FREMONT MUTUAL FUNDS, INC.
INSTITUTIONAL
U.S. MICRO-CAP FUND
SEMI-ANNUAL REPORT
[GRAPHIC OMITTED]
April 30, 1999
Fremont
Funds [LOGO]
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TABLE OF CONTENTS
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Fund Profile and Letter to Shareholders ................................... 2
Statement of Investments .................................................. 4
Combined Financial Statements
Statement of Assets and Liabilities ....................................... 5
Statement of Operations ................................................... 6
Statement of Changes in Net Assets ........................................ 7
Financial Highlights ...................................................... 7
Notes to Financial Statements ............................................. 8
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FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
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Robert E. Kern, Jr.
Portfolio Manager
Kern Capital Management LLC
[PHOTO OMITTED]
Robert E. Kern, Jr.,
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FUND PROFILE
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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 Institutional 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-eco-nomic
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.
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 months ended April 30, 1999, the Fremont Institutional U.S.
Micro-Cap Fund gained 51.33% compared to the Russell 2000's 15.16% advance.
The strategy we implemented in the dark days of August/September,
1998--concentrating the portfolio in those individual stocks and sectors we
believed would lead a micro-cap recovery--rewarded us during this reporting
period. We handily outperformed our Russell 2000 benchmark in the initial stages
of the small company stock rebound (October, 1998 through Janu-ary, 1999) and
have maintained this large performance edge over the last three months of first
half fiscal 1999.
Coming off the October 1998 bottom, virtually all of our portfolio sectors
(consumer, technology, services, healthcare, and special situations) performed
well. Over the last several months sector performance has diverged, with our
consumer, technology, and services holdings materially outperforming our
healthcare and special situation investments.
Consumer companies have benefited from a high level of consumer confidence
spawned by full employment, rising wages, and the wealth effect of this historic
bull market. They have been able to sustain and in some cases, expand profit
margins, because of suppliers' lack of pricing flexibility. We believe the
American consumer will continue to spend liberally and that our consumer company
holdings will continue to grow earnings at attractive rates.
Our technology holdings performed well in general and certain sub-sectors
have been particularly productive, most notably what we refer to as internet
"enablers". These include companies that provide account identification and
transaction security systems and services to the e-commerce players, and
broadband companies that have developed technologies that expand the
transmission capacity of copper phone wires, allowing for faster internet
service. Importantly these "enablers" remain much more reasonably priced than
the ".com" start ups that come public at 10 and trade at 100 an hour later. We
believe owning seasoned companies that serve large segments of the internet
industry is more prudent than speculating on which of the many new portals will
ultimately succeed.
Concern over the prospect of additional federal "reform" has put a cloud
over the healthcare sector. We aren't giving up on our healthcare holdings, many
of which are specialty medical equipment makers not likely to be as negatively
impacted by any prospective regulatory change as healthcare service providers.
We think these stocks can do quite well when investors look at them more
objectively.
Since the consumer sector now has the largest weighting in the portfolio,
let's discuss one of our favorite consumer companies with Judy Finger, one of
the Fund's three senior investment managers and an expert on the consumer
sector. Genesco is a shoe retailer, whose stock sold off last year due primarily
to a general slowdown throughout the footwear industry. In the midst of this
slump, Genesco aggressively cut costs, and fourth quarter 1998 earnings came in
well above consensus estimates. Going forward, we believe earnings will continue
to be strong, driven by top line revenue growth from its Journey's chain (pop
ular brand footwear for teens and children) and its Johnston & Murphy division,
which retails and wholesales upscale men's dress shoes. Journey's is a great
concept serving one of the fastest growing demographic segments of the market,
and Johnston & Murphy has built a strong brand name in one of the highest margin
categories in the industry. Also, Genesco opened 75 new stores last year.
Gener-ally, store sales ramp up substantially in the second and third years.
This should provide a revenue tailwind for the company. Genesco stock has done
well this year, but we think it is still reasonably priced relative to very
favorable earnings growth prospects.
In closing, we are quite proud of the Fremont Institutional U.S. Micro-Cap
Fund's long term track record relative to its benchmark and its peer group. Why
have we done so well? We credit research driven stock selection focused on the
most innovative sectors in the economy. Quite simply, we have been able to find
exceptional small growth companies in America's most dynamic industries. This
has translated into superior absolute and relative performance. Our attractive
annualized returns have not come without some volatility. Such is the nature of
small company stock investing. However, we believe our discipline will help us
continue to fulfill our mission --rewarding loyal shareholders with generous
long term investment returns.
We are also pleased the special features of our Fund--a low expense ratio
and stable institutional shareholder base--have enhanced returns. Low costs and
the ability to stay fully invested rather than having to reserve cash for
potential fund redemptions has translated into superior performance relative to
our own "retail" micro-cap fund.
Sincerely,
/s/ Robert E. Kern, Jr.
Robert E. Kern, Jr.
Portfolio Manager
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GROWTH OF $10,000 (1)
[GRAPHIC OMITTED]
4/30/99
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FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND $67,696
RUSSELL 2000 INDEX $30,899
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 4/30/99
1 YEAR 5 YEARS 10 YEARS
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11.46% 23.10% 21.08%
ANNUAL RETURNS
11/01/88-10/31/89 +25.28%
11/01/89-10/31/90 -10.25%
11/01/90-10/31/91 +84.70%
11/01/91-10/31/92 -0.65%
11/01/92-10/31/93 +42.08%
11/01/93-10/31/94 -10.62%
11/01/94-10/31/95 +29.21%
11/01/95-10/31/96 +41.99%
11/01/96-10/31/97 +34.19%
11/01/97-10/31/98 -21.03%
11/01/98-4/30/99* +51.33%
TOP TEN HOLDINGS
Orckit Communications Ltd. .................. 4.6%
Emulex Corp. ................................ 4.1%
Rent-Way, Inc. .............................. 3.4%
Anaren Microwave, Inc. ...................... 3.2%
NPC International, Inc. ..................... 3.1%
Wesley Jessen VisionCare, Inc. .............. 3.0%
MDSI Mobile Data Solutions, Inc. ............ 2.8%
Photon Dynamics, Inc. ....................... 2.6%
Information Resources, Inc. ................. 2.4%
Pacific Sunwear of California, Inc. ......... 1.9%
TOTAL ............................... 31.1%
*Unannualized (1) Assumes initial investment of $10,000 on November 1, 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. Performance for the Fremont Institutional U.S.
Micro-Cap Fund reflects the performance of the post-venture fund of Fund A of
the Bechtel Trust & Thrift, whose assets were transferred into the Fremont
Institutional 8 8U.S. Micro-Cap Fund on 8/6/97, net of actual fees and expenses.
The post-venture fund imposed higher fees and expenses than that of the Fremont
Institutional U.S. Micro-Cap Fund and was not registered with the Securities and
Exchange Commission and therefore was not subject to the investment restrictions
imposed on registered mutual funds. Management fees and other expenses are
included in the Fund's performance; however, fees and expenses are not
incorporated in the Russell 2000 Index.
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FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
PORTFOLIO DIVERSIFICATION AS OF 4/30/99
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[GRAPHIC OMITTED]
Technology (Components) (17.4%)
Consumer Services (11.8%)
Technology (Software) (7.0%)
Business Equipment & Services (9.7%)
Consumer Non-DUrables (9.4%)
Health Care (9.8%)
Retail (11.4%)
Short-Term Securities (11.5%)
Other (12.0%)
FREMONT MUTUAL FUNDS PAGES 2 AND 3
<PAGE>
FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
APRIL 30, 1999 (UNAUDITED)
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
Value
Shares Security Description (Note 1)
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STOCKS 88.5%
BUSINESS EQUIPMENT & SERVICES 9.7%
* 54,200 AmeriLink Corp. $ 372,625
* 32,100 Arguss Holdings, Inc. 525,638
* 59,350 Cameron Ashley Building Products, Inc. 652,850
* 30,400 Corporate Executive Board Co. 855,000
* 83,400 NewsEdge Corp. 708,900
* 125,400 NuCO2, Inc. 862,125
* 6,900 Realty Information Group, Inc. 270,394
* 122,600 TeleTech Holdings, Inc. 812,225
* 35,000 Zomax Optical Media, Inc. 783,125
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5,842,882
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CAPITAL GOODS 1.5%
* 71,500 IMPCO Technologies, Inc. 607,750
* 59,000 Miller Industries, Inc. 298,688
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906,438
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CONSUMER DURABLES 1.6%
72,900 Craftmade International, Inc. 956,813
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956,813
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CONSUMER NON-DURABLES 9.4%
* 80,000 Audiovox Corp. (Class A) 510,000
* 52,200 Hines Horticulture, Inc. 443,700
* 88,800 Image Entertainment, Inc. 810,300
* 104,500 NPC International, Inc. 1,881,000
* 48,000 RARE Hospitality International, Inc. 864,000
* 57,900 Steven Madden Ltd. 521,100
* 125,700 U.S. Home & Garden, Inc. 691,350
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5,721,450
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CONSUMER SERVICES 11.8%
* 60,950 American Classic Voyages Co. 1,089,481
* 43,500 Blue Rhino Corp. 625,313
* 40,700 Carmike Cinemas, Inc. (Class A) 877,594
79,500 Cash America International, Inc. 1,013,625
* 53,500 Cinar Corp. (Class B) 1,116,813
* 35,800 First Cash, Inc. 391,563
* 6,600 SoftNet Systems, Inc. 215,325
* 59,300 Wesley Jessen VisionCare, Inc. 1,816,063
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7,145,777
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ENERGY 1.8%
* 51,900 Marine Drilling Co., Inc. 892,031
* 24,500 Newpark Resources, Inc. 225,094
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1,117,125
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HEALTH CARE 9.8%
* 47,450 ArthroCare Corp. 818,513
* 53,400 Cytyc Corp. 1,044,638
* 49,800 EndoSonics Corp. 252,113
* 32,000 Fusion Medical Technologies, Inc. 226,000
* 122,100 Gene Logic, Inc. 518,925
* 245,800 Genelabs Technologies, Inc. 414,788
* 88,300 Mediconsult.com, Inc. 1,054,081
* 24,400 NeoPharm, Inc. 417,850
* 17,700 Novoste Corp. 393,825
* 11,600 Perclose, Inc. 440,800
HEALTH CARE (cont.)
* 22,400 SangStat Medical Corp. $ 24,800
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5,906,333
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RAW MATERIALS 0.7%
73,400 Northern Technologies International Corp. 440,400
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440,400
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RETAIL 11.4%
* 26,700 Gadzooks, Inc. 253,650
* 101,000 Genesco, Inc. 1,098,375
* 60,500 Movie Gallery, Inc. 355,438
* 31,700 Pacific Sunwear of California, Inc. 1,175,872
* 75,000 Rent-Way, Inc. 2,043,750
* 74,700 United Retail Group, Inc. 807,694
* 59,100 Urban Outfitters, Inc. 1,145,063
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6,879,842
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TECHNOLOGY (COMPONENTS) 17.4%
* 95,500 Anaren Microwave, Inc. 1,945,813
* 58,000 Ault, Inc. 630,750
* 117,300 Elantec Semiconductor, Inc. 923,738
* 56,000 Emulex Corp. 2,471,000
* 14,145 Hi/fn, Inc. 763,830
* 52,200 Kopin Corp. 985,275
* 116,900 Orckit Communications Ltd. 2,805,600
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10,526,006
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TECHNOLOGY (EQUIPMENT) 6.4%
* 72,500 Information Resources, Inc. 1,450,000
* 8,400 Intergral Systems, Inc. 189,000
* 16,900 Netopia, Inc. 379,193
* 154,000 Photon Dynamics, Inc. 1,540,000
* 7,600 Proxim, Inc. 292,600
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3,850,793
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TECHNOLOGY (SOFTWARE) 7.0%
* 40,000 Brooktrout Technology, Inc. 597,499
* 30,800 Digital Lava, Inc. 296,449
* 2,800 Exigent International, Inc. 14,524
* 97,000 MDSI Mobile Data Solutions, Inc. 1,697,499
* 12,100 New Era of Networks, Inc. 454,505
* 146,000 OrCAD, Inc. 1,131,499
* 5,400 Puma Technology, Inc. 29,024
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4,220,999
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TOTAL STOCKS (Cost $47,869,808) 53,514,858
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SHORT-TERM SECURITIES 8.4%
5,072,038 SSgA Prime Money Market Fund 5,072,038
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TOTAL SHORT-TERM SECURITIES (Cost $ 5,072,038) 5,072,038
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TOTAL INVESTMENTS (Cost $52,941,846), 96.9% 58,586,896
OTHER ASSETS AND LIABILITIES, NET, 3.1% 1,880,148
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NET ASSETS, 100.0% $60,467,044
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* Non-income producing securities
The accompanying notes are an integral part of these financial statements.
4 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
APRIL 30, 1999 (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
(All numbers in thousands except net asset value per share)
Assets:
Investments in securities at cost $ 52,942
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Investments in securities at value (Note 1) 58,587
Dividends and interest receivable 16
Receivable for securities sold 1,490
Receivable from sale of fund shares 1,654
Unamortized organization costs (Note 3) 17
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Total assets 61,764
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Liabilities:
Bank overdraft 6
Payable for securities purchased 1,215
Payable to management company 22
Accrued expenses:
Investment advisory and administrative fees 54
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Total liabilities 1,297
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Net assets $ 60,467
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Net assets consist of:
Paid in capital $ 48,526
Undistributed net investment loss (151)
Unrealized appreciation on investments 5,645
Accumulated net realized gain 6,447
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Net assets $ 60,467
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Shares of capital stock outstanding 5,315
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Net asset value per share $ 11.38
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The accompanying notes are an integral part of these financial statements.
FREMONT MUTUAL FUNDS 5
<PAGE>
FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
STATEMENT OF OPERATIONS
(All numbers in thousands)
Investment Income:
Interest $ 143
Dividends 14
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Total income 157
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Expenses:
Investment advisory and administrative fees (Note 2) 284
Shareholder servicing fees 8
Custody fees 17
Accounting fees 9
Audit and legal fees 9
Directors' fees (Note 2) 2
Registration fees 5
Reports to shareholders 2
Other 5
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Total expenses before reductions 341
Expenses waived and/or reimbursed by Advisor (Note 2) (33)
--------
Total net expenses 308
--------
Net investment loss (151)
--------
Realized and unrealized gain from investments:
Net realized gain from investments 9,594
Net unrealized appreciation on investments 10,127
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Net realized and unrealized gain from investments 19,721
--------
Net increase in net assets resulting from operations $ 19,570
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The accompanying notes are an integral part of these financial statements.
6 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT INSTITUTIONAL U.S. MICRO-CAP FUND
APRIL 30, 1999
STATEMENT OF CHANGES IN NET ASSETS
(All numbers in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Year ended
April 30, 1999 October 31, 1998
-------------- ----------------
Increase (decrease) in net assets:
From operations:
<S> <C> <C>
Net investment loss $ (151) $ (221)
Net realized gain (loss) from investments 9,594 (3,141)
Net unrealized appreciation (depreciation) on investments 10,127 (8,765)
-------- --------
Net increase (decrease) in net assets from operations 19,570 (12,127)
-------- --------
Distributions to shareholders from:
Net realized gains -- (1,255)
-------- --------
Total distributions to shareholders -- (1,255)
-------- --------
From capital share transactions:
Proceeds from shares sold (Note 2) 6,496 31,161
Payments for shares redeemed (2,946) (22,116)
Reinvested dividends -- 1,139
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Net increase in net assets
from capital share transactions 3,550 10,184
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Net increase (decrease) in net assets 23,120 (3,198)
Net assets at beginning of period 37,347 40,545
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Net assets at end of period $ 60,467 $ 37,347
======== ========
Capital transactions in shares:
Sold (Note 2) 644 3,337
Redeemed (298) (2,640)
Reinvested dividends -- 127
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Net increase from capital share transactions 346 824
======== ========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Unaudited) Period from
Six Months Ended Year ended August 4, 19971 to
April 30, 1999 October 31, 1998 October 31, 1997
---------- ---------- ----------
Selected Per Share Data
for one share outstanding during the period
<S> <C> <C> <C>
Net asset value, beginning of period $ 7.52 $ 9.78 $ 10.00
---------- ---------- ----------
Income from Investment Operations
Net investment loss (.03) (.04) --
Net realized and unrealized gain (loss) 3.89 (1.98) .09
---------- ---------- ----------
Total investment operations 3.86 (2.02) .09
---------- ---------- ----------
Less Distributions
From net realized gains -- (.24) (.31)
---------- ---------- ----------
Total distributions -- (.24) (.31)
---------- ---------- ----------
Net asset value, end of period $ 11.38 $ 7.52 $ 9.78
========== ========== ==========
Total Return2 51.33% -21.03% 0.90%
Ratios and Supplemental Data
Net assets, end of period (000s omitted) $ 60,467 $ 37,347 $ 40,545
Ratio of net expenses to average net assets3 1.25%* 1.25% 1.25%*
Ratio of gross expenses to average net assets3 1.38%* 1.38% 1.49%*
Ratio of net investment loss to average net assets3 -.61%* -.44% -.21%*
Portfolio turnover rate 95% 187% 28%
</TABLE>
1 Fund's date of inception
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.
FREMONT MUTUAL FUNDS 7
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 1999 (UNAUDITED)
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 twelve series, one of
which, the Institutional U.S. Micro-Cap Fund (the Fund), is covered by this
report. The Fund has its own investment objective and policies and operates
as a separate mutual fund.
Significant accounting policies followed by the Fund 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 available where no closing value is
available.
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. Interest income and estimated
expenses are accrued daily. Bond discount and premium are amortized as
required by the Internal Revenue Code, as amended. Distributions to
shareholders are recorded on the ex-dividend date. The Investment Company
accounts for the assets of the Fund and allocates general expenses of the
Investment Company to the Fund based upon the relative net assets of the Fund
or the nature of the services performed and their applicability to the Fund.
D. Income Taxes
The Fund's 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. The 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 the prospectus.
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 losses deferred due to wash sale
rules, classification of gains/losses related to 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.
For Federal income tax purposes, The Fund has a capital loss carryover 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 Fund has a capital loss carryover of
$2,860,764 at October 31, 1998 which will expire in 2006.
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.
2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Investment Advisor
The Fund has 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 the Fund's investment activities and
provides administrative services as necessary to conduct Fund business. For
its advisory and administrative services, the Advisor receives a management
fee based on the average daily net assets of the Fund at an annual rate of
1.15%.
The Advisor has agreed to limit the Fund's total operating expenses to 1.25%
of average daily net assets. The 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. Because of these
substantial contingencies, the potential reimbursements will be accounted for
8 FREMONT MUTUAL FUNDS
<PAGE>
FREMONT MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 1999 (UNAUDITED)
as contingent liabilities that are not recordable on the balance sheet of the
Fund until payment is probable. The Advisor has not recouped $86,622 of prior
period expense waivers and reimbursements as of April 30, 1999.
Investors Fiduciary Trust Company ("IFTC") serves as custodian and investment
accounting agent for the Fund. All fees charged by IFTC are paid by the Fund,
subject to the limitations listed above. Fees for custody services are
subject to reductions by credits earned on the cash balances of the Fund 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 the Fund's Financial
Highlights table.
The Fund is also required to comply with the limitations set forth in the
laws, regulations, and administrative interpretations of the states in which
it is registered. For the six months ended April 30, 1999, no reimbursements
were required or made to the Fund by the Advisor to comply with these
limitations.
Other Related Parties
At April 30, 1999, 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
approximately 79% of the Fund.
Certain officers and/or directors of the Fund 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 Fund.
3. ORGANIZATION COSTS
Costs incurred by the 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 OF INVESTMENT SECURITIES
Aggregate purchases and aggregate proceeds from sales of securities for the
six months ended April 30, 1999 were as follows:
Purchases Proceeds
Long-term securities: $43,609,672 $41,627,070
5. PORTFOLIO CONCENTRATIONS
Although the Fund has a diversified investment portfolio, there are certain
investment concentrations of risk which may subject the Fund more
significantly to economic changes occurring in certain segments or
industries.
6. UNREALIZED APPRECIATION (DEPRECIATION) - TAXBASIS
At April 30, 1999, the cost of securities for federal income tax purposes was
$53,228,575 and the net unrealized appreciation based on that cost were as
follows:
Unrealized appreciation $ 9,787,943
Unrealized depreciation (4,429,622)
-------------
Net unrealized appreciation $ 5,358,321
=============
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. The Fund's borrowings
cannot exceed 20% of its net assets. Combined borrowings of all Funds cannot
exceed the $75 million limit on the total line of credit. The Fund is subject
to the annual fees and interest on the unpaid balance based on prevailing
market rates as defined in the LOC. At April 30, 1999, there were no such
borrowings outstanding.
FREMONT MUTUAL FUNDS 9
<PAGE>
FREMONT
FUNDS [LOGO]
50 Beale Street, Suite 100
San Francisco, CA 94105
www.fremontfunds.com
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