<PAGE>
DEVELOPING COUNTRIES
ROBERTSON STEPHENS MUTUAL FUNDS
The Developing Countries Fund
Second-Quarter Report
June 30, 1996
[GRAPHIC]
2
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
FUND PHILOSOPHY
Long-term capital appreciation drives the investment strategy of The Robertson
Stephens Developing Countries Fund. We believe that the outlook is good for the
long-term performance of emerging markets worldwide, and anticipate that some
foreign equity markets may outpace the stock markets of developed countries. The
Fund seeks to capitalize on both rising and falling markets. Primarily, it will
invest in equity securities of growing or undervalued companies in developing
countries that we believe have the potential for future growth. Additionally, we
seek to identify countries, sectors, or individual securities that may be
overvalued. We will sell short these securities in an attempt to profit from
anticipated devaluation. Shareholders are encouraged to invest with a three- to
five-year time frame, and are urged to recognize that there are special risks
associated with international investing.
CONTENTS
Fund Highlights 1
Report to Shareholders 2
Did You Know? 8
Answers to Your Questions 9
Country Focus 10
Portfolio Manager's Travelogue 12
Fund Performance 14
Portfolio Summary 15
Schedule of Net Assets 16
Statement of Net Assets 20
Statement of Operations 21
Statement of Changes in Net Assets 22
Financial Highlights 23
Notes to Financial Statements 24
Administration 28
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ROBERTSON, STEPHENS & COMPANY
FUND HIGHLIGHTS
SECOND-QUARTER REVIEW
The second quarter of 1996 was a good one for emerging market investing.
ASSET ALLOCATION
During the quarter, the Fund benefited from an offensive asset allocation
stance, with the average quarterly positions as follows: longs 91.8%, cash 7.8%,
and shorts 1.4%.
COUNTRY DIVERSIFICATION
The Fund's holdings remain well diversified in terms of country and regional
weightings.
WHY "EMERGING" MARKETS?
Experienced emerging market investors will be familiar with the two main ideas
supporting investment in the emerging markets: a low correlation with the U.S.
equity market and potentially higher returns as a result of higher economic
growth rates than developed markets.
LOOKING FORWARD
I remain optimistic about the prospects for the asset class, and I am hopeful
that the Fund will be able to add to its good start this year.
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
[PHOTO]
FUND MANAGER
MICHAEL C. HOFFMAN
Portfolio Manager
The Robertson Stephens Developing Countries Fund
DEAR SHAREHOLDER:
The second quarter of 1996 was a good one for emerging market investing. The
Robertson Stephens Developing Countries Fund appreciated 12.81%, making it our
best quarter ever. At the close of the quarter, the Fund's net asset value (NAV)
stood at $9.95 and the year-to-date return equaled 24.06%.
ASSET ALLOCATION
During the quarter, the Fund benefited from an offensive asset allocation
stance, with the average quarterly positions as follows: longs 91.8%, cash 7.8%,
and shorts 1.4%. We remain positive about the prospects for the emerging markets
asset class and intend to maintain an aggressively "long" allocation through the
remainder of the year. While capital inflows will likely increase our cash
positions at times, we will endeavor to put this money to work as quickly as
prudently possible.
"While CAPITAL INFLOWS will likely increase our cash positions at times, I will
endeavor to PUT THIS MONEY TO WORK as quickly as prudently possible."
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ROBERTSON, STEPHENS & COMPANY
COUNTRY DIVERSIFICATION
The Fund's holdings remain well diversified in terms of country and regional
weightings. The Robertson Stephens Developing Countries Fund now has investments
in more than 20 different countries around the globe. Regionally, the Fund
continues to invest heavily in Eastern Europe, and at the end of the quarter,
roughly 34.6% of its equity investments were in this region. I believe that this
part of the world is likely to be the top-performing region this year, as well
as the best performer over the ensuing two-year period. I am particularly
optimistic about the longer term prospects of the Russian market (our country
focus this month, see page 10), as I believe investments there will benefit from
both strong economic growth and the development of the Russian capital markets.
Elsewhere around the globe, we have increased our investments in Latin America,
particularly Mexico, where I believe company earnings should recover sharply as
a result of renewed economic growth in the second half of the year. In addition,
we have decreased our allocation to Asia, except for our mainland Chinese
investments, which I believe are currently very attractive. Latin America and
Asia now represent 25.7% and 25.5% of our equity investments, respectively. We
are also excited about
3
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
DIVERSIFICATION
some newer investment opportunities that are in a few of the more nontraditional
emerging markets, such as Egypt, Israel, and Vietnam.
Q2 PORTFOLIO ADDITIONS
During the second quarter, our additions to the portfolio included:
CHERNOGORNEFT, ADR -- A Russian company that performs research and exploration
of oil and gas fields, technical maintenance for the oil industry, and
pretransportation processing of oil and gas.
PEREZ COMPANC, S.A., ADR -- An Argentine company that provides, among other
things, oil, gas, construction, and telecommunications services.
VIETNAM INDUSTRIAL INVESTMENTS, LTD. -- A company owned by Malaysian and
Vietnamese backers that invests in Vietnamese industrial companies.
INVESTMENT MANAGEMENT
G. RANDY HECHT
President
Robertson Stephens Investment Trust
INVESTMENT TEAM
SENIOR TRADER
Catherine O'Neill
TRADING
Christopher Beagle
Don Heidary
ADMINISTRATION
Nancy Mayer
4
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ROBERTSON, STEPHENS & COMPANY
WANT WANT HOLDINGS, LTD. -- A Singaporean investment holding company whose
subsidiaries manufacture snack foods, beverages, and related products.
WHY "EMERGING" MARKETS?
Experienced investors in the emerging markets area will be familiar with the two
main ideas supporting investment in the emerging markets. First, the asset class
typically has a low correlation with the U.S. equity market, and as such offers
investors a chance to diversify their portfolios. This may be particularly
attractive to investors who are nervous about developments in U.S. financial
markets. Second, many emerging markets offer investors potentially higher
returns than those of developed markets as a result of higher economic growth
rates. Companies operating in faster growing economies may be able to achieve
above-average earnings growth, and in turn may be able to provide equity
investors with higher rates of return. Of course, international investing
contains special risks, like currency fluctuations, economic and political
instability, and accounting differences.
I also believe that investors in the emerging markets benefit from the
development of the emerging capital markets, or the "emerging" of emerging
markets investing. During the early stages of a capital market's history, a lot
of concerns or "risks" cause securities to trade at very low valuations. As the
market matures, issues are often addressed by market participants, and concerns
dissipate, often resulting in a re-rating of
5
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
OUTLOOK
security valuations to higher levels. While the process may take many years to
complete, the bulk of the re-rating gains typically occurs early in the process.
This potential extra boost from the development of capital markets themselves is
one of several reasons why we are optimistic about Eastern Europe, and Russia in
particular.
LOOKING FORWARD
The first half of the year has been a good one for emerging markets investing
and for the Fund. Our investments in Eastern Europe, the natural resource
sector, and smaller companies have paid off handsomely. We believe that these
investments should continue to do well. We remain optimistic about the prospects
for the asset class, and I am hopeful that the Fund will be able to add to its
good start this year.
"I firmly believe that EASTERN EUROPE is likely to be the TOP-PERFORMING REGION
this year.
6
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ROBERTSON, STEPHENS & COMPANY
In closing, we would like to extend a hearty welcome to our new shareholders and
to thank those of you who have been invested for some time. We look forward to
reporting to you again next quarter.
Sincerely,
/s/ Michael C. Hoffman
MICHAEL C. HOFFMAN
Portfolio Manager
August 21, 1996
TO HEAR MY ONGOING THOUGHTS ON THE FUND, CALL OUR 24-HOUR HOTLINE AT 1-800-766-
3863.
"THE FIRST HALF OF THE YEAR HAS BEEN A GOOD ONE FOR EMERGING MARKETS INVESTING
AND FOR THE FUND."
7
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
DID YOU KNOW?
Test your global knowledge. Answers follow on page 13.
1.
Which of the following represents the emerging markets' share of world market
capitalization in 1995?
a. 4%
b. 7%
c. 9%
d. 11%
2.
Which of the following emerging markets had the highest number of listed
domestic companies in 1995?
a. Thailand
b. Czech Republic
c. Turkey
d. Poland
3.
At year-end 1994, the emerging markets' share of the world population was:
a. 35%
b. 47%
c. 62%
d. 85%
8
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ROBERTSON, STEPHENS & COMPANY
ANSWERS TO YOUR QUESTIONS
We believe it is important for you to have the opportunity to ask Portfolio
Manager Michael Hoffman for his thoughts on matters of interest to you. If there
is anything you want to know, or if you have a suggestion, please contact us at
the address below. We look forward to hearing from you.
Q: Does your outlook for the U.S. market determine how you allocate the Fund
among cash, short positions and long positions?
A: It generally has more of an impact on which countries we may invest in as
opposed to our asset allocation among longs, shorts, and cash. With so many
countries and companies in the emerging markets area now, we can generally find
a wide selection of investments that have a low correlation with U.S. financial
markets. If I am concerned with potentially negative developments in the United
States, particularly if that concern centers on higher U.S. interest rates, I
tend to shy away from markets and companies that have a proven high correlation
with U.S. markets. These are often markets that are either close geographically
or have a currency that is tied to the United States' in some fashion.
Q: Can you comment on the recent political upheaval in Indonesia and how you
assess the longer term problems there?
A: The recent upheaval was essentially an isolated incident and centered on a
conflict within the opposition party. As such, there should be no further
fallout in the short term. Longer term, however, there are certainly risks that
the transition of power from Suharto to his successor may be a difficult one. I
don't expect this transition to happen for many years yet, but it is something
that we closely monitor.
Q: What is your outlook for the second half of 1996?
A: I still remain optimistic about the prospects for Eastern Europe and expect
that region to do well not only in the second half of this year, but also in
1997. In addition, I am excited about the prospects in Northeast Asia, which I
believe should benefit from increased investments due to strong mutual fund
inflows later in the year. Finally, I expect that Mexico will have a successful
second half as a result of much stronger economic growth, lower interest rates,
and a sharp rebound in corporate earnings.
Send your questions regarding The Robertson Stephens Developing Countries Fund
to:
Beth Wooster
c/o Robertson, Stephens & Company
555 California Street, Suite 2600
San Francisco, CA 94104
Fax: 415/693-3541
E-mail: [email protected].
QUESTIONS MAY BE EDITED FOR REASONS OF SPACE AND CLARITY.
9
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
COUNTRY FOCUS
Russia
Russia has a wealth of natural resources and a diverse industrial base.
Economically, the country is experiencing difficulties as it moves from its old
centrally planned economy to a modern market economy. President Yeltsin's
government has made strides toward converting to a market economy by freeing up
prices, cutting defense spending, eliminating the old centralized distribution
system, establishing private financial institutions, and decentralizing foreign
trade.
Despite these inroads, there are still wide swings in monthly inflation rates
and financial stability is still not a reality. In addition, the government has
not developed the social infrastructure to support business, such as providing
benefits for companies' workers, and has been slow to build a legal structure to
support a market economy and encourage foreign investment.
However, Russia has made significant headway in privatizing state assets,
completing a voucher privatization program in midyear 1994. At least some of
approximately 110,000 state enterprises were transferred to foreign hands by the
end of 1994. Including partially privatized firms, the private sector accounted
for roughly half of Russia's GDP in 1994. But financial stabilization continued
to be a challenge.
Thus, although some progress has been made toward economic development, it seems
that Russia is still years away from taking full advantage of its wealth of
natural resources and human assets.
Source: 1995 World Factbook
COUNTRY FACTS
CAPITAL: Moscow
POPULATION: 149.9 Million
AREA: 17.1 Million sq. km.
(slightly more than 1.8 times the size of the U.S.)
NEIGHBORING COUNTRIES:
Russia's 20 land boundaries include China, Mongolia, Kazakstan, Ukraine,
Belarus, Finland, and Norway.
PRESIDENT:
Boris Yeltsin
[MAP]
"Russia has made significant HEADWAY in PRIVATIZING STATE ASSETS."
10
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ROBERTSON, STEPHENS & COMPANY
ECONOMIC FACTS
UNEMPLOYMENT: NA
INFLATION: 51.46%
TRADE BALANCE:
U.S. $21 Billion (1995)
CURRENT ACCOUNT BALANCE:
U.S. $7.1 Billion (1995)
EXTERNAL DEBT/GDP:
26.2% (1995)
GROSS DOMESTIC PRODUCT:
U.S. $413 Billion (1995)
GDP GROWTH:
(3.5)% (1995)
FOREIGN RESERVES:
U.S. $14.1 Billion
EQUITY MARKET FACTS
ANNUAL RETURNS
1995 10.3%
1994 NA
1993 NA
MARKET CAPITALIZATION:
U.S. $21.0 Billion (1995)
SOURCE: THE EMERGING STOCK MARKETS FACTBOOK 1996 AND ING BARINGS EASTERN EUROPE
MONTHLY
[PHOTO]
PORTFOLIO MANAGER MICHAEL HOFFMAN AND PAUL STEPHENS, PORTFOLIO MANAGER OF THE
CONTRARIAN FUND, DURING A RECENT VISIT TO MOSCOW'S RED SQUARE.
THE RUSSIAN/SKATE PRESS STOCK MARKET GENERAL INDEX*
Price Graph for The Russian/Skate Press Stock Market General Index -- 6/24/94-
8/16/96
(IN RUBLES)
[GRAPH]
* The Russian/Skate Press Stock Market General Index is a capitalization-
weighted index of the most actively traded companies on the OTC. The index was
developed with a base value of 100 as of June 20, 1994.
SOURCE: BLOOMBERG
11
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
PORTFOLIO MANAGER'S TRAVELOGUE
During the second quarter, Michael's research travels focused on Eastern Europe.
[GRAPHIC]
CZECH REPUBLIC
PRAGUE, APRIL 14 - APRIL 17
GOVERNMENT VISITS
Czech National Bank
Dr. Jan Klacek, Director
NATIONAL PROPERTY FUND
Peter Cermak
Vice-Chairman
RM-S SECURITIES EXCHANGE
Martin Stepanek
Deputy Director
COMPANY VISITS
Tabak
Cez
SPT Telecom
Komercni Banka
Sklo Bohemia
Elektromontaz
Prazke Pivovary
[MAP]
HUNGARY
BUDAPEST, APRIL 17 - APRIL 21
GOVERNMENT VISITS
Hungarian National Bank
Frigyes Harshegyi
Deputy President
FINANCE MINISTRY
Laszlo Csaba
Deputy State Secretary
HUNGARIAN PRIVATIZATION AND STATE HOLDING COMPANY
Dr. Maria Vanicsek, Chief Advisor
Dr. Istvan Rozsnyai, Chief Economist
COMPANY VISITS
Domus
Egis
OTP
MOL
Fotex
POLAND
WARSAW, APRIL 21 - APRIL 26
GOVERNMENT VISITS
Privatization Ministry
Ewa Freyberg, Under-Secretary
POLISH CHAMBER OF COMMERCE
Marek Kloczko
Secretary General
CENTRAL BANK
Pawel Durjasz
Advisor to the President
FINANCE MINISTRY
12
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ROBERTSON, STEPHENS & COMPANY
COMPANY VISITS
Rolimpex
Warta
BRE
Wedel
Bank Pekao
Computerland
Polifarb Cieszyn
Mostostal Zabrze
RUSSIA
MOSCOW, JUNE 23 - JUNE 26
GOVERNMENT/ECONOMIC VISITS
COMMISSION ON SECURITIES AND CAPITAL MARKETS
Alexander Kolesnikov
Head of Corporate Equities
FINANCE MINISTRY
Vugin Oleg Vyacheslovich
Deputy Finance Minister
IMF
Tom Wolf
Resident Representative
TAX AND BANKING COMMITTEE
Alexander Zhukov
Deputy Chairman, Member
of Parliament
AMERICAN CHAMBER OF COMMERCE
Peter Charow
President
COMPANY VISITS
Arthur Andersen
Mosenergo
Yukos
United Financial Group
GUM
TURKEY
ISTANBUL & ANKARA, JUNE 26 - JUNE 29
GOVERNMENT/ECONOMIC VISITS
Refah Party
Abdullah Gul
Member of Parliament
CENTRAL BANK
Suha Mirahur
Director
PRIME MINISTRY OF THE TREASURY
Aydin Karaoz
Director
UNITED STATES EMBASSY
Nicholas Kass
Political Attache
COMPANY VISITS
Sarkuysan
Altinyildiz
DID YOU KNOW?
(ANSWERS)
1.
d. 11%
At year-end 1995, the market capitalizations of all emerging markets totaled
US$1.9 trillion.
2.
b. Czech Republic
In 1995, the Czech Republic had a total of 1,635 listed domestic companies, up
from 1,024 in 1994, while Thailand had 416, Turkey, 205, and Poland, 65.
3.
d. 85%
At year-end 1994, emerging markets accounted for 85% of the world's population
and 20% of the world's gross national product.
SOURCE: THE EMERGING STOCK MARKETS FACTBOOK 1996
13
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
FUND PERFORMANCE
RESULTS OF A HYPOTHETICAL $10,000 INVESTMENT
in The Robertson Stephens Developing Countries Fund and the MSCI Emerging
Markets Global Index(1)
IF INVESTED ON MAY 2, 1994(2)
[GRAPH]
CUMULATIVE TOTAL RETURNS
DEVELOPING COUNTRIES MSCI EMERGING MARKETS
FOR THE PERIODS ENDED 6/30/96 FUND GLOBAL INDEX(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
One year 7.57% 6.37%
- --------------------------------------------------------------------------------
Since inception (5/2/94)(2) 0.85% 5.19%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
DEVELOPING COUNTRIES MSCI EMERGING MARKETS
FOR THE PERIODS ENDED 6/30/96 FUND GLOBAL INDEX(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Since inception (5/2/94)(2) 0.39% 2.37%
- --------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International ("MSCI") Emerging Markets Global
Index is a market capitalization-weighted index composed of companies
representative of the market structure of 23 emerging market countries in
Europe, Latin America, and the Pacific Basin.
The MSCI Indices reflect stock market trends by representing the evolution
of an unmanaged portfolio containing a broad selection of domestically
listed companies. Stock selection also takes into consideration the trading
capabilities of foreigners in emerging market countries.
(2) Date that the Fund's shares were first offered to the public.
Investors should realize that all performance data presented is based upon
past performance during limited periods of time, and that past performance
is no guarantee of future performance. Investors should also realize that
both investment return and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. The
correlation of performance between an unmanaged index and this Fund is not
usually exact.
Investing internationally may involve risks such as currency fluctuations
and political and economic instability. Short selling is the sale of a
borrowed security and may involve the risk that the price of the security
may increase between the date it is sold and the date the fund must replace
the borrowed security. Options and futures involve the risk that their value
may not be perfectly correlated to that of the underlying index or security.
14
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ROBERTSON, STEPHENS & COMPANY
PORTFOLIO SUMMARY
AS OF JUNE 30, 1996
[PIE CHART]
Russia 6.4%
Czech Republic 10.7%
Poland 5.1 %
Indonesia 5.9%
Mexico 13.3%
Japan 3.3%
Turkey 4.3%
Agentina 3.8%
Other 6.7%
China 2.3%
Hong Kong 1.6%
Phillipines 2.6%
Brazil 2.6%
Taiwan 1.8%
Thailand 1.2%
Korea 1.6%
Cash & Cash Equivalents 23.4%
Hungary 2.4%
TOP TEN HOLDINGS
1.
KOMERCNI BANKA, A.S., GDR
The Czech Republic's largest bank, with 96 branches (49% state-owned). Performs
deposits and loans, as well as operates electronic cash machines and
international banking facilities.
2.
COMPANHIA VALE DO RIO DOCE, ADR
Through subsidiaries, operates in the mining, rail transportation and mineral
sales industries in Brazil, primarily supplying consumers in Europe and Asia.
3.
LUKOIL HOLDING, ADR
Prospects for, extracts, transports, and refines oil and gas. Holds
approximately 15% of Russia's oil and gas extracting market.
4.
SPT TELECOM, A.S.
The main provider of telephone and telecommunications in the Czech Republic.
Owned and operated by the Czech Republic (51%) and by a joint venture between
the Dutch and Swiss phone companies (27%).
5.
CORPORACION INDUSTRIAL SANLUIS, S.A. DE C.V., 144A, ADR
Through its subsidiaries, owns, operates, and extracts gold and silver from
mining interests in San Dimas, Mexico. Also manufactures products such as car
parts, and owns and operates retail department stores in Mexico.
6.
PEREZ COMPANC, S.A., ADR
Through its subsidiaries, provides oil, gas, and oil services, construction,
petrochemicals, telecommunications services, farming, forestry, and
agroindustry.
7.
FIRST DYNASTY MINES, LTD.
Acquires, explores for, and develops mineral properties.
8.
TAIWAN WEIGHTED INDEX 2 OPTION,
MARCH 97, STRIKE 198.17
9.
CHERNOGORNEFT, ADR
A Russian company that performs research and exploration of oil and gas fields,
technical maintenance for the oil industry, and pretransportation processing of
oil and gas.
10.
CZECH VALUE FUND
Investment fund focusing on
closed-end Czech funds.
15
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THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
SCHEDULE OF NET ASSETS
JUNE 30, 1996 SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS
- --------------------------------------------------------------------------------
AFRICA - 0.3%
General Gold Resources NL 240,220 $ 103,828
Ghana Gold Mines, Ltd. 307,500 94,244
- --------------------------------------------------------------------------------
198,072
- --------------------------------------------------------------------------------
ARGENTINA - 3.8%
- --------------------------------------------------------------------------------
Astra Cia Argentina de Petroleo, S.A.(1) 200,000 474,190
Perez Companc, S.A., ADR(1), (2) 80,000 1,070,000
YPF Sociedad Anonima, ADR(1), (2) 30,000 675,000
- --------------------------------------------------------------------------------
2,219,190
- --------------------------------------------------------------------------------
BRAZIL - 2.6%
Companhia Vale Do Rio Doce, ADR(1), (2), (6) 77,000 1,491,875
- --------------------------------------------------------------------------------
1,491,875
- --------------------------------------------------------------------------------
CANADA - 0.2%
NDU Resources, Ltd., Restricted(6), (7) 75,000 91,051
- --------------------------------------------------------------------------------
91,051
- --------------------------------------------------------------------------------
CHINA - 2.3%
Royal Plastics Group, Ltd. 25,000 379,953
Sino-Forest Corporation, Class A 415,400 456,383
Wuxi Little Swan Company, Ltd., Class B(6) 892,000 519,547
- --------------------------------------------------------------------------------
1,355,883
- --------------------------------------------------------------------------------
CZECH REPUBLIC - 10.7%
Alpha-Effect 6,000 160,506
Bohemia Crystal, I.F., A.S. 12,000 94,210
Czech Industries, Inc. 210,000 288,750
Czech Value Fund(6) 100,000 950,000
Komercni Banka, A.S., GDR(3) 60,000 1,620,000
Komercni Banka, I.F. 11,000 308,654
PF YSE Akcionara 9,300 163,941
PPF Cesky Podilovy 1,425 26,000
PPF Investicni Holding 3,667 53,313
Privatizacni Investicni Fond 5,250 104,187
Restirucni Investicni Fond Ceske 4,684 156,287
SPT Telecom, A.S. 11,100 1,355,577
Sporitelni Privat Vseobecny 40,000 205,023
Sporitelni Vynosovy Investic 18,429 99,878
Stavby Silinic a Zeleznic, A.S. 4,300 248,501
I.F. Yse 2 8,850 112,583
Zivnobanka-Investicni Fond 7,250 130,438
Zivnobanka-Podilovy Fond 6,218 84,299
- --------------------------------------------------------------------------------
6,162,147
- --------------------------------------------------------------------------------
ECUADOR - 0.2%
Overseas and General, Ltd. 575,077 115,241
- --------------------------------------------------------------------------------
115,241
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16
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ROBERTSON, STEPHENS & COMPANY
JUNE 30, 1996 SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HONG KONG - 1.6%
Cathay Investment Fund, Ltd.(1) 750,000 $ 930,136
- --------------------------------------------------------------------------------
930,136
- --------------------------------------------------------------------------------
HUNGARY - 2.4%
Borsod Chemical, GDR(1), (3) 21,000 409,500
Cie Financiere Pour L'Europe Central(6) 12,000 576,000
Pannonplast Muanjagipari(1) 15,000 404,636
- --------------------------------------------------------------------------------
1,390,136
- --------------------------------------------------------------------------------
INDONESIA - 5.9%
First Dynasty Mines, Ltd. 185,000 1,056,911
PT Apac Centertex Corporation, Foreign(1), (5), (6) 600,000 721,805
PT Dynaplast, Foreign(1), (5), (6) 579,000 547,282
PT Multibreeder Adirama, Foreign(1), (5), (6) 872,500 337,379
PT Sumalindo Lestari Jaya, Foreign(1), (5), (6) 362,500 436,090
PT Tambang Timah, Foreign(1), (5), (6) 170,000 314,071
- --------------------------------------------------------------------------------
3,413,538
- --------------------------------------------------------------------------------
JAPAN - 3.3%
Hokkaido Takushoku Bank(1) 250,000 758,927
Nichimo (Builder) Corporation(1) 70,000 393,636
Nippon Credit Bank(1) 200,000 744,297
- --------------------------------------------------------------------------------
1,896,860
- --------------------------------------------------------------------------------
KOREA - 1.6%
LG Electronics, Inc., 144A, GDR(3), (4) 80,000 600,000
Samsung Electronics, 144A, GDR, non-voting(3), (4) 8,987 217,935
Samsung Electronics, 144A, GDR, non-voting bonus
shares(3), (4) 2,708 58,222
Samsung Electronics, 144A, GDR, voting(3), (4) 479 24,549
Samsung Electronics, 144A, GDR, voting bonus shares(3), (4) 144 6,462
- --------------------------------------------------------------------------------
907,168
- --------------------------------------------------------------------------------
MALAYSIA - 0.5%
Lingui Developments Berhad(1) 124,000 293,285
- --------------------------------------------------------------------------------
293,285
- --------------------------------------------------------------------------------
MEXICO - 12.5%
ALFA, S.A. de C.V., Class A(1) 207,435 936,671
Bufete Industrial, S.A., ADR(2) 20,400 354,450
Corporacion Industrial Sanluis, S.A. de C.V.,
144A, ADR(2), (4), (6) 30,000 1,106,250
Empresas ICA, S.A., ADR(1), (2) 60,000 832,500
Empresas La Moderna, S.A. de C.V., ADR(1), (2) 38,500 693,000
Farallon Resources, Ltd., Restricted(6), (7) 85,000 698,528
Grupo Mexicano de Desarrollo, S.A., Class L, ADR(2) 290,000 616,250
Industrias Penoles, S.A.(1) 150,000 688,200
Transportacion Maritima Mexicana, S.A. de C.V.,
ADR(1), (2) 77,000 567,875
Tubos de Acero do Mexico, S.A., ADR(2) 77,500 731,406
- --------------------------------------------------------------------------------
7,225,130
- --------------------------------------------------------------------------------
MYANMAR - 0.8%
Indochina Goldfields, Ltd. 54,700 470,757
- --------------------------------------------------------------------------------
470,757
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
SCHEDULE OF NET ASSETS (CONTINUED)
JUNE 30, 1996 SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PHILIPPINES - 2.6%
HI Cement Corporation 348,000 $ 131,496
Manila Mining Corporation, Class B(1) 300,000,000 297,710
Paper Industries Corporation of the Philippines 3,872,000 738,931
Philex Mining Corporation, Class B(1) 2,731,000 349,193
- --------------------------------------------------------------------------------
1,517,330
- --------------------------------------------------------------------------------
POLAND - 6.0%
Bank Rozwolo Eksportu, S.A.(1) 10,500 274,373
Budimex, S.A., Series D 9,870 80,305
Exbud, S.A. 22,853 243,913
Fleming Poland Fund 89,200 914,300
Huta Szkla Gospodarczego Irena 24,300 218,218
Mostostal Zabrze Holding, S.A. 45,500 217,695
Mostostal-Export, S.A. 200,000 684,553
Polifarb-Cieszyn, S.A.(1) 61,950 314,641
Stalexport, S.A.(1) 27,700 525,027
- --------------------------------------------------------------------------------
3,473,025
- --------------------------------------------------------------------------------
RUSSIA - 6.4%
Bakyrchik Gold PLC 86,000 534,244
Chernogorneft, ADR(2) 105,000 1,029,000
Lukoil Holding, ADR(2), (6) 35,000 1,417,500
Mosenergo, ADR(2), (6) 25,000 675,000
Star Mining Corporation, N.L. 500,000 53,045
- --------------------------------------------------------------------------------
3,708,789
- --------------------------------------------------------------------------------
SINGAPORE - 0.3%
Want Want Holdings, Ltd. 58,000 156,020
- --------------------------------------------------------------------------------
156,020
- --------------------------------------------------------------------------------
SLOVAKIA - 0.1%
Ferro Fond, I.F. 14,545 79,882
- --------------------------------------------------------------------------------
79,882
- --------------------------------------------------------------------------------
THAILAND - 1.2%
Alphatec Electronics Company, Ltd.,
Foreign(1), (5), (6) 38,000 452,078
Muramoto Electronic Thai PLC, Foreign(1), (5), (6) 79,200 215,277
- --------------------------------------------------------------------------------
667,355
- --------------------------------------------------------------------------------
TURKEY - 4.3%
Akal Tekstil Sanayii(1) 4,530,000 281,332
Altinyildiz Mensucat ve Konfeksiyon Fabriklari, A.S.(1) 434,000 103,057
Arcelik, A.S.(1) 2,112,000 195,460
Bolu Cimento Sanayii, A.S.(1) 9,018,000 255,320
Demirbank, T.A.S.(1) 12,500,000 426,206
Eczacibasi Yatirim Holding Ortaklig, A.S.(1) 1,100,000 147,345
Merko Gida Sanayi Ve Ticaret, A.S. 5,000,000 210,058
Sarkusan Electrolitik Bakir(1) 2,040,000 154,019
Turk Dis Ticaret Bankasi(1) 1,626,000 31,185
Yapi ve Kredi Bankasi, A.S.(1) 7,650,000 216,589
Yapi ve Kredi Bankasi, A.S., non-tradable receipts(6) 16,065,000 454,836
- --------------------------------------------------------------------------------
2,475,407
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
ROBERTSON, STEPHENS & COMPANY
JUNE 30, 1996 SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VIETNAM - 0.9%
Vietnam Industrial Investments, Ltd. 2,016,000 $ 491,128
- --------------------------------------------------------------------------------
491,128
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 70.5% (Cost: $39,364,996) 40,729,405
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WARRANTS
- --------------------------------------------------------------------------------
Farallon Resources, Ltd., Warrants, Strike
CAD6.25, Expire 5/7/97(6)(7)(8) 85,000 490,973
Fleming Poland Fund, Warrants, Strike $10,
Expire 1/1/99 17,840 44,600
NDU Resources, Ltd., 1/2 Warrants, Strike
CAD2.31, Expire 5/17/98(6)(7)(8) 75,000 0
- --------------------------------------------------------------------------------
TOTAL WARRANTS - 0.9% (Cost: $0) 535,573
CONTRACTS VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OPTIONS
- --------------------------------------------------------------------------------
Taiwan Weighted Index 2(6)
March 97 198.17 15,000 $ 1,036,125
- --------------------------------------------------------------------------------
TOTAL OPTIONS - 1.8% (Cost: $926,000) 1,036,125
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 73.2% (Cost: $40,290,996) 42,301,103
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- --------------------------------------------------------------------------------
Cash 32,127
Indonesian Rupiah 16,624
Turkish Lira 9,495
Repurchase Agreement
State Street Bank and Trust Company,
4.85%, dated 6/28/96, due 7/1/96,
maturity value $13,495,452 (collateralized
by $14,090,000 par value U.S. Treasury
Bills, 5.09%, due 10/03/96) 13,490,000
- --------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 23.4% 13,548,246
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS, NET - 3.4% 1,957,250
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 57,806,599
- --------------------------------------------------------------------------------
(1) Income-producing security.
(2) ADR - American Depository Receipt.
(3) GDR - Global Depository Receipt.
(4) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(5) Shares registered for foreign investors.
(6) Fair-value security. See 1.a. in Notes to Financial Statements.
(7) See 4.g. in Notes to Financial Statements.
(8) See 4.f. in Notes to Financial Statements.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
STATEMENT OF NET ASSETS
JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value (Cost: $40,290,996) $ 42,301,103
Cash and cash equivalents 13,548,246
Receivable for investments sold 1,046,747
Receivable for fund shares subscribed 2,310,110
Receivable from adviser 164,281
Dividends/interest receivable 112,984
- --------------------------------------------------------------------------------
TOTAL ASSETS 59,483,471
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for investments purchased 1,494,605
Payable for fund shares redeemed 131,214
Payable to distributor 38,151
Accrued expenses 12,902
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 1,676,872
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 57,806,599
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital 56,826,232
Accumulated undistributed net investment income 170,221
Accumulated net realized loss from investments (1,517,021)
Accumulated net realized gain from securities sold short 317,146
Net unrealized appreciation on investments 2,010,021
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 57,806,599
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRICING OF SHARES: $ 9.95
Net Asset Value, offering and redemption price per share
(net assets of $57,806,599 applicable to 5,807,080 shares of
beneficial interest outstanding with no par value)
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
ROBERTSON, STEPHENS & COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign tax withheld of $22,193) $ 363,402
Interest 85,295
Other 18,099
- --------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 466,796
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Investment advisory fees 199,781
Custodian and transfer agent fees 129,185
Distribution fees 39,955
Professional fees 35,040
Shareholder reports 33,660
Registration and filing fees 25,844
Trustees' fees and expenses 11,102
Dividend expense for securities sold short 5,081
Insurance fees 211
- --------------------------------------------------------------------------------
Total expenses 479,859
Less: Reimbursement from adviser (183,284)
- --------------------------------------------------------------------------------
TOTAL EXPENSES, NET 296,575
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 170,221
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON
INVESTMENTS AND SECURITIES SOLD SHORT
- --------------------------------------------------------------------------------
Net realized gain from investments 1,268,862
Net realized gain from short sales 32,841
Net change in unrealized appreciation on investments 4,216,719
- --------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
AND SECURITIES SOLD SHORT 5,518,422
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,688,643
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE
SIX MONTHS ENDED NINE MONTHS ENDED
6/30/96 12/31/95
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income/(loss) $ 170,221 $ (59,234)
Net realized gain/(loss) from investments 1,268,862 (1,766,278)
Net realized gain/(loss) from securities
sold short 32,841 (17,500)
Net change in unrealized appreciation on
investments 4,216,719 112,264
- --------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,688,643 (1,730,748)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distributions to Shareholders
- --------------------------------------------------------------------------------
Net investment income - -
Realized gains on investments - -
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS - -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase in net assets resulting from
capital share transactions 37,774,536 7,729,040
- --------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 37,774,536 7,729,040
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 43,463,179 5,998,292
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 14,343,420 8,345,128
End of period $ 57,806,599 $ 14,343,420
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
ROBERTSON, STEPHENS & COMPANY
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE NINE FOR THE
FOR A SHARE OUTSTANDING MONTHS ENDED MONTHS ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 6/30/96 12/31/95 3/31/95(1)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, beginning of period $ 8.02 $ 8.57 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 0.05 (0.03) 0.06
Net realized gain/(loss) and net change in unrealized
appreciation/(depreciation) on investments and securities sold short 1.88 (0.52) (1.36)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting From Operations 1.93 (0.55) (1.30)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income - - (0.04)
Distributions from realized gains on investments - - (0.09)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.95 $ 8.02 $ 8.57
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 24.06% (6.42)% (13.14)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 57,806,599 $ 14,343,420 $ 8,345,128
Ratio of Expenses to Average Net Assets 1.84%(2) 1.83%(2) 3.15%(2)
Ratio of Net Investment Income/(Loss) to Average Net Assets 1.06%(2) (0.51)%(2) 0.72%(2)
Portfolio Turnover Rate 72% 103% 124%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on May 2, 1994.
(2) If the Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the six months ended June 30, 1996, the nine months ended December 31,
1995, and the period from March 31, 1994 (commencement of operations), to
March 31, 1995, would have been 2.98%, 4.24%, and 3.46%, respectively, and
the ratio of net investment income/(loss) to average net assets would have
been (0.08)%, (2.92)%, and 0.41%, respectively.
Per-share data has been determined by using the average number of shares
outstanding throughout the period.
Ratios, except for total return and portfolio turnover rate, have been
annualized.
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
Notes to Financial Statements
The Robertson Stephens Developing Countries Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as a nondiversified, open-end
management investment company. The Fund became effective to offer shares to the
public on April 29, 1994, and it started to offer shares to the public on May 2,
1994. The Trust offers eleven series of shares -- The Robertson Stephens
Emerging Growth Fund, The Robertson Stephens Value + Growth Fund, The Robertson
Stephens Contrarian Fund, The Robertson Stephens Developing Countries Fund, The
Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners Fund,
The Robertson Stephens Information Age Fund, The Robertson Stephens Global
Natural Resources Fund, The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund (effective August 1, 1996), and The
Robertson Stephens MicroCap Growth Fund (effective August 15, 1996). The assets
for each series are segregated and accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities including options and foreign securities are valued at the
last sale price on the principal exchange or market on which they are traded;
or, if there were no sales that day, at the mean between the closing bid and
asked prices. Foreign securities prices are generally denominated in foreign
currencies. The currencies are translated into U.S. dollars by using the
exchange rates quoted at the close of The London Stock Exchange prior to when
the Fund's net asset value is next determined. At June 30, 1996, 77% of the
Fund's long positions were valued in this manner.
Securities for which market quotations are not readily available are valued
at their fair value as determined in accordance with the guidelines and
procedures adopted by the Fund's Board of Trustees. The guidelines and
procedures use all available resources including quotations from market
makers and fundamental valuation methods which include, but are not limited
to, the analysis of: the effect of any restrictions on the sale of the security,
product development and trends of the security's issuer, changes in the
industry and other competing companies, significant changes in the issuer's
financial position, and any other event which would have a significant impact
on the value of a security. At June 30, 1996, 23% of the Fund's long positions
were valued using these guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund has made no provision for federal income tax for the six months ended
June 30, 1996. The Fund complied with requirements of the Internal Revenue Code
for qualifying as a regulated investment company so as not to be subject to
federal income tax.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased, sold, or sold short (trade date). Realized gains and losses on
securities transactions are determined on the basis of specific identification.
24
<PAGE>
ROBERTSON, STEPHENS & COMPANY
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts, and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions.
The Fund does not isolate the portion of the fluctuations on investments
resulting from changes in foreign currency exchange rates from the fluctuations
in market prices of investments held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
G. CAPITAL ACCOUNTS:
The Fund follows the provisions of the AICPA's Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies"
("SOP"). The purpose of this SOP is to report undistributed net investment
income or loss and accumulated net realized gain or loss accounts in such a
manner as to approximate amounts available for future distributions to
shareholders, if any.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the six months ended June
30, 1996, and for the nine months ended December 31, 1995, were as follows:
1/1/96 - 6/30/96 SHARES AMOUNT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares sold 6,682,662 $ 62,634,536
Shares reinvested - -
- --------------------------------------------------------------------------------
6,682,662 62,634,536
- --------------------------------------------------------------------------------
Shares redeemed (2,663,068) (24,860,000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase 4,019,594 $ 37,774,536
- --------------------------------------------------------------------------------
4/1/95 - 12/31/95 SHARES AMOUNT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares sold 2,510,903 $ 23,109,743
Shares reinvested - -
- --------------------------------------------------------------------------------
2,510,903 23,109,743
- --------------------------------------------------------------------------------
Shares redeemed (1,697,748) (15,380,703)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase 813,155 $ 7,729,040
- --------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Fund's Board of Trustees, the Fund pays Robertson, Stephens &
Company Investment Management, L.P. ("RSIM"), an investment advisory fee
calculated at an annual rate of 1.25% of the average daily net assets of the
Fund. For the six months ended June 30, 1996, the Fund incurred investment
advisory fees of $199,781. RSIM has voluntarily agreed to reimburse the Fund for
any annual operating expenses exceeding an annual expense ratio of 1.85%. For
the six months ended June 30, 1996, the Adviser agreed to reimburse $183,284 of
its fees and other expenses.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also Members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor, and
RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer,
and a Trustee of the Fund, is also a Director of RSIM, a Member of RSGroup, and
Chief Operating
25
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
Notes to Financial Statements (CONTINUED)
Officer of RS & Co. Terry R. Otton, Chief Financial Officer of the Fund, is a
Member of RS Group and Chief Financial Officer of RS & Co. John P. Rohal, a
Trustee of the Fund, is a Member of RS Group and Director of Research for RS &
Co. All affiliated and access persons, as defined in the 1940 Act, follow strict
guidelines and policies on personal trading as outlined in the Fund's Code of
Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $11,102 for the six months ended June 30, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of the Fund's shares. The
distribution fee is calculated at an annual rate of 0.25% of the average daily
net assets of the Fund. For the six months ended June 30, 1996, the Fund
incurred distribution fees of $39,955.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the six months ended June 30, 1996, the Fund
paid brokerage commissions $50 to RS & Co., which represented 0.0% of total
commissions paid for the period.
NOTE 4 INVESTMENTS:
a. PORTFOLIO TURNOVER RATE:
The portfolio turnover rate, which is calculated based on the lesser of the cost
of investments purchased or the proceeds from investments sold (excluding
securities sold short and short-term investments), measured as a percentage of
the Fund's average monthly investment portfolio for the six months ended June
30, 1996, was 72%.
b. TAX BASIS OF INVESTMENTS:
At June 30, 1996, the cost of investments for federal income tax purposes was
$40,290,996. Accumulated net unrealized appreciation on investments was
$2,010,107, consisting of gross unrealized appreciation and depreciation of
$5,772,796 and $(3,762,689), respectively.
c. INVESTMENT PURCHASES AND SALES:
For the six months ended June 30, 1996, the cost of investments purchased and
the proceeds from investments sold (excluding options, securities sold short and
short-term investments) were $44,435,855 and $20,392,811, respectively.
d. PUT OPTIONS:
At June 30, 1996, the Fund had no hedge position in put options.
E. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in value between those dates. All
short sales must be fully collateralized. The Fund maintains the
26
<PAGE>
ROBERTSON, STEPHENS & COMPANY
collateral in a segregated account consisting of cash and/or U.S. government
securities sufficient to collateralize its obligations on the short positions.
The Fund may also sell short "against the box" (i.e., the Fund enters into a
short sale as described above while holding an offsetting long position in the
security which is sold short). If the Fund enters into a short sale against the
box, it will hold an equivalent amount of the securities to cover its position
while the short sale is outstanding. The Fund limits the value of short sale
positions (excluding short sales against the box) to 25% of the Fund's total
assets. At June 30, 1996, none of the Fund's total assets were in short
positions. For the six months ended June 30, 1996, the cost of investments
purchased to cover short sales and the proceeds from investments sold short were
$1,879,109 and $1,912,688, respectively.
f. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to purchase a proportionate
amount of a particular class of the issuer's securities at a predetermined price
during a specific period.
Options and warrants for which market quotations were not readily available were
valued such that when the exercise price of the option or warrant was less than
that of the underlying common stock, the option or warrant was priced using the
modified Black-Scholes Valuation Formula. The Black-Scholes Valuation Formula
values an option or warrant by determining the differential between the exercise
price of the option or warrant and the current price of the underlying stock,
based on a number of factors. These factors include, but are not limited to,
current price of the underlying stock, exercise price of the option or warrant,
time to expiration, assumed riskless rate of interest, compounded rate of
return, and standard deviation of the return on the stock. If the exercise price
was greater than that of the underlying common stock, the option or warrant was
valued at zero. This valuation method is subject to frequent review and in
accordance with the guidelines and procedures adopted by the Fund's Board of
Trustees.
g. RESTRICTED SECURITIES:
A restricted security is a security which has been purchased through a private
offering and cannot be resold to the general public without prior registration
under the Securities Act of 1933. If the security is subsequently registered and
resold, the issuers would bear the expense of all registrations at no cost to
the Fund. At June 30, 1996, the Fund held restricted securities with an
aggregate value of $1,280,552, which represented 2.2% of the Fund's total
assets. Restricted securities are valued according to the guidelines and
procedures adopted by the Fund's Board of Trustees as outlined in Note 1.a.,
paragraph 2.
ACQUISITION
SECURITY SHARES COST VALUE DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Farallon Resources, Ltd. 85,000 389,300 698,528 5/7/96
Farallon Resources, Ltd.,
Warrants 85,000 0 490,973 5/7/96
NDU Resources, Ltd. 75,000 109,649 91,051 5/16/96
NDU Resources, Ltd.,
1/2 Warrants 75,000 0 0 5/16/96
h. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, reevaluation of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
The Fund intends to invest no more than 40% of its total assets exclusively in
one foreign currency. At June 30, 1996, the Fund had its largest concentrated
foreign investments, worth 12% of the Fund's total assets, in Mexico.
27
<PAGE>
THE DEVELOPING COUNTRIES FUND SECOND-QUARTER RESULTS
Administration
OFFICERS AND TRUSTEES
G. Randy Hecht
President, Chief Executive Officer
Terry R. Otton
Chief Financial Officer
Dana K. Welch
Secretary
Leonard B. Auerbach, Trustee
President and Chairman of Auerbach Associates, Inc.
Daniel R. Cooney, Trustee
Former Portfolio Manager of the
Lord Abbett Developing Growth Fund
James K. Peterson, Trustee
Director of the IBM Retirement Funds
John P. Rohal, Trustee
Managing Director and Director of Research, Robertson, Stephens & Co.
INVESTMENT ADVISER
Robertson Stephens & Company Investment Management, L.P.
555 California Street, Suite 2600
San Francisco, CA 94104
DISTRIBUTOR
Robertson, Stephens & Company LLC
555 California Street, Suite 2600
San Francisco, CA 94104
1-800-766-3863
TRANSFER AGENT AND DISBURSING AGENT
State Street Bank & Trust Company
c/o National Financial Data Services
Kansas City, MO
1-800-272-6944
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
AUDITORS
Price Waterhouse LLP
San Francisco, CA
LEGAL COUNSEL
Ropes & Gray
Boston, MA
This report is submitted for the information of shareholders of The Robertson
Stephens Developing Countries Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
Published August 29, 1996
28
<PAGE>
The Robertson Stephens Mutual Funds
In addition to THE DEVELOPING COUNTRIES FUND, Robertson Stephens offers the
following mutual funds:
THE CONTRARIAN FUND-TM-
A DEFENSIVE POSITION IN TODAY'S VOLATILE MARKET - Invests in attractively
priced, growing companies worldwide that are out of favor or have not been
discovered by institutional investors. Adheres to an independent, aggressive,
and flexible investment strategy. The Fund may engage in short sales and invests
in companies of all sizes. Managed by Paul Stephens.
THE DIVERSIFIED GROWTH FUND
FOCUSING ON SMALL- AND MID-CAP COMPANIES - Invests primarily in equity
securities to create a portfolio broadly diversified over industries
and companies.
THE EMERGING GROWTH FUND
SEEKING TO INVEST IN AMERICA'S MOST DYNAMIC, GROWTH-ORIENTED INDUSTRIES -
Invests primarily in common stocks of emerging growth companies (predominantly
technology, specialty retailing, and health care) with above-average growth
potential. No load. Managed by Jim Callinan.
THE GLOBAL LOW-PRICED STOCK FUND
SEEKING OVERLOOKED AND UNDERVALUED COMPANIES - Invests in companies worldwide
that are low-priced (stock prices no greater than $10 per share), have future
growth potential, but are underappreciated or overlooked by other investors. No
load. Managed by Hannah Sullivan.
THE GLOBAL NATURAL RESOURCES FUND
PRIMARILY FOCUSING ON ATTRACTIVE HARD ASSET COMPANIES - Invests in equities of
companies engaged in the discovery, development, production, or distribution of
natural resources, such as energy, metals, and forest products. No load. Managed
by Andy Pilara, Jr.
THE GROWTH & INCOME FUND
SEEKING HIGH GROWTH WHILE MODERATING RISK - Invests primarily in small- and mid-
cap company stocks, as well as convertible bonds and preferred stocks. No load.
Managed by John Wallace.
THE INFORMATION AGE FUND-TM-
FOCUSING ON INVESTMENTS IN THE INFORMATION TECHNOLOGY SECTOR -
Invests in a wide range of technology companies with strong fundamentals, market
advantage, and growth potential, including computer hardware
and software, telecommunications, and multimedia. No load. Managed by Ron
Elijah.
THE MICROCAP GROWTH FUND
FOCUSING ON COMPANIES WITH MARKET CAPS OF LESS THAN $250 MILLION - Invests
primarily in "micro-cap" companies with the potential for long-term capital
appreciation.
THE PARTNERS FUND
A SMALL-CAP FUND USING A VALUE METHODOLOGY - This methodology combines
traditional Graham & Dodd balance sheet analysis and cash flow analysis. No
load. Managed by Andy Pilara, Jr.
THE VALUE + GROWTH FUND
A GROWTH FUND FOR THE LONG-TERM INVESTOR - Invests primarily in
growth companies with favorable price/earnings ratios in sectors with the
potential for above-average growth. Ability to short sell. No load. Managed by
Ron Elijah.
For a discussion of the risks associated with using options, investing in small
companies, international investing, investing in a few sectors, allocating a
large percentage of a portfolio to one security, and short selling, please read
the prospectus.
Design: Broom & Broom, Inc., San Francisco Photography: Jerry Orabona, Bill
Zemanek
<PAGE>
[LOGO]
555 California Street, Suite 2600
San Francisco, California 94104
Fund News & Information
ROBERTSON STEPHENS
INVESTOR SERVICES
- -Knowledgeable mutual
fund representatives.
- -Automated access to daily
net asset values.
- -Portfolio managers' hotline,
24 hours a day.
1-800-766-3863
ROBERTSON STEPHENS
MUTUAL FUND E-MAIL
[email protected]
ROBERTSON STEPHENS
ON THE WEB
http://www.rsim.com
ROBERTSON STEPHENS
ACCOUNTLINK
- -Automated account
information, 24 hours a day.
1-800-624-8025
FUND LISTINGS
The Fund is listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY, and most local newspapers as DevCtry under the heading Robertson
Stephens. Its computer quotation symbol is RSDCX.
The views expressed in this report were those of the Fund's portfolio manager as
of the date specified, and may not reflect the views of the portfolio manager on
the date they are first published or at any other time thereafter. RSIM and its
affiliates may buy or sell investments at any time for the Fund, their other
clients or for their own accounts, and may not necessarily do so in a manner
consistent with the views expressed in this report. The prices at which they buy
or sell investments may be affected favorably by the contents of this report or
the timing of its publication. THE VIEWS EXPRESSED IN THIS REPORT ARE INTENDED
TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR INVESTMENT IN THE FUND
AND DO NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS SHOULD CONSULT THEIR OWN
INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL INVESTMENT PROGRAMS.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
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<NUMBER> 04
<NAME> DEVELOPING COUNTRIES
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 6-MOS
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<PERIOD-START> JAN-01-1996
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<EQUALIZATION> 0
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