1 1.94% 1.90% 2.22% 2.50% 2.50%*
Ratio of net investment income (loss)
to average net assets -1.22% -.67% -.51% -.67% .68%*
Portfolio turnover rate 170% 125% 81% 144% 44%
</TABLE>
1 Management fees were voluntarily waived from February 1, 1995 to January 8,
1997.
2 Total return would have been lower had the advisor not waived expenses.
*Annualized
<TABLE>
<CAPTION>
Year Ended
U.S. SMALL CAP FUND October 31 Period from
- ------------------------------------------------------------------- 9/24/97 to
Selected Per Share Data 1998 10/31/97
for one share outstanding during the period --------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 9.57 $ 10.00
--------- ---------
Income from Investment Operations
Net investment income (loss) (.04) .02
Net realized and unrealized gain (loss) (.66) (.42)
--------- ---------
Total investment operations (.70) (.40)
--------- ---------
Less Distributions
From net investment income 1 -- (.02)
From net realized gains 1 -- (.01)
--------- ---------
Total distributions 1 -- (.03)
--------- ---------
Net asset value, end of period $ 8.87 $ 9.57
========= =========
Total Return 2 -7.29% -4.06%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 7,367 $ 5,350
Ratio of net expenses to average net assets 3 1.50% 1.50%*
Ratio of gross expenses to average net assets 3 2.85% 3.32%*
Ratio of net investment income (loss)
to average net assets -.52% 1.81%*
Portfolio turnover rate 273% 8%
</TABLE>
1 For 1998, distributions are less than $.01 per share.
2 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
3 See Note 2 of "Notes to Financial Statements."
*Annualized
The accompanying notes are an integral part of these financial statements.
66 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
Period from
12/31/97 to
SELECT FUND October 31, 1998
- --------------------------------------------------------------------------------
Selected Per Share Data
for one share outstanding during the period
Net asset value, beginning of period $ 9.93
---------
Income from Investment Operations
Net investment loss (.01)
Net realized and unrealized gain (1.97)
---------
Total investment operations (1.98)
---------
Less Distributions
From net investment income --
From net realized gains --
---------
Total distributions --
---------
Net asset value, end of period $ 7.95
=========
Total Return 1 -19.94%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 4,610
Ratio of net expenses to average net assets 2 1.40%*
Ratio of gross expenses to average net assets 2 2.40%*
Ratio of net investment loss to average net assets -.20%*
Portfolio turnover rate 98%
1 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
2 See Note 2 of "Notes to Financial Statements."
*Annualized
<TABLE>
<CAPTION>
GROWTH FUND Year Ended October 31
- ---------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data 1998 1997 1996 1995 1994
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.96 $ 15.02 $ 13.06 $ 10.46 $ 11.25
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income .20 .20 .10 .13 .21
Net realized and unrealized gain (loss) .87 3.43 2.65 2.74 (.02)
--------- --------- --------- --------- ---------
Total investment operations 1.07 3.63 2.75 2.87 .19
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.17) (.22) (.08) (.17) (.18)
From net realized gains (.30) (3.47) (.71) (.10) (.80)
--------- --------- --------- --------- ---------
Total distributions (.47) (3.69) (.79) (.27) (.98)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 15.56 $ 14.96 $ 15.02 $ 13.06 $ 10.46
========= ========= ========= ========= =========
Total Return 7.30% 29.26% 22.06% 28.12%2 1.72%2
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 159,375 $ 147,641 $ 78,624 $ 59,632 $ 27,244
Ratio of net expenses to average net assets 1 .82% .85% .92% .97% .94%
Ratio of gross expenses to average net assets 1 .82% .85% .92% 1.01% 1.08%
Ratio of net investment income to average net assets 1.25% 1.44% .75% 1.02% 1.31%
Portfolio turnover rate 111% 48% 129% 108% 55%
</TABLE>
1 Administrative fees were voluntarily waived from August 14, 1992 to March 31,
1995.
2 Total return would have been lower had the advisor not waived expenses.
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 67
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
Period from
12/31/97 to
REAL ESTATE SECURITIES FUND October 31, 1998
- --------------------------------------------------------------------------------
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 .19
Net realized and unrealized loss (2.07)
---------
Total investment operations (1.88)
---------
Less Distributions
From net investment income (.14)
From net realized gains --
---------
Total distributions (.14)
---------
Net asset value, end of period $ 7.98
=========
Total Return 1 -18.78%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 33,482
Ratio of net expenses to average net assets 2 1.09%*
Ratio of gross expenses to average net assets 2 1.80%*
Ratio of net investment income to average net assets 4.10%*
Portfolio turnover rate 196%
1 Total return would have been lower had the advisor not waived and/or
reimbursed expenses.
2 See Note 2 of "Notes to Financial Statements."
*Annualized
<TABLE>
<CAPTION>
BOND FUND Year Ended October 31
- ---------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data 1998 1997 1996 1995 1994
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.23 $ 9.99 $ 10.13 $ 9.29 $ 10.27
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income .60 .67 .67 .65 .53
Net realized and unrealized gain (loss) .41 .25 .11 .83 (.98)
--------- --------- --------- --------- ---------
Total investment operations 1.01 .92 .78 1.48 (.45)
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.62) (.66) (.70) (.64) (.53)
From net realized gains (.18) (.02) (.22) -- --
--------- --------- --------- --------- ---------
Total distributions (.80) (.68) (.92) (.64) (.53)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.44 $ 10.23 $ 9.99 $ 10.13 $ 9.29
========= ========= ========= ========= =========
Total Return 1 10.31% 9.54% 8.18% 16.49% -4.42%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 228,001 $ 90,302 $ 70,577 $ 86,343 $ 64,244
Ratio of net expenses to average net assets 2 .60% .61% .68% .60% .66%
Ratio of gross expenses to average net assets 2 .72% .76% .83% .75% 1.04%
Ratio of net investment income to average net assets 5.92% 6.40% 6.82% 6.69% 5.76%
Portfolio turnover rate 256% 191% 154% 21% 205%
</TABLE>
1 Total return would have been lower had the advisor not waived expenses.
2 See Note 2 of "Notes to Financial Statements."
The accompanying notes are an integral part of these financial statements.
68 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
FINANCIAL HIGHLIGHTS - OCTOBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET FUND Year Ended October 31
- ---------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data 1998 1997 1996 1995 1994
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 .05 .06 .03
--------- --------- --------- --------- ---------
Total investment operations .05 .05 .05 .06 .03
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.05) (.05) (.05) (.06) (.03)
--------- --------- --------- --------- ---------
Total distributions (.05) (.05) (.05) (.06) (.03)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return 1 5.45% 5.39% 5.34% 5.84% 3.49%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 717,291 $ 433,152 $ 329,652 $ 299,312 $ 224,439
Ratio of net expenses to average net assets 2 .29% .30% .31% .30% .46%
Ratio of gross expenses to average net assets 2 .44% .45% .46% .45% .61%
Ratio of net investment income to average net assets 5.33% 5.26% 5.22% 5.70% 4.02%
</TABLE>
1 Total return would have been lower had the advisor not waived expenses.
2 See Note 2 of "Notes to Financial Statements."
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE TAX-FREE FUND Year Ended October 31
- ---------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data 1998 1997 1996 1995 1994
for one share outstanding during the period --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.99 $ 10.80 $ 10.86 $ 10.13 $ 11.10
--------- --------- --------- --------- ---------
Income from Investment Operations
Net investment income .51 .51 .52 .53 .53
Net realized and unrealized gain (loss) .26 .20 (.03) .73 (.97)
--------- --------- --------- --------- ---------
Total investment operations .77 .71 .49 1.26 (.44)
--------- --------- --------- --------- ---------
Less Distributions
From net investment income (.51) (.51) (.52) (.53) (.53)
From net realized gains -- (.01) (.03) -- --
--------- --------- --------- --------- ---------
Total distributions (.51) (.52) (.55) (.53) (.53)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.25 $ 10.99 $ 10.80 $ 10.86 $ 10.13
========= ========= ========= ========= =========
Total Return 1 7.16% 6.75% 4.63% 12.77% -3.94%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 64,011 $ 64,309 $ 51,156 $ 50,313 $ 58,305
Ratio of net expenses to average net assets 2 .47% .49% .51% .50% .51%
Ratio of gross expenses to average net assets 2 .67% .69% .73% .72% .71%
Ratio of net investment income to average net assets 4.55% 4.72% 4.86% 5.08% 4.94%
Portfolio turnover rate 9% 6% 6% 18% 21%
</TABLE>
1 Total return would have been lower had the advisor not waived expenses.
2 See Note 2 of "Notes to Financial Statements."
The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 69
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Fremont Mutual Funds, Inc. (the "Investment Company") is an open-end
investment company authorized to issue ten billion shares of $.0001 par
value capital stock. These shares are currently offered in thirteen
series, twelve of which are covered by this report:
o the GLOBAL FUND
o the INTERNATIONAL GROWTH FUND
o the INTERNATIONAL SMALL CAP FUND
o the EMERGING MARKETS FUND
o the U.S. MICRO-CAP FUND
o the U.S. SMALL CAP FUND
o the SELECT FUND
o the GROWTH FUND
o the REAL ESTATE SECURITIES FUND
o the BOND FUND
o the MONEY MARKET FUND
o the CALIFORNIA INTERMEDIATE TAX-FREE FUND (the California Intermediate
Tax-Free Fund is available only to residents of Arizona, California,
Colorado, Nevada, New Mexico, Oregon, Texas, Utah and Washington)
Each of the Funds maintains a totally separate investment portfolio.
Significant accounting policies followed by the Funds are in conformity
with generally accepted accounting principles for investment companies and
are summarized below.
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 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. The Investment Company accounts for the assets of each Fund
separately and allocates general expenses of the Investment Company 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. Distributions
to shareholders are recorded on the ex-dividend date.
Dividends received by the Real Estate Securities Fund from its securities
may be a return of capital. Such distributions reduce the cost basis of
the securities, and any distributions in excess of the cost basis are
recognized as realized gains.
Distributions to shareholders made by the California Intermediate Tax-Free
Fund during the year ended October 31, 1998, excluding capital gains
distributions, were of tax-exempt income.
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 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 differences will be reclassified to paid in capital. Temporary
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.
70 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
For Federal income tax purposes, certain funds have capital loss
carryovers at October 31, 1998. Capital loss carryovers result when a fund
has net capital losses during a tax year. These are carried over to
subsequent years and may reduce distributions of realized gains in those
years. Unused capital loss carryovers expire in eight years. The following
funds have capital loss carryovers at October 31, 1998 which expire in
2006.
Fund Amount
---- -----------
International Small Cap Fund $ 2,125,957
Emerging Markets Fund 5,018,887
U.S. Micro-Cap Fund 5,239,292
U.S. Small Cap Fund 765,089
Select Fund 479,314
Real Estate Securities Fund 2,922,722
E. Accounting Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the amounts of income and expense
during the reporting period. Actual results could differ from those
estimates.
F. Foreign Currency Translation
The market values of foreign securities, currency holdings, and other
assets and liabilities of the 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, the International Growth 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.
FREMONT MUTUAL FUNDS 71
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
At October 31, 1998, 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 (18,500,000) Australian Dollar 11/12/98 $(11,111,285) $(11,538,265) $ (426,980)
4,800,000 Australian Dollar 11/12/98 2,868,000 2,993,712 125,712
(12,000,000) British Pound 11/12/98 (19,522,800) (20,084,400) (561,600)
(2,000,000) British Pound 11/12/98 (3,393,200) (3,347,400) 45,800
(18,500,000) Canadian Dollar 11/12/98 (12,203,166) (11,984,970) 218,196
(106,500,000) German Deutschemark 11/12/98 (60,251,188) (64,408,830) (4,157,642)
(23,000,000) German Deutschemark 11/12/98 (12,946,806) (13,909,888) (963,082)
3,000,000 German Deutschemark 11/12/98 1,829,826 1,814,333 (15,493)
6,000,000 German Deutschemark 11/12/98 3,566,122 3,628,667 62,545
(2,500,000,000) Japanese Yen 11/12/98 (17,323,817) (21,548,009) (4,224,192)
(700,000,000) Japanese Yen 11/12/98 (4,850,669) (6,033,443) (1,182,774)
(42,800,000) Swedish Krona 11/12/98 (5,315,450) (5,504,328) (188,878)
------------
$(11,268,388)
============
Int. Growth Fund (214,114) Australian Dollar 03/23/99 $ (125,000) $ (134,031) $ (9,031)
340,055 Australian Dollar 07/30/99 211,000 212,932 1,932
(8,754) British Pound 11/03/98 (14,656) (14,649) 7
(86,455) British Pound 01/04/99 (147,000) (144,458) 2,542
(130,987) British Pound 07/30/99 (211,000) (216,888) (5,888)
(285,575) Canadian Dollar 11/10/98 (185,754) (185,018) 736
(273,184) Canadian Dollar 11/30/98 (175,000) (176,955) (1,955)
(172,295) Canadian Dollar 01/06/99 (111,134) (111,619) (485)
329,165 German Deutschemark 11/10/98 185,754 199,192 13,438
314,025 German Deutschemark 11/30/98 175,000 190,214 15,214
181,255 German Deutschemark 01/06/99 111,134 109,971 (1,163)
276,827 German Deutschemark 04/26/99 165,939 168,632 2,693
75,684 German Deutschemark 04/28/99 44,915 46,107 1,192
(3,134,120) Japanese Yen 11/04/98 (22,000) (26,995) (4,995)
3,134,120 Japanese Yen 11/04/98 26,997 26,995 (2)
(84,426,000) Japanese Yen 11/04/98 (600,000) (727,183) (127,183)
84,426,000 Japanese Yen 11/04/98 727,566 727,183 (383)
(33,940,400) Japanese Yen 12/10/98 (260,000) (293,882) (33,882)
(23,395,655) Japanese Yen 12/11/98 (173,000) (202,612) (29,612)
23,395,655 Japanese Yen 12/11/98 203,912 202,612 (1,300)
(6,556,000) Japanese Yen 12/17/98 (50,000) (56,831) (6,831)
(13,898,352) Japanese Yen 12/21/98 (104,000) (120,562) (16,562)
(23,921,202) Japanese Yen 12/21/98 (179,000) (207,505) (28,505)
(7,307,850) Japanese Yen 03/03/99 (55,000) (64,042) (9,042)
(3,999,620) Japanese Yen 03/10/99 (31,000) (35,084) (4,084)
(8,969,800) Japanese Yen 04/08/99 (70,000) (78,987) (8,987)
8,969,800 Japanese Yen 04/08/99 67,671 78,987 11,316
(16,797,884) Japanese Yen 04/26/99 (146,000) (148,273) (2,273)
(19,559,180) Japanese Yen 04/26/99 (165,939) (172,647) (6,708)
(5,351,640) Japanese Yen 04/28/99 (44,915) (47,251) (2,336)
(18,877,000) Japanese Yen 05/06/99 (166,802) (166,670) 132
(44,842,460) Japanese Yen 06/04/99 (338,000) (397,645) (59,645)
(39,936,480) Japanese Yen 10/13/99 (348,000) (343,318) 4,682
(534,310) Swedish Krona 01/15/99 (68,000) (68,924) (924)
------------
$ (307,892)
============
Bond Fund (1,611,000) New Zealand Dollar 12/21/98 $ (813,136) $ (854,506) $ (41,370)
------------
$ (41,370)
============
</TABLE>
72 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
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 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. The Funds use futures contracts to seek appreciation or
to reduce principal volatility.
At October 31, 1998, the open futures contracts were as follows:
Net Unrealized
Contracts Expiration Appreciation
To Buy Date (Depreciation)
------ ---- --------------
Global Fund
S&P 500 Index 250 Dec '98 $ 4,306,468
S&P 500 Index 78 Dec '98 1,606,775
S&P 500 Index 29 Dec '98 429,200
-----------
$ 6,342,443
===========
Bond Fund
5-yr. U.S. Treasury Note 325 Dec '98 $ 976,953
10-yr. U.S. Treasury Note 168 Dec '98 374,964
30-yr. U.S. Treasury Bond 177 Dec '98 58,782
90-day Euro Dollar 3 Sep '00 7,800
90-day Euro Dollar 3 Dec '00 6,675
90-day Euro Dollar 3 Mar '01 6,488
90-day Euro Dollar 3 Jun '01 6,113
90-day Euro Dollar 10 Sep '01 18,381
90-day Euro Dollar 10 Dec '01 16,430
90-day Euro Dollar 10 Mar '02 16,203
90-day Euro Dollar 10 Jun '02 15,432
-----------
$ 1,504,221
===========
Growth Fund
S&P 500 Index 93 Dec '98 $ 1,601,077
-----------
$ 1,601,077
===========
At October 31, 1998, $6,790,000, $2,013,000 and $985,000 par value of U.S.
Treasury Bills for the Global Fund, 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 331 1/43% 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 Rule 2a-7 of
the 1940 Act. At October 31, 1998, the Funds had no loans outstanding.
The Funds receive a portion of the income earned on the collateral which
is included in interest income. For the year ended October 31, 1998,
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
$94,154, $5,451, $2,915, $893, $52,790, and $12,746, respectively.
J. Reverse Repurchase Agreements
During the year ended October 31, 1998, 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.
FREMONT MUTUAL FUNDS 73
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Investment Advisor
The Funds each have entered into an investment management and
administrative services agreement with Fremont Investment Advisors, Inc.
(the "Advisor"), a majority-owned subsidiary of Fremont Investors, Inc.
Under this agreement, 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* 1.00% on all net assets 0.15% on all net assets
International Small Cap Fund* 1.25% on all net assets 0.15% 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
Select Fund* 1.00% on all net assets --
Growth Fund 0.50% on all net assets 0.15% on all net assets
Real Estate Securities Fund* 1.00% 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. The waivers are voluntary and may be changed in the future.
For the Emerging Markets Fund, the Bond Fund, the Money Market Fund and
the California Intermediate Tax-Free Fund, all fees waived in the past
cannot be recouped in the future.
Investors Fiduciary Trust Company ("IFTC") serves as custodian and
investment accounting agent for the Fremont Funds. All fees charged by
IFTC are paid by the Funds, subject to the limitations listed above. Fees
for custody services are subject to reductions by credits earned on the
cash balances of the Funds held by IFTC as custodian.
Ratios of expenses have been disclosed both before and after the impact of
these various waivers, reimbursements and credits under each Fund's
Financial Highlights table.
For the International Growth Fund, the International Small Cap Fund, the
U.S. Small Cap Fund, the Select Fund and the Real Estate Securities Fund,
to the extent management fees are waived and/or other expenses are
reimbursed by the Advisor, a Fund may reimburse the Advisor for any
reductions in the Fund's expenses 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.
For the International Growth Fund and the International Small Cap Fund,
the Advisor has voluntarily limited the total operating expenses to 1.50%
of average net assets beginning on March 2, 1998. Prior to March 2, 1998,
the Advisor received a single management fee (i.e., a unitary fee) from
these Funds. For the eight months ended October 31, 1998, the Advisor
reimbursed expenses of $59,431 and $65,386, respectively, for the
International Growth Fund and the International Small Cap Fund.
For the Emerging Markets Fund and the U.S. Small Cap Fund, the Advisor has
voluntarily limited the total operating expenses to 1.50% of average net
assets. For the year ended October 31, 1998, the Advisor reimbursed
expenses of $112,958 and $85,500, respectively, for the Emerging Markets
Fund and the U.S. Small Cap Fund. The Advisor has not recouped $10,033 of
prior period expense waivers and reimbursements from the U.S. Small Cap
Fund as of October 31, 1998.
74 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
For the Select Fund, the Advisor has voluntarily limited the total
operating expenses to 1.40% of average net assets. For the period ended
October 31, 1998, the Advisor waived and/or reimbursed expenses of $42,142
for the Select Fund.
For the Real Estate Securities Fund, the Advisor voluntarily limited the
total operating expenses to 1.50% of average net assets beginning July 1,
1998. Prior to July 1, 1998, the Advisor limited the total operating
expenses to 0.50%. The Advisor voluntarily agreed to waive the management
fee for the first six months, until June 30, 1998, and would have
continued to waive the management fee until December 31, 1998 or until the
assets in the Fund reach $25 million. As of June 30, 1998, the Fund's
assets reached over $33 million, and therefore, the management fee waiver
was discontinued. For the period ended October 31, 1998, the Advisor
waived and/or reimbursed expenses of $135,255 for the Real Estate
Securities Fund.
For the Bond Fund, the Advisor has voluntarily waived 0.10% out of the
0.15% administrative fee beginning on March 1, 1998. Prior to March 1,
1998, the Advisor voluntarily waived the administrative fee in its
entirety. For the year ended October 31, 1998, the Advisor waived
administrative fees of $153,552 for the Bond Fund.
For the Money Market Fund, the Advisor has voluntarily waived the
administrative fee in its entirety. For the year ended October 31, 1998,
the Advisor waived administrative fees of $809,350 for the Money Market
Fund.
For the California Intermediate Tax-Free Fund, the Advisor has voluntarily
reduced the advisory and administrative fees to 0.30% and 0.005% ,
respectively, of average net assets. For the year ended October 31, 1998,
the Advisor waived advisory and administrative fees of $37,500 and
$95,154, respectively, for the California Intermediate Tax-Free Fund.
Under the terms of the Advisory agreement, the Advisor receives a single
management fee from the U.S. Micro-Cap Fund, and is obligated to pay all
expenses of the 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
International Growth Fund, the International Small Cap Fund, the Emerging
Markets Fund, the U.S. Small Cap Fund, the Select Fund and the Real Estate
Securities Fund have adopted a plan of distribution under which the Funds
may directly compensate the Advisor for certain distribution-related
expenses. The annual limitation for compensation to the Advisor pursuant
to the plan of distribution is 0.25% of a Fund's average daily net assets.
All payments are reviewed by the Board of Directors. On August 1, 1998,
the 12b-1 plan of the International Small Cap Fund was discontinued.
Each Fund is also required to comply with the expense limitations set
forth in the laws, regulations, and administrative interpretations of the
states in which it is registered. For the year ended October 31, 1998, no
reimbursements were required or made to any Fund by the Advisor to comply
with these limitations.
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, 1998, follows:
<TABLE>
<CAPTION>
Share Aggregate Aggregate Net Share
Balance Purchase Sales Realized Balance Value
Issuer 10/31/97 Cost Cost Gain/(Loss) Income 10/31/98 10/31/98
------ -------- ---- ---- ----------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Interlink Electronics, Inc. 320,200 $ -- $ 2,399,528 $ (733,276) $ -- -- $ --
MDSI Mobile Data Solutions, Inc. 317,700 $ 865,164 $ 818,975 $ 16,935 $ -- 337,700 $ 4,558,950
Richey Electronics, Inc. 455,500 $ -- $ 2,646,785 $ (392,752) $ -- 206,200 $ 2,074,888
V-One Corp. 681,400 $ -- $ 600,000 $ (249,073) $ -- 561,400 $ 1,491,218
------------------------------------------------ -----------
$ 865,164 $ 6,465,288 $(1,358,166) $ -- $ 8,125,056
================================================ ===========
</TABLE>
FREMONT MUTUAL FUNDS 75
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
Other Related Parties
At October 31, 1998, 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 62%
International Growth Fund 87%
International Small Cap Fund 42%
Emerging Markets Fund 47%
U.S. Small Cap Fund 66%
Select Fund 90%
Growth Fund 52%
Real Estate Securities Fund 3%
Bond Fund 86%
Money Market Fund 84%
California Intermediate Tax-Free Fund 69%
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).
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, 1998 were as follows:
Purchases Proceeds
--------- --------
Long-term securities excluding U.S.
Government securities:
Global Fund $ 443,434,075 $ 554,087,459
International Growth Fund 45,269,978 39,670,193
International Small Cap Fund 8,459,167 9,990,159
Emerging Markets Fund 18,931,904 15,579,374
U.S. Micro-Cap Fund 220,723,430 255,896,465
U.S. Small Cap Fund 17,055,963 14,694,080
Select Fund 9,403,168 4,444,986
Growth Fund 167,229,324 181,612,073
Real Estate Securities Fund 77,346,993 41,451,455
Bond Fund 105,319,033 45,840,861
California Intermediate Tax-Free Fund 6,255,873 5,605,000
Long-term U.S. Government securities:
Global Fund $ 26,008,937 $ 18,168,584
Bond Fund 327,060,335 280,514,972
Transactions in written put and call options for the year ended October
31, 1998 for the Bond Fund were as follows:
<TABLE>
<CAPTION>
Amount of Premiums Number of Contracts
------------------ -------------------
<S> <C> <C>
Options outstanding at October 31, 1997 $ 41,625 50
Options sold -- --
Options cancelled in closing purchase transactions -- --
Options expired prior to exercise (41,625) (50)
Options exercised -- --
----------- ------
Options outstanding at October 31, 1998 $ -- --
=========== ======
</TABLE>
76 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 1998
5. PORTFOLIO CONCENTRATIONS
There are certain investment concentrations of risk which may subject each
Fund more significantly to economic changes occurring in certain segments,
industries or countries.
6. UNREALIZED APPRECIATION (DEPRECIATION) - TAX BASIS
At October 31, 1998, 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 $ 613,132,430 $ 61,113,362 $ (38,972,638) $ 22,140,724
International Growth Fund 42,796,213 3,629,459 (5,198,706) (1,569,247)
International Small Cap Fund 6,960,652 344,789 (1,502,055) (1,157,266)
Emerging Markets Fund 11,024,764 347,860 (2,894,641) (2,546,781)
U.S. Micro-Cap Fund 140,822,473 8,834,891 (22,415,237) (13,580,346)
U.S. Small Cap Fund 7,783,235 807,318 (774,620) 32,698
Select Fund 5,275,798 346,098 (1,018,292) (672,194)
Growth Fund 148,957,817 16,891,211 (5,789,242) 11,101,969
Real Estate Securities Fund 38,412,921 378,342 (4,905,143) (4,526,801)
Bond Fund 254,584,866 3,689,025 (1,129,414) 2,559,611
Money Market Fund 708,592,607 -- -- --
California Intermediate Tax-Free Fund 58,952,777 4,263,233 -- 4,263,233
</TABLE>
7. LINE OF CREDIT
The Investment Company has a Line of Credit Arrangement ("LOC") with State
Street Bank and Trust Company, to be used for extraordinary or emergency
purposes, primarily to cover redemption payments. Each Fund's borrowings
cannot exceed 20% of each Fund's net assets. Combined borrowings of all
Funds cannot exceed the $75 million limit on the total line of credit.
Each Fund is subject to the annual fees and interest on the unpaid balance
based on prevailing market rates as defined in the LOC. At October 31,
1998, there were no such borrowings outstanding.
FREMONT MUTUAL FUNDS 77
<PAGE>
Fremont [LOGO]
Funds
50 Beale Street, Suite 100
San Francisco, CA 94105
www.fremontfunds.com
[GRAPHIC]
Distributed by First Fund Distributors, Inc., San Francisco, CA 94105
BR008-9812
