<PAGE>
ROBERTSON STEPHENS MUTUAL FUNDS
The Developing Countries Fund
Second-Quarter Report
June 30, 1997
DEVELOPING COUNTRIES
2
<PAGE>
The Developing Countries Fund SECOND-QUARTER REPORT
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? 6
Country Focus 7
Fund Performance - Class A Shares 8
Portfolio Summary 9
Fund Performance - Class C Shares 10
Schedule of Investments 11
Statement of Assets and Liabilities 15
Statement of Operations 16
Statement of Changes in Net Assets 17
Financial Highlights - Class A Shares 18
Financial Highlights - Class C Shares 19
Notes to Financial Statements 20
Administration 28
<PAGE>
FUND HIGHLIGHTS
ASIA
At quarter-end, the bulk of our investment in Asia was in Korea, where we
believe an economic rebound could occur sooner than expected as a result of
strong export business.
LATIN AMERICA
Latin America has been the best performing region within the emerging markets
this year.
EASTERN EUROPE
Although markets in The Czech Republic and Poland have cooled off recently,
we see economic potential in Romania (where we took a recent research trip)
and Russia.
ACQUISITION
During the quarter, BankAmerica agreed to acquire Robertson Stephens. The
deal is subject to regulatory and other approvals, and it is expected to be
completed as early as September 30, 1997.
1
<PAGE>
[PHOTO]
FUND MANAGER
MICHAEL C. HOFFMAN
Portfolio Manager
The Robertson Stephens Developing Countries Fund
DEAR SHAREHOLDER:
The Robertson Stephens Developing Countries Fund had a return of 2.18% for
the second quarter versus 8.36% for the MSCI Emerging Markets Global Index.
For the first half, the Fund was up 6.19% versus 16.65% for the MSCI. For the
period from May 8, 1997 (Commencement of Operations) to June 30, 1997, the
Fund's Class C shares had a return of 6.42%.
At quarter-end, we had 89.7% of the Fund invested, with roughly 35% in Asia,
31% in Latin America, 14% in Eastern Europe, and the balance spread out in
markets such as the Middle East, Africa, and some of the smaller countries
around the globe. On the short side, we had about 6% of the Fund in short
positions in Hong Kong securities.
ASIA
Asia has undergone an economic slowdown during the year and has shown
disappointing equity market performance. Thailand, in particular, has done
very poorly. There is an overstretched property market (resulting in earnings
disappointments in property companies) and a decrease in exports, a driver of
economic growth.
This situation has led to a period of competitive currency devaluations. When
Thailand recently devalued its currency, other countries in the region (such
as the Philippines) became less competitive and were forced to devalue their
currencies as well.
2
"WE ARE FINDING ATTRACTIVE INVESTMENT OPPORTUNITIES IN KOREA...."
<PAGE>
This economic slowdown likely will continue over the next quarter, with
short-term problems such as rising interest expenses and debt putting
pressure on the banking system and resulting in overall economic weakness.
This competitive currency situation has caused dislocation in the region that
we believe offers investment opportunities. We are finding attractive
opportunities and have looked to expand our exposure to exporters, as they
tend to drive countries out of these periods of economic sluggishness.
KOREA
The bulk of our investment in Asia is in Korea, which represented
approximately 18% of the Fund at quarter-end. Many value global investors
consider Korea, along with Thailand, the cheapest market in the world from a
valuation standpoint. For about 18 months Korea has had nothing but terrible
news, resulting in some cheap equity prices. Toward the end of the quarter,
things began to move in a more positive direction. The yen began to
appreciate rather dramatically against the dollar, which was very positive
for Korean exporters. Korea exports high-value products and competes
primarily with the Japanese, so if the yen appreciates, the won becomes much
more effective in terms of exports around the globe. In addition, the Koreans
are tied to the global economy, and as the global economy has been gaining
strength with the weak currency, it looks as though the exporters could have
a very strong year. Thus, an economic rebound in the area could occur sooner
than expected, and I am looking for strong earnings growth and a reignition
of the domestic economy resulting from this export strength.
In addition, we have seen interest rates begin to fall very rapidly in Korea.
I believe some of this is due to expectations of financial market
deregulation, as well as the fact that the government has opted to lower
interest rates quite strongly to restimulate the domestic economy. Should
interest rates continue to fall, as I expect to see, we would likely see
renewed domestic investor interest in the equity market.
Going forward, it will be important to watch what happens on the political
front. All in all, though, I believe the investment environment looks good
for Korea going forward from a valuation and earnings standpoint.
3
<PAGE>
INVESTMENT MANAGEMENT OPPORTUNITIES
HONG KONG
I still believe that the outlook for Hong Kong is a very negative one for the
next year or so. I also expect that the property companies in Hong Kong are
going to run into problems. I do not expect the Hong Kong market, which is
now at a record high, to have a very good second half of the year, so we
expect to maintain the short position that we have in Hong Kong, and
potentially add to that position if we see an advantage in doing so.
LATIN AMERICA
Latin America has been the best performing region within the emerging markets
this year. We have seen very strong performances out of the markets in both
Brazil and Peru. We are seeing a very strong rebound and economic growth
coming a couple of years past the Mexican devaluation. In addition, many
companies in the region are experiencing very strong earnings growth, and
that has attracted a lot of liquidity back into the marketplace. As current
stock prices are reflecting the prosperity of the Latin American countries,
we have moved past the best time to invest in the region (after the
devaluation) for now.
4
<PAGE>
Watching U.S. interest rates will be very important in terms of managing the
Fund's Latin American holdings going forward. Interest rate events in the
United States can impact Latin American equities in a negative fashion, and
that is certainly a risk. On the other hand, if interest rates were to fall
in the United States, there is the potential for upside in equity prices.
Another concern in Latin America is increased political risk in the third and
fourth quarters of this year. Elections are planned in Mexico and Brazil, and
shortly thereafter, in Argentina. Things can sometimes get a little rough
politically in these countries, so I think that watching political
developments and understanding how they are going to impact the equity
markets and the economic policies of these countries will be important. All
in all, though, I believe the outlook is good for Latin America.
EASTERN EUROPE
I have been reducing the portfolio's weighting in Eastern Europe for some
time now. After strong performance in 1996, The Czech Republic and Poland
have cooled off recently. The big problems have been with current account
deficits and overvalued currency. I still think that things are going to be
somewhat difficult economically for The Czech Republic and Poland, and we do
not anticipate putting any more money there at this time.
I believe the exciting plays in the region currently are Russia and Romania.
During the quarter, I visited Romania, which is in the very, very early
stages of its capital market development. Equities are just beginning to take
shape now. The market is beginning to achieve some liquidity, although the
average volume in the country is not more than a million dollars a day, so it
is very difficult to get invested. However, liquidity increases very rapidly
as privatization takes place, and there is increasingly more breadth and
depth to the offerings.
Going forward, I remain very positive about the growth prospects and
opportunities across the globe. I will continue to monitor the countries and
our Fund investments, and, as always, be ready to invest when I find new
potential for growth.
If you should have questions or comments, please call or E-mail us at
[email protected].
Sincerely,
/s/ Michael C. Hoffman
MICHAEL C. HOFFMAN
Portfolio Manager
August 7, 1997
TO HEAR MY ONGOING THOUGHTS ON THE FUND, CALL OUR PORTFOLIO MANAGER HOTLINE
AT 1-800-766-3863.
5
<PAGE>
DID YOU KNOW?
Test your global knowledge.
Q
1. Which Asian nation was liberated 52 years ago and is the world's 10th
largest trading state?
a. Thailand
b. Singapore
c. South Korea
2. Which Latin American city recently elected its first mayor?
a. Mexico City
b. Buenos Aires
c. Rio de Janeiro
3. How many Western companies have set up shop in Moscow?
a. 3,500
b. 35,000
c. 350,000
A
1. c. South Korea
2. a. Mexico City
3. b. 35,000
6
<PAGE>
COUNTRY FOCUS
INDONESIA
Indonesia is the world's largest archipelago, with 13,677 islands stretching
along the equator for 5,120 kilometers (a total land area slightly less than
three times the size of Texas). With a population of approximately 190
million, it is the fourth most populous country in the world.
Economic reform driven by the government and a team of U.S.-trained
economists has resulted in progress over the last thirty years, resulting in
a transition in 1995 from "low" to "middle income" country status according
to World Bank criteria. At year-end 1995, the Jakarta Stock Exchange had 238
listed companies and Indonesia represented 3.7% of emerging market
capitalization.
In 1996, the government introduced a liberalization package that cut tariff
rates on most imported goods in an attempt to improve Indonesia's
competitiveness. The reforms also encouraged bank mergers by offering such
incentives as tax exemptions.
Over the next few years, questions are likely to arise about the region's
stability as the society addresses political corruption and possible
leadership shifts, but with its large population and progress to date, it is
a country to watch for future economic reform and investment opportunities.
[MAP]
[FOLLOWING ISLANDS IDENTIFIED ON MAP]
Sumatra
Borneo
Jayapura
Celebes
Jakarta
Java
Sources: EMERGING STOCK MARKETS FACTBOOK 1996 and 1996 INDONESIA, MALAYSIA &
SINGAPORE HANDBOOK.
7
<PAGE>
FUND PERFORMANCE - CLASS A SHARES
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 PERIOD ENDED 6/30/97 FUND GLOBAL INDEX(1)
- --------------------------------------------------------------------------------
Since inception (5/2/94)(2) 4.61% 15.91%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
DEVELOPING COUNTRIES MSCI EMERGING MARKETS
FOR THE PERIODS ENDED 6/30/97 FUND GLOBAL INDEX(1)
- --------------------------------------------------------------------------------
One year 3.73% 10.19%
- --------------------------------------------------------------------------------
Since inception (5/2/94)(2) 1.44% 4.77%
- --------------------------------------------------------------------------------
(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. You cannot invest in an index itself.
(2) Date that the Fund's Class A 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.
International investing can involve greater currency fluctuations and less
political and economic stability. Investing in smaller companies can involve
more volatility, less liquidity, and less publicly available information.
investing in a more limited number of issuers and sectors can be subject to
greater market fluctuation. Short selling is the sale of a borrowed security
and the price of the security can increase between the date the security is
sold and the date when the fund must replace it. Options and futures may not
be perfectly correlated to the underlying index or security.
8
<PAGE>
PORTFOLIO SUMMARY
AS OF JUNE 30, 1997
[CHART]
Cash/Cash Equivalents 4.8%
Myanmar 0.9%
South Africa 1.7%
Philippines 2.0%
Thailand 2.3%
Poland 2.3%
Egypt 2.4%
Israel 2.5%
Malaysia 2.9%
Indonesia 3.1%
Czech Republic 3.2%
Romania 4.0%
Russia 4.9%
Brazil 6.0%
Other/Other Assets, Net 1.9%
Korea 18.2%
Mexico 15.6%
Argentina 8.9%
Hong Kong Short Positions 6.4%
China 6.0%
TOP TEN HOLDINGS
1.
COMPANHIA VALE DO RIO DOCE (5.96%; BRAZIL)
Through subsidiaries, operates in the mining, rail transportation, and
mineral sales industries in Brazil, primarily supplying consumers in Europe
and Asia.
2.
EMPRESAS ICA SOCIEDAD CONTROLADORA, S.A. DE C.V. (5.20%; MEXICO)
Provides a full range of construction and related activities for the Mexican
public and private sectors.
3.
CIFRA S.A. DE C.V. (4.80%; MEXICO)
Through its subsidiaries, owns and operates discount stores that offer
groceries, clothing, and general merchandise and are located throughout
Mexico.
4.
CRESUD SACIFYA (4.49%; ARGENTINA)
Operates in the agribusiness sector in Argentina, cultivating such cash
grains as wheat, corn, soybeans, and sunflowers.
5.
INVERSIONES Y REPRESENTACIONES, S.A. (4.41%; ARGENTINA)
Develops real estate.
6.
KOREAN AIR (4.30%; KOREA)
With a fleet of 73 aircraft, carries passengers to more than 53 destinations
in 23 countries.
7.
LG SEMICONDUCTOR COMPANY (3.84%; KOREA)
Manufactures various DRAM and computer memory products, as well as non-memory
products such as MICRO and ASIC.
8.
LG CHEMICAL, LTD. (3.70%; KOREA)
Manufactures petrochemicals for products ranging from cosmetics to advanced
materials.
9.
KOREA ELECTRIC POWER CORPORATION (3.06%; KOREA)
Engages in the transmission and distribution of electricity in the Republic
of Korea. Owns approximately 95% of Korea's electric generating capacity.
10.
SINO-FOREST CORPORATION (3.01%; CHINA)
Holds interest in six joint ventures in southern China covering 600,000
hectares of hardwood plantations.
9
<PAGE>
FUND PERFORMANCE - CLASS C SHARES
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 8, 1997(2)
[GRAPH]
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION> DEVELOPING COUNTRIES DEVELOPING COUNTRIES MSCI EMERGING MARKETS
FOR THE PERIOD ENDED 6/30/97 FUND FUND(3) GLOBAL INDEX(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Since inception (5/8/97)(2) 7.42% 6.42% 7.40%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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. You cannot invest in an index.
(2) Date that the Fund's Class C shares were first sold to the public.
(3) Reflects the contingent deferred sales charge imposed on redemptions
within the first year of purchasing shares.
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.
International investing can involve greater currency fluctuations and less
political and economic stability. Investing in smaller companies can involve
more volatility, less liquidity, and less publicly available information.
Investing in a more limited number of issuers and sectors can be subject to
greater market fluctuation. Short selling is the sale of a borrowed security
and the price of the security can increase between the date the security is
sold and the date when the fund must replace it. Options and futures may not
be perfectly correlated to the underlying index or security.
10
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30, 1997 (UNAUDITED) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
ARGENTINA - 8.9%
Cresud Sacifya 1,432,639 $ 3,195,265
Inversiones y Representaciones, S.A.(1) 718,300 3,139,442
- -----------------------------------------------------------------------------------------------------------------------------
6,334,707
- -----------------------------------------------------------------------------------------------------------------------------
BRAZIL - 6.0%
Companhia Vale Do Rio Doce, ADR(1),(2) 190,000 4,235,746
- -----------------------------------------------------------------------------------------------------------------------------
4,235,746
- -----------------------------------------------------------------------------------------------------------------------------
CANADA - 0.9%
Etruscan Enterprises, Ltd. 79,300 339,123
Sutton Resources, Ltd. 27,000 220,165
Sutton Resources, Ltd., Restricted(6),(7) 14,000 108,451
- -----------------------------------------------------------------------------------------------------------------------------
667,739
- -----------------------------------------------------------------------------------------------------------------------------
CHINA - 6.0%
Sino-Forest Corporation, Class A 1,687,500 2,140,488
Wuxi Little Swan Company, Ltd., Class B 1,260,000 2,114,285
- -----------------------------------------------------------------------------------------------------------------------------
4,254,773
- -----------------------------------------------------------------------------------------------------------------------------
CZECH REPUBLIC - 3.2%
Czech Value Fund 169,250 1,079,815
SPT Telecom, A.S. 11,100 1,164,635
- -----------------------------------------------------------------------------------------------------------------------------
2,244,450
- -----------------------------------------------------------------------------------------------------------------------------
EGYPT - 2.4%
Al-Ahram Beverages Company S.A.E., GDR(3) 85,000 1,738,250
- -----------------------------------------------------------------------------------------------------------------------------
1,738,250
- -----------------------------------------------------------------------------------------------------------------------------
GHANA - 0.6%
Leo Shield Exploration NL 1,460,000 448,351
- -----------------------------------------------------------------------------------------------------------------------------
448,351
- -----------------------------------------------------------------------------------------------------------------------------
INDONESIA - 3.1%
First Dynasty Mines, Ltd. 617,500 581,755
First Dynasty Mines, Ltd., Restricted(6),(7) 110,000 98,467
PT Dynaplast, Foreign(1),(5) 1,657,000 1,499,244
- -----------------------------------------------------------------------------------------------------------------------------
2,179,466
- -----------------------------------------------------------------------------------------------------------------------------
ISRAEL - 2.5%
Blue Square Israel Ltd., ADR(2) 102,400 1,766,400
- -----------------------------------------------------------------------------------------------------------------------------
1,766,400
- -----------------------------------------------------------------------------------------------------------------------------
KOREA - 18.2%
Daewoo Securities Company 70,000 1,269,148
Korea Electric Power Corporation, ADR(1),(2) 73,000 2,178,498
Korean Air 150,570 3,058,209
LG Chemical, Ltd.(1) 190,000 2,631,766
LG Electronics, Inc.,144A, GDR(3),(4) 190,000 1,102,000
LG Semiconductor Company 70,000 2,727,487
- -----------------------------------------------------------------------------------------------------------------------------
12,967,108
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIA - 2.9%
Land and General Holdings(1) 1,800,000 $ 2,067,982
- -----------------------------------------------------------------------------------------------------------------------------
2,067,982
- -----------------------------------------------------------------------------------------------------------------------------
MEXICO - 15.6%
Acer Computech Latino America, ADR(2) 120,000 2,100,000
Amarc Resources, Ltd. 409,400 474,787
Amarc Resources, Ltd., Restricted(6),(7) 65,000 67,843
Anooraq Resources Corporation 326,800 355,307
Cifra S.A. de C.V., Class B, ADR(1),(2) 1,900,000 3,410,500
Empresas ICA Sociedad Controladora, S.A.,
de C.V., ADR(1),(2) 230,000 3,694,375
Farallon Resources, Ltd. 150,000 962,200
- -----------------------------------------------------------------------------------------------------------------------------
11,065,012
- -----------------------------------------------------------------------------------------------------------------------------
MYANMAR - 0.9%
Indochina Goldfields, Ltd. 137,000 645,454
- -----------------------------------------------------------------------------------------------------------------------------
645,454
- -----------------------------------------------------------------------------------------------------------------------------
PHILIPPINES - 2.0%
Ionics Circuits, Inc. 2,576,000 1,416,135
- -----------------------------------------------------------------------------------------------------------------------------
1,416,135
- -----------------------------------------------------------------------------------------------------------------------------
POLAND - 2.3%
Bank Handlowy W. Warszawie 45,400 562,960
Government of Poland Privatisation Certificates 25,000 1,065,044
Mostostal-Export, S.A.(1) 4,000 12,659
- -----------------------------------------------------------------------------------------------------------------------------
1,640,663
- -----------------------------------------------------------------------------------------------------------------------------
ROMANIA - 4.0%
Romanian Growth Fund 75,000 750,000
Romanian Investment Fund 2,000 2,110,000
- -----------------------------------------------------------------------------------------------------------------------------
2,860,000
- -----------------------------------------------------------------------------------------------------------------------------
RUSSIA - 4.9%
Black Sea Energy, Ltd. 229,500 648,752
Black Sea Energy, Ltd., Restricted(6),(7) 728,820 1,566,214
Eurogas Corporation 263,665 359,287
Eurogas Corporation, 144A(4) 38,000 51,781
Mosenergo, 144A, ADR(2),(4) 20,000 840,000
- -----------------------------------------------------------------------------------------------------------------------------
3,466,034
- -----------------------------------------------------------------------------------------------------------------------------
SLOVAKIA - 0.0%
Ferro Fond, I.F.(6) 14,545 0
- -----------------------------------------------------------------------------------------------------------------------------
0
- -----------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA - 1.7%
Consolidated Mining Corporation, Ltd. 10,000,000 1,190,607
- -----------------------------------------------------------------------------------------------------------------------------
1,190,607
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, 1997 (UNAUDITED) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THAILAND - 2.3%
Alphatec Electronics Company, Ltd., Foreign(5) 628,800 $ 479,807
Siam Commercial Bank, Foreign(1),(5) 279,200 1,188,562
- -----------------------------------------------------------------------------------------------------------------------------
1,668,369
- -----------------------------------------------------------------------------------------------------------------------------
TURKEY - 0.9%
Eczacibasi Ilac Sanayi ve Ticaret, A.S. 12,101,000 643,374
- -----------------------------------------------------------------------------------------------------------------------------
643,374
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 89.3% (Cost $60,965,605) 63,500,620
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
Amarc Resources, Ltd.,Warrants, Strike CAD 2.05,
Expire, 7/16/97(6),(7),(8),(9) 65,000 5,644
Anooraq Resources Corporation, Warrants,
Strike CAD 2.07, Expire 9/12/97(6),(8),(9) 65,000 12,190
Etruscan Enterprises, Warrants, Strike CAD 7.50,
Expire 4/21/98(6),(8),(9) 73,300 74,144
Farallon Resources, Ltd., Warrants,
Strike CAD 6.25, Expire 8/30/97(6),(8),(9) 85,000 171,585
First Dynasty Mines, Ltd., Warrants,
Strike CAD 4.50, Expire 9/13/97(6),(7),(8),(9) 110,000 0
NDU Resources, Ltd., Warrants,
Strike CAD 2.31, Expire 5/17/98(6),(8),(9) 75,000 1,766
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL WARRANTS - 0.4% (Cost $453,024) 265,329
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 89.7% (Cost $61,418,629) 63,765,949
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 12,050
Repurchase Agreement
State Street Bank and Trust Company, 5.50%,
dated 6/30/97, due 7/1/97, maturity value
$3,396,519 (collateralized by $3,445,000 par
value U.S.Treasury Notes, 6.375%, due 4/30/99) 3,396,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 4.8% 3,408,050
- -----------------------------------------------------------------------------------------------------------------------------
SECURITIES SOLD SHORT - (6.4)% (Proceeds: $4,037,475) (4,569,979)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, 1997 (UNAUDITED) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS, NET - 11.9% $ 8,507,887
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $71,111,907
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income - producing security.
(2) ADR - American Depository Receipt.
(3) GDR - Global Depository Receipt.
(4) These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
(5) Shares registered for foreign investors.
(6) Fair-value security. See 1.a. in Notes to Financial Statements.
(7) Restricted security. See 4.e. in Notes to Financial Statements.
(8) See 4.d. in Notes to Financial Statements.
(9) Foreign - denominated security. CAD - Canadian Dollar.
SCHEDULE OF SECURITIES SOLD SHORT
<TABLE>
<CAPTION>
JUNE 30, 1997 (UNAUDITED) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG
- -----------------------------------------------------------------------------------------------------------------------------
Hang Seng Bank, Ltd. 170,000 $ 2,424,716
Henderson Investment, Ltd. 1,400,000 1,545,054
Sun Hung Kai Properties 50,000 600,209
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES SOLD SHORT - (6.4)%
(Proceeds: $4,037,475) $ 4,569,979
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $61,418,629) $ 63,765,949
Cash and cash equivalents 3,408,050
Receivable for investments sold 11,236,166
Receivable for fund shares subscribed 4,388,221
Dividends/interest receivable 39,272
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 82,837,658
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Securities sold short (Proceeds: $4,037,475) 4,569,979
Payable for investments purchased 6,502,559
Payable for fund shares redeemed 502,358
Accrued expenses 80,810
Payable to adviser 55,423
Payable to distributor 14,622
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 11,725,751
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 71,111,907
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 69,882,159
Accumulated undistributed net investment income 213,196
Accumulated net realized loss from investments (1,745,827)
Accumulated net realized gain from securities sold short 945,570
Net unrealized appreciation on investments 2,349,313
Net unrealized depreciation on securities sold short (532,504)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 71,111,907
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES:
Net Asset Value, offering, and redemption price
per share - Class A Shares $ 10.29
(Net assets of $71,039,006 applicable to 6,906,048 shares
of beneficial interest with no par value)
Net Asset Value, offering, and redemption price
per share - Class C Shares $ 10.28
(Net assets of $72,901 applicable to 7,092 shares of
beneficial interest with no par value)(1)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Redemption price per share is equal to the net asset value less any
applicable contingent deferred sales charge.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 322,225
Dividends (net of foreign tax withheld of $32,803) 695,813
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,018,038
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 475,369
Dividend expense for securities sold short 103,971
Distribution fees - Class A Shares 95,058
Custodian fees 89,260
Transfer agent fees 47,945
Professional fees 34,390
Shareholder reports 23,530
Registration and filing fees 23,305
Trustees' fees and expenses 11,041
Insurance 769
Distribution fees - Class C Shares 49
Shareholder servicing fees - Class C Shares 16
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 904,703
Less: Expense waiver by adviser (97,137)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 807,566
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 210,472
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN /(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION)
ON INVESTMENTS AND SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
Net realized loss from investments (1,547,800)
Net realized gain from securities sold short 628,424
Net change in unrealized appreciation on investments 3,068,592
Net change in unrealized depreciation on securities sold short (532,504)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/
(DEPRECIATION) ON INVESTMENTS AND SECURITIES SOLD SHORT 1,616,712
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,827,184
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 1997 (UNAUDITED) DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income $ 210,472 $ 155,268
Net realized (loss)/gain from investments (1,547,800) 2,587,856
Net realized gain from securities sold short 628,424 32,841
Net change in unrealized appreciation on investments 3,068,592 1,487,419
Net change in unrealized depreciation on securities sold short (532,504) --
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,827,184 4,263,384
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income - Class A Shares -- (152,544)
Net investment income - Class C Shares(1) -- --
Realized gain on investments - Class A Shares -- --
Realized gain on investments - Class C Shares(1) -- --
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -- (152,544)
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 18,860,765 31,969,698
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 18,860,765 31,969,698
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 20,687,949 36,080,538
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
BEGINNING OF PERIOD 50,423,958 14,343,420
End of period $ 71,111,907 $ 50,423,958
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class C Shares were first sold on May 8, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
FINANCIAL HIGHLIGHTS - CLASS A SHARES
<TABLE>
<CAPTION>
FOR THE SIX FOR THE FOR THE NINE FOR THE
FOR A SHARE OUTSTANDING MONTHS ENDED YEAR ENDED MONTHS ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 6/30/97 (UNAUDITED) 12/31/96 12/31/95 3/31/95 (1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 9.69 $ 8.02 $ 8.57 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 0.03 0.03 (0.03) 0.06
Net realized gain/(loss) and unrealized
appreciation/(depreciation) on investments
and securities sold short 0.57 1.67 (0.52) (1.36)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting From Operations 0.60 1.70 (0.55) (1.30)
- -----------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income -- (0.03) -- (0.04)
Distributions from realized gain on investments -- -- -- (0.09)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.29 $ 9.69 $ 8.02 $ 8.57
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 6.19% 21.19% (6.42)% (13.14)%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period (000S) $71,039 $50,424 $ 14,343 $ 8,345
Ratio of Expenses to Average Net Assets 2.12%(2) 1.84%(2) 1.83%(2) 3.15%(2)
Ratio of Net Investment Income/(Loss)
to Average Net Assets 0.55%(2) 0.36%(2) (0.51)%(2) 0.72%(2)
Portfolio Turnover Rate 64% 165% 103% 124%
Average Commission Rate Paid(3) $0.0051 $0.0009 -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A Shares were first issued on May 2, 1994.
(2) If the Fund had paid all of its expenses and there had been no
reimbursement from the Adviser for the six months ended June 30, 1997,
the year ended December 31, 1996, the nine months ended December 31,
1995, and the period from May 2, 1994 (Commencement of Operations), to
March 31, 1995, total return would have been 6.0%, 20.19%, (8.17)%, and
(13.65)%, respectively, the ratio of expenses to average net assets
would have been 2.37%, 2.70%, 4.24%, and 3.46%, respectively, and the
ratio of net investment income/(loss) to average net assets would have
been 0.30%, (0.50)%, (2.92)%, and 0.41%, respectively.
(3) A fund is required to disclose its average commission rate per
share for security trades on which a commission is charged. This amount
may vary from fund to fund and period to period depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ. This rate generally does not
reflect markups, markdowns or spreads on shares traded on a principle
basis, if any.
Ratios, except for total return and portfolio turnover rate, have been
annualized.
Per-share data with respect to Class A Shares has been determined by using
the average number of Class A Shares outstanding throughout each period.
Distributions reflect actual per-share amounts distributed for the periods.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
FINANCIAL HIGHLIGHTS - CLASS C SHARES
FOR THE
FOR A SHARE OUTSTANDING PERIOD ENDED
THROUGHOUT THE PERIOD: 6/30/97(1)(UNAUDITED)
- ----------------------------------------------------------------------------
Net Asset Value, beginning of period $ 9.57
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net investment loss (0.02)
Net realized gain and unrealized appreciation on
investments and securities sold short 0.73
- ----------------------------------------------------------------------------
Net increase in Net Assets Resulting From Operations 0.71
- ----------------------------------------------------------------------------
Distributions from net investment income --
Distributions from realized gain on investments --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.28
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
TOTAL RETURN 7.42%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net Assets, end of period (000s) $ 73
Ratio of Expenses to Average Net Assets 2.87%(2)
Ratio of Net Investment Loss to Average Net Assets (2.33)%(2)
Portfolio Turnover Rate 64%
Average Commission Rate Paid(2) $ 0.0051
- ----------------------------------------------------------------------------
(1) Class C Shares were first sold on May 8, 1997.
(2) If the Fund had paid all of its expenses and there had been no
reimbursement from the Adviser for the period from May 8, 1997
(Commencement of Operations), through June 30, 1997, total return would
have been 7.42%, the ratio of expenses to average net assets would have
been 3.21%, and the ratio of net investment loss to average net assets
would have been (2.67)%.
(3) A fund is required to disclose its average commission rate per
share for security trades on which a commission is charged. This amount
may vary from fund to fund and period to period depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ. This rate generally does not
reflect markups, markdowns or spreads on shares traded on a principle
basis, if any.
Ratios, except for total return and portfolio turnover rate, have been
annualized.
Total returns do not include the 1% contingent deferred sales charge.
Per-share data with respect to Class C Shares has been determined by using
the average number of Class C Shares outstanding throughout the period.
Distributions reflect actual per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
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
diversified, 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 twelve series of
shares -- The Robertson Stephens Emerging Growth Fund, The Robertson Stephens
Value + Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens
Developing Countries Fund, The Robertson Stephens Growth & Income Fund, The
Robertson Stephens Partners Fund, The Information Age Fund-TM-, The Robertson
Stephens Global Natural Resources Fund, The Robertson Stephens Global
Low-Priced Stock Fund, The Robertson Stephens Diversified Growth Fund, The
Robertson Stephens MicroCap Growth Fund and The Robertson Stephens Global
Value Fund. The assets for each series are segregated and accounted for
separately.
The Trustees have authorized the issuance of two classes of shares of
beneficial interest the Fund, designated as Class A and C, respectively. The
shares of each class represent an interest in the same portfolio of
investments of the Fund. Expenses of the Fund are borne pro-rata by the
holders of each class of shares, except that each class may bear expenses
unique to that class (including, but not limited to, distribution expenses
applicable to such class). Shares of each class would receive their pro-rata
share of the net assets of the Fund, if the Fund were liquidated. In
addition, the Board of Trustees declares separate distributions of each class
of shares. Each class votes as a class only with respect to its own
distribution plan or other matters for which a class vote is required by law
or determined by the Board of Trustees. Class C shares were first sold by the
Fund on May 8, 1997. Class C shares are subject to a 1% contingent deferred
sales charge if those shares are redeemed within one year of purchase.
20
<PAGE>
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 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. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. Foreign securities 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,
1997, 96.7% of the Fund's long positions and 100% of its short 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 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 that could have a
significant impact on the value of the security. At June 30, 1997,
approximately 3.3% 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, 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.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
c. FEDERAL INCOME TAXES:
The Fund intends to comply with requirements of the Internal Revenue Code,
qualifying as a regulated investment company. Therefore, the Fund does not
expect to be subject to income tax, and no provision for such tax will be
made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date securities are
purchased, sold, or sold short (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific
identification.
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars.
Investments 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 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 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. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CLASS ALLOCATIONS:
Income, common expenses, and realized and unrealized gains/(losses) are
determined at the Fund level and allocated daily to each class of shares
based on the appropriate net assets of the respective classes. Transfer agent
expenses, distribution/shareholder service fees and any other class specific
expenses, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate applicable
to each class.
22
<PAGE>
i. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may
differ from the year in which the income and realized gains/(losses) were
recorded by the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value divided into two classes designated Class A and Class C.
Transactions in capital shares for Class A for the six months ended June 30,
1997, and for the year ended December 31, 1996, and for Class C for the
period from May 8, 1997 (Commencement of Operations) to June 30, 1997, were
as follows:
CLASS A
1/1/97 - 6/30/97 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 9,316,920 $ 96,464,467
Shares reinvested -- --
- ------------------------------------------------------------------------------
9,316,920 96,464,467
- ------------------------------------------------------------------------------
Shares redeemed (7,617,264) (77,673,710)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 1,699,656 $ 18,790,757
- ------------------------------------------------------------------------------
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 11,798,506 $112,215,356
Shares reinvested 15,445 148,733
- ------------------------------------------------------------------------------
11,813,951 112,364,089
- ------------------------------------------------------------------------------
Shares redeemed (8,395,045) (80,394,391)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 3,418,906 $ 31,969,698
- ------------------------------------------------------------------------------
CLASS C
5/8/97* - 6/30/97 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 7,094 $ 70,027
Shares reinvested -- --
- ------------------------------------------------------------------------------
7,094 70,027
- ------------------------------------------------------------------------------
Shares redeemed (2) (19)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 7,092 $ 70,008
- ------------------------------------------------------------------------------
* Class C shares were first sold on May 8, 1997.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Board of Trustees, the Fund pays Robertson Stephens
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, 1997, the Fund incurred investment advisory fees of
$475,369. RSIM has voluntarily agreed to waive any annual operating expenses,
excluding class-specific expenses, of the Fund's Class A and Class C shares
exceeding an annual expense ratio of 1.85%, excluding dividend expenses
related to short sales. For the six months ended June 30, 1997, the Adviser
voluntarily agreed to waive fees and other expenses of $97,115 for Class A
shares and $22 for Class C shares.
b. 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 $11,041 for the six months
ended June 30, 1997.
c. DISTRIBUTION FEES:
The Fund has entered into agreements with Robertson, Stephens & Company LLC
("RS & Co.") for distribution services with respect to its Class A and Class
C shares and has adopted Plans of Distribution pursuant to Rule 12b-1 under
the 1940 Act, where continuance is reviewed annually by the Fund's Board of
Trustees. Under these Plans, RS & Co. is compensated for services in such
capacity including its expenses in connection with the promotion and
distribution of the Fund's Class A and Class C shares. The distribution fees
for Class A and Class C shares are calculated at an annual rate of 0.25% and
0.75%, respectively, based on the average daily net assets attributable to
each class of shares, although the Class C Plan contemplates payments at a
rate of up to 1.00% of the Fund's average net assets attributable to Class C
shares. The Fund's Class A plan permits a distribution fee of up to 0.50%,
but is currently limited to 0.25% by the Trustees of the Fund. For the six
months ended June 30, 1997, for Class A, and for the period from May 8, 1997
(Commencement of Operations) through June 30, 1997, for Class C, the Fund
incurred distribution fees of $95,058 and $49, respectively.
24
<PAGE>
d. SHAREHOLDER SERVICING FEE:
The Trust has adopted a Shareholder Servicing Plan for the Class C shares of
each fund. Under the Plan, each fund pays fees to RS & Co. at an annual rate
of up to 0.25% of the fund's average daily net assets. The Plan contemplates
that financial institutions will enter into shareholder service agreements
with RS & Co. to provide administrative support services to their customers
who are fund shareholders. In return for providing these support services, a
financial institution may receive payments from RS & Co. at a rate not
exceeding 0.25% of the average daily net assets of the Class C shares of each
fund for which the financial institution is the financial institution of
record. For the period from May 8, 1997 (Commencement of Operations) through
June 30, 1997, for Class C, the Fund incurred shareholder services fees of
$16.
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, 1997, the Fund paid brokerage commissions of $2,500 to
RS & Co., which represented 0.69% of total commissions paid during this
period.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At June 30, 1997, the cost of investments purchased and proceeds of
securities sold short for federal income tax purposes was $65,456,104.
Accumulated net unrealized appreciation on investments and securities sold
short, excluding the foreign currency fluctuation associated with other
assets and liabilities, was $1,814,816, consisting of gross unrealized
appreciation and depreciation of $10,678,340 and $8,863,524, respectively.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
b. INVESTMENT PURCHASES AND SALES:
For the six months ended June 30, 1997, the cost of investments purchased and
the proceeds from investments sold (excluding options, securities sold short
and short-term investments) were $54,326,298 and $40,754,857, respectively.
c. 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 typically realize a gain if the security
declines in value between those dates. All short sales must be fully
collateralized. The Fund maintains the collateral in a segregated account
consisting of cash, equities and/or U.S. government securities sufficient to
collateralize its obligation 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, 1997, the Fund had 5.5% of its total assets in short positions. For
the six months ended June 30, 1997, the cost of investments purchased to
cover short sales and proceeds from investments sold short were $6,504,228
and $11,155,045, respectively.
d. OPTIONS, WARRANTS, AND RIGHTS:
Options, warrants, and rights 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, warrants, and rights for which market quotations were not readily
available were priced using the modified Black-Scholes Valuation Formula. The
Black-Scholes Valuation Formula values an option, warrant, or right by
determining the differential between the exercise price of the option,
warrant, or right 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, warrant or
right, time to expiration, assumed riskless rate of interest, compounded rate
of return on the stock, and standard deviation of the return on the stock.
This valuation method is subject to frequent review and is in accordance with
the guidelines and procedures adopted by the Fund's Board of Trustees.
26
<PAGE>
e. RESTRICTED SECURITIES:
A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933. If the security is
subsequently reregistered and resold, the issuers would bear the expense of
all registrations at no cost to the Fund. At June 30, 1997, the Fund held
restricted securities with an aggregate value of $1,846,619, which
represented 0.5% 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., paragraphs 1 and 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- -----------------------------------------------------------------------------
Amarc Resources, Ltd. 65 $ 72 $ 68 7/17/96
Amarc Resources, Ltd.,
Warrants 65 25 6 7/17/96
Black Sea Energy, Ltd. 729 1,318 1,566 2/5/97
First Dynasty Mines, Ltd. 110 246 98 9/13/96-
1/13/97
First Dynasty Mines,
Warrants 110 64 0 9/13/96-
1/13/97
Sutton Resources, Ltd. 14 124 109 3/13/97
- -----------------------------------------------------------------------------
$1,849 $1,847
- -----------------------------------------------------------------------------
f. 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, revaluation 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.
NOTE 5 MERGER:
On June 8, 1997, BankAmerica Corporation ("BankAmerica") entered into an
Agreement and Plan of Merger with Robertson, Stephens & Company Group, L.L.C.
and Robertson, Stephens & Company, Inc., pursuant to which each of those
entities would be merged into a subsidiary of BankAmerica. Upon the
consummation of those mergers (expected to occur as early as September 30,
1997), BankAmerica will become the owner of the entire beneficial interest in
RSIM, L.P. and RSIM, Inc.
27
<PAGE>
ADMINISTRATION
OFFICERS AND TRUSTEES
G. Randy Hecht, Trustee
President, Chief Executive Officer
Leonard B. Auerbach, Trustee
President and Chairman of Auerbach Associates, Inc.
John W. Glynn, Jr., Trustee
Principal and Chairman of
Glynn Capital Management
James K. Peterson, Trustee
Former Director of the IBM Retirement Funds
John P. Rohal, Trustee
Managing Director and Director of Research, Robertson, Stephens & Co.
Terry R. Otton
Chief Financial Officer
Dana K. Welch
Secretary
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
INDEPENDENT ACCOUNTANTS
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, 1997
28
<PAGE>
Design: Broom & Broom, Inc., San Francisco
Photography: Jerry Orabona, Bill Zemanek
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. 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. No load. Managed by John Wallace.
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.
THE GLOBAL VALUE FUND
APPLYING A CASH FLOW VALUE METHODOLOGY WORLDWIDE - Uses a methodology that
combines traditional Graham & Dodd balance sheet analysis and cash flow
analysis. No load. Managed by Andy Pilara.
THE GROWTH & INCOME FUND
SEEKING HIGH GROWTH WHILE ATTEMPTING TO MANAGE 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. No load. Managed by David Evans.
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.
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. No load. Managed by Ron Elijah.
Please read the prospectus to learn about the Funds' objectives, investment
policies, and the special risks associated with The Robertson Stephens Mutual
Funds, including international investing, investing in smaller companies,
investing in a more limited number of issuers and sectors or a particular
sector, short selling, using options and futures, and investing in
high-yielding, lower-quality debt securities.
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ROBERTSON, STEPHENS & COMPANY
BRINGING THE FUND MANAGER TO YOU
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 Manager 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.
