The 23-year-old, who was mentally retarded, disappeared on June 20, 2009 while nine months pregnant.
She released herself from Bendigo’s hospital and told friends she was going to a party in Pyramid Hill, but she never made it there.
Her family fears she was murdered by the father of her unborn baby.
A Victorian inquest investigates the circumstances leading to her disappearance and whether she was murdered.
Fraser’s friend Nicholas Dingfelder said during the investigation on Tuesday that he had encountered her on the train on the night of June 20.
They talked about housing, he asked when she was due to give birth and she said she would be induced the next day.
The couple were getting off the train together on Pyramid Hill when Mr. Dingfelder saw a man walking on the train tracks about five or six meters away.
“He had his hands in his pockets and he was kicking train stones and I didn’t think anything of it at first,” he said.
“She said, ‘I have to go, he’s going to get mad at me’.”
Mrs. Fraser went to meet the man Mr. Dingfelder described as stocky with short brown hair and a crisp haircut.
He said the man seemed excited and well dressed, wearing a black suede jacket, jeans and “looked like he had some money”.
He saw Mrs. Fraser walk away with the man along the track towards the shops and has not seen her again.
Dingfelder said police showed him photos of several men about a month ago and he identified a man who matched his description.
“I’m pretty sure that was the person I saw that night,” he said.
He said the police had not told him the man’s name.
The inquest heard earlier Tuesday from Chantel Fraser, who said her sister was in a heated argument with a man named Peter Jenkinson in the weeks before she disappeared.
“He was pretty angry, he was yelling at her through the phone,” she said.
“He yelled at her, asked for the money, said ‘come and meet me’, but she didn’t go to him.”
Mrs. Fraser told her family that she did not know who the father of her child was, but that she is considering doing a DNA test.
Several men have been named as possible fathers, including Mr Jenkinson and Gareth David.
On Monday, Mr David told the inquest that he had never had sex with Ms Fraser, despite telling police he had done so in 2009.
The investigation continues.