UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-04010 OCM Mutual Fund --------------- (Exact name of registrant as specified in charter) 1536 Holmes Street Livermore, California 94550 (Address of principal executive offices) (Zip code) Gregory M. Orrell Orrell Capital Management, Inc 1536 Holmes Street Livermore, California 94550 (Name and address of agent for service) Registrant's telephone number, including area code: (925) 455-0802 -------------- Date of fiscal year end: November 30 ----------- Date of reporting period: May 31, 2008 ------------ ITEM 1. REPORT TO STOCKHOLDERS. LOGO ------------- OCM GOLD FUND ============= SEMI-ANNUAL REPORT MAY 31, 2008 (UNAUDITED) "THE UNLIMITED EXPANSION OF BANK PAPER HAS DRIVEN BRITAIN'S GOLD OUT OF CIRCULATION AND IS CARRYING HER RAPIDLY TO BANKRUPTCY AS IT DID FRANCE, AS IT DID US AND WILL DO US AGAIN SHOULD PAPER BE CIRCULATED EXCEPT UNDER THE MOST RIGOROUS LIMITATIONS." Thomas Jefferson, 1813 Dear Fellow Shareholder: For the fiscal six month period ending May 31, 2008 your Fund gained 4.95% (+0.23 after max. sales load) versus a decline of 4.47% for the S&P 500. The Philadelphia Gold and Silver Index ("XAU") advanced 6.49% over the same period as large cap gold shares outperformed your Fund's more diversified approach to the gold industry of owning large and small cap mining shares. Over the long run your Fund's strategy has outpaced the XAU index as demonstrated by the Fund's 3, 5 and 10 year track record versus the XAU (see table). The unraveling of the credit markets continued in the first half of 2008, forcing the Federal Reserve (the "Fed") to take unprecedented measures in order to prevent a complete meltdown of the global financial system. In an effort to provide liquidity to banks and brokerages, the Fed exchanged high quality treasury bonds for much lower quality debt instruments including mortgage backed securities and other asset backed securities of dubious value. Faced with the choice of compromising the integrity of the dollar or risk systemic collapse, the Fed has shown its willingness to sacrifice the dollar, in our opinion. Consequently, the Fed's credibility as the steward of monetary policy is being questioned by the market. Repeated calls of "the worst is behind us" are but hopeful cries that are met with revelations of more losses by financial institutions. The Fed engineered bailout of Bear Stearns and their counterparties in derivative trades early in the year was a stop-gap measure to buy time and hope. It appears both have run out as government sponsored mortgage giants Fannie Mae and Freddie Mac with a combined $5.3 trillion in debt teeter on the brink of insolvency threatening to force the government to take the debt on to its balance sheet and thereby doubling the amount of national debt outstanding.Additionally, share prices of both regional and money center banks have collapsed as fear of the next casualty of the credit market unraveling grips the markets raising the specter of further government bailouts. With confidence in financial markets fragile, gold has responded by trading between $850 and $950 per ounce through the first half of the year with a brief stint above $1,000 per ounce at the height of the Bear Stearns collapse (see chart).We believe the environment for higher gold prices is excellent with gold set to establish a new base of value above $1,000 per ounce. Major gold producers, such as Goldcorp, Inc., Barrick Gold Corp., and NewmontMining Corp., are beginning to realize increased cash flow and earnings as gold price increases are finally outstripping operating cost inflation. The lack of operating leverage to higher gold prices, in our opinion, has led gold shares to underperform the metal over the past year in contrast to gold shares historical price movement ratio of 3 to 1 to the price of gold. Rising earnings for gold shares should attract attention from investors in search of companies with rising earnings versus the poor performance of earnings comparisons being reported by a large segment of the economy, most notably finance and retail. - 1 - GOLD PRICE, DOLLAR PER OUNCE, LONDON PM FIX Date US$ ---- --- 4-Jan-00 281.50 3-Jul-00 287.65 2-Jan-01 271.10 2-Jul-01 268.35 2-Jan-02 278.35 1-Jul-02 312.10 2-Jan-03 343.80 1-Jul-03 350.20 2-Jan-04 415.25 1-Jul-04 394.80 4-Jan-05 427.75 1-Jul-05 432.60 3-Jan-06 530.00 3-Jul-06 622.95 2-Jan-07 639.75 2-Jul-07 654.75 2-Jan-08 846.75 1-Jul-08 937.50 Source: Global Insight Share prices of junior gold producers and exploration and development companies in general have dramatically underperformed the large cap gold shares. The perceived higher risk profile of small cap stocks and the less liquid nature of their share markets is the reason, in our opinion, along with the uncertainty of the companies to tap capital markets for future funding. While we believe the small caps in the gold sector represent excellent relative value to the large caps at present, we are maintaining our disciplined tiered approach of owning the major gold producers, with progressively smaller percentages of intermediate/mid-tier producers, junior gold producers and exploration and development companies. This allows your Fund to participate as investment dollars move throughout the gold sector. Should values for junior mining shares remain at depressed levels, major gold producers, in our opinion, will employ growing cash balances to acquire relatively cheap ounces in the ground which should lead to junior miners regaining investor interest. In our opinion, the unraveling of the credit markets precipitated by the over issuance of credit to marginal borrowers is far from over. We are entering a period whereby lending institutions are contracting the availability of credit in response to shrinking capital bases. A vicious cycle can be envisioned where contracting credit leads to a serious economic downturn putting yet further pressure on the banks' loan portfolios. The dilemma for the Fed will be to find avenues to inject credit into the economy without destroying the value of the U.S. dollar. It appears to us Fed Chairman Bernanke's theory of dropping money from helicopters to stave off deflation may be tested. In any event, dollar weakness could accelerate as markets view the Fed having to embrace inflation as it did in the 1970's in an effort to stave off a prolonged recession. In a period of depreciating financial assets, investors, including central banks, will find comfort in the fact the gold is an owned asset and not someone else's liability. - 2 - We appreciate your shareholding and confidence in the OCM Gold Fund and we look forward to meeting the investment objective of preserving your purchasing power. Should you have any questions regarding the Fund or gold, please contact your financial adviser or you may contact us directly at 1-800-779-4681. For question regarding your account, please contact Shareholder Service at 1-800-628-9403. Sincerely, /S/ GREGORY M. ORRELL /S/ TIMOTHY G. CHURCH - ---------------------- --------------------- Gregory M. Orrell Timothy G. Church PORTFOLIO MANAGER ASSISTANT PORTFOLIO MANAGER JULY 15, 2008 Performance as of May 31, 2008 - -------------------------------------------------------------------------------- OCMGX OCMGX Philadelphia (NAV) (max load) Gold Index (XAU) - -------------------------------------------------------------------------------- Six Months + 4.95% + 0.23% + 6.49% - -------------------------------------------------------------------------------- One year +24.67% +19.08% +30.86% - -------------------------------------------------------------------------------- 3 year Annualized +35.65% +33.59% +29.50% - -------------------------------------------------------------------------------- 5 year Annualized +23.70% +22.55% +21.17% - -------------------------------------------------------------------------------- 10 Year Annualized +17.14% +16.61% +10.87% - -------------------------------------------------------------------------------- The returns shown include the reinvestment of all dividends but do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is not indicative of future results. The Philadelphia Gold and Silver Index (XAU) is an unmanaged capitalization-weighted index composed of 16 companies listed on U.S. exchanges involved in the gold and silver mining industry. The index is generally considered as representative of the gold and silver share market. - 3 - OCM GOLD FUND SCHEDULE OF INVESTMENTS - MAY 31, 2008 (UNAUDITED) - -------------------------------------------------------------------------------- SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCKS 93.2% MAJOR GOLD PRODUCERS 38.6% 20,000 AngloGold Ashanti Ltd. ADR ................... $ 695,800 75,000 Barrick Gold Corp. ........................... 3,021,750 10,000 Freeport-McMoRan Copper & Gold, Inc. ......... 1,157,100 270,000 Gold Fields Ltd. ADR ......................... 3,491,100 666,250 Goldcorp, Inc. ............................... 26,743,275 200,000 Harmony Gold Mining Co. Ltd. ADR* ............ 2,380,000 22,235 Kinross Gold Corp. ........................... 443,492 408,445 Kinross Gold Corp. ADR ....................... 8,156,647 32,200 Lihir Gold Ltd. ADR* ......................... 927,038 107,333 Lihir Gold Ltd.* ............................. 304,970 124,994 Newmont Mining Corp. ......................... 5,940,965 ------------- 53,262,137 ------------- INTERMEDIATE/MID-TIER GOLD PRODUCERS 25.3% 161,860 Agnico-Eagle Mines Ltd. ...................... 11,441,884 430,000 Eldorado Gold Corp.* ......................... 3,483,446 504,800 I AMGOLD Corp. ............................... 2,983,368 500,000 Oxiana Ltd. .................................. 1,473,112 140,000 Randgold Resources Ltd. ADR .................. 5,936,000 634,750 Yamana Gold, Inc. ............................ 9,698,980 ------------- 35,016,790 ------------- JUNIOR GOLD PRODUCERS 11.4% 599,000 Alhambra Resources Ltd.* ..................... 548,546 250,000 Aurizon Mines Ltd.* .......................... 1,200,000 400,000 Capstone Mining Corp . * ..................... 1,706,753 21,429 Central Sun Mining, Inc. ..................... 44,207 291,200 Claude Resources, Inc. ....................... 266,672 457,000 Golden Cycle Gold Corp.* ..................... 4,889,900 250,000 Great Basin Gold Ltd.* ....................... 867,500 50,000 Jaguar Mining, Inc. .......................... 566,066 300,000 Red Back Mining, Inc.* ....................... 2,391,064 665,500 San Gold Corp.* .............................. 1,111,734 583,333 Sino Gold Mining Ltd.* ....................... 1,529,047 500,000 Yukon-Nevada Gold Corp.* ..................... 699,407 ------------- 15,820,896 ------------- - -------------------------------------------------------------------------------- SHARES VALUE - -------------------------------------------------------------------------------- EXPLORATION AND DEVELOPMENT COMPANIES 8.0% 375,000 Amazon Mining Holding PLC* ................... $ 245,295 187,500 Anatolia Minerals Development Ltd.* .......... 652,863 500,000 Andean American Mining Corp. ................. 271,712 58,200 Aquiline Resources, Inc.* .................... 444,539 400,000 Argentex Mining Corp. *+ ..................... 414,000 250,000 Australian Solomons Gold Ltd.* ............... 125,792 700,000 Brazauro Resources Corp.* .................... 612,860 126,707 DOT Resources Ltd .* ......................... 14,664 500,000 Evolving Gold Corp.* ......................... 342,156 300,000 Fury Explorations Ltd. * ..................... 190,198 215,600 Geologix Explorations, Inc.* ................. 499,024 800,000 Grayd Resource Corp. * ....................... 442,790 100,000 Guyana Goldfields, Inc. ...................... 467,948 500,000 Hana Mining Ltd.* ............................ 261,648 100,000 Keegan Resources, Inc. ....................... 368,000 300,000 MAG Silver Corp.* ............................ 3,502,063 287,500 Majestic Gold Corp.* ......................... 20,253 125,000 Mansfield Minerals, Inc.* .................... 377,378 250,000 Maximus Ventures Ltd.* ....................... 69,186 500,000 Mediterranean Resources Ltd.* ................ 93,086 120,000 Pediment Exploration Ltd.* ................... 190,802 200,000 Radius Gold, Inc.* ........................... 55,349 300,000 Sabina Silver Corp.* ......................... 473,986 273,500 Sinchao Metals Corp.* ........................ 92,203 207,700 Sunridge Gold Corp.* ......................... 179,754 500,000 TNR Gold Corp.* .............................. 120,761 192,307 Volta Resources, Inc. ........................ 114,180 200,000 Western Goldfields, Inc.* .................... 468,000 ------------- 11,110,490 ------------- OTHER 4.1% 206,812 Altius Minerals Corp.* ....................... 2,713,926 229,200 International Royalty Corp. .................. 1,379,306 50,000 Royal Gold, Inc. ............................. 1,537,000 ------------- 5,630,232 ------------- See notes to financial statements. - 4 - OCM GOLD FUND SCHEDULE OF INVESTMENTS - MAY 31, 2008 (UNAUDITED) - -------------------------------------------------------------------------------- SHARES VALUE - -------------------------------------------------------------------------------- PRIMARY SILVER PRODUCERS 5.8% 225,000 Fortuna Silver Mines, Inc.* .................. $ 518,516 200,000 Hecla Mining Co.* ............................ 1,803,999 48,075 Pan American Silver Corp.* ................... 1,593,147 190,000 Silver Wheaton Corp.* ........................ 2,757,149 359,997 Silverstone Resources Corp * ................. 970,909 700,000 US Silver Corp.* ............................. 316,997 ------------- 7,960,717 ------------- TOTAL COMMON STOCKS (Cost $44,244,957) ........................... 128,801,262 ------------- EXCHANGE TRADED FUNDS 5.2% 9,000 iShares Silver Trust* ........................ 1,500,570 65,000 SPDR Gold Trust* ............................. 5,679,700 ------------- TOTAL EXCHANGE TRADED FUNDS (Cost $3,931,360) ............................ 7,180,270 ------------- WARRANTS 0.6% 187,500 Amazon Mining Holding PLC + * # Exercise Price 1.55 CAD, Exp. 11/16/2009 ... -- 4,928 AngloGold Ashanti Ltd. * Exercise Price $27.81, Exp. 6/23/2008 ...... 45,830 200,000 Argentex Mining Corp. *+# Exercise Price $1.60, Exp. 9/19/2009 ....... -- 125,000 Australian Solomons Gold Ltd.* Exercise Price 1.71 CAD, Exp. 8/28/2008 .... 1,887 75,000 Central Sun Mining, Inc.* Exercise Price 1.25 CAD, Exp. 11/26/2008 ... 1,510 89,000 Endeavour Mining Capital Corp.* Exercise Price 5.50 CAD, Exp. 11/10/2008 ... 184,502 150,000 Fury Explorations Ltd.*+# Exercise Price 1.25 CAD, Exp. 9/20/2008 .... -- 143,750 Majestic Gold Corp.* +# Exercise Price 0.60 CAD, Exp. 5/3/2009 ..... -- 35,000 Nevsun Resources*+# Exercise Price 10.00 CAD, Exp. 12/18/2008 .. -- - -------------------------------------------------------------------------------- SHARES VALUE - -------------------------------------------------------------------------------- WARRANTS (CONTINUED) 60,000 Pediment Exploration Ltd.* +# Exercise Price 3.75 CAD, Exp. 11/16/2009 ... $ -- 150,000 San Gold Corp.*+# Exercise Price 2.00 CAD, Exp. 05/28/2009 ... -- 250,000 Silver Wheaton Corp.* Exercise Price 4.00 CAD, Exp. 8/5/2009 ..... 528,328 100,000 Yukon-Nevada Gold Corp.* Exercise Price 3.00 CAD, Exp. 6/20/2012 .... 49,814 ------------- TOTAL WARRANTS (Cost $17,918) ............................... 811,871 ------------- SHORT-TERM INVESTMENT 1.4% 1,906,997 UMB Money Market Fiduciary, 0.92% ............ 1,906,997 ------------- TOTAL SHORT-TERM INVESTMENTS (Cost $1,906,997) ............................ 1,906,997 ------------- TOTAL INVESTMENTS (Cost $50,101,232) .................... 100.4% 138,700,400 LIABILITIES LESS ...................................... (0.4)% (502,331) ------------- NET ASSETS ............................................ 100.0% $ 138,198,069 ============= - ------------- ADR -- American Depository Receipts. CAD -- Canadian Dollars. * Non-income producing security. + Illiquid security. Security is valued at fair value in accordance with procedures established by the Fund's Board of Trustees. # Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The securities are valued at fair value in accordance with procedures established by the Fund's Board of Trustees. See notes to financial statements. - 5 - OCM GOLD FUND SCHEDULE OF INVESTMENTS - MAY 31, 2008 (CONTINUED) (UNAUDITED) At May 31, 2008, restricted securities totaled $414,000 or 0.3% of net assets and consisted of the following securities: MAY 31, 2008 CARRYING VALUE ACQUISITION ISSUER PER UNIT COST DATE - -------------------------------------------------------------------------------- Argentex Mining Corp. $1.035 $1.25 03/19/2008 Argentex Mining Corp. Warrants Exercise Price $1.60, Exp. 09/19/2009 -- -- 03/19/2008 - -------------------------------------------------------------------------------- SUMMARY OF INVESTMENTS BY COUNTRY PERCENT OF COUNTRY MARKET VALUE INVESTMENT SECURITIES - -------------------------------------------------------------------------------- Australia $ 3,129,839 2.3% Canada 96,312,172 69.4 Cayman Islands 184,502 0.1 Jersey 5,936,000 4.3 New Guinea 1,232,008 0.9 South Africa 6,566,900 4.7 United Kingdom 245,295 0.2 United States(1) 25,093,684 18.1 - -------------------------------------------------------------------------------- TOTAL $138,700,400 100.0% - -------------------------------------------------------------------------------- (1) Includes short-term securities. See notes to financial statements. - 6 - OCM GOLD FUND STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 2008 (UNAUDITED) ASSETS: Investments in unaffiliated issuers, at value (cost $50,101,232) $ 138,700,400 Interest and dividends receivable .............................. 37,390 Receivable for fund shares sold ................................ 83,248 Prepaid expenses and other assets .............................. 15,488 ------------- Total assets ................................................. 138,836,526 ------------- LIABILITIES: Payable for securities purchased ............................... 127,835 Payable for fund shares redeemed ............................... 98,909 Due to investment adviser ...................................... 95,742 Accrued distribution fees ...................................... 235,747 Accrued trustees fees .......................................... 2,006 Accrued Chief Compliance Officer fees .......................... 430 Accrued expenses and other liabilities ......................... 77,788 ------------- Total liabilities ............................................ 638,457 ------------- Net Assets ................................................... $ 138,198,069 ============= NET ASSETS CONSIST OF: Shares of beneficial interest, no par value; unlimited shares authorized .................................. $ 48,556,652 Undistributed net investment loss .............................. (3,303,928) Undistributed net realized gain on investments and foreign currency transactions ................................ 4,346,074 Net unrealized appreciation on investments and foreign currency translations ................................ 88,599,271 ------------- Net Assets ..................................................... $ 138,198,069 ============= CALCULATION OF MAXIMUM OFFERING PRICE: Net asset value and redemption price per share(1) .............. $ 21.09 Maximum sales charge (4.50% of offering price) ................. 0.99 ------------- Offering price to public ....................................... $ 22.08 ------------- Shares outstanding ............................................. 6,551,647 ============= - ------------ (1) A 1.50% redemption fee is imposed on redemptions of shares held less than three months. See notes to financial statements. - 7 - OCM GOLD FUND STATEMENT OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) INVESTMENT INCOME: Interest .................................................... $ 19,549 Dividends (net of foreign withholding taxes of $25,243) ..... 241,351 ----------- Total investment income ................................... 260,900 ----------- EXPENSES: Distribution fees ........................................... 615,051 Investment advisory fees .................................... 592,868 Fund administration and accounting fees ..................... 86,831 Transfer agent fees and expenses ............................ 35,654 Professional fees ........................................... 31,223 Custody fees ................................................ 13,617 Federal and state registration fees ......................... 10,258 Chief Compliance Officer fees ............................... 6,492 Reports to shareholders ..................................... 5,304 Trustees' fees .............................................. 4,010 Other expenses .............................................. 4,285 ----------- Total expenses ............................................ 1,405,593 ----------- Net investment loss ....................................... (1,144,693) ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments and foreign currency transactions ..................................... 5,689,725 Net change in unrealized appreciation/depreciation on investments and foreign currency translations .......... 2,004,681 ----------- Net gain on investments ................................... 7,694,406 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $ 6,549,713 =========== See notes to financial statements. - 8 - OCM GOLD FUND STATEMENTS OF CHANGES IN NET ASSETS SIX MONTHS ENDED YEAR ENDED MAY 31, 2008 NOV. 30, (UNAUDITED) 2007 -------------- ------------- OPERATIONS: Net investment loss ................................ $ (1,144,693) $ (1,813,932) Net realized gain on investments and foreign currency transactions .................... 5,689,725 8,400,525 Net change in unrealized appreciation/depreciation on investments and foreign currency translations 2,004,681 11,847,045 ------------- ------------- Net increase in net assets resulting from operations 6,549,713 18,433,638 ------------- ------------- DISTRIBUTIONS PAID TO SHAREHOLDERS: Dividends from net investment income ............... -- -- Distributions paid from net realized gains ......... (8,998,120) (10,048,572) ------------- ------------- Total distributions ................................ (8,998,120) (10,048,572) ------------- ------------- FUND SHARE TRANSACTIONS: Net proceeds from shares sold ...................... 7,687,682 14,220,807 Distributions reinvested ........................... 8,489,751 8,876,117 Payment for shares redeemed(1) ..................... (11,772,047) (14,997,190) ------------- ------------- Net increase in net assets from fund share transactions .......................... 4,405,386 8,099,734 ------------- ------------- TOTAL INCREASE IN NET ASSETS ......................... 1,956,979 16,484,800 NET ASSETS, BEGINNING OF PERIOD ...................... 136,241,090 119,756,290 ------------- ------------- NET ASSETS, END OF PERIOD ............................ $ 138,198,069 $ 136,241,090 ============= ============= UNDISTRIBUTED NET INVESTMENT LOSS .................... $ (3,303,928) $ (2,159,235) ============= ============= TRANSACTIONS IN SHARES: Shares sold ........................................ 349,237 727,987 Shares issued on reinvestment of distributions ..... 415,350 510,122 Shares redeemed .................................... (551,244) (758,285) ------------- ------------- Net increase in shares outstanding ................. 213,343 479,824 ============= ============= (1) Net of redemption fees of $6,796 and $2,617 for the six months ended May 31, 2008, and year ended November 30, 2007, respectively. See notes to financial statements. - 9 - OCM GOLD FUND NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (UNAUDITED) NOTE 1. ORGANIZATION OCM Mutual Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Massachusetts business trust on January 6, 1984 and consists of the OCM Gold Fund (the "Fund"). The investment objective for the Fund is long-term growth of capital through investing primarily in equity securities of domestic and foreign companies engaged in activities related to gold and precious metals. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. SECURITY VALUATION -- Portfolio securities that are listed on national securities exchanges are valued at the last sale price as of the close of business of such securities exchanges, or, in the absence of recorded sales, at the average of readily available closing bid and ask prices on such exchanges. NASDAQ National Market(R) and SmallCap(R) securities are valued at the NASDAQ Official Closing Price ("NOCP"). If a NOCP is not issued for a given day, these securities are valued at the average of readily available closing bid and asked prices. Unlisted securities are valued at the average of the quoted bid and ask prices in the over-the-counter market. Short-term investments which mature in less than 60 days are valued at amortized cost (unless the Board of Trustees determines that this method does not represent fair value). Short-term investments which mature after 60 days are valued at market. Securities and other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the investment adviser under procedures established by and under the general supervision and responsibility of the Trust's Board of Trustees. For each investment that is fair valued, the investment adviser considers, to the extent applicable, various factors including, but not limited to, the type of security, the financial condition of the company, comparable companies in the public market, the nature and duration of the cause for a quotation not being readily available and other relevant factors. In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157") effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The Fund adopted FAS 157 during fiscal 2008. Under FAS 157, various inputs are used in determining the value of the Fund's investments. These inputs are summarized into three broad levels and described below: o Level 1 - quoted prices in active markets for identical securities o Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, and evaluated quotation obtained from pricing services) o Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used, as of May 31, 2008, in valuing the Fund's assets: - -------------------------------------------------------------------------------- INVESTMENT IN OTHER FINANCIAL VALUATION INPUTS SECURITIES INSTRUMENTS* - -------------------------------------------------------------------------------- Level 1 - Quoted Prices $138,286,400 -- - -------------------------------------------------------------------------------- Level 2 - Other Significant Observable Inputs 414,000 -- - -------------------------------------------------------------------------------- Level 3 - Significant Unobservable Inputs -- -- - -------------------------------------------------------------------------------- Total $138,700,400 -- * - -------------------------------------------------------------------------------- * Other financial instruments include futures, forwards and swap contracts. FOREIGN CURRENCY - Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net unrealized and realized gain or loss from investments. - 10 - OCM GOLD FUND NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED) (UNAUDITED) Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities, other than investments in securities at fiscal year end, resulting from changes in exchange rates. FEDERAL INCOME TAXES - The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and to make the requisite distributions of income to its shareholders which will be sufficient to relieve it from all or substantially all federal income taxes. In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 addresses the accounting for uncertainty in income taxes and establishes for all entities, including pass-through entities, such as the Fund, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction). The Fund recognizes tax benefits only if it is more likely than not that a tax position (including the Fund's assertion that its income is exempt from tax) will be sustained upon examination. The Fund adopted FIN 48 in fiscal 2008. The Fund had no material uncertain tax positions and has not recorded a liability for unrecognized tax benefits as of May 31, 2008. Also, the Fund had recognized no interest and penalties related to uncertain tax benefits in 2008. At May 31, 2008, the fiscal years 2005 through 2008 remain open to examination in the Fund's major tax jurisdictions. SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are accounted for on a trade date basis. Realized gains and losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded on the ex-dividend date. The Fund declares and pays dividends of net investment income, if any, annually and distributes net realized gains, if any, annually. The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense or gain items for financial statement and tax purposes. To the extent that these differences are attributable to permanent book and tax accounting differences, the components of net assets have been adjusted. REDEMPTION FEE - A 1.50% redemption fee is retained by the Fund to offset transaction costs and other expenses associated with short-term investing. The fee is imposed on redemptions or exchanges of shares held less than three months from their purchase date. The Fund records the fee as a reduction of shares redeemed and as a credit to paid-in-capital. For the period ended May 31, 2008, the Fund received $6,796 in redemption fees. GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims against the Fund that have not yet occurred. Based on experience, the Fund expects the risk of loss to be remote. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. NOTE 3. INVESTMENT ADVISORY AGREEMENT The Fund has an investment advisory agreement with Orrell Capital Management, Inc. ("OCM"). Under the agreement, the Fund pays OCM a fee computed daily and payable monthly, at the following annual rates based upon average daily net assets: ASSETS FEE RATE - ------ -------- $0 to $50 million ........................................... 1.000% $50 million to $75 million .................................. 0.875% $75 million to $100 million ................................. 0.750% $100 million to $150 million ................................ 0.625% $150 million to $250 million ................................ 0.500% Over $250 million ........................................... 0.375% - 11 - OCM GOLD FUND NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED) (UNAUDITED) NOTE 4. DISTRIBUTION AGREEMENT AND PLAN The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The Plan authorizes the Fund to reimburse the distributor for marketing expenses incurred in distributing shares of each Fund, including the cost of printing sales material and making payments to dealers of the Fund's shares, in any fiscal year, subject to a limit of 0.99% of average daily net assets. Fees incurred by the Fund under the Plan during the period ended May 31, 2008 are reflected in the Statement of Operations. At May 31, 2008, $235,747 of Distributions Fees were available for eligible 12b-1 expenses. NOTE 5. PURCHASES AND SALES OF SECURITIES Purchases and sales of investment securities (excluding short-term securities and U.S. government obligations) for the period ended May 31, 2008 were $5,284,605 and $8,744,462, respectively. There were no purchases or sales of U.S. government obligations. NOTE 6. FEDERAL INCOME TAX INFORMATION At May 31, 2008, gross unrealized appreciation and depreciation of investments owned by the Fund, based on cost for federal income tax purposes were as follows: Cost of investments ........................... $ 51,326,883 ============ Unrealized appreciation ....................... $ 89,911,194 Unrealized depreciation ....................... (2,537,677) ------------ Net unrealized appreciation on investments .... $ 87,373,517 ============ The difference between cost amounts for financial statement and federal income tax purposes is due primarily to investments in passive foreign investment companies ("PFICs"). The tax character of distributions paid during the fiscal years ended November 30, 2007 and 2006 was as follows: 2007 2006 ---- ---- Ordinary income .............................. $ -- $-- Net long-term capital gains .................. 10,048,572 -- =========== ------- Total distributions .......................... $10,048,572 $-- =========== ======= As of November 30, 2007 the components of accumulated earnings on a tax basis were as follows: Undistributed ordinary income .......................... $ 219,986 Undistributed long-term gains .......................... 7,438,001 ----------- Tax accumulated earnings ............................... 7,657,987 Accumulated capital and other losses ................... -- Unrealized appreciation on investments ................. 84,431,738 Unrealized appreciation on foreign currency ............ 99 ----------- Total accumulated earnings ............................. $92,089,824 =========== - 12 - OCM GOLD FUND NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED) (UNAUDITED) NOTE 7. OFFERING PRICE PER SHARE A maximum front-end sales charge of 4.50% is imposed on purchases of the Fund's shares. For the period ended May 31, 2008, the Fund was advised that the Distributor received $17,075 of sales charges from sales of the Fund's shares. NOTE 8. CONCENTRATION OF RISK Investing in foreign securities involves certain risks not necessarily found in U.S. markets. These include risks associated with adverse changes in economic, political, regulatory and other conditions, changes in currency exchange rates, exchange control regulations, expropriation of assets or nationalization, imposition of withholding taxes on dividend or interest payments or capital gains, and possible difficulty in obtaining and enforcing judgments against foreign entities. Further, issuers of foreign securities are subject to different, and often less comprehensive, accounting, reporting and disclosure requirements than domestic issuers. As the Fund concentrates its investments in the gold mining industry, a development adversely affecting the industry (for example, changes in the mining laws which increases production costs or a significant decrease in the market price of gold) would have a greater adverse effect on the Fund than it would if the Fund invested in a number of different industries. - 13 - OCM GOLD FUND FINANCIAL HIGHLIGHTS SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MAY 31, 2008 NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30, (UNAUDITED) 2007 2006 2005 2004 2003 PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout each period) Net asset value, beginning of period .............. $ 21.49 $ 20.44 $ 12.85 $ 12.76 $ 14.46 $ 7.53 --------- --------- --------- -------- --------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss ............................... (0.16) (0.27) (0.29) (0.18) (0.18) (0.12) Net realized and unrealized gain (loss) on investments and foreign currency transactions ........................... 1.18 3.06 7.88 0.69 (1.30) 7.05 --------- --------- --------- -------- --------- -------- Total from investment operations .................. 1.02 2.79 7.59 0.51 (1.48) 6.93 --------- --------- --------- -------- --------- -------- LESS DISTRIBUTIONS: Dividends from net investment income .............. -- -- -- (0.11) (0.01) -- Distribution from net realized gains .............. (1.42) (1.74) -- (0.31) (0.21) -- --------- --------- --------- -------- --------- -------- Total distributions ............................... (1.42) (1.74) -- (0.42) (0.22) -- --------- --------- --------- -------- --------- -------- Net asset value, end of period .................... $ 21.09 $ 21.49 $ 20.44 $ 12.85 $ 12.76 $ 14.46 ========= ========= ========= ======== ========= ======== TOTAL RETURN* ..................................... 4.95%(2) 15.64% 59.07% 4.34% (10.31)% 92.03% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (in 000's) ................ $ 138,198 $ 136,241 $ 119,756 $ 78,528 $ 80,202 $ 84,230 Ratio of expenses to average net assets: Net of waivers and reimbursements ............... 1.94%(1) 1.93% 2.07% 2.24% 2.15% 2.39% Before waivers and reimbursements ............... 1.94%(1) 1.93% 2.07% 2.24% 2.17% 2.39% Ratio of net investment loss to average net assets: Net of waivers and reimbursements ............... (1.58)%(1) (1.51)% (1.64)% (1.51)% (1.58)% (1.42)% Before waivers and reimbursements ............... (1.58)%(1) (1.51)% (1.64)% (1.51)% (1.60)% (1.42)% Portfolio turnover rate ........................... 4%(2) 11% 20% 5% 12% 17% - --------- * Assumes no sales charge. (1) Annualized for periods less than one year. (2) Not annualized for periods less than one year. See notes to financial statements. - 14 - OCM GOLD FUND EXPENSE EXAMPLE - FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) As a shareholder of the OCM Gold Fund (the "Fund"), you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees on certain redemptions (the Fund imposes a 1.50% redemption fee on shares held less than 3 months after purchase); and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2007 to May 31, 2008 (the "period"). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 equals 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing the ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs could have been higher. EXPENSES PAID DURING THE PERIOD BEGINNING ENDING DURING THE ACCOUNT VALUE ACCOUNT VALUE PERIOD ENDED DECEMBER 1, 2007 MAY 31, 2008 MAY 31, 2008* ---------------- ------------ ------------- Actual $1,000.00 $1,049.50 $9.95 Hypothetical (5% return before expenses) 1,000.00 1,015.29 9.79 - -------------- * Expenses are equal to the Fund's annualized expense ratio of 1.94% for the period, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). - 15 - OCM GOLD FUND INVESTMENTS BY SECTOR (UNAUDITED) AS A PERCENTAGE OF NET ASSETS PIE CHART OMITTED Major Gold Producers 38.6% Intermediate/Mid-Tier Gold Producers 25.3% Junior Gold Producers 11.5% Exploration and Development Companies 8.0% Primary Silver Producers 6.2% Exchange Traded Funds 5.2% Other 4.2% Cash and Other Assets 1.0% A description of the Fund's proxy voting policies and procedures and a record of the Fund's proxy votes for the year ended June 30, 2007 are available without charge, upon request by calling toll free 1-800-779-4681 and on the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. The Fund will file its complete schedule of investments with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q will be available on the EDGAR database on the SEC's website at http://www.sec.gov. These Forms may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. - 16 - OCM Gold Fund Distributed by: Syndicated Capital, Inc. 1299 Ocean Avenue, Suite 210 Santa Monica, CA 90401 ITEM 2. CODE OF ETHICS. Not applicable to semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable to semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable to semi-annual reports. ITEM 6. SCHEDULE OF INVESTMENTS The schedule of investments in securities in unaffiliated issuers are included as part of the reports to shareholders filed under Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not applicable. ITEM 10. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS As of the end of the period covered by this report, the registrant had not adopted any procedures by which shareholders may recommend nominees to the registrant's Board of Directors. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's certifying officers have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2 under the Investment Company Act of 1940 (the "Act")) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-2 under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR. (b) Not applicable. ITEM 12. EXHIBITS. (a)(1) Code of Ethics - Not applicable. (a)(2) Certification for each principal executive and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2(a)) - Filed as an attachment to this filing. (b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) - Filed as an attachment to this filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OCM Mutual Fund By: /s/ GREGORY M. ORRELL --------------------- Gregory M. Orrell President Date: July 31, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ GREGORY M. ORRELL --------------------- Gregory M. Orrell President Date: July 31, 2008 By: /s/ JACKLYN ORELL --------------------- Jacklyn Orrell Secretary and Treasurer Date: July 31, 2008