GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
SEMI-ANNUAL REPORT
(UNAUDITED)
FOR THE PERIOD ENDED
30TH JUNE, 1998
This report has been prepared for the information of shareholders of GAM Funds,
Inc., and is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus that includes information
regarding the Funds' objectives, policies, management, records and other
information.
GAM FUNDS, INC.
Investment Adviser:
GAM International Management Limited
GAM [LOGO]
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THE GAM GROUP
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The GAM group was founded in April 1983 by Gilbert de Botton. GAM's
corporate policy is to attempt to harness the top investment talent in the
world, not only in-house but also outside the GAM organization, in order to
provide above average, long term growth. The GAM group currently has
approximately US$13.3 billion under management and employs a worldwide staff of
about 430 people.
For US investors, GAM offers GAM Funds, Inc. an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Fund consists of eight open-end mutual funds - GAM
International, GAM Global, GAM Europe, GAM Pacific Basin, GAM Japan Capital, GAM
North America, GAM Asian Capital and GAMerica Capital Funds.
For additional information about any of the GAM Funds, please contact your
financial consultant or call GAM at 1-800-426-4685 (toll free).
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Contents
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GAM International ........................................................ 3
GAM Global ............................................................... 10
GAM Europe ............................................................... 16
GAM Pacific Basin ........................................................ 21
GAM Japan Capital ........................................................ 27
GAM North America ........................................................ 32
GAM Asian Capital ........................................................ 37
GAMerica Capital ......................................................... 41
Financial Statements ..................................................... 45
Notes to Financial Statements ............................................ 52
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GAM INTERNATIONAL FUND
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FUND MANAGEMENT
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JOHN R. HORSEMAN JOINED GAM IN 1987, INITIALLY AS A MEMBER
OF THE ASIAN TEAM BASED IN HONG KONG. AFTER MOVING TO THE
LONDON OFFICE IN 1990 HE IS NOW RESPONSIBLE FOR A NUMBER OF
GAM'S GLOBAL AND INTERNATIONAL FUNDS. PRIOR TO JOINING GAM
[PHOTO] IN 1987 HE WORKED FOR BA INVESTMENT MANAGEMENT INTERNATIONAL
LTD AND WAS RESPONSIBLE FOR CERTAIN OF THE BANK OF AMERICA'S
GLOBAL EQUITY FUNDS. HE COMMENCED MANAGEMENT OF GAM GLOBAL
AND GAM INTERNATIONAL FUNDS ON 1ST APRIL, 1990. MR HORSEMAN
ALSO MANAGES THE OFFSHORE FUND GAM UNIVERSAL US$ INC. HE WAS
EDUCATED AT THE UNIVERSITY OF BIRMINGHAM.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in
countries other than the United States, including Canada, the United Kingdom,
Continental Europe and the Pacific Basin. However, if the Fund determines that
the long-term capital appreciation of debt securities may equal or exceed the
return on equity securities, it may be substantially invested in debt securities
of companies and governments, their agencies and instrumentalities. Any income
realized by the Fund on its investments will be incidental to its goal of
long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO SHAREHOLDERS
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THE FACTS - CLASS A SHARES
GAM
International
Class A
(after Average
GAM maximum MSCI 1 Month
International sales load EAFE Deposit
Class A of 5%) Index Rate
30th June, 98 US$33.39 US$35.15 1,367.81
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% % % %
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Quarter to June, 98 + 1.77 - 3.32 + 1.13 + 1.39
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Jan - June, 1998 +17.32 +11.46 +16.08 + 2.83
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Average annual total return:-
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5 years to Jun, 1998 +23.89 +22.63 +10.34 + 5.15
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10 years to Jun, 1998 +18.76 +18.15 + 7.16 + 5.97
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Since inception +22.22 +21.76 +16.04 + 6.36
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Performances are calculated on a total return basis. Class A inception was
on 2nd January, 1985, Class B on 26th May, 1998, Class C on 20th May, 1998 and
Class D on 18th September, 1995. Indication of past performance are not
necessarily indicative of future performance. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
3
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GAM INTERNATIONAL FUND -- REPORT TO SHAREHOLDERS (CONTINUED)
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(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is
shown after adjustment to reflect the maximum sales load, which are waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
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Sources used are the net asset value of the Fund computed daily and Morgan
Stanley Capital International.
The MSCI Europe, Australian and Far East Index Index is a market value weighted,
unmanaged index on the weighted share prices of some 1,000 companies listed on
the stock exchanges of Australia, Austria, Belgium, Denmark, France, Germany,
Hong Kong, Italy, Japan, Netherlands, Norway, Singapore/Malaysia, Spain, Sweden,
Switzerland and the United Kingdom. The combined market capitalisation of these
companies represents approximately 60% of the aggregate market value of the
stock exchanges of the above 16 countries. The percentage change in the value of
the index includes dividends reinvested.
AVERAGE ANNUAL TOTAL RETURN - CLASS A (BAR CHART)
ANNUAL PERFORMANCE - CLASS A (BAR CHART)
GAM
International
GAM Class A
International (after maximum MSCI
Class A sales load of 5%) EAFE Index
Year % % %
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1994 (10.23) (14.71) 8.06
1995 30.09 23.59 11.55
1996 8.98 3.53 6.36
1997 28.93 22.48 2.06
1998* 17.32 11.46 16.08
*6 months
4
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GAM INTERNATIONAL FUND -- REPORT TO SHAREHOLDERS (CONTINUED)
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THE FACTS - CLASS B SHARES
GAM MSCI Average
International EAFE 1 Month
Class B Index Deposit Rate
30th June, 98 US$33.43 1,367.81
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% % %
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Since Inception* + 0.12 - 1.64 + 0.53
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THE FACTS - CLASS C SHARES
GAM MSCI Average
International EAFE 1 Month
Class C Index Deposit Rate
30th June, 98 US$33.37 1,367.81
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% % %
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Since Inception* + 1.27 - 0.37 + 0.64
THE FACTS - CLASS D SHARES
GAM
International
Class D
(after Average
GAM maximum MSCI 1 Month
International sales load EAFE Deposit
Class D of 3.5%) Index Rate
30th June, 98 US$33.24 US$34.45 1,367.81
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% % % %
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Quarter to June, 98 + 1.74 - 1.82 + 1.13 + 1.39
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Jan - June, 1998 +17.29 +13.18 +16.08 + 2.83
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Average annual total return:-
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Since inception* +23.26 +21.69 +11.25 + 5.59
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*Inception was on 26th May, 1998 for Class B shares , 20th May, 1998 for Class C
shares and 18th September, 1995 for Class D shares.
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class D and a comparable index. The performances of Class D is
shown after adjustment to reflect the maximum sales load, which are waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- -----------------
Sources used are the net asset value of the Fund computed daily and Morgan
Stanley Capital International.
The MSCI Europe, Australian and Far East Index Index is a market value weighted,
unmanaged index on the weighted share prices of some 1,000 companies listed on
the stock exchanges of Australia, Austria, Belgium, Denmark, France, Germany,
Hong Kong, Italy, Japan, Netherlands, Norway, Singapore/Malaysia, Spain, Sweden,
Switzerland and the United Kingdom. The combined market capitalisation of these
companies represents approximately 60% of the aggregate market value of the
stock exchanges of the above 16 countries. The percentage change in the value of
the index includes dividends reinvested.
5
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GAM INTERNATIONAL FUND -- STATEMENT OF INVESTMENTS
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THE COMMENT
The Fund had a strong first quarter of 1998, underpinned by many of the
fundamental forces that were going on. The large position we have had in Europe
has been directly an influence on the Fund and we think it is being supported by
factors that are helping the European markets to move ahead. The European
economies are still not suffering from that much inflation and that has allowed
short- and long-term interest rates to fall over where they were a year ago. In
Europe, we continue to concentrate on pharmaceuticals and financials. Cyclicals,
in which we are not involved, may disappoint in the second half. In Germany,
slow growth in exports and consumption may indicate a more subdued period ahead.
We have positions in the European defence and aerospace industries, which will
benefit from the need to replace old equipment, such as aircraft. Examples are
British Aerospace and Lagardere (France).
In the second quarter the Asian worries came back to haunt markets and we
are very pleased to say that despite these concerns, the underlying tone in
Europe, where the Fund is predominantly invested, is still very firm. We have
gone through each and every one of the stocks that we own and tried to assess to
what extent Asia represents a problem or an opportunity for these companies and
in general we are very comfortable with that particular prospect.
STATEMENT OF INVESTMENTS
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
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ADJUSTABLE RATE INDEX NOTES - 3.5%
UNITED KINGDOM - 3.5%
+ DLJ ARIN, Indexed to 3,000,000 shares
British Biotech 1999-01-15 7,297,252
+ DLJ ARIN, Indexed to 3,200,000 shares
British Biotech 1998-04-03 3,701,530
+ DLJ ARIN, Indexed to 13,000,000 shares
British Steel 1998-11-09 19,206,621
+ DLJ ARIN, Indexed to 1,000,000 shares
Energise 1999-06-02 6,997,931
+ DLJ ARIN, Indexed to 800,000 shares
Energise 1999-06-03 5,730,691
+ DLJ ARIN, Indexed to 500,000 shares
Energise 1999-06-04 3,673,340
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1998-10-08 4,064,330
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1998-10-08 3,698,386
+ DLJ ARIN, Indexed to 1,000,000 shares
Flextech 1999-05-28 3,871,634
+ DLJ ARIN, Indexed to 4,407,192 shares
General Cable 1998-12-07 6,487,911
+ DLJ ARIN, Indexed to 1,944,000 shares
Seibe 1998-11-13 25,434,945
+ DLJ ARIN, Indexed to 7,650,000 shares
TeleWest Communications 1998-12-07 6,056,628
+ DLJ ARIN, Indexed to 1,500,000 shares
TeleWest Communications 1999-06-14 1,259,881
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TOTAL ADJUSTABLE RATE INDEX NOTES (COST $83,899,962) 97,481,080
----------
BONDS - 0.2%
GERMANY - 0.2%
9,750,000 Bundes Deutchland 6.25% 2024-01-04 6,100,531
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TOTAL BONDS (COST $5,956,647) 6,100,531
----------
BOND WARRANTS - 1.1%
GERMANY - 1.1%
*6,000,000 Bundes Deutschland 6.5% Wts
1998-02-01 16,542,313
*5,439,300 Salomon Brothers Call WTS 6.5%
1999-02-09 15,479,216
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TOTAL BOND WARRANTS (COST $23,268,123) 32,021,529
----------
6
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GAM INTERNATIONAL FUND -- STATEMENT OF INVESTMENTS (CONTINUED)
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MARKET
VALUE
HOLDINGS DESCRIPTION US$
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CURRENCY WARRANTS - 0.6%
GERMANY - 0.6%
US Salomom USD/DEM Call Wts
*8,031,000 1999-01-29 17,597,676
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TOTAL CURRENCY WARRANTS (COST $28,162,969) 17,597,676
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EQUITIES - 86.1%
BELGIUM - 2.5%
*14,400 KBC Bancassurance Holding Strip
806,008 KBC Bancassurance Holding SA 72,198,071
-----------
72,198,071
-----------
DENMARK - 1.9%
442,377 Den Danske Bank 53,149,061
-----------
53,149,061
-----------
FINLAND - 2.5%
965,006 Nokia A 71,089,076
-----------
71,089,076
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FRANCE - 11.1%
641,240 AXA - UAP 72,174,659
*1,076,989 Credit Lyonnais 109,989,607
84,118 L'Oreal 46,824,271
1,215,249 Lagardere SCA Groupe Registered 50,629,508
235,575 Union des Assurances Federales 37,160,138
-----------
316,778,183
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HONG KONG - 1.1%
7,061,580 Hong Kong & China Gas 30,735,919
-----------
30,735,919
-----------
HUNGARY - 0.5%
172,973 Gedeon Richter GDR 13,837,840
-----------
13,837,840
-----------
ITALY - 1.7%
7,798,537 Telecom Italia Mobile SPA 47,729,273
-----------
47,729,273
-----------
JAPAN - 13.7%
2,391,000 Canon 54,519,889
1,693,000 Credit Saison 33,701,907
1,302,000 Honda Motor 46,558,906
3,710,000 Ricoh 39,236,382
360,000 Rohm 37,134,894
534,000 Sony 46,192,768
1,500,000 Takeda Chemica 40,066,597
627,000 TDK 46,521,771
2,779,000 Terumo 44,256,397
-----------
388,189,511
-----------
NETHERLANDS - 8.0%
3,834,659 ABN AMRO Holding 89,818,028
1,289,380 Fortis AMEV 75,565,317
922,345 ING 60,454,334
-----------
225,837,679
-----------
NORWAY - 1.5%
8,179,997 Den Norske Bank 43,033,271
-----------
43,003,271
-----------
SINGAPORE - 0.1%
3,834,366 Want Want Holdings 2,837,431
*966,873 Want Want Hold 638,136
-----------
3,475,567
-----------
SWEDEN - 1.1%
1,447,643 OM Gruppen 30,150,082
-----------
30,150,082
-----------
SWITZERLAND - 10.0%
51,046 Nestle Registered 109,420,403
61,952 Novartis Registered 103,260,152
7,292 Roche Holdings Genusschiene 71,725,774
-----------
284,406,329
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UNITED KINGDOM - 30.4%
10,468,356 Bank of Scotland 117,284,184
4,598,409 Barclays 132,982,328
5,123,592 British Aerosp 39,266,815
5,437,648 Corporate Services Group 21,699,386
4,546,010 Dairy Crest Group 26,035,322
2,386,933 Emap Publishing 48,303,800
2,422,940 Hyder 38,109,391
4,388,652 National Express Group 71,225,558
*4,339,899 Newsquest 23,478,107
4,943,509 Prudential 65,166,727
7
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GAM INTERNATIONAL FUND -- STATEMENT OF INVESTMENTS (CONTINUED)
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MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
3,955,301 Scottish Power 34,671,872
3,268,678 Severn Trent 57,278,684
2,368,824 Severn Trent Class B 1,265,672
3,473,071 Stagecoach Holdings 73,937,080
3,422,457 Thames Water 62,344,938
1,171,180 Zeneca 50,295,955
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863,345,819
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TOTAL EQUITIES (COST $1,810,154,328) 2,443,955,681
-------------
EQUITY RIGHTS - 0.0%
UNITED KINGDOM - 0.0%
*1,395,138 Corporate Services Rts 372,714
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TOTAL EQUITY RIGHTS (COST $521,991) 372,714
-------------
EQUITY WARRANTS - 0.7%
HONG KONG - 0.0%
*1,217,890 Hong Kong & China Gas Wts 1998-09-30 83,309
-------------
83,309
-------------
JAPAN - 0.6%
*632,400 Nikkei 255 Wts 1999-12-03 9,612,480
*6,019,119 Sony Wts 1998-12-04 6,244,003
-------------
15,856,483
-------------
SWITZERLAND - 0.0%
*7,800 Swiss Bank Corp Bearer Wts 2000 182,857
-------------
182,857
-------------
UNITED STATES - 0.1%
*704,000 Goldman Wts 1999-06-11 4,005,760
-------------
TOTAL EQUITY WARRANTS (COST $21,096,168) 20,128,409
-------------
OPTIONS - 3.7%
FRANCE - 3.6%
*4,221 CAC 40 Index 1998-09-30
3,100 FRF Calls 41,081,652
*5,500 CAC 40 Index 1999-03-30
3,550 FRF Calls 37,985,186
*6,500 CAC 40 Long Index 1999-09-30
4,450 FRF Calls 23,125,217
-------------
102,192,055
-------------
JAPAN - 0.1%
*4,015,600 Nikkei 225 Index 1999-01-30
15,057 JPY Puts 2,502,756
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TOTAL OPTIONS (COST $65,236,090) 104,694,811
-------------
TIME DEPOSITS - 2.2%
UNITED STATES - 2.2%
62,153,788 Republic National Bank
5.25% 1998-07-01 62,153,788
-------------
TOTAL TIME DEPOSITS (COST $62,153,788) 62,153,788
-------------
TOTAL INVESTMENTS (COST $2,100,450,066**) - 98.1% 2,784,506,219
-------------
NET CURRENT ASSETS - 1.9% 54,323,175
-------------
TOTAL NET ASSETS - 100.0% 2,838,829,394
=============
* Non-income producing security.
** Cost for federal income tax purposes is identical.
+ Adjustable rate index notes are inversely indexed to the value of the
underlying security.
Glossary of Terms:
FR- Foreign Registered
HKD- Hong Kong Dollar
PHP- Philippine Peso
See notes to financial statements.
8
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GAM INTERNATIONAL FUND -- STATEMENT OF INVESTMENTS (CONTINUED)
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GEOGRAPHIC ANALYSIS AS AT 30TH JUNE, 1998
(PIE CHART HERE)
UNITED KINGDOM 30.42%
FRANCE 14.76%
JAPAN 14.32%
SWITZERLAND 10.03%
NETHERLANDS 7.96%
DENMARK 1.87%
BELGIUM 2.54%
GERMANY 1.96%
OTHER 14.23%
NET CURRENT ASSETS 1.91%
INVESTMENT ANALYSIS AS AT 30TH JUNE, 1998
(PIE CHART HERE)
HEALTH & PERSONAL CARE 13.43%
INSURANCE 8.81%
BUSINESS & PUBLIC SERVICES 6.38%
TRANSPORTATION - ROAD & RAIL 5.11%
FOOD & HOUSEHOLD PRODUCTS 4.89%
OTHER 37.68%
NET CURRENT ASSETS 1.91%
BANKING 21.79%
9
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GAM GLOBAL FUND
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FUND MANAGEMENT
JOHN R. HORSEMAN JOINED GAM IN 1987, INITIALLY AS A MEMBER
OF THE ASIAN TEAM BASED IN HONG KONG. AFTER MOVING TO THE
LONDON OFFICE IN 1990 HE IS NOW RESPONSIBLE FOR A NUMBER OF
GAM'S GLOBAL AND INTERNATIONAL FUNDS. PRIOR TO JOINING GAM
[PHOTO] IN 1987 HE WORKED FOR BA INVESTMENT MANAGEMENT INTERNATIONAL
LTD AND WAS RESPONSIBLE FOR CERTAIN OF THE BANK OF AMERICA'S
GLOBAL EQUITY FUNDS. HE COMMENCED MANAGEMENT OF GAM GLOBAL
AND GAM INTERNATIONAL FUNDS ON 1ST APRIL, 1990. MR HORSEMAN
ALSO MANAGES THE OFFSHORE FUND GAM UNIVERSAL US$ INC. HE WAS
EDUCATED AT THE UNIVERSITY OF BIRMINGHAM.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies with
principal offices in countries including the United States, Canada, the United
Kingdom, Continental Europe, and the Pacific Basin. However, if the Fund
determines that the long-term capital appreciation of debt securities may equal
or exceed the return on equity securities, it may be substantially invested in
debt securities of companies and governments, their agencies and
instrumentalities. Any income realized by the Fund on its investments will be
incidental to its goal of long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO SHAREHOLDERS
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THE FACTS - CLASS A SHARES
GAM
Global
Class A
(after Average
GAM maximum MSCI 1 Month
Global sales load World Deposit
Class A of 5%) Index Rate
30th June, 98 US$22.12 US$23.28 1,085.74
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% % % %
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Quarter to June, 98 + 5.18 - 0.08 + 2.12 + 1.39
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Jan - June, 1998 +18.23 +12.31 +16.85 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
5 years to June, 1998 +25.57 +24.29 +16.16 + 5.15
- --------------------------------------------------------------------------------
10 years to June, 1998 +17.32 +16.72 +11.78 + 5.97
- --------------------------------------------------------------------------------
Since inception +14.87 +14.39 +13.22 + 6.14
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was
on 28th May, 1986, Class B on 26th May, 1998 and Class C on 20th May and 1998
Class D inception was on 6th October, 1995. Indications of past performance are
not necessarily indicative of future performance. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
10
<PAGE>
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GAM GLOBAL FUND -- REPORT TO SHAREHOLDERS (CONTINUED)
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(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------
Sources used are the net asset value of the Fund computed daily and Morgan
Stanley Capital International.
The MSCI World Index is an arithmetical average weighted by market value of the
performance of some 1,400 securities listed on the stock exchanges of Australia,
Austria, Belgium, Canada, Denmark, France, Finland, Germany, Hong Kong, Italy,
Japan, Netherlands, New Zealand, Norway, Singapore, Malaysia, Spain, Sweden,
Switzerland, the United Kingdom and the United States of America. The combined
market capitalisation of these companies represents approximately 60% of the
aggregate market value of the stock exchanges of the above 20 countries. The
percentage change in the value of the index includes dividends reinvested.
Annual Performance - Class A
(BAR GRAPH HERE)
Average Annual Total Return - Class A
(BAR GRAPH HERE)
GAM Global
GAM Class A MSCI
Global (after maximum World
Class A sales load of 5%) Index
YEAR % % %
- --------------------------------------------------------------------------------
1994 (16.15) (20.35) 5.58
1995 36.25 29.44 21.33
1996 12.74 7.11 14.00
1997 34.95 28.20 16.23
1998* 18.23 12.31 16.85
*6 months
11
<PAGE>
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GAM GLOBAL FUND -- REPORT TO SHAREHOLDERS (CONTINUED)
- --------------------------------------------------------------------------------
THE FACTS - CLASS B SHARES
GAM MSCI Average
Global World 1 Month
Class B Index Deposit Rate
30th June, 98 US$21.11 1,085.74
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 5.34 + 1.12 + 0.53
- --------------------------------------------------------------------------------
THE FACTS - CLASS C SHARES
GAM MSCI Average
Global World 1 Month
Class C Index Deposit Rate
30th June, 98 US$22.11 1,085.74
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 4.34 + 0.57 + 0.64
- --------------------------------------------------------------------------------
THE FACTS - CLASS D SHARES
GAM Global
Class D
(after Average
GAM maximum MSCI 1 Month
Global sales load World Deposit
Class D of 3.5%) Index Rate
30th June, 98 US$21.85 US$22.64 1,085.74
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 + 5.15 - 0.11 + 2.12 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 +18.11 +12.20 +16.85 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
1 year to June, 1998 +31.93 +25.33 +17.46 + 5.76
- --------------------------------------------------------------------------------
Since inception* +26.34 +23.99 +19.56 + 5.59
- --------------------------------------------------------------------------------
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class D and a comparable index. The performance of Class D is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------
Sources used are the net asset value of the Fund computed daily and Morgan
Stanley Capital International.
The MSCI World Index is an arithmetical average weighted by market value of the
performance of some 1,400 securities listed on the stock exchanges of Australia,
Austria, Belgium, Canada, Denmark, France, Finland, Germany, Hong Kong, Italy,
Japan, Netherlands, New Zealand, Norway, Singapore, Malaysia, Spain, Sweden,
Switzerland, the United Kingdom and the United States of America. The combined
market capitalisation of these companies represents approximately 60% of the
aggregate market value of the stock exchanges of the above 20 countries. The
percentage change in the value of the index includes dividends reinvested.
12
<PAGE>
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GAM GLOBAL FUND - STATEMENT OF INVESTMENTS
- --------------------------------------------------------------------------------
THE COMMENT
The US market has consolidated as earnings expectations have been revised
downwards. The Fund has maintained its exposure to pharmaceuticals, financials
and IT outsourcing and other areas such as telecom equipment where we have
confidence that earnings will continue to grow. Positions in computer hardware
and airlines were reduced. In Europe, most stock markets performed well as the
dollar remained strong, interest rates low and corporate restructuring continued
to enhance earnings. These factors have provided an excellent backdrop for the
Fund as it remained within sectors such as financials and pharmaceuticals that
have benefited from these trends. Our investments in Japan remain unchanged and
our exposure is biased towards electrical exporters whose earnings should
continue to benefit from the weakness of the yen.
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
ADJUSTABLE RATE INDEX NOTES - 2.2%
UNITED KINGDOM - 0.6%
+ DLJ ARIN, Indexed to 115,000 shares
British Biotech 1999-05-07 132,951
+ DLJ ARIN, Indexed to 85,000 shares
Flextech 1998-10-13 372,368
+ DLJ ARIN, Indexed to 120,360 shares
General Cable 1999-06-10 119,072
+ DLJ ARIN, Indexed to 75,000 shares
TeleWest Communications 1999-03-24 77,015
+ DLJ ARIN, Indexed to 100,000 shares
TeleWest Communications 1999-04-02 117,714
----------
819,120
----------
UNITED STATES - 1.6%
+ DLJ ARIN, Indexed to 3,300 shares
Global Star Tele 1999-01-12 1,066,097
+ DLJ ARIN, Indexed to 250,000 shares
Worldcom 1998-10-19 433,542
+ DLJ ARIN, Indexed to 12,500 shares
Worldcom 1998-10-28 274,219
+ DLJ ARIN, Indexed to 18,000 shares
Worldcom 1998-11-12 408,375
+ DLJ ARIN, Indexed to 14,000 shares
Worldcom 1998-12-29 162,512
----------
2,344,745
----------
TOTAL ADJUSTABLE RATE INDEX NOTES (COST $2,977,701) 3,163,865
----------
BOND WARRANTS - 0.3%
GERMANY - 0.3%
*166,800 Salomon Bundes 6.5% Wts 1999-02-09 474,681
----------
TOTAL BOND WARRANTS (COST $403,546) 474,681
----------
CURRENCY WARRANTS - 0.4%
GERMANY - 0.4%
*239,000 US Salomon USD/DEM Call Wts 1999-01-29 523,701
----------
TOTAL CURRENCY WARRANTS (COST $976,176) 523,701
----------
EQUITIES 86.6%
FINLAND - 1.5%
29,758 Nokia A 2,192,182
----------
2,192,182
----------
13
<PAGE>
- --------------------------------------------------------------------------------
GAM GLOBAL FUND - STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
FRANCE - 4.3%
33,184 Credit Lyonnais 3,388,981
2,762 L'Oreal 1,537,467
8,502 Union des Assurances Federales 1,341,125
-----------
6,267,573
-----------
JAPAN - 7.5%
99,000 Canon 2,257,410
66,000 Honda Motor 2,360,129
17,000 Rohm 1,753,592
26,500 Sony 2,292,338
29,000 TDK 2,151,725
-----------
10,815,194
-----------
NETHERLANDS - 5.1%
183,733 ABN-AMRO Holding 4,303,521
51,110 Fortis AMEV 2,995,349
-----------
7,298,870
-----------
SWITZERLAND - 3.6%
3,071 Novartis Registered 5,118,671
10 Roche Holding Genusscheine 98,362
-----------
5,217,033
-----------
UNITED KINGDOM - 6.2%
162,961 Barclays 4,712,702
113,323 Hyder 1,782,409
133,157 Thames Water 2,425,645
-----------
8,920,756
-----------
UNITED STATES - 58.4%
66,810 Abbott Laboratories 2,730,859
14,703 American International Group 2,146,638
*27,043 Amerisource Health Corp 1,776,387
*31,160 BMC Software 1,618,373
22,402 Burlington Northern/Santa Fe 2,199,596
51,218 Chase Manhattan 3,866,959
15,095 Citicorp 2,252,929
*39,347 Cognizant Corp 2,478,861
53,222 Computer Associates International 2,957,147
34,634 Computer Sciences 2,216,576
29,246 Estee Lauder A 2,038,081
54,176 Federal Home Loan Mortgage 2,549,658
63,776 First Union 3,714,952
*30,933 Fiserv 1,313,686
80,803 Galileo Intl 3,641,185
36,258 Johnson & Johnson 2,674,028
*62,843 Kroger 2,694,394
33,983 Lucent Technologies 2,826,961
68,563 MBNA 2,262,579
34,926 Medtronic 2,226,532
21,439 Merck 2,867,466
65,117 Merrill Lynch 6,007,043
*38,847 Microsoft 4,210,044
35,230 Morgan Stan./Dean Witter Disc 3,219,141
44,915 NationsBank 3,435,997
40,743 Omnicom Group 2,032,057
*34,385 Palm Harbor Homes 1,465,661
*13,493 Rambus 824,760
29,790 Schering-Plough 2,729,509
81,882 Scientific Atlanta 2,077,756
28,168 Shared Medical Systems Corp 2,068,588
*35,730 Sungard Data 1,371,139
*27,186 Tellabs 1,947,197
84,442,739
-----------
TOTAL EQUITIES (COST $103,076,788) 125,154,347
-----------
Equity Warrants - 0.2%
HONG KONG - 0.0%
*31,146 Hong Kong & China Gas
Wts 1999-09-30 2,131
----------
2,131
----------
JAPAN - 0.2%
*289,931 Sony Wts 1998-12-04 300,763
----------
300,763
----------
SWITZERLAND - 0.0%
*195 Swiss Bank Corp Bearer
Wts 2000-06-30 4,571
----------
4,571
----------
TOTAL EQUITY WARRANTS (COST $436,007) 307,465
----------
OPTIONS - 3.5%
FRANCE - 3.4%
*477 CAC 40 Index
3,550 FRF Calls 1999-03-30 3,294,352
*462 CAC 40 Index
4,450 FRF Calls 1999-09-30 1,643,669
----------
4,938,021
----------
JAPAN - 0.1%
*267,700 Nikkei 225 Index
15,057 JPY Puts 1999-01-30 166,846
----------
166,846
----------
TOTAL OPTIONS (COST $3,676,596) 5,104,867
----------
14
<PAGE>
================================================================================
GAM GLOBAL FUND--STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
TIME DEPOSITS - 17.9%
UNITED STATES - 17.9%
25,867,488 Morgan Guaranty London 5.25%
5.25% 1998-07-01 25,867,488
-----------
25,867,488
-----------
TOTAL TIME DEPOSITS (COST $25,867,488) 25,867,488
-----------
TOTAL INVESTMENTS (COST $137,414,302**)-111.1% 160,596,414
NET CURRENT LIABILITIES - (11.1)% (16,005,356)
-----------
TOTAL NET ASSETS - 100.0% 144,591,058
-----------
* Non-income producing security.
** Cost for federal income tax purposes is identical.
+ Adjustable rate index notes are inversely indexed to the value of the
underlying security.
Glossary of Terms:
DEM - German Deutchemark
FR - Foreign Registered
FRF - French Franc
HKD - Hong Kong Dollar
JPY - Japanese Yen
USD - United States Dollar
See notes to financial statements.
[THE FOLLOWING TABLE REPRESENTS GEOGRAPHIC PIE CHART]
GEOGRAPHIC ANALYSIS AS AT
30TH JUNE, 1998
NET CURRENT LIABILITIES (11.07)%
UNITED STATES 50.02%
OTHER 20.36%
SWITZERLAND 3.61%
NETHERLANDS 5.05%
UNITED KINGDOM 6.74%
JAPAN 7.54%
FRANCE 7.75%
[THE FOLLOWING TABLE REPRESENTS INVESTMENT PIE CHART]
INVESTMENT ANALYSIS AS AT
30TH JUNE, 1998
NET CURRENT LIABILITIES (11.07)%
BUSINESS & PUBLIC SERVICES 16.93%
HEALTH & PERSONAL CARE 16.55%
BANKING 17.75%
FINANCIAL SERVICES 9.71%
ELECTRICAL & ELECTRONICS 6.25%
INSURANCE 4.48%
OTHER 39.59%
15
<PAGE>
================================================================================
GAM EUROPE FUND
================================================================================
Fund Management
JOHN BENNETT, INVESTMENT DIRECTOR, IS RESPONSIBLE FOR
EUROPEAN MARKETS. PRIOR TO JOINING GAM IN 1993, HE WAS A
SENIOR FUND MANAGER AT IVORY & SIME, RESPONSIBLE FOR
[PHOTO] CONTINENTAL EUROPEAN EQUITY PORTFOLIOS. HE COMMENCED
MANAGEMENT OF GAM EUROPE FUND ON 1ST JANUARY, 1993. MR
BENNETT ALSO MANAGES THE OFFSHORE FUND GAM PAN EUROPEAN
INC. HE IS BASED IN LONDON.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in Europe.
However, if the Fund determines that the long-term capital appreciation of debt
securities may equal or exceed the return on equity securities, it may be
substantially invested in debt securities of companies and governments, their
agencies and instrumentalities. Any income realized by the Fund on its
investments will be incidental to its goal of long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS - CLASS A SHARES
GAM
Europe
Class A
(after Average
GAM maximum MSCI 1 Month
Europe sales load Europe Deposit
Class A of 5%) Index Rate
30th June, 98 US$15.02 US$15.81 1,326.45
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 - 0.40 - 5.38 + 5.22 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 +19.49 +13.52 +26.67 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
3 years to June, 1998 +25.22 +23.10 +27.35 + 5.62
- --------------------------------------------------------------------------------
5 years to June, 1998 +19.62 +18.40 +23.42 + 5.15
- --------------------------------------------------------------------------------
Since inception + 8.72 + 8.06 +15.06 + 5.39
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was on
1st January, 1990, Class B on 27th May, 1998 and Class C on 21st May, 1998.
Indications of past performance are not necessarily indicative of future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
16
<PAGE>
================================================================================
GAM EUROPE FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------
Sources used are the net asset value of the Fund computed daily and Morgan
Stanley Capital International.
The MSCI Europe Index is an arithmetical average weighted by market value of the
performance of some 600 securities listed on the stock exchanges of Austria,
Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Spain,
Sweden, Switzerland and the United Kingdom. The combined market capitalisation
of these companies represents approximately 60% of the aggregate market value of
the stock exchanges of the above 13 countries. The percentage change in the
value of the index includes dividends reinvested.
[CHART BELOW REPRESENT BAR GRAPH]
AVERAGE ANNUAL TOTAL RETURN - CLASS A
One Year Three Years Five Years Since Inception
23.6 25.22 19.62 8.72
29.75 27.35 18.40 8.06
37.48 23.10 23.42 15.06
GAM Europe
GAM Europe
(after maximum)
sales load of 5%)
MSCI Europe Index
ANNUAL PERFORMANCE - CLASS A
GAM Europe
GAM Europe
(after maximum)
sales load of 5%)
MSCI Europe Index
GAM
Europe
Class A
GAM after maximum MSCI
Europe sales load Europe
Class A of 5%) Index
Year % % %
- --------------------------------------------------------------------------------
1994 (3.11) (7.95) 2.66
1995 16.77 10.93 22.13
1996 21.32 15.25 21.57
1997 27.55 21.17 24.20
1998* 19.49 13.52 26.67
*6 months
17
<PAGE>
================================================================================
GAM EUROPE FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
THE FACTS - CLASS B SHARES
Average
GAM MSCI 1 Month
Europe Europe Deposit
Class B Index Rate
30th June, 98 US$15.04 1,326.45
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 0.47 + 1.12 + 0.52
- --------------------------------------------------------------------------------
THE FACTS - CLASS C SHARES
Average
GAM MSCI 1 Month
Europe Europe Deposit
Class B Index Rate
30th June, 98 US$15.04 1,326.45
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 1.30 - 0.24 + 0.64
- --------------------------------------------------------------------------------
* Inception was on 27th May, 1998 for Class B shares and 21st May, 1998 for
Class C shares.
THE COMMENT The second quarter has seen a return of volatility to Europe's
equity markets. Throughout the period, we have remained focused on our key
investment themes. The Fund's weighting in the telecommunications sector has
risen to 24.43% as we seek to capitalise on the growth and structural changes
facing this industry. Latterly, our exposure to Europe's fixed line telecom
operators has been supplemented by holdings in the mobile sector, such as
Vodafone plc, Orange plc and STET Hellas. Financial stocks represent our second
largest industry weighting following some profit taking during the quarter.
Europe's economic outlook remains attractive with gathering evidence of domestic
recovery. Worthy of mention is France, where the dearth of growth and confidence
is finally yielding to better times. The Fund is invested in a selected group of
French businesses which are in an excellent position to prosper.
18
<PAGE>
================================================================================
GAM EUROPE FUND - STATEMENT OF INVESTMENTS
================================================================================
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
EQUITIES - 102.2%
DENMARK - 5.8%
11,800 Bang & Olufsen Holding Class B 850,621
8,755 Den Danske Bank 1,051,863
7,300 Jyske Bank Registered 862,393
12,000 Spar Nord Holding 634,362
-----------
3,399,239
-----------
FINLAND - 4.3%
28,450 Helsinki Telephone Class E 1,324,499
13,445 Kesko 211,100
13,100 Nokia A 965,038
-----------
2,500,637
-----------
FRANCE - 21.7%
12,935 Alcatel Alsthom 2,635,601
8,000 AXA - UAP 900,439
15,640 Banque Nationale de Paris 1,278,848
1,985 CGIP 1,049,752
8,913 Dassault Systems 420,459
15,900 France Telecom 1,097,459
4,000 Peugeot 860,713
22,300 Renault 1,269,382
4,865 St Gobain 902,700
5,585 Strafor Facom 546,344
6,193 Technip 757,532
9,000 Valeo 920,632
-----------
12,639,861
-----------
GERMANY - 13.1%
15,000 BASF 711,453
750 Bayer Motoren Werk 757,635
*224 Bayer Motoren Werk New 223,049
20,220 BHF Bank 766,670
41,000 BHW Holding 708,485
9,635 Deutsche Bank 816,969
29,000 Deutsche Telekom 783,458
4,325 Koenig & Bauer 1,127,645
7,200 Mannesmann 731,323
14,600 Veba 996,200
-----------
7,622,887
-----------
GREECE - 2.4%
*34,000 STET Hellas Telecommunications ADR 1,411,000
-----------
1,411,000
-----------
HUNGARY - 1.7%
32,665 Magyar Tavkozlesi ADR 961,576
-----------
961,576
-----------
ITALY - 8.0%
33,600 Banca Popolare di Bergamo Credit 692,409
*573,400 Olivetti Spa 853,936
335,000 Poligrafici Editoriale Spa 977,993
290,190 Telecom Italia Spa 2,137,954
-----------
4,662,292
-----------
NETHERLANDS - 5.5%
25,535 Heijmans Group 711,184
20,795 ING 1,362,991
17,350 Koninklijke 668,484
*17,350 TNT Post Group 443,949
-----------
3,186,608
-----------
NORWAY - 3.0%
46,960 Orkla Class A 1,100,034
22,160 Sparbanken 637,996
1,738,030
PORTUGAL - 0.0%
*8,297 Sotancro --
-----------
--
-----------
RUSSIA - 0.8%
*11,104 Vimpel-Communications ADR 494,822
-----------
494,822
-----------
SPAIN - 3.6%
10,000 Banco Popular Registered 854,802
27,224 Telefonica de Espana 1,261,409
-----------
2,116,211
-----------
SWEDEN - 3.3%
*23,236 Fastighetspartner Balder Units 23,322
28,800 LM Ericsson B (Fria) 841,913
23,236 Svenska Handlesbank Class A 1,078,654
-----------
1,943,889
-----------
SWITZERLAND - 9.1%
1,100 Hilti Schaan 922,539
435 Nestle Registered 932,451
*661 Novartis Registered 1,101,739
3,900 Union Bank Of Switzerland 1,452,552
1,350 Zurich Vericher Namen Registered 862,973
-----------
5,272,25
-----------
19
<PAGE>
================================================================================
GAM EUROPE FUND - STATEMENT OF INVESTMENTS
================================================================================
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
UNITED KINGDOM - 19.2%
71,730 Bank of Scotland 803,640
140,000 British Telecom 1,727,472
251,493 Burford Holdings 436,715
29,592 CGU 552,895
29,644 Daily Mail & General Trust Class A 1,341,852
31,485 Glaxo Wellcome 945,743
*84,480 Orange 895,707
51,150 Prudential 674,274
124,540 Safeway 820,341
239,250 Somerfield 1,529,992
116,000 Vodaphone Group 1,472,975
-----------
11,201,606
-----------
UNITED STATES - 0.7%
*25,000 Amdocs Ltd. 378,125
-----------
378,125
-----------
TOTAL EQUITIES (COST $50,324,634) 59,529,037
-----------
EQUITY RIGHTS - 0.0%
Belgium - 0.0%
*90 Generale de Banque Rts 2
-----------
TOTAL EQUITY RIGHTS (COST $113) 2
-----------
TOTAL INVESTMENTS (COST $50,324,747**) - 102.2% 59,529,039
NET CURRENT LIABILITIES - (2.2)% (1,256,141)
-----------
TOTAL NET ASSETS - 100.0% 58,272,898
-----------
* Non-income producing security.
** Cost for federal income tax purposes is identical.
+ Fair value determined by the Board of Directors.
Glossary of Terms:
ADR - American Depositary Receipt
See notes to financial statements.
[CHART BELOW REPRESENT PIE CHART]
GEOGRAPHIC ANALYSIS AS AT
30TH JUNE, 1998
AREA %
- ------------------------------------------------
NET CURRENT LIABILITIES (2.16)
SWITZERLAND 9.05
SWEDEN 3.34
SPAIN 3.63
RUSSIA 0.85
NORWAY 2.98
NETHERLANDS 5.47
ITALY 8.00
HUNGARY 1.65
GREECE 2.42
GERMANY 13.08
FRANCE 21.69
FINLAND 4.29
DENMARK 5.83
OTHER 0.7
UNITED KINGDOM 19.22
INVESTMENT ANALYSIS AS AT
30TH JUNE, 1998
AREA %
- ------------------------------------------------
NET CURRENT LIABILITIES (2.16)
TELECOMMUNICATIONS 24.43
BANKING 18.76
ELECTRICAL ELECTRONICS 7.62
AUTOMOBILES 3.34
FINANCIAL SERVICES 5.08
MACHINERY ENGINEERING 4.49
OTHER 36.44
20
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND
================================================================================
FUND MANAGEMENT
- --------------------------------------------------------------------------------
MICHAEL S. BUNKER, INVESTMENT DIRECTOR, HAS OVERALL
RESPONSIBILITY FOR ASIAN INVESTMENT POLICY. PRIOR TO
JOINING GAM IN 1985, HE WORKED FOR J. ROTHSCHILD
CHARTERHOUSE MANAGEMENT LTD. IN HONG KONG. HE HAS OVER 20
[PHOTO] YEARS INVESTMENT EXPERIENCE, PRIMARILY IN ASIAN MARKETS. HE
COMMENCED MANAGEMENT OF GAM PACIFIC BASIN FUND ON 6TH MAY,
1997. MR BUNKER ALSO MANAGES THE OFFSHORE FUND GAM PACIFIC
INC. MR BUNKER IS NOW BASED IN LONDON, HAVING LIVED IN HONG
KONG FOR 3 YEARS.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies with
principal offices in the Pacific Basin, including Japan, Hong Kong, Singapore,
Malaysia, Indonesia, the Philippines, Korea, Taiwan, India, Australia and New
Zealand. However, if the Fund determines that the long-term capital appreciation
of debt securities may equal or exceed the return on equity securities, it may
be invested substantially in debt securities of Pacific Basin companies and the
governments of the Pacific Basin, their agencies and instrumentalities. Any
income realized by the Fund on its investments will be incidental to its goal of
long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS - CLASS A SHARES
GAM
Pacific Basin
Class A (after Average
GAM maximum MSCI 1 Month
Pacific Basin sales load Pacific Depsosit
Class A of 5%) Index Rate
30th June, 98 US$8.10 US$8.53 1,473.74
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 -19.40 -23.43 - 8.77 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 -16.41 -20.59 - 5.82 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
5 years to June, 1998 - 4.02 - 5.00 - 5.85 + 5.15
- --------------------------------------------------------------------------------
10 years to June, 1998 + 4.53 + 4.00 - 2.91 + 5.97
- --------------------------------------------------------------------------------
Since inception + 3.96 + 3.48 - 2.39 + 6.10
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was on
6th May, 1987, Class B on 28th May, 1998, Class C on 2nd June, 1998 and Class D
on the 18th October, 1995. Indications of past performance are not necessarily
indicative of future performance. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
21
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------------------------------------------------------------------------
Sources used are the net asset value of the Fund computed daily, Morgan Stanley
Capital International.
The MSCI Pacific Index is an arithmetical average weighted by market value of
the performance of some 410 securities listed on the stock exchanges of
Australia, Hong Kong, New Zealand, Singapore/Malaysia and Japan. The combined
market capitalisation of these companies represents approximately 60% of the
aggregate market value of the stock exchanges of the above 5 countries. The
percentage change in the value of the index includes dividends reinvested.
[CHART BELOW REPRESENT BAR CHART]
AVERAGE ANNUAL TOTAL RETURN - CLASS A
Year %
- ---------------------------------------------------------
One Year -46.78
-34.46
-49.44
Five Years -4.02
-5.00
-5.85
Ten Years 4.53
4.00
-2.91
Since Inception 3.96
3.48
-2.39
GAM Pacific Basin
GAM Pacific Basin
(after maximum
sales load of 5%)
MSCI Pacific Index
ANNUAL PERFORMANCE - CLASS A
GAM Pacific Basin
GAM Pacific Basin
(after maximum
sales load of 5%)
MSCI Pacific Index
GAM
Pacific Basin
Class A (after
GAM maximum MSCI
Pacific Basin sales load Pacific
Class A of 5%) Index
Year % % %
- --------------------------------------------------------------------------------
1994 7.41 2.04 13.03
1995 4.56 (0.72) 2.99
1996 (0.39) (5.37) (8.40)
1997 (30.00) (33.50) (25.34)
1998* (16.41) (20.59) (5.82)
*6 months
22
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
THE FACTS - CLASS B SHARES
GAM MSCI Average
Pacific Basin World 1 Month
Class B Index Deposit Rate
30th June, 98 US$8.22 1,473.74
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since inception* - 7.64 - 0.58 + 0.50
- --------------------------------------------------------------------------------
THE FACTS - CLASS C SHARES
GAM MSCI Average
Pacific Basin World 1 Month
Class B Index Deposit Rate
30th June, 98 US$8.22 1,473.74
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since inception* - 4.92 + 1.37 + 0.42
- --------------------------------------------------------------------------------
THE FACTS - CLASS D SHARES
GAM
Pacific Basin
Class D (after Average
GAM maximum MSCI 1 Month
Pacific Basin sales load Pacific Deposit
Class D of 3.5%) Index Rate
30th June, 98 US$8.31 US$8.61 1,473.74
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 -16.65 -19.57 - 8.77 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 -13.62 -16.64 - 5.82 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
Since inception* -16.78 -17.87 -12.60 + 5.58
- --------------------------------------------------------------------------------
* Inception was on 28th May, 1998 for Class B shares, 2nd June, 1998 for Class C
shares and 18th October, 1995 for Class D shares.
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class D and a comparable index. The performance of Class D is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------
Sources used are the net asset value of the Fund computed daily, Morgan Stanley
Capital International.
The MSCI Pacific Index is an arithmetical average weighted by market value of
the performance of some 410 securities listed on the stock exchanges of
Australia, Hong Kong, New Zealand, Singapore/Malaysia and Japan. The combined
market capitalisation of these companies represents approximately 60% of the
aggregate market value of the stock exchanges of the above 5 countries. The
percentage change in the value of the index includes dividends reinvested.
23
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND - STATEMENT OF INVESTMENTS
================================================================================
THE COMMENT
Regional problems centre around a shortage of liquidity in Asian banking sectors
and worries that the full extent of the level of non-performing loans will not
be known until next year. The situation is being exacerbated by the fall in the
value of the yen and weakness of the Japanese banking system which is
experiencing a contraction in its ability to provide loans to the smaller Asian
economies. Those areas which offer the best fundamental value after the sharp
stockmarket declines are blue chip companies in Hong Kong, Singapore and
Australia. In Japan continued problems in the economy make only a limited number
of domestic companies appear attractively valued in terms of management, balance
sheet strength and earnings growth. Our selection continues to include household
names such as Sony, Canon and Hitachi.
as at 30th June, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
EQUITIES 89.5%
AUSTRALIA - 11.6%
61,000 Australia & New Zealand Bank Group 421,824
54,000 Coles Myer 211,179
296,310 Colonial 897,600
246,000 Novus Petroleum 305,409
49,475 Rio Tinto 589,663
-----------
2,425,675
-----------
HONG KONG - 23.7%
169,000 Cheung Kong (Holdings) 833,222
98,000 China Resources Enterprise 101,187
545,380 Hong Kong & China Gas 619,430
358,000 Hong Kong Land Holdings 447,500
127,000 Hong Kong Telecommunications 237,674
31,200 HSBC Holdings (HKD) 765,101
354,000 Kerry Properties 260,429
49,000 Shanghai Industrial Holdings 115,417
155,000 Sun Hung Kai Properties 662,171
145,000 Swire Pacific Class A 547,399
383,352 Wharf (Holdings) 378,503
-----------
4,968,033
-----------
INDONESIA - 1.0%
1,819,800 Bank Bali 105,585
525,000 Hero Supermarket 38,524
1,018,000 Mayorah Indah 41,693
*429,000 Modern Photo Film 24,159
-----------
209,961
-----------
JAPAN - 36.7%
10,000 Aiful 490,065
27,000 Anritsa 244,30
930,000 Canon 684,064
37,000 Hitachi 242,390
10,000 Japan Associated Finance 267,835
56,000 Mitsubishi Estate 494,553
24,000 Mori Seiko 295,168
15,000 Murata Manufacturing 488,617
63,000 Nagoya Railroad 191,538
38 Nippon Tel & Tel 316,334
68,000 Nissan Fire & Marine Insurance 234,797
20,000 Nomura Securities 233,812
36,000 Omron 552,463
17,600 ORIX 1,193,760
24
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND - STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
JAPAN (CONTINUED)
10,200 Sony 882,334
50,000 Sumitomo Marine & Fire Insurance 280,864
10,000 Tachihi Enterprise 235,260
34,000 Taiyo Yuden 363,270
-----------
7,691,433
-----------
KOREA - 0.0%
*2,075 Shinhan Bank 6,891
-----------
6,891
-----------
PHILLIPINES - 3.8%
850,200 Ayala Land B 244,662
238,400 Bank of The Phillipine Islands 485,947
*3,766,000 Cebu Holdings Inc (PHP) 65,928
-----------
796,537
-----------
SINGAPORE - 10.3%
307,000 DBS Land 255,226
151,775 Development Bank of Singapore (FR) 842,694
67,000 Keppel 101,057
563,000 Kim Eng Holdings 130,386
240,110 Overseas Chinese Banking (FR) 819,853
-----------
2,149,216
-----------
THAILAND - 2.4%
129,000 Bangkok Bank (FR) 158,957
156,228 Krung Thai Bank (FR) 20,732
127,750 Post Publishing (FR) 69,627
105,000 Siam Commercial Bank (FR) 33,590
238,610 Thai Farmers Bank (FR) 210,621
-----------
493,527
-----------
TOTAL EQUITIES (COST $31,420,269) 18,741,273
-----------
EQUITY WARRANTS 0.1%
AUSTRALIA - 0.1%
*59,262 Colonial Ltd Wts 1998-07-09 13,611
-----------
13,611
-----------
HONG KONG - 0.0%
*24,790 Hong Kong & China Gas Wts 1999-09-30 1,696
*19,167 Wharf (Holdings) Wts 1999-12-31 --
-----------
1,696
-----------
INDONESIA - 0.0%
*5,600 Bank Bali Wts 2000-08-29 (FR) 38
-----------
38
-----------
THAILAND - 0.0%
*17,763 Thai Farmers Bank Wts 2002-09-15 (FR) 1,052
-----------
1,052
-----------
TOTAL EQUITY WARRANTS (COST $35,941) 16,397
-----------
TIME DEPOSITS - 6.8%
UNITED STATES - 6.8%
1,410,067 NationsBank
5.25% 1998-07-01 1,410,067
-----------
TOTAL TIME DEPOSITS (COST $1,410,067) 1,410,067
-----------
TOTAL INVESTMENTS (COST $32,866,277**) -96.4% 20,167,737
NET CURRENT ASSETS -3.6% 762,899
-----------
TOTAL NET ASSETS - 100.0% 20,930,636
-----------
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of Terms:FR - Foreign RegisteredHKD - Hong Kong DollarPHP - Phillipine
Peso
See notes to financial statements.
25
<PAGE>
[CHARTS BELOW REPRESENT PIE GRAPHS]
GEOGRAPHIC ANALYSIS
AS AT 30TH JUNE, 1998 %
- -------------------------------------------------------
JAPAN 36.75
NET CURRENT ASSETS 3.64
INDONESIA 1.00
THAILAND 2.36
PHILLIPPINES 3.81
SINGAPORE 10.27
AUSTRALIA 11.66
HONG KONG 23.74
INVESTMENT ANALYSIS
AS AT 30TH JUNE, 1998 %
- -------------------------------------------------------
BANKING 18.50
FINANCIAL SERVICES 15.42
ELECTRICAL ELECTRONICS 4.96
APPLICANCES & HOUSEHOLD DURABLES 4.22
ELECTRONIC COMP. & INSTRUMENTS 4.07
REAL ESTATE 19.01
NET CURRENT ASSETS 3.64
OTHER 30.18
26
<PAGE>
================================================================================
GAM JAPAN CAPITAL FUND
================================================================================
FUND MANAGEMENT
- --------------------------------------------------------------------------------
PAUL S. KIRKBY, INVESTMENT DIRECTOR, IS RESPONSIBLE FOR
INVESTMENTS IN THE JAPANESE MARKET. PRIOR TO JOINING GAM IN
1985, AS A SENIOR FUND MANAGER IN HONG KONG, HE WAS AN
INVESTMENT ANALYST WITH NEW JAPAN SECURITIES CO. LTD IN
[PHOTO] TOKYO. HE COMMENCED MANAGEMENT OF GAM JAPAN CAPITAL FUND ON
1ST JULY, 1994. MR KIRKBY ALSO MANAGES THE OFFSHORE FUND
GAM JAPAN INC. HE IS NOW BASED IN LONDON HAVING LIVED IN
HONG KONG FOR SEVEN YEARS.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in Japan.
However, if the Fund determines that the long-term capital appreciation of debt
securities may equal or exceed the return on equity securities, it may be
substantially invested in debt securities of companies and governments, their
agencies and instrumentalities. Any income realized by the Fund on its
investments will be incidental to its goal of long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS - CLASS A SHARES
GAM Japan
Capital
Class A
(after Average
GAM Japan maximum Tokyo 1 Month
Capital sales load S.E. Deposit
Class A of 5%) Index Rate
30th June, 98 US$8.35 US$8.79 1,230.38
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 - 2.68 - 7.55 - 5.33 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 - 1.07 - 6.01 - 1.46 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
Since inception - 0.28 - 1.55 -14.15 + 5.60
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was
on 1st July, 1994, Class B on 28th May, 1998 and Class C on 20th May, 1998.
Indications of past performance are not necessarily indicative of the future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
27
<PAGE>
================================================================================
GAM JAPAN CAPITAL FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- -----------
Sources used are net asset value of the Fund computed daily and Datastream.
The Tokyo Stock Exchange Index (TOPIX) is a capitalisation-weighted composite
index of approximately 1,200 companies listed on the First section of the Tokyo
Stock Exchange. The combined market capitalisation of these companies represents
approximately 95% of the aggregate market value of the First and Second Section.
The percentage change in the value of the index is calculated on a total return
basis with dividends reinvested.
[CHART BELOW REPRESENTS BAR GRAPH]
AVERAGE ANNUAL TOTAL RETURN - CLASS A
One Year -18.09
-22.19
-34.13
Two Years -6.04
-8.42
-24.02
Three Years 5.87
4.07
-13.64
Five Years -0.28
-1.55
-14.15
GAM Japan Capital
GAM Japan Capital
(after maximum
sales load of 5%)
Tokyo Stock Exchange
Index
ANNUAL PERFORMANCE - CLASS A
GAM JAPAN CAPITAL
GAM JAPAN CAPITAL
(AFTER MAXIMUM
SALES LOAD OF 5%)
TOKYO STOCK EXCHANGE
INDEX
1994 (3.77) (8.58) (6.86)
1995 6.45 1.12 (1.32)
1996 0.16 (4.85) (16.55)
1997 (2.57) (7.44) (28.09)
1998* (1.07) (6.01) (1.46)
*6 months
28
<PAGE>
================================================================================
GAM JAPAN CAPITAL FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
THE FACTS - CLASS B SHARES
Average
GAM Japan Tokyo 1 Month
Capital S.E. Deposit
Class B Index Rate
30th June, 98 US$8.36 8.87
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* - 0.95 + 0.44 + 0.50
- --------------------------------------------------------------------------------
THE FACTS - CLASS C SHARES
Average
GAM Japan Tokyo 1 Month
Capital S.E. Deposit
Class C Index Rate
30th June, 98 US$8.35 8.87
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* - 2.68 - 1.44 + 0.64
- --------------------------------------------------------------------------------
* Inception was on 28th May, 1998 for Class B shares and 20th May, 1998 for
Class C shares.
THE COMMENT
The sharp Asian recession and the decline of the south-east Asian
currencies have deprived many Japanese exporters of the benefits normally
expected of a strong dollar - exports are now falling! Conditions remain
difficult. With plans afoot to finally tackle the bad debt problems of the
banks, Japan's stock market may finally be reaching the beginning of the end of
the eight-year bear market. However the trigger-happy should still be wary.
Hopes for economic recovery are likely to be frustrated for some time yet,
implying further profit disappointments ahead. Moreover credit risks, an
unfamiliar concept in Japan, remain extreme. Your manager continues to be
selective, cautious and watchful. Exposure to the yen is currently limited to
less than a quarter of the Fund's net asset value.
29
<PAGE>
================================================================================
GAM JAPAN CAPITAL FUND - STATEMENT OF INVESTMENTS
================================================================================
as at 30th June, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
CONVERTIBLES - 1.0%
BANKING - 1.0%
36,000,000 Sanwa International Convertible Reg S 266,459
---------
TOTAL CONVERTIBLES (COST $281,580) 266,459
---------
EQUITIES - 69.9%
APPLIANCES & HOUSEHOLD DURABLES - 3.6%
11,200 Sony 968,837
---------
968,837
---------
AUTOMOBILES - 2.0%
*44,000 Mazda Motor 150,335
42,000 Suzuki Motor 383,076
---------
533,411
---------
BANKING - 1.3%
36,000 Bank of Kyoto 169,126
14,000 Keiyo Bank 34,761
29,000 Sakura Bank 75,573
18,000 Tochigi Bank 78,179
---------
357,639
---------
BROADCASTING & PUBLISHING - 2.2%
4,000 Nippon Broadcasting System 169,387
31,000 Toppan Forms 406,616
---------
576,003
---------
BUILDING MATERIAL & COMPONENTS - 0.0%
1,500 Almetax Manufacturing 3,702
2,000 Okabe 6,298
---------
10,000
---------
BUSINESS & PUBLIC SERVICES - 2.3%
10,500 Sanix 224,221
6,000 Secom 347,895
13,100 Wesco 35,086
---------
607,202
---------
CHEMICALS - 1.0%
16,000 Shin-Etsu Chemical 277,969
---------
277,969
---------
DATA PROCESSING & REPRODUCTION - 6.5%
32,000 Canon 729,668
3,300 Nidec 226,458
74,000 Ricoh 782,612
---------
1,738,738
---------
ELECTRICAL & ELECTRONICS - 2.0%
3,800 Fuji Soft ABC 129,835
28,000 Nippon Denwa Shisetsu 94,249
20,000 Omron 306,924
---------
531,008
---------
ELECTRONIC COMP. & INSTRUMENTS - 10.4%
109,000 Hitachi 714,069
35,000 Matsushita Electric 564,986
9,400 Mimasu Semiconductor Industry 95,262
9,000 Rohm 928,372
49,000 Toshiba 201,115
27,000 Yamatake Honeywell 279,489
---------
2,783,293
---------
FINANCIAL SERVICES - 12.9%
6,000 Aiful 294,039
23,000 Credit Saison 457,852
7,000 Japan Associated Finance 187,484
6,440 Nichiei 440,071
15,000 Nomura Securities 175,359
19,800 ORIX 1,342,980
2,200 Shohkoh Fund 543,053
---------
3,440,838
---------
HEALTH & PERSONAL CARE - 2.7%
5,000 Hoya 142,241
8,000 Santen Pharmaceutical 87,966
11,000 Sawai Pharmaceutical 47,776
14,000 Towa Pharmaceutical 95,262
17,000 Yamanouchi Pharmaceutical 355,641
---------
728,886
---------
INDUSTRIAL COMPONENTS - 3.6%
96,000 Minebea 959,687
---------
959,687
---------
INSURANCE - 3.7%
36,000 Dowa Fire & Marine Insurance 108,147
19,000 Mitsui Marine & Fire Insurance 95,863
119,000 Nissan Fire & Marine Insurance 410,894
68,000 Sumitomo Marine & Fire Insurance 381,975
---------
996,879
---------
30
<PAGE>
================================================================================
GAM JAPAN CAPITAL FUND - STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
LEISURE & TOURISM - 0.1%
4,700 Yellow Hat 35,213
----------
35,213
----------
MACHINERY & ENGINEERING - 0.1%
6,000 Higashi Nihon House 23,063
----------
23,063
----------
MERCHANDISING - 12.3%
9,900 Amway Japan 105,346
15,310 Circle K Japan 535,288
43,000 Citizen Watch 356,401
1,100 Daimon 2,707
30,200 DeoDeo Corp 176,419
17,900 Matsumotokiyoshi 632,321
9,000 Paris Miki 118,636
4,100 Ryohin Keikaku 394,730
16,600 Shimachu 273,973
43,000 Shiseido 490,557
12,600 Xebio 189,258
----------
3,275,636
----------
METALS - 0.6%
8,000 Sumitomo Special Metals 170,835
----------
170,835
----------
REAL ESTATE - 2.4%
37,000 Mitsui Real Estate 293,547
8,000 Sankei Building 20,211
2,000 Tachihi Enterprise 47,052
31,930 TOC 274,818
----------
635,628
----------
UTILITIES - ELECTRIC & GAS - 0.1%
2,000 Okinawa Electric Power 31,127
----------
31,127
----------
WHOLESALE & INTERNATIONAL TRADE - 0.1%
5,000 Nakayamafuku 14,478
----------
14,478
----------
TOTAL EQUITIES (COST $22,366,341) 18,696,370
----------
OPTIONS - 0.2%
Index - 0.2%
*57 Nikkei 225 Index
14,000 JPY Puts 1998-08-21 53,639
----------
TOTAL OPTIONS (COST $101,749) 53,639
----------
TIME DEPOSITS - 12.6%
UNITED STATES - 12.6%
3,375,950 NationsBank 5.25% 1998-07-01 3,375,950
----------
TOTAL TIME DEPOSITS (COST $3,375,950) 3,375,950
----------
TOTAL INVESTMENTS (COST $26,125,620**) - 83.7% 22,392,418
NET CURRENT ASSETS - 16.3% 4,335,780
----------
TOTAL NET ASSETS - 100.0% 26,728,198
==========
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of terms:
JPY - Japanese Yen
See notes to financial statements.
31
<PAGE>
================================================================================
GAM NORTH AMERICA FUND
================================================================================
FUND MANAGEMENT
- --------------------------------------------------------------------------------
Fayez Sarofim founded Fayez Sarofim & Co in 1958 and is the
President and Chairman of the Board. He is also a director
of Teledyne Inc., Argonaut Group, Unitrin, Inc., MESA Ins.,
[PHOTO] Imperial Holly Corp. and EXOR Group. From 1951 to 1958 Mr
Sarofim worked for Anderson, Clayton & Co. where his last
assignment was as assistant to the President. He commenced
management of GAM North America Fund on 29th June, 1990. Mr
Sarofim also manages the offshore fund GAM U.S. Inc.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in the
United States and Canada. However, if the Fund determines that the long-term
capital appreciation of debt securities may equal or exceed the return on equity
securities, it may be substantially invested in debt securities of companies and
governments, their agencies and instrumentalities. Any income realized by the
Fund on its investments will be incidental to its goal of long-term capital
appreciation.
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS - CLASS A SHARES
GAM North
America
Class A
(after Average
GAM maximum S & P 1 Month
North America sales load Comp Deposit
Class A of 5%) Index Rate
30th June, 98 US$21.12 US$22.23 1,133.84
- -------------------------------------------------------------------------------
% % % %
- -------------------------------------------------------------------------------
Quarter to June, 98 + 6.51 + 1.18 + 3.28 + 1.39
- -------------------------------------------------------------------------------
Jan - June, 1998 +21.94 +15.84 +17.74 + 2.83
- -------------------------------------------------------------------------------
Average annual total return:-
- -------------------------------------------------------------------------------
5 years to June, 1998 +22.20 +20.95 +23.08 + 5.15
- -------------------------------------------------------------------------------
Since inception +16.02 +15.33 +17.83 + 5.39
- -------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was
on 1st January, 1990 and Class B on 27th May, 1998. Indications of past
performance are not necessarily indicative of future performance. The investment
return and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
32
<PAGE>
================================================================================
GAM NORTH AMERICA FUND -- REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
(PERFORMANCE LINE GRAPH HERE)
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- --------------
Sources used are the net asset value of the Fund which is computed daily and
Datastream.
The Standard & Poor's Composite Index is an unmanaged weighted index of the
stock performance of 500 industrial, transportation, utility and financial
companies. The percentage change in the value of the index includes dividends
reinvested.
[CHART BELOW REPRESENTS BAR GRAPH]
AVERAGE ANNUAL TOTAL RETURN - CLASS A
GAM North America
GAM North America
(after maximum)
sale load of 5%)
Standard & Poor's
Composite Index
Average Annual Total Return - Class A %
- ------------------------------------------------
One Year 29.77
23.28
30.17
Three Years 30.83
28.61
30.24
Five Years 22.20
20.95
23.08
Since Inception 16.02
15.33
17.83
ANNUAL PERFORMANCE - CLASS A
GAM North America
GAM North America
(after maximum)
sale load of 5%)
Standard & Poor's
Composite Index
GAM
North America Standard &
GAM Class A Poor's
North America (after maximum Composite
Class A sales load of 5%) Index
Year % % %
- --------------------------------------------------------------------------------
1994 2.97 (2.18) 1.27
1995 30.90 24.35 37.60
1996 24.10 17.89 22.95
1997 29.41 22.94 33.35
1998* 21.94 15.84 17.74
*6 months
33
<PAGE>
================================================================================
GAM NORTH AMERICA FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
THE FACTS - CLASS B SHARES
Average
GAM S&P 1 Month
North America Comp Deposit
Class B Index Rate
30th June, 98 US$21.11 1,133.84
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 4.87 + 3.95 + 0.52
- --------------------------------------------------------------------------------
THE COMMENT
At mid-year 1998, constructive fundamentals in the US, stronger growth on
the Continent and positive expectations for European financial convergence, are
balanced against collapsing economies in Asia, a weaker China, recession in Hong
Kong, crisis conditions in Russia, and uncertainty in many of the Latin American
economies. Growth in the US should moderate in the second half of 1998. However,
we expect consumption to remain stable, driven by low unemployment, real income
growth and with lower interest rates supporting the housing and auto sectors,
which are near high levels. Manufacturing and exports should continue to weaken,
however these sectors together represent less than 25% of GDP. On the positive
side, declining commodity prices have resulted in lower variable costs and an
effective tax cut for the consumer, from lower fuel costs. The strong dollar,
some moderation in GDP, and round two of the Asian crisis should keep monetary
policy on hold for an extended period. We expect earnings growth near 10% is
achievable in the portfolio, in contrast to 7% for the S&P 500. US markets
should remain volatile, reflecting concerns about earnings growth and the impact
of the Asian crisis. However, we expect our focus on large, high quality
companies to result in performance in excess of the Index. The portfolio
measurably outperformed the Index during the quarter and the financial services
and healthcare sectors had the most positive impact led by shares of Associates
First Capital, Pfizer, Citicorp and Chase Manhattan. Individual issues which
exhibited strength were Berkshire Hathaway, Chrysler, Coca-Cola, Cisco and
DuPont.
*Inception was on 27th May, 1998.
34
<PAGE>
================================================================================
GAM NORTH AMERICA FUND - STATEMENT OF INVESTMENTS
================================================================================
as at 30th June, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
EQUITIES - 97.4%
AEROSPACE/MILITARY TECHNOLOGY - 0.9%
3,408 Boeing 151,869
---------
151,869
---------
AUTOMOBILES - 6.7%
4,900 Chrysler 276,238
9,118 Ford Motor 537,962
4,000 General Motors 267,250
---------
1,081,450
---------
BANKING - 9.3%
5,300 Bankamerica 458,119
7,000 Chase Manhattan 528,500
3,500 Citicorp 522,375
---------
1,508,994
---------
BEVERAGES & TOBACCO - 11.6%
11,800 Coca-Cola 1,008,900
9,400 PepsiCo 387,162
12,300 Philip Morris 484,312
---------
1,880,374
---------
BROADCASTING & PUBLISHING - 0.3%
700 McGraw-Hill 57,094
---------
57,094
---------
CHEMICALS - 1.8%
4,000 DuPont de Nemours 298,500
---------
298,500
---------
COMPUTER SOFTWARE - 2.2%
*3,300 Microsoft 357,638
---------
357,638
---------
DATA PROCESSING & REPRODUCTION - 2.4%
6,800 Compaq Computer 192,950
3,400 Hewlett Packard 203,575
---------
396,525
---------
ELECTRICAL & ELECTRONICS - 4.9%
2,000 Emerson Electric 120,750
7,300 General Electric 664,300
---------
785,050
---------
ELECTRONIC COMP. & INSTRUMENTS - 2.6%
5,700 Intel 422,513
---------
422,513
---------
ENERGY SOURCES - 8.0%
3,800 British Petroleum ADR 335,350
3,800 Chevron 315,637
4,900 Exxon 349,431
3,800 Mobil 291,175
---------
1,291,593
---------
FINANCIAL SERVICES - 3.5%
2,649 Associates First Capital A 203,642
6,000 Federal National Mortgage Association 364,500
---------
568,142
---------
FOOD & HOUSEHOLD PRODUCTS - 3.0%
5,300 Proctor & Gamble 482,631
---------
482,631
---------
HEALTH & PERSONAL CARE - 20.6%
8,400 Abbott Laboratories 343,350
6,000 American Home Products 310,500
700 Estee Lauder Class A 48,781
8,400 Gillette 476,175
6,500 Johnson & Johnson 479,375
4,600 Merck 615,250
9,700 Pfizer 1,054,269
---------
3,327,700
---------
INSURANCE - 0.6%
1,400 American General 99,662
---------
99,662
---------
LEISURE & TOURISM - 1.8%
3,000 McDonald's 207,000
*2,750 Tricon Global Restaurants 87,141
---------
294,141
---------
MERCHANDISING - 5.4%
1,400 Wal-Mart Stores 85,050
7,600 Walgreen 313,975
---------
399,025
---------
MULTI-INDUSTRY -1.4%
5,000 Allied Signal 221,875
*6 Berkshire Hathaway 469,830
---------
691,705
---------
35
<PAGE>
================================================================================
GAM NORTH AMERICA FUND - STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
NETWORKING PRODUCTS -1.3%
2,300 Cisco Systems 211,744
----------
211,744
----------
PHARMACEUTICAL - 2.1%
3,000 Bristol-Myers Squibb 344,812
----------
344,812
----------
TELECOMMUNICATIONS - 5.4%
5,400 Bell Atlantic 246,375
4,200 Bellsouth 281,925
8,464 SBC Communications 338,560
----------
866,860
----------
TEXTILES & APPAREL -1.0%
*5,700 Polo Ralph Lauren Class A 159,600
----------
159,600
----------
TRANSPORTATION - ROAD & RAIL - 0.6%
3,000 Norfolk Southern 89,438
----------
89,438
----------
TOTAL EQUITIES (COST $11,852,515) 15,767,060
----------
PREFERRED SHARES - 0.4%
Broadcasting & Publishing - 0.4%
2,200 News Corp ADR (Pfd) 62,150
----------
62,150
----------
TOTAL PREFERRED SHARES (COST $44,407) 62,150
----------
TIME DEPOSITS - 2.4%
384,747 Morgan Guaranty London
5.25% 1998-07-01 384,747
----------
TOTAL TIME DEPOSITS (COST $384,747) 384,747
----------
TOTAL INVESTMENTS (COST $12,281,669**) - 100.2% 16,213,957
NET CURRENT LIABILITIES - (0.2%) (28,614)
----------
TOTAL NET ASSETS - 100.0% 16,185,343
==========
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of terms
ADR - American Depository Receipt
See notes to financial statements.
36
<PAGE>
================================================================================
GAM ASIAN CAPITAL FUND
================================================================================
FUND MANAGEMENT
- --------------------------------------------------------------------------------
JOHN MYTTON IS RESPONSIBLE FOR ASIAN EMERGING MARKETS
INVESTMENTS IN INDONESIA, THE PHILIPPINES, THE INDIAN
SUBCONTINENT AND VIETNAM. PRIOR TO JOINING GAM IN 1995 HE
WAS DIRECTOR OF SWISS BANK CORPORATION INTERNATIONAL
[PHOTO] FINANCE (ASIA). FROM 1978 TO 1990 HE WAS AN INTERNATIONAL
EXECUTIVE WITH HONG KONG AND SHANGHAI BANKING CORP WORKING
IN HONG KONG, OMAN AND SINGAPORE. HE COMMENCED MANAGEMENT
OF GAM ASIAN CAPITAL FUND ON 1ST APRIL, 1998. MR MYTTON IS
BASED IN HONG KONG.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in Asia
other than Japan. Countries in Asia include Hong Kong, Singapore, Malaysia,
Thailand, Vietnam, Indonesia, the Philippines, Korea, China, Taiwan, India,
Myanmar, Pakistan, Bangladesh and Sri Lanka. However, if the Fund determines
that the long-term capital appreciation of debt securities may equal or exceed
the return on equity securities, it may be substantially invested in debt
securities of companies and governments, their agencies and instrumentalities.
Any income realized by the Fund on its investments will be incidental to its
goal of long-term capital appreciation.
Investments in securities of foreign issuers involve additional risks and
expenses including currency rate fluctuations, political and economic
instability, foreign taxes and different accounting and reporting standards.
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS
GAM Asian
Capital
(after Average
GAM maximum MSCI AC 1 Month
Asian sales load Far East Deposit
Capital of 5%) ex Japan Rate
30th June, 98 US$4.32 US$4.55 144.20
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 -27.39 -31.03 -30.59 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 -28.24 -31.83 -22.86 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
Since inception -22.00 -23.27 -20.16 + 5.64
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. Class A inception was
on 12th May, 1995. Indications of past performance are not necessarily
indicative of future performance. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
37
<PAGE>
================================================================================
GAM ASIAN CAPITAL FUND--REPORT TO SHAREHOLDERS (CONTINUED)
================================================================================
(PERFORMANCE LINE GRAPH HERE)
NOTES: The graph compares the performance results of a hypothetical $10,000
investment in the Fund and a comparable index. The performance of the Fund is
also shown after adjustment to reflect the maximum sales load, which is waived
for certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- -------------
Sources used are net asset value of the Fund which is computed daily and
Datastream.
The MSCI AC Far East (ex Japan) Index is an arithmetical average weighted by
market value of the performance of some 400 securities listed on the stock
exchanges of Hong Kong, Indonesia, Korea, Malaysia, Phillipines, Singapore,
Tawian and Thailand. The combined market capitalisation of these companies
represents approximately 60% of the aggregated market value of the stock
exchanges of the above 8 countries. The percentage change in the value of the
index includes dividends reinvested.
THE COMMENT
The largest weighting in the Fund remains Hong Kong whose economy continues
to suffer. These economic difficulties raised doubts as to whether the Hong Kong
government possesses the resolve to preserve its pegged exchange rate system.
These difficulties prompted the government to announce a HK$32 billion package
of measures designed to improve confidence. The problems in Hong Kong have also
placed pressure on China, whose leaders have frequently said that they will not
devalue their currency, but who recently stated that they might be forced to
re-consider their position if the Japanese yen continued to weaken. Prospects
for Hong Kong therefore continue to remain difficult, but provided the Hong Kong
government acts in a sensible fashion to restore confidence, Hong Kong should be
the first beneficiary of any improvement in the Asian region.
38
<PAGE>
================================================================================
GAM ASIAN CAPITAL FUND--STATEMENT OF INVESTMENTS
================================================================================
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
EQUITIES - 71.0%
HONG KONG - 45.2%
10,000 Asia Satellite Telecom 16,520
1,000 Cheung Kong Holdings 4,930
3,000 Cheung Kong Holdings 5,672
4,000 CLP Holdings 18,172
14,000 Cosco Pacific 4,969
700 Hang Seng Bank 3,975
5,730 HKR International 2,015
15,560 Hong Kong & China Gas 17,673
9,000 Hong Kong Electric 27,878
*4,000 Hong Kong Land Holdings 5,000
10,400 Hong Kong Telecommunications 19,463
800 HSBC Holdings (HKD) 19,618
2,000 Hutchison Whampoa 10,532
4,800 Jardine Matheson 12,960
2,000 New World Development 3,872
*6,000 New World Infrastructure 6,931
13,000 Regent Pacific Group 4,279
1,000 Sun Hung Kai Properties 4,272
4,000 Swire Pacific Class A 15,101
2,000 Television Broadcasting 5,292
*36,000 Yanzhou Coal Mining 6,877
-------
216,001
-------
INDONESIA - 1.1%
2,000 Gudang Garam 1,188
19,000 Mayorah Indah 778
6,000 Sampeorna 829
4,000 Semen Gresik 2,294
-------
5,089
-------
NEW ZEALAND - 1.3%
6,000 Shortland Properties 2,029
2,000 Telecom Corp New Zealand 4,277
-------
6,306
-------
PHILIPPINES - 2.0%
15,600 Ayala Corp 4,022
13,600 Ayala Land 3,914
60,000 Metro Pacific 1,367
-------
9,303
-------
REPUBLIC OF CHINA - 4.0%
19,000 Beijing Datang Power (HKD) 5,334
*8,000 China Telecom 13,939
-------
19,273
-------
SINGAPORE - 16.2%
10,000 DBS Land 8,313
3,860 Development Bank of Singapore (FR) 21,432
*4,000 Osprey Maritime 1,853
3,000 Overseas Chinese Banking (FR) 10,243
3,000 Overseas Union Bank (FR) 6,591
3,000 Singapore Airlines (FR) 14,074
1,276 Singapore Press Holdings (FR) 8,562
2,000 Unites Overseas Bank (FR) 6,235
-------
77,303
-------
THAILAND - 1.2%
*16,000 National Finance Public (FR) 1,251
*600 PTT Exploration (FR) 4,550
-------
5,801
-------
TOTAL EQUITIES (COST $479,734) 339,076
-------
EQUITY WARRANTS - 0.0%
HONG KONG - 0.0%
*980 Hong Kong & China Gas Wts 1999-09-30 67
-------
TOTAL EQUITY WARRANTS (COST $0) 67
-------
TIME DEPOSITS - 19.5%
UNITED STATES - 19.5%
93,277 Brown Brothers Harriman
5.25% 1998-07-01 93,277
-------
TOTAL TIME DEPOSITS (COST $93,277) 93,277
-------
TOTAL INVESTMENTS (COST $573,011**) - 90.5% 432,420
NET CURRENT ASSETS - 9.5% 45,286
-------
TOTAL NET ASSETS - 100.0% 477,706
=======
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of terms:
FR - Foreign Registered
HKD - Hong Kong Dollar
See notes to financial statements.
39
<PAGE>
================================================================================
GAM ASIAN CAPITAL FUND--STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
[CHART BELOW REPRESENT BAR GRAPH]
GEOGRAPHIC ANALYSIS AS AT
30TH JUNE, 1998 %
- --------------------------------------------------------
HONG KONG 45.20
CHINA 4.17
NET CURRENT ASSETS 9.50
INDONESIA 1.10
NEW ZEALAND 1.36
PHILLIPPINES 2.01
SINGAPORE 16.20
THAILAND 1.26
OTHER 19.20
INVESTMENT ANALYSIS AS AT
30TH JUNE, 1998 %
- --------------------------------------------------------
UTILITIES-ELECTRICAL & GAS 14.90
TELECOMMUNICATIONS 11.73
BANKING 15.66
MULTI-INDUSTRY 10.30
NCY CURRENT ASSETS 9.50
REAL ESTATE 7.42
TRANSPORTATION AIRLINES 5.19
OTHER 27.37
40
<PAGE>
================================================================================
GAMERICA CAPITAL FUND
================================================================================
FUND MANAGEMENT
- --------------------------------------------------------------------------------
GORDON GRENDER, DIRECTOR, HAS BEEN ASSOCIATED WITH GAM
SINCE 1983 AND IS ALSO ADVISER TO GAMERICA. HE HAS BEEN
ACTIVELY INVOLVED IN FUND MANAGEMENT IN NORTH AMERICAN
[PHOTO] STOCK MARKETS SINCE 1974. HE COMMENCED MANAGEMENT OF
GAMERICA CAPITAL FUND ON 12TH MAY, 1995. MR GRENDER ALSO
MANAGES GAMERICA INC., AN OFFSHORE FUND WITH SIMILAR
INVESTMENT OBJECTIVES.
The Fund's investment objective is to seek long-term capital appreciation,
generally through investment in equity securities issued by companies in the
United States. However, if the Fund determines that the long-term capital
appreciation of debt securities may equal or exceed the return on equity
securities, it may be substantially invested in debt securities of companies and
governments, their agencies and instrumentalities. Any income realized by the
Fund on its investments will be incidental to its goal of long-term capital
appreciation.
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FACTS - CLASS A SHARES
GAMerica
Capital
Class A
(after Average
GAMerica maximum S & P 1 Month
Capital sales load Comp Deposit
Class A of 5%) Index Rate
30th June, 98 US$16.88 US$17.77 1,133.84
- --------------------------------------------------------------------------------
% % % %
- --------------------------------------------------------------------------------
Quarter to June, 98 + 3.49 - 1.68 + 3.28 + 1.39
- --------------------------------------------------------------------------------
Jan - June, 1998 +25.69 +19.40 +17.74 + 2.83
- --------------------------------------------------------------------------------
Average annual total return:-
- --------------------------------------------------------------------------------
Since inception +26.11 +24.07 +30.40 + 5.64
- --------------------------------------------------------------------------------
Performances are calculated on a total return basis. The Fund's inception
was on 12th May, 1995, Class B on 27th May, 1998 and Class C on 27th May, 1998.
Indications of past performance are not necessarily indicative of future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
41
<PAGE>
================================================================================
GAMERICA CAPITAL FUND - REPORT TO SHAREHOLDERS
================================================================================
[LINE GRAPH]
NOTE: The graph compares the performance results of a hypothetical $10,000
investment in Class A and a comparable index. The performance of Class A is also
shown after adjustment to reflect the maximum sales load, which is waived for
certain investors. The performance of the index does not reflect brokerage
commissions and other expenses that would be incurred to acquire a comparable
portfolio of securities.
- -----------
Sources used are the net asset value of the Fund which is computed daily and
Datastream.
The Standard & Poor's Composite Index is an unmanaged weighted index of the
stock performance of 500 industrial, transportation, utility and financial
companies. The percentage change in the value of the index includes dividends
reinvested
THE FACTS - CLASS B SHARES
Average
GAMerica S&P 1 Month
Capital Comp Deposit
Class B Index Rate
30th June, 98 US$16.8 1,133.84
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 2.06 + 3.95 + 0.52
- --------------------------------------------------------------------------------
THE FACTS - CLASS C SHARES
Average
GAMerica S&P 1 Month
Capital Comp Deposit
Class B Index Rate
30th June, 98 US$16.8 1,133.84
- --------------------------------------------------------------------------------
% % %
- --------------------------------------------------------------------------------
Since Inception* + 2.12 + 3.95 + 0.52
* Inception was on 27th May, 1998 for Class B shares and C shares.
42
<PAGE>
================================================================================
GAMERICA CAPITAL FUND - STATEMENT OF INVESTMENTS
================================================================================
THE COMMENT
The US stock market measured by the major indices continued to rise
strongly through the second quarter and reached all time highs. The more broadly
based indices having fallen in the first quarter performed strongly in the
second quarter but are still significantly lagging the major indices in their
year to date performance. Measured by the Standard & Poor's Composite Index the
market rose by 13.06% during the quarter.
While Gross Domestic Product Growth slowed in the second quarter, most
evidence suggests this slowdown has ended. Third quarter growth is likely to
reach a 3% rate up from 1.5% in the second quarter while inflation, both in the
US and internationally, appears to be falling.
The US economy has clearly become less volatile in recent years which in
itself justifies a higher level of valuation of equity securities. Earnings
growth for the second quarter is estimated to have been around 10% with analysts
forecasting increases of 14-15% for the second half of the year. Stock prices of
the major companies have increased by about 20% this year easily outpacing any
expected or actual gains in earnings. Margin expansion accounts for much of the
gains in earnings. We have commented before about the improvement in
manufacturing technologies brought about by the fall in computing costs. In the
longer term it is likely that margins will flatten. If earnings revert to
growing at a rate comparable to that of the economy the present overall level of
market valuation is likely to prove to be high.
AS AT 30TH JUNE, 1998
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
EQUITIES - 59.1%
AUTOMOBILE PARTS & EQUIPMENT - 7.0%
*15,000 Keystone Automotive Industries 346,875
*15,000 United Auto Group 328,125
-------
675,000
-------
BEVERAGE & TOBACCO - 1.2%
2,000 Fortune Brands 76,875
2,000 Gallaher Group ADR 43,750
-------
120,625
-------
BUSINESS & PUBLIC SERVICES - 3.6%
*14,000 Professional Staff ADR 192,500
*26,400 Titan 158,400
-------
350,900
-------
CONSTRUCTION & HOUSING - 3.4%
*7,812 Palm Harbor Homes 332,986
-------
332,986
-------
ELECTRICAL & ELECTRONICS - 0.4%
2,500 AVX 40,156
-------
40,156
-------
ELECTRONIC COMP. & INSTRUMENTS - 1.3%
13,393 Power One 126,396
-------
126,396
-------
ENERGY SOURCES - 1.1%
3,000 Unocal 107,250
-------
107,250
-------
FINANCIAL SERVICES - 0.5%
*3,000 Freidman, Billings, Ramsey Group 43,312
-------
43,312
-------
FOOD & HOUSEHOLD PRODUCTS - 0.7%
3,307 Archer-Daniels-Midland 64,073
-------
64,073
-------
43
<PAGE>
================================================================================
GAMERICA CAPITAL FUND - STATEMENT OF INVESTMENTS (CONTINUED)
================================================================================
MARKET
VALUE
HOLDINGS DESCRIPTION US$
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE - 3.2%
*4,500 ClinTrials Research 21,938
8,000 Intimate Brands Class A 220,500
*30,000 Unilab 71,250
---------
313,688
---------
INDUSTRIAL COMPONENTS - 5.9%
17,000 Foamex International 296,438
12,000 Gerber Scientific 273,000
---------
569,438
---------
INSURANCE - 4.9%
20,000 Intercargo 235,000
3,000 Mid Ocean Limited 235,500
---------
470,500
---------
MACHINERY & ENGINEERING - 1.5%
5,000 Raychem Corp 147,813
---------
147,813
---------
MERCHANDISING - 18.9%
*12,000 Best Buy 433,500
*50,000 CyberShop International 562,500
6,250 Fred's Class A 159,375
*12,500 Jumbosports 14,063
2,000 Mercantile Stores 157,875
*7,500 Party City 220,312
*15,000 Software.net 286,875
---------
1,834,500
---------
REAL ESTATE - 1.5%
7,000 Bradley Real Estate 147,875
---------
147,875
---------
RECREATION, OTHER CONSUMER GOODS - 1.0%
*5,000 N2K 98,125
---------
98,125
---------
TELECOMMUNICATIONS - 3.0%
*6,000 World Com 290,625
---------
290,625
---------
TOTAL EQUITIES (COST $4,036,175) 5,733,262
---------
TIME DEPOSITS - 40.7%
3,948,166 Morgan Guaranty London
5.25% 1998-07-01 3,948,166
---------
TOTAL TIME DEPOSITS (COST $3,948,166) 3,948,166
---------
TOTAL INVESTMENTS (COST $7,984,341**) - 99.8% 9,681,428
NET CURRENT ASSETS - 0.2% 27,317
---------
TOTAL NET ASSETS - 100.0% 9,708,745
=========
* Non-income producing security.
** Cost for federal income tax purposes is identical.
Glossary of terms: ADR - American Depository Receipt
See notes to financial statements.
44
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
at 30th June, 1998 (unaudited)
<TABLE>
<CAPTION>
GAM
GAM GAM GAM Pacific
International Global Europe Basin
---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS (In US$)
Investments in securities at value $ 2,784,506,219 $ 160,596,414 $ 59,529,039 $ 20,167,737
Cash 10,725,953 -- 4,529,526 --
Cash -- Foreign currencies 13,208,255 313,915 (215,721) 36,161
Receivables:
Securities sold 99,383,153 28,668,648 7,936,473 582,385
Capital shares sold 20,106,369 2,659,295 478,820 60,822
Dividends, interest and other 7,870,277 181,467 285,812 75,820
Net equity in foreign currency exchange contracts (Note 6) 23,860,460 671,075 -- 326,361
Due from broker for futures contracts (Note 6) 26,232,051 890,232 -- --
Deferred organizational expenses and other assets 3,924 17,818 20,692 20,735
--------------- ------------- ------------- -------------
TOTAL ASSETS 2,985,896,661 193,998,864 72,564,641 21,270,021
--------------- ------------- ------------- -------------
LIABILITIES
Payables:
Securities purchased 132,871,969 48,966,334 8,566,296 83,709
Capital shares redeemed 1,862,590 85,641 32,353 74,519
Loans -- -- 4,483,086 --
Written options 3,755,826 -- -- --
Net equity in foreign currency exchange contracts (Note 6) -- -- 1,032,457 --
Accrued management fee 6,654,410 304,212 133,160 103,288
Accrued distribution fee 1,785,866 35,304 37,985 13,077
Accrued expenses and other 136,606 16,315 6,406 64,792
--------------- ------------- ------------- -------------
TOTAL LIABILITIES 147,067,267 49,407,806 14,291,743 339,385
--------------- ------------- ------------- -------------
NET ASSETS $ 2,838,829,394 $ 144,591,058 $ 58,272,898 $ 20,930,636
=============== ============= ============= =============
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 4) $ 2,094,486,508 $ 116,173,521 $ 44,001,056 $ 45,549,768
Accumulated net investment income/(loss) (958,876) (225,451) 473,546 (293,589
Accumulated net realized gains/(losses) 58,462,073 5,321,766 5,646,649 (11,962,797
Net unrealized appreciation/(depreciation) 686,839,689 23,321,222 8,151,647 (12,362,746
--------------- ------------- ------------- -------------
NET ASSETS $ 2,838,829,394 $ 144,591,058 $ 58,272,898 $ 20,930,636
=============== ============= ============= =============
CLASS A SHARES OUTSTANDING 79,158,474 5,831,011 3,834,416 2,360,896
CLASS A NET ASSETS $ 2,643,243,929 $ 128,983,756 $ 57,592,606 $ 19,114,133
Net asset value and redemption value per share (Note 4) $ 33.39 $ 22.12 $ 15.02 $ 8.10
Offering price per share (100/95 x net asset value per share reduced
on sales of $100,000 or more) $ 35.15 $ 23.28 $ 15.81 $ 8.53
CLASS B SHARES OUTSTANDING 457,080 172,231 24,616 12,224
CLASS B NET ASSETS $ 15,279,842 $ 3,808,556 $ 370,350 $ 100,491
Net asset value and redemption value per share (Note 4) $ 33.43 $ 22.11 $ 15.04 $ 8.22
CLASS C SHARES OUTSTANDING 548,910 103,828 20,644 820
CLASS C NET ASSETS $ 18,315,577 $ 2,295,436 $ 309,942 $ 6,650
Net asset value and redemption value per share (Note 4) $ 33.37 $ 22.11 $ 15.01 $ 8.11
CLASS D SHARES OUTSTANDING 4,872,873 434,953 205,746
CLASS D NET ASSETS $ 161,990,046 $ 9,503,310 $ 1,709,362
Net asset value and redemption value per share (Note 4) $ 33.24 $ 21.85 $ 8.31
Offering price per share (100/96.5 x net asset value per share reduced
on sales of $100,000 or more) $ 34.45 $ 22.64 $ 8.61
Identified cost of investments $ 2,100,450,066 $ 137,414,302 $ 50,324,747 $ 32,866,277
</TABLE>
See notes to financial statements.
45
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
at 30th June, 1998 (unaudited)
<TABLE>
<CAPTION>
GAM GAM GAM
Japan North Asian GAMerica
Capital America Capital Capital
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS (In US$)
Investments in securities at value $ 22,392,418 $ 16,213,957 $ 432,420 $ 9,681,428
Cash -- -- -- --
Cash -- Foreign currencies 3,444,170 -- 33,868 --
Receivables:
Securities sold 335,458 79,722 858 --
Capital shares sold 423,129 7,396 1,000 40,094
Dividends, interest and other 89,424 17,461 803 4,925
Net equity in foreign currency exchange contracts (Note 6) 1,011,125 -- -- --
Due from broker for futures contracts (Note 6) 314,453 -- -- --
From Distributor -- -- 23,870 --
Deferred organizational expenses and other assets 13,803 10,548 27,279 26,359
------------ ------------ ------------ ------------
TOTAL ASSETS 28,023,980 16,329,084 520,098 9,752,806
------------ ------------ ------------ ------------
LIABILITIES
Payables:
Securities purchased 958,327 -- -- 2,998
Capital shares redeemed 166,109 91,150 16,471 --
Loans -- -- -- --
Written options -- -- -- --
Net equity in foreign currency exchange contracts (Note 6) -- -- 1,347 --
Accrued management fee 70,939 43,277 1,377 21,117
Accrued distribution fee 21,679 7,756 340 8,337
Accrued expenses and other 78,728 1,558 22,857 11,609
------------ ------------ ------------ ------------
TOTAL LIABILITIES 1,295,782 143,741 42,392 44,061
------------ ------------ ------------ ------------
NET ASSETS $ 26,728,198 $ 16,185,343 $ 477,706 $ 9,708,745
============ ============ ============ ============
SOURCE OF NET ASSETS
Net capital paid in on shares of capital stock (Note 4) $ 36,034,384 $ 9,108,813 $ 1,791,102 $ 7,805,365
Accumulated net investment income/(loss) (509,640) 3,227 148 6,919
Accumulated net realized gains/(losses) (5,971,602) 3,141,015 (1,171,606) 199,374
Net unrealized appreciation/(depreciation) (2,824,944) 3,932,288 (141,938) 1,697,087
------------ ------------ ------------ ------------
Net assets $ 26,728,198 $ 16,185,343 $ 477,706 $ 9,708,745
============ ============ ============ ============
CLASS A SHARES OUTSTANDING 3,117,588 766,222 110,476 556,801
CLASS A NET ASSETS $ 26,033,028 $ 16,179,037 $ 477,706 $ 9,398,938
Net asset value and redemption value per share
(Note 4) $ 8.35 $ 21.12 $ 4.32 $ 16.88
Offering price per share (100/95 x net asset value per share reduced on
sales of $100,000 or more) $ 8.79 $ 22.23 $ 4.55 $ 17.77
CLASS B SHARES OUTSTANDING 12,081 299 15,351
CLASS B NET ASSETS $ 100,972 $ 6,306 $ 258,963
Net asset value and redemption value per share (Note 4) $ 8.36 $ 21.11 $ 16.87
CLASS C SHARES OUTSTANDING 71,195 3,013
CLASS C NET ASSETS $ 594,198 $ 50,844
Net asset value and redemption value per share (Note 4) $ 8.35 $ 16.88
CLASS D SHARES OUTSTANDING
CLASS D NET ASSETS
Net asset value and redemption value per share (Note 4)
Offering price per share (100/96.5 x net asset value per share reduced on
sales of $100,000 or more)
Identified cost of investments $ 26,125,620 $ 12,281,669 $ 573,011 $ 7,984,341
</TABLE>
See notes to financial statements.
46
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Operations
- --------------------------------------------------------------------------------
for the six months ended 30th June, 1998 (unaudited)
<TABLE>
<CAPTION>
GAM
GAM GAM GAM Pacific
International Global Europe Basin
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (in US$)
Dividends (Note 5) $ 22,667,366 $ 532,295 $ 826,388 $ 291,036
Interest (Note 5) 3,380,741 191,242 9,116 34,608
------------- ----------- ------------- -----------
26,048,107 723,537 835,504 325,644
------------- ----------- ------------- -----------
EXPENSES
Investment advisory fee (Note 2) 11,913,011 512,283 238,315 120,030
Custodian fees and expenses 896,915 29,573 38,162 49,576
Transfer agent fees and expenses 462,688 16,718 10,554 16,285
Shareholder servicing fees 647,856 5,429 6,339 23,321
Distribution Fee -- Class A (Note 2) 3,350,907 144,216 68,591 33,688
Distribution Fee -- Class B (Note 2) 8,168 2,465 198 90
Distribution Fee -- Class C (Note 2) 12,539 1,012 193 5
Distribution Fee -- Class D (Note 2) 326,357 16,157 -- 4,309
Professional fees 34,749 15,939 15,172 16,797
Administrative expense 836,958 36,887 21,640 30,215
Printing 94,502 3,435 1,560 5,016
Amortization of organization costs -- -- -- --
Filing fees 15,080 1,254 1,004 1,685
Other 56,279 3,867 3,340 5,315
------------- ----------- ------------- -----------
Total operating expenses 18,656,009 789,235 405,068 306,332
Expenses reimbursed (Note 2) -- -- -- --
Interest expense -- 4,404 46,566 2,048
------------- ----------- ------------- -----------
Total expense 18,656,009 793,639 451,634 308,380
------------- ----------- ------------- -----------
Net investment income/(loss) 7,392,098 (70,102) 383,870 17,264
------------- ----------- ------------- -----------
REALIZED AND UNREALIZED
GAIN/(LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain/(loss) from:
Securities and futures 43,211,739 3,924,322 4,502,756 (7,674,825)
Foreign currency transactions 41,853,770 789,337 682,554 1,417,654
------------- ----------- ------------- -----------
85,065,509 4,713,659 5,185,310 (6,257,171)
------------- ----------- ------------- -----------
Unrealized appreciation/(depreciation)
for the period:
Securities and futures 296,698,714 13,135,413 3,963,512 2,997,357
Foreign currency translation of assets and liabilities other than
investments (20,157,462) (200,870) (1,846,577) (703,883)
------------- ----------- ------------- -----------
276,541,252 12,934,543 2,116,935 2,293,474
------------- ----------- ------------- -----------
Net gain/(loss) on investments and foreign currencies 361,606,761 17,648,202 7,302,245 (3,963,697)
------------- ----------- ------------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS $ 368,998,859 $17,578,100 $ 7,686,115 ($ 3,946,433)
============= =========== ============= ===========
</TABLE>
See notes to financial statements.
47
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Operations (continued)
- --------------------------------------------------------------------------------
for the six months ended 30th June, 1998 (unaudited)
<TABLE>
<CAPTION>
GAM GAM GAM
Japan North Asian GAMerica
Capital America Capital Capital
--------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (in US$)
Dividends (Note 5) $ 113,052 $ 131,282 $ 9,543 $ 20,317
Interest (Note 5) 146,717 18,491 2,496 59,791
----------- ---------- --------- ----------
259,769 149,773 12,039 80,108
----------- ---------- --------- ----------
EXPENSES
Investment advisory fee (Note 2) 154,500 84,230 3,287 33,337
Custodian fees and expenses 78,544 6,097 13,895 5,985
Transfer agent fees and expenses 11,634 2,872 1,178 920
Shareholder servicing fees 13,013 1,041 722 526
Distribution Fee -- Class A (Note 2) 46,655 25,475 996 9,955
Distribution Fee -- Class B (Note 2) 47 6 -- 181
Distribution Fee -- Class C (Note 2) 211 -- -- 38
Distribution Fee -- Class D (Note 2) -- -- -- --
Professional fees 14,217 9,614 11,641 8,315
Administrative expense 23,216 5,327 3,462 2,849
Printing 4,188 1,238 1,711 2,978
Amortization of organization costs 1,585 -- 3,012 691
Filing fees 3,047 746 1,184 4,792
Other 7,581 2,966 4,133 2,622
----------- ---------- --------- ----------
Total operating expenses 358,438 139,612 45,221 73,189
Expenses reimbursed (Note 2) -- -- (38,948) --
Interest expense -- 6,934 23 --
----------- ---------- --------- ----------
Total expense 358,438 146,546 6,296 73,189
----------- ---------- --------- ----------
Net investment income/(loss) (98,669) 3,227 5,743 6,919
----------- ---------- --------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain/(loss) from:
Securities and futures (3,583,506) 2,846,473 (333,210) 37,513
Foreign currency transactions 1,512,774 -- (445) --
----------- ---------- --------- ----------
(2,070,732) 2,846,473 (333,655) 37,513
----------- ---------- --------- ----------
Unrealized appreciation/(depreciation)
for the period:
Securities and futures 2,308,611 499,444 143,869 1,169,868
Foreign currency translation of assets and liabilities other than in-
vestments (373,810) -- (939) --
----------- ---------- --------- ----------
1,934,801 499,444 142,930 1,169,868
----------- ---------- --------- ----------
Net gain/(loss) on investments and foreign currencies (135,931) 3,345,917 (190,725) 1,207,381
----------- ---------- --------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS ($ 234,600) $3,349,144 ($ 184,982) $1,214,300
=========== ========== ========= ==========
</TABLE>
See notes to financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM International GAM Global GAM Europe
-------------------------------- ----------------------------- -----------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED MONTHS ENDED ENDED
30TH JUNE, 31ST DEC. 30TH JUNE, 31ST DEC., 30TH JUNE, 31ST DEC.,
1998 1997 1998 1997 1998 1997
--------------- ---------------- -------------- -------------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET
ASSETS FROM:
Operations
Net investment income/(loss) $ 7,392,098 $ 3,992,788 ($ 70,102) ($ 99,246) $ 383,870 $ 56,137
Net realized gain/(loss) 85,065,509 41,910,352 4,713,659 2,745,392 5,185,310 6,720,669
Unrealized appreciation/
(depreciation) for the period 276,541,252 297,012,713 12,934,543 6,526,805 2,116,935 1,955,004
-------------- -------------- ----------- ----------- ----------- ------------
Net increase/(decrease) in net
assets from operations 368,998,859 342,915,853 17,578,100 9,172,951 7,686,115 8,731,810
Dividends paid to shareholders from:
Net investment income
Class A -- (9,853,914) -- (41,404) -- (157,450)
Class B -- -- -- -- -- --
Class C -- -- -- -- -- --
Class D -- (446,919) -- (3,430) -- --
Net realized gain on investments
Class A -- (69,883,955) -- (1,964,612) -- (6,689,436)
Class B -- -- -- -- -- --
Class C -- -- -- -- -- --
Class D -- (3,900,288) -- (113,298) -- --
Capital share transactions (Note 4) 576,882,523 585,581,903 57,505,460 42,059,028 11,486,195 12,088,259
-------------- -------------- ----------- ----------- ----------- ------------
Total increase/(decrease) in net assets 945,881,382 844,412,680 75,083,560 49,109,235 19,172,310 13,973,183
NET ASSETS
Beginning of period 1,892,948,012 1,048,535,332 69,507,498 20,398,263 39,100,588 25,127,405
-------------- -------------- ----------- ----------- ----------- ------------
End of period $2,838,829,394 $1,892,948,012 $144,591,058 $69,507,498 $58,272,898 $ 39,100,588
============== ============== ============ =========== =========== ============
</TABLE>
See notes to financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Pacific Basin GAM Japan Capital GAM North America
------------------------------- ----------------------------- ----------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDE ENDED MONTHS ENDED ENDED MONTHS ENDED ENDED
30TH JUNE, 31ST DEC. 30TH JUNE, 31ST DEC., 30TH JUNE, 31ST DEC.,
1998 1997 1998 1997 1998 1997
-------------- ---------------- -------------- -------------- ------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM:
Operations
Net investment income/(loss) $ 17,264 $ 8,059 ($ 98,669) ($ 309,689) $ 3,227 $ 54
Net realized gain/(loss) (6,257,171) (2,999,804) (2,070,732) (526,629) 2,846,473 390,977
Unrealized appreciation/(depreciation)
for the period 2,293,474 (11,915,960) 1,934,801 (1,717,822) 499,444 1,513,490
------------ -------------- ----------- ----------- ----------- -----------
Net increase/(decrease) in net assets from
operations (3,946,433) (14,907,705) (234,600) (2,554,140) 3,349,144 1,904,521
Dividends paid to shareholders from:
Net investment income
Class A -- -- -- -- -- (576)
Class B -- -- -- -- -- --
Class C -- -- -- -- -- --
Class D -- -- -- -- -- --
Net realized gain on investments
Class A -- (3,364,522) -- (2,411,374) -- (130,244)
Class B -- -- -- -- -- --
Class C -- -- -- -- -- --
Class D -- (168,365) -- -- -- --
Capital share transactions (Note 4) 248,729 (8,616,881) (3,908,976) (679,565) 1,870,026 3,339,649
------------ -------------- ----------- ----------- ----------- -----------
Total increase/(decrease) in net assets (3,697,704) (27,057,473) (4,143,576) (5,645,079) 5,219,170 5,113,350
NET ASSETS
Beginning of period 24,628,340 51,685,813 30,871,774 36,516,853 10,966,173 5,852,823
------------ -------------- ----------- ----------- ----------- -----------
End of period $ 20,930,636 $ 24,628,340 $26,728,198 $30,871,774 $16,185,343 $10,966,173
============ ============== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
GAM Funds, Inc. -- Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Asian Capital GAMerica Capital
------------------------------- ------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
30TH JUNE, 31ST DEC., 30TH JUNE, 31ST DEC.,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM:
Operations
Net investment income/(loss) $ 5,743 $ 28,537 $ 6,919 ($ 45,849)
Net realized gain/(loss) (333,655) (640,791) 37,513 400,765
Unrealized appreciation/(depreciation)
for the period 142,930 (319,163) 1,169,868 351,466
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets from
operations (184,982) (931,417) 1,214,300 706,382
Dividends paid to shareholders from:
Net investment income
Class A -- (3,857) -- --
Class B -- -- -- --
Class C -- -- -- --
Class D -- -- -- --
Net realized gain on investments
Class A -- (74,195) -- (228,865)
Class B -- -- -- --
Class C -- -- -- --
Class D -- -- -- --
Capital share transactions (Note 4) (161,525) (3,795,577) 4,695,388 1,397,530
----------- ----------- ----------- -----------
Total increase/(decrease) in net assets (346,507) (4,805,046) 5,909,688 1,875,047
NET ASSETS
Beginning of period 824,213 5,629,259 3,799,057 1,924,010
----------- ----------- ----------- -----------
End of period $ 477,706 $ 824,213 $ 9,708,745 $ 3,799,057
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
51
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
at 30th June, 1998 (unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
GAM Funds, Inc. (the "Company"), is an open-end diversified investment company
registered under the Investment Company Act of 1940 comprised of eight
portfolios: GAM International Fund, GAM Global Fund, GAM Europe Fund, GAM
Pacific Basin Fund, GAM Japan Capital Fund, GAM North America Fund, GAM Asian
Capital Fund, and GAMerica Capital Fund (the "Funds").
Each Fund seeks long-term capital appreciation by investing primarily in equity
securities. GAM International Fund invests primarily in securities of companies
in Europe, the Pacific Basin and Canada. GAM Global Fund invests primarily in
securities of companies in the United States, Europe, the Pacific Basin and
Canada. GAM Europe Fund invests primarily in securities of companies in Europe.
GAM Pacific Basin Fund invests primarily in securities of companies in the
Pacific Basin. GAM Japan Capital Fund invests primarily in securities of
companies in Japan. GAM North America Fund invests primarily in securities of
companies in the United States and Canada. GAM Asian Capital Fund invests
primarily in securities of companies in Asia excluding Japan. GAMerica Capital
Fund invests primarily in securities of companies in the United States.
The Funds offer Class A, Class B, Class C and Class D shares. Class B and Class
C shares currently are available for all funds excluding GAM Asian Capital Fund
and Class D shares currently are available only for GAM International Fund, GAM
Global Fund and GAM Pacific Basin Fund. Class A shares are sold with a front-end
sales charge of up to 5.0% and Class D shares are sold with a front-end sales
charge of up to 3.5%. There is no front-end sales charge on Class B or Class C
shares. Class B shares are currently sold with a contingent deferred sales
charge which declines from 5% to zero depending on the period of time the shares
are held. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month of purchase. Class C shares redeemed
within one year of purchase will be subject to a contingent deferred sales
charge of 1%. The four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears its separate
distribution and certain class expenses, and has exclusive voting rights with
respect to any matter on which a separate vote of any class is required by
federal or state law. The following is a summary of significant accounting
policies followed in the preparation of the Company's financial statements.
Valuation of securities
Investment securities are stated at value based on the last sale price on the
principal exchange on which the securities are traded, or, lacking any sales, at
the last available bid price. Securities traded in the over-the-counter market
are valued at the last available bid price. Short-term securities maturing in 60
days or less are valued on an amortized cost basis which approximates market
value. Forward foreign currency contracts are valued at the forward rate and are
marked to market daily. Other securities for which market quotations are not
readily available are valued at fair value as determined by or under the
direction of the Board of Directors.
Adjustable Rate Index Notes
Each Fund may invest in adjustable rate index notes (ARINs) or similar
instruments. An ARIN is a form of promissory note issued by a brokerage firm or
other counterparty which provides that the amount of principal or
52
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
interest paid will vary inversely in proportion to changes in the value of a
specified security. The Funds could suffer losses in the event of a default or
insolvency of the brokerage firm or other counterparty issuing the ARIN.
Foreign currency
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into US dollar amounts at date of valuation. Purchases
and sales of portfolio securities and income items denominated in foreign
currencies are translated into US dollar amounts on the respective dates of such
transactions.
The Funds do 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 realized and unrealized gain or loss from investments.
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, the difference between the amounts
of dividends, interest and foreign withholding taxes recorded on the Funds'
books, and the US dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at period end,
resulting from changes in the exchange rate.
Foreign currency contracts
Each Fund may enter into forward foreign currency exchange contracts primarily
in order to hedge against foreign currency exchange rate risks on the non-US
dollar denominated investment securities. These contracts are valued daily and
the Funds' equity therein, representing unrealized gain or loss on the
contracts, is included in the Statement of Assets and Liabilities. Realized and
unrealized gains and losses on these contracts are included in the Statement of
Operations.
Futures contracts
Initial margin deposits made with respect to futures contracts traded on
domestic exchanges are maintained by the Funds' custodian in segregated asset
accounts. Initial margin deposits made upon entering into futures contracts
traded on foreign exchanges are recognized as assets due from the broker (the
Funds' agent in acquiring the futures positions). Subsequent changes in the
daily valuation of open contracts are recognized as unrealized gains or losses.
Variation margin payments are made or received on domestically traded futures as
appreciation or depreciation in the value of these contracts occurs. Realized
gains or losses are recorded when a contract is closed.
Federal income taxes
It is each Fund's policy to satisfy the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no provision for Federal income taxes
is required.
53
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Option contracts
The Funds may invest, for hedging and other purposes, in call and put options on
securities, currencies and futures contracts. Call and put options give the
Funds the right but not the obligation to buy (calls) or sell (puts) the
instrument underlying the option at a specified price. The premium paid on the
option, should it be excercised, will, on a call, increase the cost of the
instrument acquired and, on a put, reduce the proceeds received from the sale of
the instrument underlying the option. If the options are not exercised, the
premium paid will be recorded as a capital loss upon expiration. The Funds may
incur additional risk to the extent that the value of the underlying instrument
does not correlate with the movement of the option value.
Distributions to shareholders
Distributions are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences, which
may result in distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions, passive
foreign investment companies (PFIC), capital loss carryforwards and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid-in capital and may affect the per share distribution
between net investment income and realized and unrealized gain/(loss). The
calculation of Net Investment Income per share in the Selected Financial
Information excludes these adjustments. Undistributed net investment
income/(loss) and accumulated undistributed net realized gain/(loss) on
investments and foreign currency transactions may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
Deferred organization expenses
Organization costs for GAM Japan Capital Fund, GAM Asian Capital Fund and
GAMerica Capital Fund have been deferred and are being amortized on a
straight-line basis over a five-year period from each Fund's commencement of
operations.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 income and expense during the reporting period. Actual
results could differ from those estimates.
Other
Securities transactions are recorded on the trade date basis. Interest is
accrued on a daily basis and market discount is accreted on a straight-line
basis. Dividend income is recorded on the ex-dividend date, except that certain
dividends on foreign securities are recorded as soon as information is available
to the Fund.
54
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NOTE 2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Investment Adviser, GAM International Management Limited, receives a fee
under its agreement with the Company equivalent to 1% per annum of each Fund's
average daily net assets, except for GAM North America Fund. With respect to GAM
North America Fund, GAM International Management Limited and Fayez Sarofim & Co.
serve as co-investment advisers to the Fund. Each co-adviser receives a fee
under its agreement equivalent to 0.50% per annum of the Fund's average daily
net assets. For the six months ended 30th June, 1998 GAM Services, Inc., the
Fund's distributor, voluntarily limited expenses for the GAM Asian Capital Fund
to 2% of the Fund's average daily net assets. As a result of the Fund's expenses
exceeding this expense limitation, GAM Services, Inc., assumed Fund expenses
totaling $38,948.
GAM Services, Inc. acts as principal underwriter of the Fund. For the six
months ended 30th June, 1998, GAM Services, Inc. received front-end sales load
charges of $2,751,942 from the sale of the Funds' shares.
Effective 5th September, 1995, the Funds adopted a Class D Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 which provides
for payments by the Funds to GAM Services at the annual rate of up to 0.50% of
each applicable Fund's average net assets attributable to Class D Shares.
Effective 9th October, 1996, the Funds adopted a Class A Distribution Plan
pursuant to this rule which provides for payments by the Funds to GAM Services
at the annual rate of up to 0.30% of each applicable Fund's average net assets
attributable to Class A shares. Effective 29th April, 1998, the Funds adopted a
Class B and Class C Distribution Plan pursuant to this rule which provides for
payments by the Funds to GAM Services at the annual rate of up to 1.00% of each
applicable Fund's average net assets attributable to Class B and Class C shares.
NOTE 3. DIRECTORS FEES
The Funds do not pay any compensation to their officers or to any directors,
officers or employees of GAM International Management Limited, GAM Services Inc.
or their affiliates. Each disinterested director is compensated by each Fund as
follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM
GAM GAM GAM Pacific Japan North Asian GAMerica
International Global Europe Basin Capital America Capital Capital
------------- ------ ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Retainer $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125
Meeting Fee 125 125 125 125 125 125 125 125
</TABLE>
55
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NOTE 4. CAPITAL STOCK
The Company declared a 10-for-1 stock split to shareholders of record as of 19th
December, 1995. All per share data have been restated to reflect the stock
split.
At 30th June, 1998, GAM Funds, Inc. had 1,510,000,000 shares of common stock,
$0.001 par value authorized. For each of the eight active funds shares were
allocated as follows: 260,000,000, 160,000,000, 75,000,000 and 50,000,000
shares, respectively, were allocated to each of Class A, Class B, Class C and
Class D of GAM International; 85,000,000, 75,000,000, 20,000,000 and 25,000,000
shares, respectively, were allocated to Class A, Class B, Class C and Class D of
GAM Global; 60,000,000, 50,000,000, 20,000,000 and 25,000,000 shares,
respectively, were allocated to Class A, Class B, Class C and Class D of GAM
Europe and GAM Pacific Basin; 55,000,000, 50,000,000, 20,000,000 and 12,500,000
shares, respectively, were allocated to Class A, Class B, Class C and Class D of
GAM Japan Capital; 55,000,000, 50,000,000, 15,000,000 and 25,000,000 shares,
respectively, were allocated to Class A, Class B, Class C and Class D of GAM
North America; 25,000,000, 25,000,000, 10,000,000 and 12,500,000 shares,
respectively, were allocated to Class A, Class B, Class C and Class D of GAM
Asian Capital; while 30,000,000, 25,000,000, 15,000,000 and 25,000,000 shares,
respectively, were allocated to Class A, Class B, Class C and Class D of
GAMerica Capital. Changes in each Fund's capital stock are summarized as
follows:
<TABLE>
<CAPTION>
GAM International Fund
For the Periods
--------------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
------ --- ------ ---
<S> <C> <C> <C> <C>
CLASS A
Shares sold 22,608,791 706,351,468 29,334,376 797,964,527
Shares issued on reinvestment of dividends -- -- 2,500,837 69,462,995
Shares redeemed (6,472,917) (205,718,826) (12,437,416) (332,541,512)
---------- ------------ ----------- ------------
Net increase 16,135,874 500,632,642 19,397,797 534,886,010
========== ============ =========== ============
CLASS B*
Shares sold 457,530 15,216,159 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed (450) (15,154) -- --
---------- ------------ ----------- ------------
Net increase 457,080 15,201,005 -- --
========== ============ =========== ============
CLASS C*
Shares sold 557,170 18,194,446 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed (8,260) (4,722) -- --
---------- ------------ ----------- ------------
Net increase 548,910 18,189,724 -- --
========== ============ =========== ============
CLASS D
Shares sold 1,721,143 54,007,742 2,142,282 59,042,169
Shares issued on reinvestment of dividends -- -- 134,583 3,717,035
Shares redeemed (350,991) (11,148,590) (452,108) (12,063,311)
---------- ------------ ----------- ------------
Net increase 1,370,152 42,859,152 1,824,757 50,695,893
========== ============ =========== ============
</TABLE>
* Class B and Class C Shares were offered for sale on 29th April, 1998.
56
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Global Fund
For the Periods
-------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 2,813,506 56,363,876 3,043,487 53,815,753
Shares issued on reinvestment of dividends -- -- 95,084 1,743,330
Shares redeemed (496,042) (10,217,813) (989,599) (16,207,961)
----------- ----------- ----------- -----------
Net increase 2,317,464 46,146,063 2,148,972 39,351,122
=========== =========== =========== ===========
CLASS B*
Shares sold 172,231 3,640,838 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 172,231 3,640,838 -- --
=========== =========== =========== ===========
CLASS C*
Shares sold 103,934 2,221,469 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed (106) (2,225) -- --
----------- ----------- ----------- -----------
Net increase 103,828 2,219,244 -- --
=========== =========== =========== ===========
CLASS D
Shares sold 281,967 6,562,657 164,316 3,018,076
Shares issued on reinvestment of dividends -- -- 5,659 102,511
Shares redeemed (50,713) (1,063,342) (23,624) (412,681)
----------- ----------- ----------- -----------
Net increase 231,254 5,499,315 146,351 2,707,906
=========== =========== =========== ===========
</TABLE>
* Class B and Class C Shares were offered for sale on 29th April, 1998.
57
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Europe Fund
For the Periods
---------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,650,699 24,098,958 2,155,335 28,650,194
Shares issued on reinvestment of dividends -- -- 382,881 4,693,020
Shares redeemed (926,528) (13,294,480) (1,547,698) (21,254,955)
----------- ----------- ----------- -----------
Net increase 724,171 10,804,478 990,518 12,088,259
=========== =========== =========== ===========
CLASS B*
Shares sold 24,616 368,519 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 24,616 368,519 -- --
=========== =========== =========== ===========
CLASS C*
Shares sold 20,644 313,198 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 20,644 313,198 -- --
=========== =========== =========== ===========
</TABLE>
* Class B and Class C Shares were offered for sale on 29th April, 1998.
58
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Pacific Basin Fund
For the Periods
----------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,040,518 9,550,741 1,941,999 28,048,990
Shares issued on reinvestment of dividends -- -- 236,407 2,658,787
Shares redeemed (1,058,631) (9,802,461) (3,062,559) (39,899,633)
----------- ----------- ----------- -----------
Net decrease (18,113) (251,720) (884,153) (9,191,856)
=========== =========== =========== ===========
CLASS B*
Shares sold 12,224 110,000 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 12,224 110,000 -- --
=========== =========== =========== ===========
CLASS C*
Shares sold 820 7,000 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 820 7,000 -- --
=========== =========== =========== ===========
CLASS D
Shares sold 53,450 494,013 51,066 746,179
Shares issued on reinvestment of dividends -- -- 14,840 163,481
Shares redeemed (12,289) (110,564) (24,922) (334,685)
----------- ----------- ----------- -----------
Net increase 41,161 383,449 40,984 574,975
=========== =========== =========== ===========
* Class B and Class C Shares were offered for sale on 29th April, 1998.
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM Japan Capital Fund
For the Periods
-----------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,538,860 13,206,747 3,911,543 38,716,276
Shares issued on reinvestment of dividends -- -- 219,840 1,969,882
Shares redeemed (2,077,554) (17,802,566) (4,362,649) (41,365,723)
----------- ----------- ----------- -----------
Net decrease (538,694) (4,595,819) (231,266) (679,565)
=========== =========== =========== ===========
CLASS B*
Shares sold 12,986 107,653 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed (905) (6,573) -- --
----------- ----------- ----------- -----------
Net increase 12,081 101,080 -- --
=========== =========== =========== ===========
CLASS C*
Shares sold 71,195 585,763 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 71,195 585,763 -- --
=========== =========== =========== ===========
* Class B and Class C Shares were offered for sale on 29th April, 1998.
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAM North America Fund
For the Periods
------------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 721,998 13,317,631 392,721 6,494,878
Shares issued on reinvestment of dividends -- -- 5,909 101,515
Shares redeemed (588,873) (11,453,605) (197,145) (3,256,744)
----------- ----------- ----------- -----------
Net increase 133,125 1,864,026 201,485 3,339,649
=========== =========== =========== ===========
CLASS B*
Shares sold 299 6,000 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
----------- ----------- ----------- -----------
Net increase 299 6,000 -- --
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GAM Asian Capital
For the Periods
--------------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 25,557 134,097 180,437 1,471,448
Shares issued on reinvestment of dividends -- -- 10,133 75,019
Shares redeemed (52,096) (295,622) (626,223) (5,342,044)
---------- ---------- ---------- ----------
Net decrease (26,539) (161,525) (435,653) (3,795,577)
========== ========== ========== ==========
</TABLE>
* Class B Shares were offered for sale on 29th April, 1998.
61
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GAMerica Capital
For the Periods
---------------------------------------------------------
01-Jan-98 to 30-June-98 01-Jan-97 to 31-Dec-97
Shares US$ Shares US$
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 276,749 4,437,292 168,956 2,197,313
Shares issued on reinvestment of dividends -- -- 9,395 124,173
Shares redeemed (2,764) (45,333) (73,313) (923,956)
---------- ---------- ---------- ----------
Net increase 273,985 4,391,959 105,038 1,397,530
========== ========== ========== ==========
CLASS B*
Shares sold 15,351 253,802 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed -- -- -- --
---------- ---------- ---------- ----------
Net increase 15,351 253,802 -- --
========== ========== ========== ==========
CLASS C*
Shares sold 10,117 167,345 -- --
Shares issued on reinvestment of dividends -- -- -- --
Shares redeemed (7,104) (117,718) -- --
---------- ---------- ---------- ----------
Net increase 3,013 49,627 -- --
========== ========== ========== ==========
</TABLE>
* Class B and Class C Shares were offered for sale on 29th April, 1998.
62
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NOTE 5. INVESTMENT TRANSACTIONS
The cost of purchases and proceeds of sales of investment securities for the six
months ended 30th June, 1998 excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM
GAM GAM GAM Pacific Japan North Asian GAMerica
International Global Europe Basin Capital America Capital Capital
------------- ------ ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Purchases 796,680,117 80,206,144 41,937,450 7,012,730 7,840,229 8,723,703 267,751 2,481,329
Sales 295,079,296 27,445,081 28,723,165 8,333,970 10,043,528 6,614,556 583,873 213,513
</TABLE>
Realized gains and losses are reported on an identified cost basis. At 30th
June, 1998, the aggregate gross unrealized appreciation and depreciation of
securities, based on cost for federal income taxes purposes, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM
GAM GAM GAM Pacific Japan North Asian GAMerica
International Global Europe Basin Capital America Capital Capital
------------- ------ ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Appreciation 754,148,435 24,724,105 10,309,601 941,624 968,767 3,979,099 1,763 2,071,994
Depreciation (70,092,282) (1,541,993) (1,105,309) (13,640,164) (4,701,969) (46,811) (142,354) (374,907)
----------- ---------- ---------- ----------- ---------- --------- -------- ---------
Net 684,056,153 23,182,112 9,204,292 (12,698,540) (3,733,202) 3,932,288 (140,591) 1,697,087
=========== ========== ========== =========== ========== ========= ======== =========
</TABLE>
At 31st December, 1997, the Funds had tax basis net capital losses as follows.
These losses may be carried over to offset future capital gains through the
expiration dates shown:
<TABLE>
<CAPTION>
GAM GAM GAM GAM
GAM GAM GAM Pacific Japan North Asian GAMerica
International Global Europe Basin Capital America Capital Capital
------------- ------ ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$ -- -- -- 770,561 507,841 -- 291,731 --
2,414,939
Carryforward -- -- -- 31st Dec, 31st Dec, -- 31st Dec, --
Expiration dates -- -- -- 2005 2003 & 2005 -- 2005 --
</TABLE>
Foreign taxes withheld from dividends and interest for the six months ended 30th
June, 1998, were as follows:
<TABLE>
<CAPTION>
GAM GAM GAM GAM
GAM GAM GAM Pacific Japan North Asian GAMerica
International Global Europe Basin Capital America Capital Capital
------------- ------ ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In US$
Dividends 3,000,995 43,099 92,951 27,166 19,799 571 686 235
Interest -- -- -- -- -- -- -- --
</TABLE>
63
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NOTE 6. FINANCIAL INSTRUMENTS
During the period, several of the Funds have been party to financial instruments
with off-balance sheet risks, including forward foreign currency contracts and
futures contracts, primarily in an attempt to minimize the risk to the Fund, in
respect of its portfolio transactions. These instruments involve market and/or
credit risk in excess of the amount recognized in the Statement of Assets and
Liabilities. Risks arise from the possible inability of counterparties to meet
the terms of their contracts and from unexpected movement in currencies,
securities values and interest rates. The contract amounts indicate the extent
of the Funds' involvement in such contracts.
Forwards: When entering a forward currency contract, the Fund agrees to receive
or deliver a fixed quantity of foreign currency for an agreed upon price on an
agreed upon future date.
At 30th June, 1998, the Fund had outstanding forward contracts for the purchase
and sale of currencies as set out below. The contracts are reported in the
financial statements at the Fund's net equity, as measured by the difference
between the forward foreign exchange rates at the dates of entry into the
contracts and the forward rates at the reporting date, or the date an offsetting
position, if any, has been entered into.
GAM INTERNATIONAL FUND
Unrealized
appreciation/
(depreciation)
-------------
US$
567,319,000 French francs sold vs. 94,000,000 US$
6th July, 1998 65,904
51,666,930,000 Japanese yen sold vs. 406,000,000 US$
6th July, 1998 31,706,883
79,288,000 German marks sold vs. 44,000,000 US$
14th July, 1998 (23,517)
403,334,600 Dutch guilders sold vs. 198,000,000 US$
14th July, 1998 (656,756)
1,790,620,000 French francs sold vs. 296,000,000 US$
15th July, 1998 (651,064)
159,690,000 Swedish krona sold vs. 20,000,000 US$
31st July, 1998 (69,507)
170,731,707 UK Pound sterling sold vs. 280,000,000 US$
10th August, 1998 (4,542,488)
29,862,000 Swiss francs sold vs. 20,000,000 US$
2nd October, 1998 89,443
370,923,300 Swiss francs sold vs. 253,000,000 US$
8th October, 1998 5,531,264
1,103,700,000 Belgian francs sold vs. 30,000,000 US$
29th October, 1998 103,481
64
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
562,104,000 Hong Kong dollar sold vs. 72,000,000 US$
30th October, 1998 380,559
220,923,153 UK Pound sterling sold vs. 357,000,000 US$
5th November, 1998 (9,349,353)
187,040,000 Finnish markka sold vs. 35,000,000 US$
12th November, 1998 580,464
64,580,400,000 Italian lire sold vs. 37,000,000 US$
9th December, 1998 476,872
265,174,000 Norwegian kroner sold vs. 35,000,000 US$
16th December, 1998 171,153
272,040,000 Danish krone sold vs. 40,000,000 US$
29th December, 1998 47,122
-----------
Net equity in foreign currency exchange contracts 23,860,460
===========
GAM GLOBAL FUND
US$
1,502,254,000 Japanese yen sold vs. 11,600,000 US$
6th July, 1998 717,162
10,437,647 Dutch guilders sold vs. 5,096,000 US$
13th July, 1998 (44,583)
630,700 German marks sold vs. 350,000 US$
14th July, 1998 (187)
40,510,870 French francs sold vs. 6,650,000 US$
15th July, 1998 (61,414)
1,097,561 UK Pound sterling sold vs. 1,800,000 US$
10th August, 1998 (29,202)
7,026,300 Hong Kong dollars sold vs. 900,000 US$
30th October, 1998 7,488
5,025,791 Swiss francs sold vs. 3,428,000 US$
30th October, 1998 74,945
6,412,800 Finnish markka sold vs. 1,200,000 US$
12th November, 1998 19,902
12,043,000 French francs sold vs. 2,000,000 US$
9th December, 1998 (13,036)
--------
Net equity in foreign currency exchange contracts 671,075
========
65
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
GAM EUROPE FUND
US$
23,250,000 Finnish markka sold vs. 4,236,858 US$
22nd July, 1998 (71,388)
127,550,000 French francs sold vs. 21,049,205 US$
22nd July, 1998 (294,646)
20,650,000 German marks sold vs. 11,427,423 US$
22nd July, 1998 (157,115)
31,000,000 Belgian francs sold vs. 840,507 US$
23rd July, 1998 (15,019)
38,750,000 Danish krone sold vs. 5,646,515 US$
23rd July, 1998 (59,220)
15,900,000 Dutch guilders sold vs. 7,818,348 US$
23rd July, 1998 (131,776)
14,930,000,000 Italian lire sold vs. 8,354,176 US$
23rd July, 1998 (134,366)
22,400,000 Norwegian kroner sold vs. 2,960,918 US$
24th July, 1998 (35,213)
733,500,000 Spanish pesetas sold vs. 4,803,119 US$
24th July, 1998 (59,387)
36,750,000 Swedish krona sold vs. 4,682,537 US$
24th July, 1998 (60,311)
12,750,000 Swiss francs sold vs. 8,562,495 US$
24th July, 1998 (14,016)
----------
Net equity in foreign currency exchange contracts (1,032,457)
==========
GAM PACIFIC BASIN FUND
US$
32,734,800 Hong Kong dollars sold vs. 4,200,000 US$
15th July, 1998 (21,903)
1,105,040,000 Japanese yen sold vs. 8,500,000 US$
31st July, 1998 463,386
4,439,675 Australian dollars sold vs. 2,611,386 US$
16th September, 1998 (115,122)
--------
Net equity in foreign currency exchange contracts 326,361
========
66
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
GAM JAPAN CAPITAL FUND
US$
259,980,000 Japanese yen sold vs. 2,000,000 US$
1st July, 1998 70,220
129,870,000 Japanese yen sold vs. 1,000,000 US$
14th July, 1998 58,021
905,590,000 Japanese yen sold vs. 7,000,000 US$
21st July, 1998 424,293
1,107,635,000 Japanese yen sold vs. 8,500,000 US$
6th August, 1998 437,427
133,960,000 Japanese yen sold vs. 1,000,000 US$
20th August, 1998 22,917
259,980,000 Japanese yen bought vs. 1,929,780 US$
1st July, 1998 (1,753)
----------
Net equity in foreign currency exchange contracts 1,011,125
==========
GAM ASIAN CAPITAL FUND
US$
1,948,500 Hong Kong dollars sold vs. 250,000 US$
15th July, 1998 (1,347)
------
Net equity in foreign currency exchange contracts (1,347)
======
At 30th June, 1998 the Funds had sufficient cash and/or securities to cover any
commitments under these contracts.
Futures: A futures contract obligates one party to sell and the other party to
purchase a specific instrument for an agreed price on an agreed future date. At
30th June, 1998 GAM International Fund, GAM Global Fund and GAM Japan Capital
Fund had outstanding futures contracts as set out in their respective Statement
of Investments.
67
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NOTE 7. SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding
throughout the period)
----------------------------------------------------------------
Income from investment operations
---------------------------------------------
Net realized
Net asset value, Net and unrealized Total from
beginning investment gain/(loss) on investment
of period income/(loss) investments operations
------------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
01-JAN-98 TO
30-JUN-98
(UNAUDITED)
US$
GAM International
Class A US$ 28.46 0.10+ 4.83 4.93
Class B US$ 33.39 0.02+ 0.02 0.04
Class C US$ 32.95 0.03+ 0.39 0.42
Class D US$ 28.34 0.08+ 4.82 4.90
GAM Global
Class A US$ 18.71 (0.01)+ 3.42 3.41
Class B US$ 20.99 0.00+ 1.12 1.12
Class C US$ 21.19 (0.00)+ 0.92 0.92
Class D US$ 18.50 (0.03)+ 3.38 3.35
GAM Europe
Class A US$ 12.57 0.11+ 2.34 2.45
Class B US$ 14.97 0.03+ 0.04 0.07
Class C US$ 15.30 0.04+ (0.33) (0.29)
GAM Pacific Basin
Class A US$ 9.69 0.01+ (1.60) (1.59)
Class B US$ 8.90 0.00+ (0.68) (0.68)
Class C US$ 8.53 0.00+ (0.42) (0.42)
Class D US$ 9.62 0.01+ (1.32) (1.31)
GAM Japan Capital
Class A US$ 8.44 (0.03)+ (0.06) (0.09)
Class B US$ 8.44 (0.01)+ (0.07) (0.08)
Class C US$ 8.58 (0.01)+ (0.22) (0.23)
GAM North America
Class A US$ 17.32 0.00+ 3.80 3.80
Class B US$ 20.13 (0.02)+ 1.00 0.98
GAM Asian Capital
Class A US$ 6.02 0.09+ (1.79) (1.70)
GAMerica Capital
Class A US$ 13.43 0.02+ 3.43 3.45
Class B US$ 16.53 0.00+ 0.34 0.34
Class C US$ 16.53 0.00+ 0.35 0.35
<CAPTION>
Per share operating performance (for a share outstanding
throughout the
period)
---------------------------------------------------------
Less distributions
-------------------------------------------
Dividends Distributions
from net from net Net asset
investment realized Total value, end
income gains Distributions of period
------------ -------------- --------------- -----------
<S> <C> <C> <C> <C>
01-JAN-98 TO
30-JUN-98
(UNAUDITED)
US$
GAM International
Class A -- -- 0.00 US$ 33.39
Class B -- -- 0.00 US$ 33.43
Class C -- -- 0.00 US$ 33.37
Class D -- -- 0.00 US$ 33.24
GAM Global
Class A -- -- 0.00 US$ 22.12
Class B -- -- 0.00 US$ 22.11
Class C -- -- 0.00 US$ 22.11
Class D -- -- 0.00 US$ 21.85
GAM Europe
Class A -- -- 0.00 US$ 15.02
Class B -- -- 0.00 US$ 15.04
Class C -- -- 0.00 US$ 15.01
GAM Pacific Basin
Class A -- -- 0.00 US$ 8.10
Class B -- -- 0.00 US$ 8.22
Class C -- -- 0.00 US$ 8.11
Class D -- -- 0.00 US$ 8.31
GAM Japan Capital
Class A -- -- 0.00 US$ 8.35
Class B -- -- 0.00 US$ 8.36
Class C -- -- 0.00 US$ 8.35
GAM North America
Class A -- -- 0.00 US$ 21.12
Class B -- -- 0.00 US$ 21.11
GAM Asian Capital
Class A -- -- 0.00 US$ 4.32
GAMerica Capital
Class A -- -- 0.00 US$ 16.88
Class B -- -- 0.00 US$ 16.87
Class C -- -- 0.00 US$ 16.88
</TABLE>
68
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding
throughout the period)
----------------------------------------------------------------
Income from investment operations
---------------------------------------------
Net realized
Net asset value, Net and unrealized Total from
beginning investment gain/(loss) on investment
of period income/(loss) investments operations
------------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
01-JAN-97 TO
31-DEC-97
US$
GAM International
Class A US$ 23.15 0.08+ 6.58 6.66
Class D US$ 23.07 0.01+ 6.59 6.60
GAM Global
Class A US$ 14.35 (0.04)+ 5.04 5.00
Class D US$ 14.22 (0.09)+ 5.02 4.93
GAM Europe
Class A US$ 11.85 0.02+ 3.15 3.17
GAM Pacific Basin
Class A US$ 15.26 0.00+ (4.45) (4.45)
Class D US$ 15.20 0.01+ (4.47) (4.46)
GAM Japan Capital
Class A US$ 9.39 (0.10)+ (0.11) (0.21)
GAM North America
Class A US$ 13.56 0.00+ 3.99 3.99
GAM Asian Capital
Class A US$ 9.83 0.09+ (3.48) (3.39)
GAMerica Capital
Class A US$ 10.82 (0.24)+ 4.23 3.99
01-JAN-96 TO
31-DEC-96
US$
GAM International
Class A US$ 21.37 0.57+ 1.34 1.91
Class D US$ 21.35 0.45+ 1.32 1.77
GAM Global
Class A US$ 13.51 0.16+ 1.55 1.71
Class D US$ 13.48 0.07+ 1.47 1.54
GAM Europe
Class A US$ 10.04 0.07+ 2.06 2.13
GAM Pacific Basin
Class A US$ 16.97 0.04+ (0.11) (0.07)
Class D US$ 16.96 (0.10)+ (0.11) (0.21)
GAM Japan Capital
Class A US$ 10.16 (0.05)+ 0.07 0.02
GAM North America
Class A US$ 11.93 (0.05)+ 2.93 2.88
GAM Asian Capital
Class A US$ 9.53 (0.07)+ 0.38 0.31
GAMerica Capital
Class A US$ 10.03 (0.42)+ 2.22 1.80
<CAPTION>
Per share operating performance (for a share outstanding
throughout the
period)
----------------------------------------------------------
Less distributions
-------------------------------------------
Dividends Distributions
from net from net Net asset
investment realized Total value, end
income gains Distributions of period
------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
01-JAN-97 TO
31-DEC-97
US$
GAM International
Class A (0.18) (1.17) (1.35) US$ 28.46
Class D (0.17) (1.17) (1.33) US$ 28.34
GAM Global
Class A (0.02) (0.62) (0.64) US$ 18.71
Class D (0.03) (0.62) (0.65) US$ 18.50
GAM Europe
Class A (0.06) (2.39) (2.45) US$ 12.57
GAM Pacific Basin
Class A -- (1.12) (1.12) US$ 9.69
Class D -- (1.12) (1.12) US$ 9.62
GAM Japan Capital
Class A -- (0.74) (0.74) US$ 8.44
GAM North America
Class A -- (0.23) (0.23) US$ 17.32
GAM Asian Capital
Class A (0.02) (0.40) (0.42) US$ 6.02
GAMerica Capital
Class A 0.00 (1.38) (1.38) US$ 13.43
01-JAN-96 TO
31-DEC-96
US$
GAM International
Class A (0.09) (0.04) (0.13) US$ 23.15
Class D (0.01) (0.04) (0.05) US$ 23.07
GAM Global
Class A (0.08) (0.79) (0.87) US$ 14.35
Class D (0.01) (0.79) (0.80) US$ 14.22
GAM Europe
Class A (0.01) (0.31) (0.32) US$ 11.85
GAM Pacific Basin
Class A (0.74) (0.90) (1.64) US$ 15.26
Class D (0.65) (0.90) (1.55) US$ 15.20
GAM Japan Capital
Class A (0.70) (0.09) (0.79) US$ 9.39
GAM North America
Class A -- (1.25) (1.25) US$ 13.56
GAM Asian Capital
Class A -- (0.01) (0.01) US$ 9.83
GAMerica Capital
Class A -- (1.01) (1.01) US$ 10.82
</TABLE>
69
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding
throughout the period)
----------------------------------------------------------------
Income from investment operations
---------------------------------------------
Net realized
Net asset value, Net and unrealized Total from
beginning investment gain/(loss) on investment
of period income/(loss) investments operations
------------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
01-JAN-95 TO
31-DEC-95
US$
GAM International
Class A US$ 17.21 0.52 4.64 5.16
Class D US$ 20.46 0.10 1.78 1.88
GAM Global
Class A US$ 10.60 0.35 3.48 3.83
Class D US$ 13.46 -- 0.92 0.92
GAM Europe
Class A US$ 8.66 0.07 1.38 1.45
GAM Pacific Basin
Class A US$ 17.62 -- 0.61 0.61
Class D US$ 17.36 (0.02) 0.26 0.24
GAM Japan Capital
Class A US$ 9.62 (0.07) 0.69 0.62
GAM North America
Class A US$ 9.14 -- 2.83 2.83
GAM Asian Capital **
Class A US$ 10.00 (0.01) (0.42) (0.43)
GAMerica Capital **
Class A US$ 10.00 0.07 0.07 0.14
01-JAN-94 TO
31-DEC-94
US$
GAM
International US$ 23.90 0.34 (2.58) (2.24)
GAM Global US$ 17.92 0.19 (2.94) (2.75)
GAM Europe US$ 8.93 -- (0.27) (0.27)
GAM Pacific
Basin US$ 19.20 (0.05) 1.36 1.31
GAM Japan
Capital* US$ 10.00 0.02 (0.40) (0.38)
GAM North
America US$ 12.80 0.04 0.23 0.27
<CAPTION>
Per share operating performance (for a share outstanding
throughout the
period)
----------------------------------------------------------
Less distributions
-------------------------------------------
Dividends Distributions
from net from net Net asset
investment realized Total value, end
income gains Distributions of period
------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
01-JAN-95 TO
31-DEC-95
US$
GAM International
Class A (0.47) (0.53) (1.00) US$ 21.37
Class D (0.46) (0.53) (0.99) US$ 21.35
GAM Global
Class A (0.30) (0.62) (0.92) US$ 13.51
Class D (0.28) (0.62) (0.90) US$ 13.48
GAM Europe
Class A (0.06) (0.01) (0.07) US$ 10.04
GAM Pacific Basin
Class A -- (1.26) (1.26) US$ 16.97
Class D -- (0.64) (0.64) US$ 16.96
GAM Japan Capital
Class A (0.05) (0.03) (0.08) US$ 10.16
GAM North America
Class A -- (0.04) (0.04) US$ 11.93
GAM Asian Capital**
Class A -- (0.04) (0.04) US$ 9.53
GAMerica Capital**
Class A (0.07) (0.04) (0.11) US$ 10.03
01-JAN-94 TO
31-DEC-94
US$
GAM
International (0.66) (3.79) (4.45) US$ 17.21
GAM Global (0.49) (4.08) (4.57) US$ 10.60
GAM Europe -- -- -- US$ 8.66
GAM Pacific
Basin -- (2.89) (2.89) US$ 17.62
GAM Japan
Capital* -- -- -- US$ 9.62
GAM North
America (0.23) (3.70) (3.93) US$ 9.14
</TABLE>
70
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per share operating performance (for a share outstanding
throughout the period)
----------------------------------------------------------------
Income from investment operations
---------------------------------------------
Net realized
Net asset value, Net and unrealized Total from
beginning investment gain/(loss) on investment
of period income/(loss) investments operations
------------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
01-JAN-93 TO
31-DEC-93
US$
GAM International US$ 14.56 0.25 10.38 10.63
GAM Global US$ 10.33 0.24 7.46 7.70
GAM Europe US$ 7.34 0.24 1.41 1.65
GAM Pacific Basin US$ 13.14 (0.03) 6.57 6.54
GAM North Amer-
ica US$ 13.63 0.19 (0.46) (0.27)
<CAPTION>
Per share operating performance (for a share outstanding
throughout the period)
----------------------------------------------------------
Less distributions
-------------------------------------------
Dividends Distributions
from net from net Net asset
investment realized Total value, end
income gains Distributions of period
------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
01-JAN-93 TO
31-DEC-93
US$
GAM International (0.34) (0.95) (1.29) US$ 23.90
GAM Global (0.11) -- (0.11) US$ 17.92
GAM Europe (0.06) -- (0.06) US$ 8.93
GAM Pacific Basin (0.04) (0.44) (0.48) US$ 19.20
GAM North Amer-
ica (0.07) (0.49) (0.56) US$ 12.80
</TABLE>
+ For the six months ended 30th June, 1998 and the years ended 31st December
1996 and 1997, net investment income per share has been determined based on
the weighted average shares outstanding method.
* Period from 1st July, 1994 (Inception) to 31st December, 1994.
** Period from 12th May, 1995 (Inception) to 31st December, 1995.
71
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
---------------------------------------------------------------------------------
Ratios to average net assets
-------------------------------------------
Total return
(without Net assets Net Portfolio
deduction of end of period investment turnover
sales load)++ (000 omitted) Expenses income/(loss) rate
--------------- ----------------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
01-JAN-98 TO
30-JUN-98
(UNAUDITED)
US$
GAM International
Class A 17.32% US$ 2,643,244 1.57%* 0.63%* 23%
Class B 0.12% US$ 15,280 2.34%* 0.85%* 23%
Class C 1.27% US$ 18,316 2.25%* 0.82%* 23%
Class D 17.29% US$ 161,990 1.71%* 0.52%* 23%
GAM Global
Class A 18.23% US$ 128,984 1.52%* (0.13)%* 53%
Class B 5.34% US$ 3,809 2.32%* 0.02%* 53%
Class C 4.34% US$ 2,295 2.25%* (0.20)%* 53%
Class D 18.11% US$ 9,503 1.68%* (0.27)%* 53%
GAM Europe
Class A 19.49% US$ 57,593 1.88%* 1.60%* 119%
Class B 0.47% US$ 370 2.70%* 2.74%* 119%
Class C ( 1.90)% US$ 310 2.70%* 2.85%* 119%
GAM Pacific Basin
Class A (16.41)% US$ 19,114 2.55%* 0.14%* 62%
Class B ( 7.64)% US$ 100 3.22%* (0.29)%* 62%
Class C ( 4.92)% US$ 7 3.18%* 0.20%* 62%
Class D (13.62)% US$ 1,709 2.51%* 0.22%* 62%
GAM Japan Capital
Class A ( 1.07)% US$ 26,033 2.30%* (0.63)%* 67%
Class B ( 0.95)% US$ 101 3.01%* (2.50)%* 67%
Class C ( 2.68)% US$ 594 3.73%* (2.96)%* 67%
GAM North America
Class A 21.94% US$ 16,179 1.73%* 0.04%* 82%
Class B 4.87% US$ 6 2.38%* (1.26)%* 82%
GAM Asian Capital **
Class A (28.24)% US$ 478 2.00%* 1.76%* 101%
GAMerica Capital
Class A 25.69% US$ 9,399 2.19%* 0.21%* 10%
Class B 2.06% US$ 259 3.02%* (0.06)%* 10%
Class C 2.12% US$ 51 3.05%* 0.08%* 10%
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
-------------------------------------------------------------------------------
Ratios to average net assets
-----------------------------------------
Total return
(without Net assets Net Portfolio
deduction of end of period investment turnover
sales load)++ (000 omitted) Expenses income/(loss) rate
--------------- ----------------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C>
01-JAN-97 TO
31-DEC-97
US$
GAM International
Class A 28.93% US$ 1,793,665 1.68% 0.28% 48%
Class D 28.78% US$ 99,283 1.82% 0.05% 48%
GAM Global
Class A 34.95% US$ 65,739 1.83% (0.25)% 48%
Class D 34.80% US$ 3,768 2.01% (0.53)% 48%
GAM Europe
Class A 27.55% US$ 39,101 1.81% 0.15% 80%
GAM Pacific Basin
Class A (30.00)% US$ 23,046 1.98% 0.02% 42%
Class D (30.18)% US$ 1,583 2.08% (0.09)% 42%
GAM Japan Capital
Class A ( 2.58)% US$ 30,872 2.15% (1.06)% 76%
GAM North America
Class A 29.41% US$ 10,966 1.94% 0.00% 15%
GAM Asian Capital **
Class A (35.34)% US$ 824 1.81% 1.04% 68%
GAMerica Capital
Class A 37.28% US$ 3,799 3.45% (2.04)% 22%
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
-------------------------------------------------------------------------------
Ratios to average net assets
-----------------------------------------
Total return
(without Net assets Net Portfolio
deduction of end of period investment turnover
sales load)++ (000 omitted) Expenses income/(loss) rate
--------------- ----------------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C>
01-JAN-96 TO
31-DEC-96
US$
GAM International+
Class A 8.98% US$ 1,009,819 1.56% 2.70% 82%
Class D 8.33% US$ 38,716 2.06% 2.13% 82%
GAM Global+
Class A 12.74% US$ 19,583 2.26% 1.17% 107%
Class D 11.54% US$ 815 2.88% 0.52% 107%
GAM Europe+
Class A 21.32% US$ 25,127 1.89% 0.59% 76%
GAM Pacific Basin+
Class A (0.39)% US$ 49,808 1.76% 0.22% 46%
Class D (1.19)% US$ 1,878 2.28% (0.57)% 46%
GAM Japan Capital+
Class A 0.16% US$ 36,517 1.84% (0.50)% 23%
GAM North America+
Class A 24.10% US$ 5,853 2.61% (0.39)% 9%
GAM Asian Capital**+
Class A 3.28% US$ 5,629 2.98% (0.75)% 86%
GAMerica Capital**+
Class A 18.31% US$ 1,924 5.16% (3.79)% 27%
</TABLE>
74
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
---------------------------------------------------------------------------------
Ratios to average net assets
---------------------------------------------
Total return
(without Net assets Net Portfolio
deduction of end of period investment turnover
sales load)++ (000 omitted) Expenses income/(loss) rate
--------------- --------------- ------------ ----------------- ----------
<S> <C> <C> <C> <C> <C>
01-JAN-95 TO
31-DEC-95
US$
GAM International
Class A 30.09% US$ 560,234 1.57 % 3.89 % 35%
Class D 9.26% US$ 8,714 2.22 %* 1.90 %* 35%
GAM Global
Class A 36.25% US$ 26,161 2.16 % 2.96 % 60%
Class D 6.97% US$ 295 2.81 %* (0.09) %* 60%
GAM Europe
Class A 16.77% US$ 22,961 2.12 % 0.75 % 145%
GAM Pacific Basin
Class A 4.56% US$ 53,944 1.98 % (0.07) % 64%
Class D 2.35% US$ 1,547 2.63 %* (1.49) %* 64%
GAM Japan Capital**
Class A 6.45% US$ 13,600 3.61 % (2.35) % 122%
GAM North America**
Class A 30.90% US$ 5,981 2.98 % 0.01 % 9%
GAM Asian Capital ++**
Class A ( 4.25)% US$ 5,560 3.11 %* (0.17) %* 17%
GAMerica Capital ++**
Class A 1.38% US$ 3,029 3.73 %* 1.36 %* 11%
01-JAN-94 TO
31-DEC-94
US$
GAM International (10.23)% US$ 158,336 1.60 % 2.74 % 110%
GAM Global (16.15)% US$ 19,940 2.29 % 0.91 % 123%
GAM Europe ( 3.11)% US$ 32,233 2.35 % 0.06 % 75%
GAM Pacific Basin 7.41% US$ 48,527 1.78 % (0.35) % 29%
GAM Japan Capital + ( 3.77)% US$ 9,406 2.19 %* 0.70 %* 7%
GAM North America** 2.97% US$ 1,887 2.54 % 0.37 % 3%
</TABLE>
75
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/supplemental data
-----------------------------------------------------------------------------
Ratios to average net assets
-----------------------------------------
Total return
(without Net assets Net Portfolio
deduction of end of period investment turnover
sales load)++ (000 omitted) Expenses income/(loss) rate
--------------- --------------- ---------- --------------- ----------
<S> <C> <C> <C> <C> <C>
01-JAN-93 TO
31-DEC-93
US$
GAM International 79.96% US$ 80,776 1.99% 2.28% 98%
GAM Global 75.30% US$ 33,416 2.68% 1.88% 107%
GAM Europe 22.68% US$ 14,398 2.64% 1.05% 182%
GAM Pacific Basin 51.52% US$ 40,719 1.93% (0.29)% 91%
GAM North America (2.09)% US$ 3,289 2.10% 0.69% 3%
</TABLE>
+ Period from 1st July, 1994 (Inception) to 31st December, 1994.
++ Period from 12th May, 1995 (Inception) to 31st December, 1995.
* Annualized.
** In the absence of expense reimbursement, expenses on an annualized basis
would have represented 13.84% for GAM Asian Capital for the six months
ended June 30, 1998. Expenses on an annualized basis would have represented
5.44% for GAM Asian Capital for the year ended 31st December, 1997.
Expenses on an annualized basis would have represented 3.59% for GAM Asian
Capital and 6.16% for GAMerica Capital of average net assets, respectively,
for the year ended 31st December, 1996. Expenses on an annualized basis
would have represented 4.61% for GAM Japan Capital, Capital of average net
assets 3.27% for GAM North America, 3.95% for GAM Asian Capital and 4.73%
for GAMerica Capital of average net assets, respectively for the period
ended 31st December, 1995 and 5.81% of average net assets for GAM North
America Fund for the year ended 31st December, 1994.
+ The ratios of expenses to average net assets for the year ended 31st
December, 1996 include amounts paid through expense offset arrangements.
Prior and subsequent period ratios exclude these amounts.
++ Total return calculated for a period of less than one year is not
annualised.
76
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
-----------------------------------------------------------------------------
Average
number of shares
Average amount outstanding Average
Average of bank loans during the period amount of
outstanding outstanding (monthly debt per share
end of period during the period average) during the
(000 omitted) (000 omitted) (000 omitted) period
--------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
01-JAN-98 TO
30-JUN-98
(UNAUDITED)
US$
GAM International
Class A
Class B
Class C
Class D
GAM Global
Class A
Class B
Class C
Class D
GAM Europe tttt
Class A US$ 4,431 US$ 52.5 3,379 0.016
Class B US$ 28 US$ 0.3 16 0.019
Class C US$ 24 US$ 0.3 14 0.021
GAM Pacific Basin
Class A
Class B
Class C
Class D
GAM Japan Capital
Class A
Class B
Class C
GAM North America ++++
Class A -- US$ 165.1 823 0.201
Class B -- -- -- --
GAM Asian Capital
Class A
GAMerica Capital
Class A
Class B
Class C
</TABLE>
77
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
-----------------------------------------------------------------------------
Average
Average amount number of shares Average
Average of bank loans outstanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during the
(000 omitted) (000 omitted) (000 omitted) period
--------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
01-JAN-97 TO
31-DEC-97
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe+++
Class A US$ 884 US$ 2.4 2,688 0.001
GAM Pacific Basin+++
Class A US$ 2,102 US$ 5.8 3,265 0.002
Class D US$ 144 US$ 0.4 140 0.003
GAM Japan Capital+++
Class A
GAM North America -- US$ 145.5 3,074 0.047
Class A
GAM Asian Capital
Class A
GAMerica Capital
Class A
</TABLE>
78
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
-----------------------------------------------------------------------------
Average
Average amount number of shares Average
Average of bank loans outstanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during the
(000 omitted) (000 omitted) (000 omitted) period
--------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
01-JAN-96 TO
31-DEC-96
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe
Class A
GAM Pacific Basin
Class A
Class D
GAM Japan Capital
Class A
GAM North America
Class A
GAM Asian Capital
Class A
GAMerica Capital
Class A
</TABLE>
79
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
-----------------------------------------------------------------------------
Average
Average amount number of shares Average
Average of bank loans outstanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during the
(000 omitted) (000 omitted) (000 omitted) period
--------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
01-JAN-95 TO
31-DEC-95
US$
GAM International
Class A
Class D
GAM Global
Class A
Class D
GAM Europe
Class A -- US$ 123 390 US$ 0.32
GAM Pacific Basin
Class A
Class D
GAM Japan Capital
Class A
GAM North America
Class A
GAM Asian Capital ++
Class A
GAMerica Capital ++
Class A
01-JAN-94 TO
31-DEC-94
US$
GAM International
GAM Global
GAM Europe
GAM Pacific Basin
GAM Japan Capital +
GAM North America
</TABLE>
80
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bank loans
-----------------------------------------------------------------------------
Average
Average amount number of shares Average
Average of bank loans outstanding amount of
outstanding outstanding during the period debt per share
end of period during the period (monthly average) during
(000 omitted) (000 omitted) (000 omitted) period
--------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
01-JAN-93 TO
31-DEC-93
US$
GAM International US$ 9,557 US$ 2,042 2,700 US$ 0.76
GAM Global US$ 2,165 US$ 2,600 1,780 US$ 1.48
GAM Europe US$ 1,860 US$ 521 1,680 US$ 0.31
GAM Pacific Basin US$ -- US$ -- -- US$ --
GAM North America US$ -- US$ -- -- US$ --
</TABLE>
+ Period from 1st July, 1994 (Inception) to 31st December, 1994.
++ Period from 12th May, 1995 (Inception) to 31st December, 1995.
+++ The average daily interest rate during the period was 8.69% for GAM Europe,
8.69% for GAM Pacific Basin and 8.41% for GAM Japan Capital, respectively.
The interest rate at 31st December, 1997 was 8.69% for GAM Europe and GAM
Pacific Basin.
++++ The average daily interest rate during the period was 8.69% for GAM Europe
and 8.64% for GAM North America, respectively. The interest rate at June
30, 1998 was 8.69% for GAM Europe.
81
<PAGE>
BOARD OF DIRECTORS
Gilbert de Botton - President CHAIRMAN, Global Asset Management Limited,
London
George W. Landau SENIOR ADVISER, Latin America Group, The
Coca-Cola Company, New York
Roland Weiser PRESIDENT, Intervista, Summit, New Jersey
Robert J. Mcguire, Esq. ATTORNEY/CONSULTANT, Morvillo, Abramowitz,
Grand, Iason & Silberberg, P.C., New York, New
York
Address of the Company: 135 East 57th Street
New York, New York 10022
Tel: (212) 407-4600
1-800-426-4685 (toll free)
Fax: (212) 407-4684
Registrar and Transfer Agent: Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208
Tel: (617) 557-8000 ext 6610
1-800-356-5740 (toll free)
Fax: (617) 557-8635
- --------------------------------------------------------------------------------
Copies of this report may be obtained from the Fund,
from the Transfer Agent or from:
In the Isle of Man;
Gam Administration Limited,
11 Athol Street, Douglas, Isle of Man IM99 1HH, British Isles
Tel: 44-1624 632632 Fax: 44-1624 625956
In the United Kingdom (for authorized persons only);
Global Asset Management Limited, a member of IMRO,
12 St. James's Place, London, SW1A 1NX, UK
Tel: 44-171-493 9990 Fax: 44-171-493 0715 Tix: 296099 GAMUK G
On Internet;
Information On GAM's SEC-registered funds --
www.usinfo.gam.com
Email enquiries on GAM - [email protected]
