<PAGE>
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THE GOVETT FUNDS, INC.
Govett International Equity Fund
Govett Emerging Markets Fund
Govett Smaller Companies Fund
Govett Pacific Strategy Fund
Govett Latin America Fund
Govett Global Income Fund
Semi-Annual Report
June 30, 1996
<PAGE>
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TABLE OF CONTENTS PAGE
<TABLE>
<S> <C>
LETTER TO THE SHAREHOLDERS......................... 1
PORTFOLIO MANAGEMENT REVIEW........................ 3
FINANCIAL STATEMENTS............................... 15
</TABLE>
<PAGE>
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LETTER TO SHAREHOLDERS
July 16, 1996
Dear Shareholder:
So far 1996 has been a year of surprises throughout the world economies. In the
emerging markets arena in particular, political events coincided with changing
economic trends to make investing in these markets appear especially promising.
The UNITED STATES saw volatile markets driven by changing expectations about the
strength of the economy. By June, statistics showing declining unemployment,
rising personal income and increased industrial production caused fears of
inflation and higher interest rates to surface. We continue to anticipate rising
consumer spending, improved exports and satisfactory capital spending, and we do
not discount the near-term possibility that the Federal Reserve Board will raise
interest rates.
In JAPAN, first quarter growth of 3.25% in the gross domestic product (GDP)
exceeded expectations, due primarily to consumer spending. We expect cautious
implementation by the Bank of Japan of interest rate increases, and that stock
prices will continue to be lackluster until there is evidence of continuing
recovery beyond the second quarter.
In EUROPE, favorable interest rates and indications of imminent economic
recovery led to gains in most markets. Analysts are watching Germany for
indications that recent trends in restructuring German corporations will make
German companies better able to respond to changes in their respective
industries. Signs of dynamic, sustainable growth in Central European markets,
especially Hungary and Poland, also marked the first half of 1996.
In the UNITED KINGDOM, lower interest rates appear to be creating greater
consumer confidence despite fears about job security and limited growth in
personal incomes. A great deal will depend upon the results of the coming
elections, but we expect that consumer spending will rise by some 2% in 1996,
although dull exports to Europe may restrain overall GDP growth.
LATIN AMERICA was a bright spot among world markets during the first half of
1996, as formerly government-run utilities, such as telecommunications and
electric companies, made the transition to public ownership. Nevertheless,
despite the positive effect these privatizations have had on the Latin American
economies, we believe that the goals of low inflation and sustainable growth can
be achieved only if the constitutional reform process regains momentum. In
Mexico, exports continued to drive growth, and GDP could reach 2.7%. Argentina
continues to face the challenge of stimulating domestic growth while real
interest rates remain high in order to maintain currency convertibility. The
question for both Argentina and Mexico in the coming months remains whether they
can avoid the pattern set in 1994, when increased domestic savings and inflows
of long-term capital were insufficient to allow domestic interest rates to
resist the upward pressure of increases in U.S. short-term rates.
In the PACIFIC RIM, the Northeast Asian economies are approaching soft landings
with the opportunity for economic acceleration toward the end of 1996. China has
been easing interest rates since the beginning of the year, and real GDP rose
10.2% in the first quarter. In South Korea, corporate bond yields are falling on
sluggish demand, while in Taiwan, following the presidential election in March,
capital has flowed in and buoyed the Taiwanese currency and stock market.
However, both South Korea and Taiwan must absorb negative trends in the
semiconductor and electronics businesses, which are among these two countries'
principal industries.
1
<PAGE>
Overall, we believe that current trends indicate that Europe, Latin America and
the Pacific Basin will continue to present excellent long-term growth
opportunities for the remainder of 1996 and into 1997, and that the smaller
companies universe in the United States represents a similar arena. We will be
watching new markets in Central and Eastern Europe, so that we can take
advantage of attractive valuations and strong growth prospects. We appreciate
your investment in The Govett Funds.
Peter Pejacsevich
CHIEF INVESTMENT OFFICER
JOHN GOVETT & CO. LIMITED
2
<PAGE>
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PORTFOLIO MANAGEMENT REVIEW
GOVETT INTERNATIONAL EQUITY FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
International markets moved ahead modestly over the first six months of 1996, as
measured by the widely watched Morgan Stanley Capital International ("MSCI")
EAFE Index (a broad-based, unmanaged index that reflects the performance of
major world equity markets) which advanced by 4.67% in U.S. dollar terms.(1) The
EAFE advance was slower than the 10.1% rise in the Standard & Poor's 500
Composite Stock Index (the "S&P 500") of primarily U.S. stocks, whose
performance reflected generally easy monetary conditions at the beginning of
1996.
The Japanese market grew by 8.5% over the six months, although further yen
weakness reduced this gain to 2.1% for U.S.-based investors. The news that
economic growth was higher than expected supported this rise. At the same time,
the ongoing fragility of the Japanese banking system continued to indicate the
advisability of a relatively loose monetary policy, at least in the near term.
Supported by favorable interest rates and hopes of an economic recovery toward
the end of 1996, most European markets gained in local currency terms, as
evidenced by the rise of 6.64% in the MSCI European Index (a broad-based,
unmanaged index reflecting the performance of European markets) over the
six-month period. However, the strength of the U.S. dollar again eroded returns
to dollar-based investors: for instance, a local return of 16.2% in the
Netherlands markets decreased to 9.1% in dollar terms, while returns of 12.5% in
Swiss markets fell to 3.4% in dollar terms. In Eastern Europe, where the Fund
increased investment over the period, buoyant economic growth prospects and
attractive stock prices produced strong returns, particularly in Hungary (95.5%)
and Poland (80.7%).
Returns from Pacific Basin markets (excluding Japan) were generally mixed,
advancing overall by 8.8%. Most of these gains occurred early in 1996, before
concerns about U.S. interest rates caused growth in many of these markets to
level off.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
The Fund achieved a total return of
10.38% at net asset value during the
first half of 1996, which compares
favorably with the MSCI EAFE rise of
4.67%. When maximum front-end sales
charges are taken into consideration,
the Fund's total return was 4.92%.
<TABLE>
<CAPTION>
Average Annual Total Return(2)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year 12.17% 18.01%
Since Inception (1/7/92)+ 10.35% 11.61%
</TABLE>
- ------------------------
(1) THE INDEXES REFERRED TO IN THIS SEMI-ANNUAL REPORT INCLUDE REINVESTMENT OF
ALL DIVIDENDS AND CAPITAL GAINS BUT DO NOT INCLUDE ANY COMMISSION OR FEES THAT
WOULD BE PAID BY AN INVESTOR PURCHASING THE SECURITIES EACH INDEX REPRESENTS.
(2) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 52.
+ ANNUALIZED
3
<PAGE>
The Fund benefited over the period from its increased weighting in Eastern
Europe and the Far East. The partial hedge of the Fund's currency positions back
into the U.S. dollar was particularly helpful in a period of dollar strength.
The currency hedge against the yen, for instance, was first taken out in
mid-1995 at 82 yen to the dollar, which protected the Fund's Japanese portfolio
as the yen had fallen to 109.72 against the dollar on June 30. The Fund also
benefited from its lower weighting in the United Kingdom market, as investors'
concerns grew about political uncertainties leading up to the General Election.
MARKET OUTLOOK FOR THE REMAINDER OF 1996
Although the Federal Reserve Board decided not to raise interest rates at the
beginning of July, investors are likely to continue to focus on inflationary
indicators in the U.S. over the months ahead, particularly in light of recent
employment figures. Despite these events, many commentators predict slower
activity in the second half, although the Fed is likely to act to foster
favorable conditions for the coming year.
Developments in the U.S, particularly interest rate movements, are likely to
continue to influence the emerging markets, and we expect a delay in further
advances until the outcome of the presidential election clarifies the course of
the U.S. economy. We anticipate that economic development in the Far East will
be fueled by rapid growth in intra-regional trade and substantial construction
projects. Latin American markets should increasingly be seen again as growth
areas rather than as potential recovery plays.
In the developed markets, Japan's aggressive interest rate cuts and a weaker yen
are likely to result in further recovery in spending for capital goods and
consumer items. As confidence grows about the likelihood of sustainable economic
growth in Japan, the equity markets will probably need to adjust to higher bond
yields. Worldwide corporate earnings are expected to increase significantly
through the end of 1996, which should help to counteract the negative effect of
higher interest rates. A recovery in activity is expected in Continental Europe
during the second half of 1996, following a reduction of interest rates to
offset economic weakness. Although consumer confidence remains anemic,
significant corporate restructuring in many areas may lead to increased export
competitiveness in the long term. The Maastrict Treaty's currency convergence
criteria for monetary union will become increasingly important, as European
Community member countries attempt to balance the need for growth with
controlled monetary expenditure. Political factors are increasingly likely to
affect the U.K. market, as a General Election looms. Assuming that the current
Government remains in power, November's budget will be watched closely for any
fiscal laxity. Investors will also be concerned about the cost of the U.K. beef
crisis and the extent of any deterioration in projected borrowings by the
Government there.
Overall, we anticipate that markets will stabilize in the near term, following
the volatility of early 1996. In these circumstances, we expect that smaller
companies in particular, and growth situations in general, will continue to be
attractive. Consequently, stock selection will be an important focus in the
coming months.
Gareth Watts
PORTFOLIO MANAGER
GOVETT INTERNATIONAL EQUITY FUND
4
<PAGE>
GOVETT EMERGING MARKETS FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
The emerging markets made strong gains during the first half of 1996, greatly
influenced by low interest rates in the U.S. Following their very poor
performance in 1995, emerging markets companies' share valuations are again
attractive. The MSCI Emerging Markets Index, a broad-based unmanaged index that
reflects the performance of equity markets in emerging markets countries, rose
by 10.3% over the six months, exceeding a 4.67% rise (in U.S. dollar terms) in
the MSCI EAFE Index and a 10.1% gain in the Standard & Poor's Composite Index.
In the Pacific Basin, the Taiwanese market appreciated by 25.1%, following
weakness triggered by tensions with China before the March presidential
elections in Taiwan. Good returns from the other principal markets -- Hong Kong
(+9.3%) and Malaysia (+16.2%) -- contributed to the region's strength. Lower
returns from the weaker markets of Thailand (-3.4%) and Korea (-10.8%) reflected
political concerns and falling semiconductor prices. Overall, returns from
Pacific Basin markets rose 8.9% for the period.
The Latin American markets have been particularly buoyant. Against a backdrop of
falling inflation and interest rates, the major markets provided substantial
returns, with Argentina at 13.7% and Mexico at 17.5%. Brazil rose 36.1%,
bolstered by successful privatizations.
In Europe, strong growth prospects and compelling share valuations began to
develop in Central Europe, especially in Hungary (up 95.5% in dollar terms) and
Poland (up 80.7% in dollar terms). Mediterranean markets also performed well,
although Turkey, which rose 30.5% during the period, has recently suffered from
a damaging political environment. South African stocks fell 6% in the first
half, primarily as a result of a significant decline in the value of rand based
on political concerns.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
The Fund's total return for the
period was 12.02% at net asset value,
outperforming the MSCI Emerging
Markets Index, which rose 10.3%. When
maximum front-end sales charges are
taken into consideration, the Fund's
total return was 6.48% for the
period.
<TABLE>
<CAPTION>
Average Annual Total Return(3)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year 3.34% 8.72%
Since Inception (1/7/92)+ 11.85% 13.12%
</TABLE>
The Fund benefited from its overweighting in Latin America, starting late in
1995 with investments principally in Brazil, Argentina and Mexico. Toward the
end of the first half of 1996 the Fund was able to take profits from investments
in all three countries. In Asia, significant returns came from an increasingly
overweighted position in Taiwan. The Fund remained steady in Thailand despite
political pressures, but has reduced exposure to Korea. Significant investment
in Hungary and Poland, and selective exposure to Croatia and the Czech Republic,
mark the Fund's entry in early 1996
- ------------------------
(3) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 53.
+ ANNUALIZED
5
<PAGE>
into Central Europe. We plan to continue focusing on laggard but promising
markets such as Thailand and South Africa, while reducing exposure to markets
that are sensitive to U.S. interest rate expectations.
MARKET OUTLOOK FOR THE REMAINDER OF 1996
We expect the emerging markets economies to stabilize over the third quarter of
1996, based on the increasing possibility of interest rate increases in the U.S.
The recovery of economic growth across all the main regions nevertheless makes
the stabilizing trend positive. In particular, economic growth in Central and
Eastern Europe will be important to investors in emerging markets, if events
bear out forecasts of a 3% growth rate in this region for 1996. Latin America
will also contribute to good returns, with growth forecast at 2.5% for 1996 and
at least 4% in 1997. A 7% growth rate for 1996 is predicted for the Asian
region. This level of expansion, while slower than in previous years, is still
strong. In general, declining interest rates and inflation levels, together with
reduced budget deficits, suggest that the emerging markets continue to be
attractive long-term investments, especially since growth would be achieved
against the background of attractive valuations.
Rachael Maunder
PORTFOLIO MANAGER
GOVETT EMERGING MARKETS FUND
6
<PAGE>
GOVETT SMALLER COMPANIES FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
During the six months ended June 30, 1996, the U.S. equity markets continued to
move ahead, supported by a reasonably benign interest rate environment. Gains
came in fits and starts, as an early January correction gave way to 10%
appreciation from mid-January to mid-February. For the first half of 1996, the
S&P 500 appreciated by 8%, compared to a 34% gain in 1995 for the same period.
The NASDAQ Composite Index (a broad-based unmanaged index representing the
general performance of smaller companies' stocks) posted an 11.9% gain between
January and June. This appreciation took place in two distinct rallies, the
first one from late January to late February, and the second from mid-April to
late May. The NASDAQ was heavily weighted in computer and consumer/industrial
stocks during the period and was buoyed by strong appreciation in these sectors.
The best-performing sectors in the equity markets during the first half of 1996
were retail/ consumer products and energy. Rebounding consumer spending
contributed to rising prices in retail and consumer-related issues, after a very
soft second half of 1995. As for energy stocks, a tight supply of drilling rigs
and strong drilling activity drove performance. Further benefiting the oil patch
was sentiment created by strong prices for oil and gas resulting from Iraq's
failure to re-enter the world energy market.
The technology sector continued to perform well through June although its
driving forces changed. Business spending on software and data communications
equipment accelerated during 1996, and demand for software, networking equipment
and related products continued unabated at the strong 1995 pace. In contrast,
the consumer side of the technology sector cooled in the first half of 1996,
after last year's explosive growth.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
The Fund achieved a total return of
6.68% at net asset value during the
first half of 1996. When maximum
front-end sales charges are taken
into consideration, the Fund's total
return was 1.4%. Overall, this return
compares poorly with the 11.9% return
for the NASDAQ Composite Index.
<TABLE>
<CAPTION>
Average Annual Total Return(4)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year 30.49% 37.29%
Since Inception (1/1/93)+ 43.06% 45.15%
</TABLE>
Consistent with the Fund's objective, we endeavored to invest in companies with
the greatest potential to grow earnings and exceed earnings expectations for the
next year. The Fund's clear bias in 1995 toward the technology sector increased
as the year went on. Early in 1996, it became apparent that selectivity in
technology stocks was critical. Consequently, while the Fund remains
overweighted in this sector, it has reduced its exposure by over one-third since
the beginning of 1996.
Early in the year, we began redeploying assets into two new areas for the Fund,
the energy and retail/consumer sectors. More recently, the Fund began investing
in the business/commercial
- ------------------------
(4) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 53.
+ ANNUALIZED
7
<PAGE>
services sector, which includes companies that provide business services such as
temporary employees, technology consulting, and benefits management. A recent
correction in this sector, which had been a leader in small cap returns for the
last two years, gave the Fund an entry opportunity.
The Fund also increased its healthcare-related holdings in the first half, and
refocused its emphasis in this sector. Previously, the Fund concentrated on
subacute care and home health care providers, which lower the cost of providing
health care relative to hospitalization. Recently, Federal government pressure
on reimbursement of alternatives to hospitalization has dampened their growth
prospects. In response, the Fund shifted into physician practice management and
healthcare information systems stocks.
These shifts in portfolio composition, while important strategically,
significantly affected short-term performance. After a traumatic first ten days
of the year, when the Fund declined over 15%, we completed our repositioning in
time to allow the Fund to participate in the rise that occurred in April and
May.
MARKET OUTLOOK FOR THE REMAINDER OF 1996
We believe that if the Fed raises interest rates for the first time since
January, 1996, the outlook for the second half of 1996 is uncertain. It is our
view that the strong 4% GDP expected to be reported for the second quarter will
prove similar to the growth spurt in the third quarter of 1995 and will be
short-lived. This scenario would likely result in an interest rate hike of less
than 75 basis points, followed by a period of economic softness. Such interest
rate increases -- which are unlikely to result in radical asset shifts from
stocks to bonds -- and a weak but expanding economy, can be positives for small
growth stocks.
These factors make our outlook cautious for the remainder of 1996, which is apt
to be a volatile period, considering the duration of the current bull market and
investors' need to digest the latest changes in the economy.
Jeffrey Bernstein
Berkeley Capital Management
PORTFOLIO MANAGER
GOVETT SMALLER COMPANIES FUND
8
<PAGE>
GOVETT PACIFIC STRATEGY FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
Asian markets rallied sharply at the start of 1996. The rally reflected strong
cash inflows as international portfolios switched money into the region, as well
as the small cut in U.S. interest rates in early January. At the same time,
better performance in many Southeast Asian markets pointed to an easing of
monetary liquidity. In Japan, company annual returns were at the better end of
expectations, a sign that that the Japanese economy was beginning to emerge from
its stagnation. In Taiwan, markets were initially affected by deteriorating
relations with China which culminated in a series of Chinese missile tests just
off the Taiwanese coast. Following improved relations with the People's Republic
during the second quarter, Taiwan was the best-performing market in Asia. The
South Korean stock market has had the most difficult time of all Asian markets
in 1996, as both the computer component cycle and the petrochemical cycle turned
down, hitting Korean exports and future profit forecasts.
In response to these events, the portfolio increased its weighting in Japanese
stocks to a more neutral position, compared to the previous underweighting, but
hedged the Fund's position in the Japanese yen which we believed would continue
to weaken against the U.S. dollar. The portfolio reduced its position in Hong
Kong early in the year, and reinvested in the Philippines and Thailand. The
portfolio retained its positions in China, India and Malaysia, based on our
belief that the second half of 1996 will see some further good performance.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
The Fund appreciated 10.19% at net
asset value during the first half of
1996. When maximum front-end sales
charges are taken into consideration,
the Fund's total return was 4.74%. By
comparison, the MSCI Pacific Index
(an unmanaged index reflecting general stock market performance in the Pacific
rim region) appreciated 2.73%.
<TABLE>
<CAPTION>
Average Annual Total Return(5)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year 6.35% 11.89%
Since Inception (1/1/94)+ -4.37% -2.41%
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1996
It seems likely that in the major economies of the United States and Japan
interest rates will rise from their current low level. Both economies are seeing
growth pick up again, along with early signs of some inflationary pressure. We
expect the Japanese equity market to make some headway over the remainder of the
year, as high earnings growth (particularly in the smaller capitalization
stocks) is reflected in valuations. Elsewhere in the region, many of the
Southeast Asian markets are likely to see local interest rates fall and, if
inflationary pressure eases, the monetary environment is relaxed. China is
showing signs of re-acceleration after its three-year austerity program. The
injection of credit is likely to be selective and focused on key areas, such as
telecommunications and export industries. Stock prices in the Chinese markets
are reasonably attractive and if this trend continues the Fund will consider
further investments there.
- ------------------------
(5) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 54.
+ ANNUALIZED
9
<PAGE>
The Fund is likely to remain focused in Malaysia, Thailand and the Philippines
over the coming months. In India, the change of government seems to have left
the economic reform process in place, and the Fund is adding to its Indian
holdings.
Overall, the outlook is positive for the remainder of 1996, with stocks
apparently priced low compared to their historic trading range.
Peter Robson
PORTFOLIO MANAGER
GOVETT PACIFIC STRATEGY FUND
10
<PAGE>
GOVETT LATIN AMERICA FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
During the first six months of 1996, Latin American markets produced a return of
15.5%, as measured by the MSCI Latin American Index, a broad-based unmanaged
index reflecting the general performance of Latin American equity markets. A
benign outlook for U.S. interest rates at the end of 1995, together with the
perception that economic stability was returning to the region following a
turbulent 1995 in the wake of the Mexican peso crisis, helped these markets.
New pools of cash, lured by attractive valuations and better economic
statistics, particularly from Argentina and Mexico flowed back to emerging
markets, boosting the Latin American markets' performance. The region is
expected to grow by about 3.7% in 1996, an improvement over the 1.1% growth rate
in 1995. While rising rates for the U.S. long bond pulled the region's economies
down during March, this interdependence decreased in April and May due to events
in individual countries. The strong U.S. dollar also encouraged cash flows into
U.S. dollar-bloc countries, such as Brazil and Argentina.
Looking at individual countries over the first half, Argentina was a beneficiary
of rising liquidity and the entry of domestic pension funds into the market. In
Mexico, first quarter GDP was much better than expected, at -1%. With inflation
under control, Mexican interest rates fell sharply while the rest of the economy
remained remarkably stable. Progress on Brazilian constitutional reform has
slowed, but if economic conditions are supportive -- notably, a dramatic
improvement in the inflation rate -- political reforms should foster further
declines in real interest rates. The Chilean market has been relatively
disappointing during the first half of the year, as concerns about the country's
economic strength and high interest rates have dominated. Of the smaller
markets, Peru and Colombia were weak, while the market in Venezuela, following
steps to restructure its economy, rose 57.5% in U.S. dollar terms.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
The Fund achieved a total return of
22.83% at net asset value during the
first half, which was well ahead of
the MSCI Latin American Index return
of 15.5%. When maximum front-end
sales charges are taken into
consideration, the Fund's total
return was 16.75%.
<TABLE>
<CAPTION>
Average Annual Total Return(6)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year 18.77% 24.96%
Since Inception (3/7/94)+ -9.53% -7.52%
</TABLE>
During the first quarter, the Fund benefited from a relatively high allocation
to the Mexican market. Following this run, the Fund took profits in some
cyclical stocks in anticipation of U.S. interest rate rises, switching to more
defensive stocks and reducing the overall weighting in Mexican stocks. Money was
switched into Brazil, especially to the Sao Paulo electricity stocks and to some
of the regional telecommunications companies that were aided by tariff reforms.
The Fund also took profits out of Argentina and switched to Chile and Peru, the
laggard markets during the period.
- ------------------------
(6) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 55.
+ ANNUALIZED
11
<PAGE>
MARKET OUTLOOK FOR THE REMAINDER OF 1996
The region's equity markets entered the second half of 1996 with considerable
momentum, especially in Brazil where the telecommunications sector has led the
recent rally. The successful privatization of the Government's stake in Compania
Telefonia del Peru, and the improved current account deficit, have helped
refocus investors' attention in Peru. Having been driven by lower interest rates
in the first half, the Argentine and Mexican markets may experience increased
consumer spending as confidence is fed by improvements in economic statistics.
The Fund's strategy is to be relatively defensive into the third quarter, with
the expectation of a further rise in U.S. interest rates. This strategy is
currently exemplified by a relatively low weighting in Argentine and Mexican
export companies, and a higher weighting in Chile. It is expected that investors
will begin to focus on the further acceleration of growth to an estimated 5% for
1997 in the fourth quarter. While the region may not produce returns as strong
as it did in the first half, the outlook for the remainder of 1996 is
nevertheless positive.
Caroline Lane
PORTFOLIO MANAGER
GOVETT LATIN AMERICA FUND
12
<PAGE>
GOVETT GLOBAL INCOME FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1996
Global debt markets started 1996 at the peak of the recent bull market, with the
long bond yielding below 6%. The U.S. economy had slowed throughout 1995, with
the weakness in growth exacerbated in the final quarter by the government
shutdown in December, 1995, and by poor weather conditions in early 1996.
Corporate restructurings had increased job insecurity over the past few years
and limited wage increases. Consequently, price pressure has remained subdued
despite the fact that the U.S. economy is close to its recognized historical
"natural rate of employment" - that is, the rate beyond which inflationary
pressures have typically re-emerged. In February, debt markets entered a bearish
phase as fears of incipient wage inflation took hold, following the release of
non-farm payroll figures which indicated an increase of approximately 700,000
jobs during that month.
While the economic recovery in the U.S. during the first six months of the year
led to weakness in the Treasury market, Europe's lagging position on the
economic cycle led to relative outperformance in those markets. The buoyancy of
peripheral European markets such as Sweden, Spain and Italy has been especially
remarkable during the first half. These economies have made varying efforts over
the past year to reduce budget deficits, outstanding debt and inflation rates.
The real spur has been the end of electoral uncertainty in Spain and Italy, and
economic improvements in Sweden. These developments strengthened debt and
currency markets in these countries, as investors reassessed the risks of
investing there. In addition, the approaching inception date for the Monetary
Union has led to a contractionary fiscal policy throughout Europe, which has
permitted the development of a certain amount of separation from movements in
U.S. markets.
The U.S. dollar continued to strengthen over much of this period, as growth in
the U.S. accelerated. Starting at 103.45 yen to the dollar at the beginning of
the year, the dollar has appreciated by just over 6%, to finish at 109.72 on
June 28. The dollar appreciated by the same magnitude against the Deutschmark
and other European currencies over this period.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1996
Over the six months ended June 30,
1996, the Fund returned -1.5% at net
asset value. When maximum front-end
sales charges are taken into
consideration, the Fund's total
return was -6.38%, including
reinvestment of dividends of $0.355 per share. This compares to a total return
of -1.48% on the Salomon Brothers World Government Bond Index, a broad-based,
unmanaged index that represents the general performance of government bonds in
major bond markets.
<TABLE>
<CAPTION>
Average Annual Total Return(7)
TIME AT MAXIMUM AT NET ASSET
PERIOD OFFERING PRICE VALUE
<S> <C> <C>
One year -1.74% 3.38%
Since Inception (1/7/92)+ 4.89% 6.08%
</TABLE>
- ------------------------
(7) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. THE RETURNS SHOWN
AT MAXIMUM OFFERING PRICE ASSUME PURCHASE OF SHARES ON THE FIRST DAY OF EACH
PERIOD, THE APPLICATION OF THE MAXIMUM SALES LOAD OF 4.95%, AND THE REINVESTMENT
OF ANY EARNED OR ACCRUED DIVIDENDS OR CAPITAL GAINS. BECAUSE SALES CHARGES VARY
WITH VOLUME PURCHASED, PERFORMANCE AT NET ASSET VALUE IS ALSO SHOWN. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE MANAGER
REIMBURSED OR WAIVED CERTAIN EXPENSES. WITHOUT SUCH REIMBURSEMENTS, RETURNS
WOULD HAVE BEEN LOWER. FOR DETAILS ABOUT THESE REIMBURSEMENTS OR WAIVERS, PLEASE
REFER TO THE FINANCIAL HIGHLIGHTS TABLE ON PAGE 55.
+ ANNUALIZED
13
<PAGE>
The Fund's underperformance relative to its peers was due to its higher non-U.S.
currency exposure than most competitor funds. The dollar strengthened throughout
the first half of 1996, as accelerating economic activity raised expectations of
an early increase in short-term interest rates.
MARKET OUTLOOK FOR THE REMAINDER OF 1996
We believe that a sustained and widespread economic recovery is likely to result
from the easing of monetary policy in the U.S., Europe and Japan over 1995, as
well as from the fall in the major currencies against the U.S. dollar since
August, 1995. Accordingly, we expect short-term interest rates to be subject to
upward pressure in almost all the major economies over the next twelve months.
We believe that the scope for accelerating growth is likely to be greatest
outside the U.S., and we therefore expect the U.S. market to outperform relative
to other bond markets as the year progresses.
We continue to believe that the U.S. dollar is near a medium-term peak in value
against other major currencies. Over the long term, European economic recovery
is likely to be accompanied by expectations of interest rate increases. This
climate can be expected to benefit the Deutschmark and other European currencies
relative to the U.S. dollar. Similarly, the very lax monetary policy in Japan
over the last twelve months or so is likely to end in the near future, with
consequent upward pressure on the yen.
Alan Doyle
PORTFOLIO MANAGER
GOVETT GLOBAL INCOME FUND
14
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ---------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 95.8%
AUSTRIA - 0.8%
3,000 SES AS (CAR) ATS................................ $ 51,268
700 Wolford......................................... 171,474
-----------
222,742
-----------
AUSTRALIA - 1.0%
30,000 TAB Corp Holdings............................... 135,576
20,000 WMC............................................. 143,042
-----------
278,618
-----------
BRAZIL - 0.9%
17,000 Electrobras ADR................................. 247,197
-----------
CHINA - 1.1%
365,000 China North Industries*......................... 237,250
500,000 Jilin Chemical Industrial....................... 88,493
-----------
325,743
-----------
CROATIA - 0.3%
2,100 Pliva GDR*...................................... 83,475
-----------
CZECH REPUBLIC - 2.4%
2,000 Ceske Radiokomunikace*.......................... 280,264
1,400 Inzenyrske a Prumyslove Stavby*................. 163,655
4,000 Komercni Banka GDR.............................. 108,000
1,000 Leciva Praha*................................... 89,808
1,000 Prazske Pivovary*............................... 68,720
-----------
710,447
-----------
DENMARK - 0.8%
11,000 International Service System.................... 246,093
-----------
FINLAND - 1.3%
4,000 Finnlines Oy.................................... 80,362
12,000 Hartwall Oy AB.................................. 294,229
-----------
374,591
-----------
FRANCE - 5.6%
1,600 Bouygues........................................ 178,712
400 Chargeurs International SA*..................... 17,910
4,500 Cofinec GDR*.................................... 214,875
2,300 Christian Dior.................................. 299,864
1,600 GTM Entrepose................................... 103,989
400 Pathe*.......................................... 94,026
2,838 Primagaz........................................ 315,333
1,000 Sidel........................................... 254,719
1,500 Societe Generale*............................... 165,207
-----------
1,644,635
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
15
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ---------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
GERMANY - 4.8%
4,000 Adidas.......................................... $ 333,553
13,700 Bayer........................................... 482,655
4,300 Daimler Benz*................................... 230,984
7,600 Praktiker Bau-und Heimwerkemaerkte*............. 197,500
3,000 Siemens......................................... 161,012
-----------
1,405,704
-----------
HONG KONG - 4.3%
100,000 First Pacific Co................................ 153,732
30,000 Henderson Land Development...................... 224,784
35,000 Hutchinson Whampoa.............................. 220,198
1,000 Jardine Strategic Holdings...................... 1,088
150,000 New World Infrastructure*....................... 319,736
40,000 Swire Pacific A................................. 342,345
-----------
1,261,883
-----------
INDONESIA - 1.8%
290,000 PT Bank Bira.................................... 261,654
100,000 Roda Vivatex.................................... 75,188
6,000 Telekomunikasi Indonesia ADR.................... 178,500
-----------
515,342
-----------
IRELAND - 0.4%
90,000 Waterford Glass................................. 116,450
-----------
ISRAEL - 0.7%
12,500 Tadiran Telecommunications*..................... 201,561
-----------
ITALY - 0.9%
4,250 Gucci Group..................................... 274,125
-----------
JAPAN - 28.6%
11,000 Bank of Tokyo................................... 256,574
7,000 Canon Sales..................................... 195,289
6,000 Daiichi......................................... 174,525
18,000 Daiwa Securities................................ 232,152
25,000 Fujitsu......................................... 228,676
13,000 Honda Motor..................................... 337,709
40,000 Itochu.......................................... 280,265
12,000 JGC............................................. 158,061
12,000 Japan Radio..................................... 172,330
15,000 Japan Securities Finance........................ 242,854
20,000 Komatsu......................................... 197,576
9,000 Kurita Water Industries......................... 219,803
4,000 Kyocera......................................... 283,558
9,000 Matsushita Electric Industries.................. 167,940
41,000 Mitsubishi Chemical............................. 189,764
20,000 Mitsubishi Estate............................... 276,241
40,000 Mitsubishi Heavy................................ 348,685
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
16
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
JAPAN (CONTINUED)
20,000 Mitsubishi Trust & Banking...................... $ 338,440
20,000 Mitsukoshi...................................... 214,041
100,000 NKK*............................................ 303,682
11,000 Nichiei Construction............................ 129,796
8,000 Nippon Hodo..................................... 136,108
11,000 Nippondenso..................................... 239,469
16,000 Nomura Securities............................... 313,195
14,000 Omron........................................... 298,376
31,000 Ricoh........................................... 328,928
5,000 Rohm............................................ 331,123
4,000 Sanwa Bank...................................... 74,274
3,000 Secom........................................... 198,674
40,000 Shimadzu........................................ 269,289
12,000 Takashimaya..................................... 186,600
15,000 Tokyu........................................... 114,567
45,000 Toshiba......................................... 321,061
11,000 Toyota Motor.................................... 275,692
14,000 Yamanouchi Pharmaceutical....................... 304,779
-----------
8,340,096
-----------
MALAYSIA - 3.1%
50,000 Commerce Asset Holding.......................... 304,670
9,000 Jaya Tiasa Holdings............................. 52,676
95,000 Metacorp........................................ 274,203
50,000 Resorts World................................... 286,631
-----------
918,180
-----------
MEXICO - 1.8%
25,000 Cemex ADR....................................... 197,235
5,600 Controladora de Farmacias....................... 4,579
12,000 Empressa Ica Sociedad ADR*...................... 166,500
4,000 Metalclad Corp.................................. 12,250
4,500 Telefonos de Mexico ADR......................... 150,750
-----------
531,314
-----------
NETHERLANDS - 5.0%
5,300 ASM Lithography Holding NV*..................... 219,214
6,000 Cap Volmac Group................................ 117,923
8,750 ING Groep....................................... 261,294
4,500 Koninklijke Frans Maas Groep NV................. 179,261
4,000 KLM Koninklijke................................. 128,131
3,000 PolyGram NV..................................... 177,413
24,000 VNU............................................. 373,130
-----------
1,456,366
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
17
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
NORWAY - 2.6%
2,000 NetCom ASA*..................................... $ 21,121
3,000 Orkla AS........................................ 158,173
8,285 Protector Forsikring AS......................... 215,857
4,900 Schibsted Group................................. 63,454
23,000 Seatex AS*...................................... 122,685
31,000 Visual Management Applications.................. 167,269
-----------
748,559
-----------
POLAND - 1.0%
7,000 Elektrim........................................ 57,451
28,000 Fabrykl Melbi Forte C........................... 95,837
7,000 Stalexport...................................... 132,679
-----------
285,967
-----------
PORTUGAL - 0.4%
5,000 Portugal Telecom*............................... 130,934
-----------
RUSSIA - 1.3%
5,000 GumTech International ADR....................... 200,000
6,000 Mosenegro ADR................................... 186,314
-----------
386,314
-----------
SINGAPORE - 2.5%
78,000 DBS Land........................................ 267,555
30,000 Keppel Corp..................................... 250,886
28,000 Overseas Union Bank............................. 192,488
-----------
710,929
-----------
SLOVAKIA - 0.2%
3,000 Zavod........................................... 69,974
-----------
SOUTH KOREA - 0.5%
93 Hanyang Chemical Corp........................... 1,003
3,500 L.G. Chemical GDR............................... 57,750
28 Samsung Electronics............................. 2,351
3,385 Samsung Electronics GDS (non-voting shares)..... 95,203
-----------
156,307
-----------
SPAIN - 0.4%
5,000 Sol Melia SA*................................... 105,538
-----------
SWEDEN - 2.8%
6,000 Astra B......................................... 262,135
3,000 Celsius Industrier B............................ 39,456
3,000 Enator AB*...................................... 69,162
8,600 Nobel Biocare*.................................. 159,912
90,000 Rotneros Bruks.................................. 104,764
12,600 Stora Kopparbergs B............................. 166,669
-----------
802,098
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
18
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
SWITZERLAND - 4.4%
975 Adia............................................ $ 245,018
200 Ciba-Geigy...................................... 244,098
345 Nestle.......................................... 394,562
160 Societe Generale de Surveillance B.............. 383,513
-----------
1,267,191
-----------
THAILAND - 2.6%
30,000 National Finance & Securities................... 133,543
5,000 Siam Cement Co.................................. 245,421
97,800 Thai Military Bank.............................. 385,267
-----------
764,231
-----------
TURKEY - 0.4%
1,800,000 Konfrut Gida.................................... 122,777
-----------
UNITED KINGDOM - 11.1%
50,000 Astec........................................... 116,512
10,000 BOC Group....................................... 143,543
10,000 Bank of Ireland................................. 68,354
27,000 British Airport Authority....................... 196,300
30,000 Cable & Wireless................................ 198,537
20,000 Dixons Group.................................... 164,360
30,000 Farnell Electronic.............................. 314,117
35,000 Greenalls Group................................. 311,553
12,000 Harvey Nichols.................................. 62,823
30,000 Marks & Spencer................................. 219,276
29,500 National Westminster Bank....................... 282,301
18,500 RTZ............................................. 273,889
25,000 Reuters Holdings................................ 302,543
16,000 Shell Transport & Trading Co.................... 234,390
16,000 Zeneca Group.................................... 353,700
-----------
3,242,198
-----------
TOTAL -- COMMON STOCKS (Cost $24,834,422)....... 27,947,579
-----------
WARRANTS AND RIGHTS - 0.0%
FRANCE - 0.0%
258 Primagaz Warrants, expire 6/30/98*.............. 5,472
-----------
GERMANY - 0.0%
430 Daimler Benz AG Rights, expire 7/1/96*.......... 0
-----------
SINGAPORE - 0.0%
715 United Overseas Bank Warrants, expire
6/17/97*...................................... 2,839
-----------
TOTAL -- WARRANTS AND RIGHTS (Cost $200)........ 8,311
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
19
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ---------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BONDS - 2.1%
JAPAN - 0.5%
JPY15,000,000 Sumitomo Bank, 0.75%, 5/31/01................... $ 148,182
-----------
TAIWAN - 1.6%
US$ 100,000 Acer, Inc. 4.00%, 6/10/01....................... 254,500
160,000 United Micro Electronics, 1.25%, 6/8/04......... 209,800
-----------
464,300
-----------
TOTAL -- CONVERTIBLE BONDS (Cost $645,113)...... 612,482
-----------
TOTAL INVESTMENTS -- 97.9% (Cost $25,479,735)..... 28,568,372
Other Assets and Liabilities (net) -- 2.1%........ 610,263
-----------
TOTAL NET ASSETS -- 100.0%........................ $29,178,635
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING SECURITY
ADR AMERICAN DEPOSITARY RECEIPT
ADS AMERICAN DEPOSITARY SHARE
GDR GLOBAL DEPOSITARY RECEIPT
GDS GLOBAL DEPOSITARY SHARE
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
20
<PAGE>
- --------------------------------------------------------------------------------
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C>
Japan....................... 29.1%
United Kingdom.............. 11.1
France...................... 5.6
Netherlands................. 5.0
Germany..................... 4.8
Switzerland................. 4.4
Hong Kong................... 4.3
Malaysia.................... 3.1
Sweden...................... 2.8
Norway...................... 2.6
Thailand.................... 2.6
Singapore................... 2.5
Czech Republic.............. 2.4
Mexico...................... 1.8
Indonesia................... 1.8
Taiwan...................... 1.6
Finland..................... 1.3
Russia...................... 1.3
China....................... 1.1
Poland...................... 1.0
Australia................... 1.0
Brazil...................... 0.9
Italy....................... 0.9
Austria..................... 0.8
Denmark..................... 0.8
Israel...................... 0.7
South Korea................. 0.5
Portugal.................... 0.4
Spain....................... 0.4
Turkey...................... 0.4
Ireland..................... 0.4
Croatia..................... 0.3
Slovakia.................... 0.2
-----
97.9
Other Assets and Liabilities
(net)...................... 2.1
-----
Total Net Assets........ 100.0%
-----
-----
SECTOR ALLOCATION
Electrical & Electronics.... 12.1%
Banking..................... 8.7
Conglomerates............... 6.9
Chemicals................... 5.5
Health & Personal Care...... 5.2
Retail...................... 5.2
Construction & Housing...... 4.3
Financial Services.......... 4.1
Telecommunications.......... 4.1
Machinery & Engineering..... 4.1
Transportation.............. 4.0
Real Estate................. 3.8
Automobiles................. 3.7
Broadcasting & Publishing... 3.5
Wholesale & International
Trade...................... 3.5
Business & Public
Services................... 3.5
Building Materials.......... 2.8
Metals...................... 2.5
Leisure & Tourism........... 2.2
Food & Household Products... 1.8
Insurance................... 1.7
Utilities................... 1.6
Electronic Components....... 1.1
Forest Products............. 1.1
Textiles & Apparel.......... 0.9
-----
97.9
Other Assets and Liabilities
(net)...................... 2.1
-----
Total Net Assets........ 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
21
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 89.9%
ARGENTINA - 4.1%
56,000 Banco Frances................................... $ 538,919
66,200 Perez Companc B................................. 438,737
26,500 Quilmes Industrial.............................. 271,625
17,500 Quilmes Industrial ADR*......................... 179,375
20,800 Siderar ADR..................................... 426,400
25,900 Telecom Argentina ADR........................... 767,288
129,400 Transportadora de Gas del Sur B................. 318,442
26,000 YPF ADR......................................... 585,000
------------
3,525,786
------------
BRAZIL - 6.5%
45,995 Cemig ADR....................................... 1,305,563
20,800 Cia Vale Rio Doce ADR........................... 416,391
2,975,000 Electrobras..................................... 800,090
12,232,000 Paulista de Forca e Luz*........................ 1,120,916
104,124 Telemig......................................... 8,505
12,940 Telebras ADR.................................... 900,947
89,800 Usiminas ADR*................................... 999,474
------------
5,551,886
------------
CHILE - 3.3%
33,000 Antofagasta Holdings............................ 165,587
33,400 Banco Osorno ADR................................ 450,900
10,100 Compania de Telefonos de Chile ADR.............. 991,061
26,500 Empressa Nacional de Electricas ADR*............ 569,750
20,300 Enersis ADR..................................... 629,300
------------
2,806,598
------------
CHINA - 3.4%
1,335,000 China North Industries*......................... 867,750
1,633,000 Guangshen Railway*.............................. 617,061
52,000 Huaneng Power International ADR*................ 929,500
1,380,000 Qingling Motors Company......................... 463,521
------------
2,877,832
------------
COLOMBIA - 2.0%
35,000 Cadenalco ADR................................... 476,875
43,600 Cemento Argos................................... 243,130
55,000 Cia Nacional de Chocolates...................... 456,186
28,000 Suramericana de Seguros......................... 511,715
------------
1,687,906
------------
CROATIA - 2.0%
25,000 Pliva GDR*...................................... 993,750
55,000 Zagrebacka Banka GDR*........................... 627,000
------------
1,620,750
------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
22
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CZECH REPUBLIC - 0.8%
10,900 Komercni Banka GDR.............................. $ 294,300
3,400 SPT Telekom*.................................... 415,373
------------
709,673
------------
HONG KONG - 3.7%
1,112,000 China Resources Enterprise...................... 782,922
2,261,000 Continental Mariner*............................ 373,876
197,800 Dah Sing Financial.............................. 599,220
60,000 Guoco Group..................................... 286,019
228,000 Hong Kong Telecommunications.................... 409,418
52,000 Jardine Matheson................................ 382,200
106,687 Jardine Strategic Holdings...................... 341,398
------------
3,175,053
------------
HUNGARY - 4.0%
28,000 BorsodChem...................................... 546,000
15,673 EGIS*........................................... 936,462
22,300 Gedeon Richter*................................. 1,120,575
44,000 OTP Bank GDR.................................... 690,800
3,155 Pick Szeged GDR................................. 136,543
------------
3,430,380
------------
INDIA - 4.5%
68,000 Arvind Mills GDR................................ 335,920
69,000 Ashok Leyland GDR*.............................. 957,375
63,800 Indian Aluminum GDR............................. 438,625
18,000 Indian Hotels GDR*.............................. 517,500
29,000 Indian Rayon & Industries GDR*.................. 427,750
29,500 Larsen & Tourbo GDR*............................ 549,438
30,000 Raymond Woollen Mills GDR*...................... 622,500
------------
3,849,108
------------
INDONESIA - 1.9%
40,000 Bank International Indonesia.................... 197,637
509,500 Panca Wiratama Sakti............................ 481,590
650,000 Panin Bank...................................... 600,430
171,200 Semen Cibinong.................................. 378,810
------------
1,658,467
------------
LEBANON - 0.7%
47,000 Banque Audi GDR................................. 587,499
------------
MALAYSIA - 8.2%
255,000 Ekran........................................... 971,137
588,000 IOI Corp.*...................................... 815,586
399,000 Multi-Purpose Holdings.......................... 643,007
230,000 Petronas Dagangan............................... 622,369
274,000 Tan Chong Motor Holdings........................ 399,824
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
23
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
MALAYSIA (CONTINUED)
200,000 Tanjong......................................... $ 753,658
180,000 Technology Resources Industries*................ 627,781
227,000 Tenaga Nasional................................. 955,502
426,000 Tongkah Holdings*............................... 710,427
63,000 United Engineers................................ 436,921
------------
6,936,212
------------
MEXICO - 6.8%
72,000 Cemex ADR....................................... 568,037
225,000 Cifra C*........................................ 320,475
15,000 Controladora de Farmacias....................... 12,265
99,000 Desc B.......................................... 535,312
2,416 Desc C.......................................... 12,713
30,000 Grupo Carso ADR*................................ 436,950
36,000 Grupo Financiero Bancomer GDR*.................. 310,500
190,000 Grupo Industrial Saltillo A..................... 601,385
10,000 Grupo Televisa GDR*............................. 307,500
13,000 Hylsamex GDR.................................... 341,250
28,000 ICA............................................. 393,274
94,000 Industrias Penoles.............................. 430,175
80,000 Sears Roebuck de Mexico ADR..................... 415,840
400,000 Telefonos de Mexico L........................... 679,459
48,000 Tubo de Acero de Mexico*........................ 453,000
------------
5,818,135
------------
PAKISTAN - 0.9%
12,500 Adamjee Insurance Co............................ 49,636
74 Bhukari & Co.................................... 40
5,805 Pakistan Telecommunications GDR*................ 684,990
------------
734,666
------------
PERU - 2.2%
57,981 Banco Wiese*.................................... 413,115
24,300 Credicorp....................................... 482,962
17,000 Minas Buenaventura ADR*......................... 337,875
300,000 Telefonica de Peru*............................. 604,175
------------
1,838,127
------------
PHILIPPINES - 3.2%
82,432 Bacnotan Consolidated Industries................ 386,990
12,000 Far East Bank & Trust........................... 421,374
600,000 International Container Terminal Services*...... 406,489
14,000 Pilipino Telephone.............................. 813,750
16,770 San Miguel B.................................... 57,927
2,150,000 William Gothong & Aboitiz....................... 623,664
------------
2,710,194
------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
24
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
POLAND - 4.8%
31,000 Bank Rozwoju Eksportu........................... $ 810,055
30,000 Debica*......................................... 728,718
120,000 Elektrim........................................ 984,874
70,000 Okocimskie Zaklady*............................. 669,832
18,062 Rolimpex........................................ 920,683
------------
4,114,162
------------
SOUTH AFRICA - 4.8%
6,500 Anglo American.................................. 411,782
18,100 Anglo American Industrial....................... 726,841
81,000 Barlow.......................................... 845,892
42,000 Free State Consolidated Gold Mines.............. 394,992
30,000 Kloof Gold Mining Co............................ 290,625
121,500 Murray & Roberts Holdings....................... 485,103
130,000 Smith (C.G.).................................... 675,052
10,000 South African Breweries......................... 293,099
------------
4,123,386
------------
SOUTH KOREA - 4.3%
12,400 Chosun Brewery Co............................... 353,107
3,400 Daehan City Gas Co.............................. 310,158
16 Daewoo Corp..................................... 155
7,700 Daewoo Securities Co.*.......................... 179,401
12,046 Hyundai Engineering & Construction Co........... 500,432
12,800 Korea Electric Power Corp....................... 444,970
33,050 Korea Explosives Co............................. 541,870
11,290 Korea Housing Bank*............................. 263,044
36,300 Kwang Ju Highway Lines.......................... 362,463
13,060 LG Industrial Systems*.......................... 310,722
4,330 Samsung Display Devices......................... 310,125
501 Samsung Electronics............................. 42,058
151 Samsung Electronics*............................ 12,675
48 Shinsegae Department Stores..................... 3,237
------------
3,634,417
------------
SRI LANKA - 1.4%
102,124 Aitken Spence*.................................. 292,045
896,000 Asian Hotel*.................................... 132,950
64,799 Development Finance Corp of Ceylon.............. 350,800
133,333 Hayleys......................................... 450,838
------------
1,226,633
------------
TAIWAN - 6.6%
21,900 Asia Cement GDS................................. 443,475
529,000 Cathay Construction............................. 999,564
140,000 Cathay Life Insurance........................... 986,919
700,000 China Steel..................................... 732,558
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
25
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
TAIWAN (CONTINUED)
435,000 Shinkong Synthetic Fibers....................... $ 417,296
23,100 Taipei Fund*.................................... 1,986,600
------------
5,566,412
------------
THAILAND - 8.9%
60,000 Bangkok Bank.................................... 567,264
45,000 Bank of Ayudhya................................. 248,178
264,000 Electricity Generating.......................... 883,987
40,000 Grammy Entertainment............................ 554,658
50,800 Kang Yong Electric.............................. 200,118
60,000 Loxley.......................................... 888,714
160,000 National Finance & Holdings..................... 611,385
15,000 Siam Cement..................................... 736,262
48,000 Siam City Cement................................ 605,082
239,000 Thai Military Bank*............................. 852,058
44,000 Total Access Communication...................... 374,000
76,500 United Communication Industry................... 1,024,620
------------
7,546,326
------------
ZIMBABWE - 0.9%
208,500 Delta Corp...................................... 532,857
1,600,000 TA Holdings..................................... 233,198
------------
766,055
------------
TOTAL -- COMMON STOCKS (Cost $74,724,324)....... 76,495,663
------------
PREFERRED STOCKS - 6.2%
ARGENTINA - 0.2%
13,250 Quilmes Industrial*............................. 137,469
------------
BRAZIL - 5.9%
95,207,302 Banco Bradesco.................................. 777,628
1,124,627 Brahma.......................................... 671,001
1,730,000 Brasmotor....................................... 541,083
92,170,773 Cia Acos Especias Itabira*...................... 267,162
5,000,000 Petroleo Brasiliero............................. 615,070
6,573,376 Telecom Brasilieras............................. 458,981
7,710,000 Telemig......................................... 794,922
2,180,000 Telerj*......................................... 245,371
3,128,568 Telesp.......................................... 669,996
------------
5,041,214
------------
SOUTH KOREA - 0.1%
2,149 Samsung Electronics............................. 86,893
------------
TOTAL -- PREFERRED STOCKS (Cost $4,375,576)..... 5,265,576
------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
26
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
WARRANTS AND RIGHTS - 0.1%
<C> <S> <C>
BRAZIL - 0.0%
95,566 Brahma Warrants, expire 4/30/03*................ $ 4,759
------------
MALAYSIA - 0.1%
20,400 Kian Joo Can Factory Warrants, expire
5/22/99*...................................... 63,788
6,000 Multi-Purpose Holdings Warrants, expire
11/23/98*..................................... 3,656
------------
67,444
------------
SINGAPORE - 0.0%
26,187 Jardine Strategic Holdings Warrants, expire
5/2/98*....................................... 8,118
------------
SOUTH KOREA - 0.0%
580 Hyundai Engineering Rights, expire 9/16/96*..... 0
50 Tong Yang Cement Warrants, expire 8/18/96*...... 53
------------
TOTAL -- WARRANTS AND RIGHTS (Cost $85,363)..... 80,374
------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CONVERTIBLE BONDS - 1.6%
TAIWAN - 1.6%
$ 150,000 Acer, Inc. 4.00%, 6/10/01....................... 381,750
480,000 President Enterprises, 0.00%, 7/22/01........... 769,200
135,000 United MicroElectronic Corp., 1.25%, 6/8/04..... 177,019
------------
TOTAL -- CONVERTIBLE BONDS (Cost $998,509)...... 1,327,969
------------
TOTAL INVESTMENTS -- 97.8% (Cost $80,183,772)..... 83,169,582
Other Assets and Liabilities (net) -- 2.2%........ 1,899,678
------------
TOTAL NET ASSETS -- 100.0%........................ $ 85,069,260
------------
------------
</TABLE>
* NON-INCOME PRODUCING SECURITY
ADR AMERICAN DEPOSITARY RECEIPT
ADS AMERICAN DEPOSITARY SHARE
GDR GLOBAL DEPOSITARY RECEIPT
GDS GLOBAL DEPOSITARY SHARE
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
27
<PAGE>
- --------------------------------------------------------------------------------
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C>
Brazil...................... 12.4%
Thailand.................... 8.9
Malaysia.................... 8.3
Taiwan...................... 8.2
Mexico...................... 6.8
South Africa................ 4.8
Poland...................... 4.8
India....................... 4.5
South Korea................. 4.4
Argentina................... 4.3
Hungary..................... 4.0
Hong Kong................... 3.7
China....................... 3.4
Chile....................... 3.3
Philippines................. 3.2
Peru........................ 2.2
Colombia.................... 2.0
Croatia..................... 2.0
Indonesia................... 1.9
Sri Lanka................... 1.4
Pakistan.................... 0.9
Zimbabwe.................... 0.9
Czech Republic.............. 0.8
Lebanon..................... 0.7
-----
97.8
Other Assets and Liabilities
(net)...................... 2.2
-----
Total Net Assets........ 100.0%
-----
-----
SECTOR ALLOCATION
Telecommunications.......... 12.7%
Banking..................... 11.6
Conglomerates............... 8.3
Financial Services.......... 7.0
Construction & Housing...... 6.4
Chemicals................... 5.8
Utilities................... 5.3
Building Materials.......... 4.4
Metals...................... 4.1
Miscellaneous Materials..... 3.9
Electrical & Electronics.... 3.7
Machinery & Engineering..... 3.2
Beverages & Tobacco......... 3.1
Automobiles................. 3.1
Retail...................... 3.0
Energy Sources.............. 2.2
Transportation.............. 2.0
Food & Household Products... 1.8
Leisure & Tourism........... 1.7
Textiles & Apparel.......... 1.6
Real Estate................. 0.9
Gold Mines.................. 0.8
Business & Public
Services................... 0.7
Industrial Components....... 0.4
Forest Products............. 0.1
-----
97.8
Other Assets and Liabilities
(net)...................... 2.2
-----
Total Net Assets............ 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
28
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 91.3%
BROADCASTING - 2.9%
149,500 American Telecasting*........................... $ 1,980,875
165,000 Pairgain Technologies........................... 10,230,000
------------
12,210,875
------------
COMMERCIAL SERVICES - 4.1%
129,900 Accustaff....................................... 3,539,775
94,800 Career Horizons*................................ 3,318,000
65,000 Corestaff....................................... 2,908,750
243,000 Physician Support Systems*...................... 5,497,875
17,800 Quintiles Transnational......................... 1,170,350
17,500 Registry*....................................... 511,875
------------
16,946,625
------------
COMMUNICATIONS -- CUSTOMER EQUIPMENT - 9.2%
145,100 Adtran*......................................... 10,283,963
173,500 Ascend Communications*.......................... 9,759,375
34,800 CKS Group*...................................... 1,122,300
109,700 DSP Communications.............................. 5,635,838
154,700 P-Com........................................... 4,873,050
110,000 Premisys Communications......................... 6,710,000
------------
38,384,526
------------
COMPUTER SOFTWARE AND SERVICES - 22.7%
30,900 Amisys Managed Care Systems*.................... 795,675
132,000 Arbor Software*................................. 7,887,000
124,900 Business Objects ADR............................ 5,027,225
117,200 Ciprico......................................... 1,787,300
397,000 Cognos.......................................... 9,131,000
304,000 Cotelligent Group............................... 5,244,000
96,800 Cylink*......................................... 1,669,800
114,100 Edify*.......................................... 3,023,650
85,100 Forte Software*................................. 4,446,475
112,300 IDX Systems*.................................... 4,379,700
5,000 IKOS Systems*................................... 105,625
105,000 IQ Software*.................................... 2,100,000
77,000 Intevac*........................................ 1,135,750
76,200 Iomega.......................................... 2,209,800
54,800 Mechanical Dynamics*............................ 828,850
44,300 Netscape Communications......................... 2,757,675
100,000 Network Application*............................ 2,975,000
72,000 Peoplesoft...................................... 5,130,000
69,000 Planning Sciences ADR*.......................... 1,552,500
94,700 Premenos Technology*............................ 1,728,275
30,000 Quickturn Design Systems........................ 435,000
92,000 Security Dynamics Technology.................... 7,567,000
172,100 Softquad International.......................... 954,618
164,400 Sunquest Information Systems*................... 2,466,000
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
29
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE AND SERVICES (CONTINUED)
129,800 Systemsoft*..................................... $ 6,100,600
84,100 Unison Software*................................ 2,123,525
81,000 Veritas Software*............................... 3,483,000
99,800 Viasoft*........................................ 6,449,575
20,000 Xylan*.......................................... 930,000
14,000 Xeikon ADR...................................... 159,250
------------
94,583,868
------------
CONSTRUCTION AND CONSTRUCTION MATERIALS - 2.0%
204,800 Ade*............................................ 2,918,400
73,100 JLG Industries.................................. 5,427,675
------------
8,346,075
------------
ELECTRONIC COMPONENTS - 0.3%
39,800 Siebel Systems*................................. 1,223,850
------------
ELECTRONICS - 1.1%
5,000 Checkpoint Software............................. 120,000
175,000 Moog*........................................... 4,287,500
------------
4,407,500
------------
ELECTRONICS MANUFACTURING - 1.6%
245,000 SDL............................................. 6,798,750
------------
ENERGY EQUIPMENT AND SERVICES - 8.6%
259,100 3-D Geophysical*................................ 2,785,325
161,700 ENSCO International*............................ 5,255,250
452,700 Marine Drilling Co.*............................ 4,583,588
368,500 Nabors Industries*.............................. 5,988,125
226,500 Reading & Bates*................................ 5,011,313
105,900 Seacor Holdings*................................ 4,739,025
159,700 Seagull Energy*................................. 3,992,500
81,800 Tidewater....................................... 3,588,974
------------
35,944,100
------------
FOOD AND BEVERAGE - 1.3%
203,000 Dave & Busters*................................. 5,430,250
7,000 Manhattan Bagel................................. 103,250
------------
5,533,500
------------
HEALTH CARE - 17.3%
171,000 ABR Information Services........................ 8,592,750
303,600 American Oncology Resources..................... 6,603,300
214,800 Cardiovascular Dynamics......................... 2,631,300
126,800 Dura Pharmaceuticals*........................... 7,100,800
311,200 FPA Medical Management*......................... 4,843,050
200,000 Fresenius USA*.................................. 4,300,000
109,800 HBO & Co........................................ 7,438,950
91,800 Hologic......................................... 4,062,150
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
30
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -----------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
HEALTH CARE (CONTINUED)
420,800 Orthologic*..................................... $ 5,365,200
184,300 Phycor.......................................... 7,003,400
220,000 Physician Sales & Service....................... 5,335,000
110,600 Shiva........................................... 8,848,000
------------
72,123,900
------------
INSURANCE - 2.2%
152,700 Compdent*....................................... 7,100,550
60,000 Triad Guaranty*................................. 2,205,000
------------
9,305,550
------------
PHARMACEUTICALS - 1.4%
109,900 Intercardia..................................... 3,132,150
164,900 Noven Pharmaceuticals*.......................... 2,638,400
------------
5,770,550
------------
RETAIL - 12.0%
165,600 Borders Group*.................................. 5,340,600
299,200 Claire's Stores................................. 8,265,400
245,700 Fossil*......................................... 3,562,650
168,300 Intelcom Group*................................. 4,207,500
120,000 Just For Feet................................... 6,345,000
190,700 Party City*..................................... 3,384,925
246,000 Rexall Sundown.................................. 6,642,000
29,900 Sodak Gaming*................................... 911,950
214,600 The Finish Line Class A*........................ 6,142,925
220,000 Wet Seal*....................................... 5,238,750
------------
50,041,700
------------
TELECOMMUNICATIONS - 1.4%
39,900 Boston Communications Group*.................... 658,350
196,400 EIS International*.............................. 5,008,200
------------
5,666,550
------------
TELEPHONE EQUIPMENT - 2.2%
105,100 US Robotics..................................... 8,986,049
------------
TRANSPORTATION - 1.0%
64,000 Atlas Air*...................................... 3,680,000
------------
TOTAL -- COMMON STOCKS (Cost $333,176,918)...... 379,953,968
------------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
31
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT - 9.2%
$38,162,132 Chase Manhattan Bank Repurchase Agreement, dated
6/28/96 due 7/1/96, with a maturity value of
$38,180,482 and an effective yield of 5.77%,
collateralized by US Treasury Notes 5.625%,
with a maturity date of 6/30/97, with an
aggregate market value of $38,998,435
(Cost $38,162,132)............................ $ 38,162,132
------------
TOTAL INVESTMENTS -- 100.5% (Cost $371,339,050)... 418,116,100
Other Assets and Liabilities (net) -- (0.5%)...... (1,978,202)
------------
TOTAL NET ASSETS -- 100.0%........................ $416,137,898
------------
------------
</TABLE>
* NON-INCOME PRODUCING SECURITY
ADR AMERICAN DEPOSITARY RECEIPT
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
32
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C>
United States............... 98.7%
France...................... 1.2
United Kingdom.............. 0.4
Canada...................... 0.2
-----
100.5
Other Assets and Liabilities
(net)...................... (0.5)
-----
Total Net Assets........ 100.0%
-----
-----
SECTOR ALLOCATION
Computer Software and
Services................... 22.7%
Health Care................. 17.3
Retail...................... 12.0
Communications --
Customer Equipment......... 9.2
Energy Equipment and
Services................... 8.6
Commercial Services......... 4.1
Broadcasting................ 2.9
Insurance................... 2.2
Telephone Equipment......... 2.2
Construction and
Construction Materials..... 2.0
Electronics Manufacturing... 1.6
Pharmaceuticals............. 1.4
Telecommunications.......... 1.4
Food and Beverage........... 1.3
Electronics................. 1.1
Transportation.............. 1.0
Electronic Components....... 0.3
-----
91.3
Repurchase Agreement........ 9.2
-----
100.5
Other Assets and Liabilities
(net)...................... (0.5)
-----
Total Net Assets........ 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
33
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 92.6%
AUSTRALIA - 3.9%
4,000 Broken Hill Proprietary......................... $ 55,236
17,500 Cochlear........................................ 46,076
52,000 National Foods.................................. 58,852
42,450 Pasminco........................................ 59,721
-----------
219,885
-----------
CHINA - 1.4%
207,000 Guangshen Railway*.............................. 78,219
-----------
HONG KONG - 10.9%
22,000 Asia Satelite Telecommunications*............... 65,226
350,000 Chaifa Holdings................................. 93,822
121,000 China Resources Enterprise...................... 85,192
126,000 China Travel International Investment........... 28,811
20,000 Guoco Group..................................... 95,340
36,800 Hong Kong Telecommunications.................... 66,081
184,000 Oriental Press Group............................ 98,647
9,000 Swire Pacific................................... 77,027
-----------
610,146
-----------
INDIA - 1.9%
1,000 Larsen & Tourbo GDR*............................ 18,625
6,000 Steel Authority GDR*............................ 88,500
-----------
107,125
-----------
INDONESIA - 2.3%
30,000 Astra International............................. 43,502
150,000 Bank Umum Nasional.............................. 87,003
-----------
130,505
-----------
JAPAN - 22.9%
1,000 Asatsu Inc...................................... 43,448
5,000 Daikin Industries............................... 54,882
2,000 Inaba Denkisangyo............................... 50,309
4,000 Japan Radio..................................... 57,443
5,000 JGC Corp........................................ 65,859
100 Kandenko........................................ 1,271
3,000 Kirin Brewery................................... 36,771
1,000 Kyocera......................................... 70,890
3,000 Matsushita Electric Industries.................. 55,980
9,000 Mitsubishi Cable Industries..................... 60,919
5,000 Mitsubishi Estate............................... 69,060
6,000 Mitsubishi Motors............................... 52,687
9,000 Mitsui Mining*.................................. 50,547
4,800 Nifco Inc....................................... 61,907
5 Nippon Telegraph & Telephone.................... 37,137
1,000 Seven-Eleven.................................... 63,938
10,000 Shimadzu........................................ 67,322
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
34
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
7,000 Snow Brand Milk Products........................ $ 47,702
1,700 Sony............................................ 112,115
10,000 Sumitomo Cement................................. 48,845
9,000 Taisei.......................................... 64,048
4,000 Taiyo Yuden..................................... 50,492
4,000 Takuma.......................................... 60,736
-----------
1,284,308
-----------
MALAYSIA - 10.0%
20,000 Ekran........................................... 76,168
70,000 IOI Corp*....................................... 97,094
40,000 Magnum.......................................... 67,669
60,000 Malaysian Industrial Development................ 92,844
30,000 Malaysian Resources............................. 73,361
17,000 Rashid Hussain.................................. 62,357
18,000 Technology Resources Industries*................ 62,778
17,200 Westmont Industries............................. 30,201
-----------
562,472
-----------
PAKISTAN - 1.0%
483 Pakistan Telecommunications GDR*................ 56,994
-----------
PHILIPPINES - 8.0%
275,000 Belle*.......................................... 66,126
255,000 Empire East Land Holdings....................... 155,725
3,562 Far East Bank & Trust........................... 125,078
1,800 Pilippino Telephone............................. 104,625
-----------
451,554
-----------
SINGAPORE - 4.9%
18,600 Acma............................................ 54,310
15,000 Sembawang Shipyard.............................. 74,415
25,000 Straits Steamship Land.......................... 83,629
36,000 United Overseas Land*........................... 63,274
-----------
275,628
-----------
SOUTH KOREA - 4.3%
1,107 Chosun Brewery.................................. 31,523
180 Daewoo Securities............................... 4,194
400 Hyundai Engineering & Construction.............. 16,617
1,100 Korea Electric Power............................ 38,240
1,900 Korea Explosives................................ 31,151
1,460 Korea Housing Bank*............................. 34,016
341 Samchully....................................... 26,483
260 Samsung Display Devices......................... 18,622
12 Samsung Electronics............................. 1,007
46 Samsung Electronics GDR (common shares)......... 1,294
190 Samsung Electronics GDS (non-voting shares)*.... 5,344
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
35
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
SOUTH KOREA (CONTINUED)
40 Samsung Fire & Marine Insurance................. $ 26,233
4 Shinsegae Department Stores..................... 270
-----------
234,994
-----------
TAIWAN - 7.6%
10,000 Cathay Construction............................. 18,895
11,000 Cathay Life Insurance........................... 77,544
50,000 China Steel..................................... 52,326
1,500 Taipei Fund*.................................... 129,000
504 Tung Ho Steel GDR............................... 5,872
34,000 Want Want Holdings*............................. 91,460
37,000 Yang Ming Marine Transportation................. 54,585
-----------
429,682
-----------
THAILAND - 13.5%
18,000 BEC World*...................................... 155,998
12,125 Bank of Ayudhya................................. 66,870
10,000 Dhipaya Insurance*.............................. 37,424
20,000 Electricity Generating.......................... 66,969
50,000 First Bangkok City Bank......................... 82,726
8,000 IFCT Finance & Securities....................... 19,382
35,000 International Broadcasting...................... 82,726
6,400 K.R. Precision.................................. 44,121
2,100 Loxley.......................................... 31,105
5,000 Siam City Cement................................ 63,028
10,000 Thai Military Bank.............................. 35,650
5,500 United Communication Industry................... 73,666
-----------
759,665
-----------
TOTAL -- COMMON STOCKS (Cost $4,830,576)........ 5,201,177
-----------
PREFERRED STOCKS - 0.2%
SOUTH KOREA - 0.2%
313 Samsung Electronics............................. 12,657
-----------
TOTAL -- PREFERRED STOCKS (Cost $0)............. 12,657
-----------
WARRANTS - 0.6%
HONG KONG - 0.0%
2,400 China Travel Warrants, expire 6/30/98*.......... 0
-----------
JAPAN - 0.5%
15 Fujitsu Warrants, expire 12/6/00*............... 6,937
25 Nankai Electric Warrants, expire 12/2/97*....... 6,407
20 Optec Dai-Ichi Denko, Warrants, expire
2/8/00*....................................... 15,750
-----------
29,094
-----------
KOREA - 0.0%
11 Daewoo Corp Warrants, expire 11/8/96*........... 825
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
36
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
WARRANTS (CONTINUED)
<C> <S> <C>
SINGAPORE - 0.1%
8,100 United Overseas Land Warrants, expire
5/28/01*...................................... $ 4,018
-----------
TOTAL -- WARRANTS (Cost $50,956)................ 33,937
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<C> <S> <C>
CONVERTIBLE BONDS - 2.6%
JAPAN - 2.0%
$100,000 MBL International Finance, 3.00%, 11/30/02...... 117,000
-----------
TAIWAN - 0.6%
20,000 President Enterprises, 0.00%, 7/22/01*.......... 32,050
-----------
TOTAL -- CONVERTIBLE BONDS (Cost $124,126)...... 149,050
-----------
TOTAL INVESTMENTS -- 96.0% (Cost $5,005,658)...... 5,396,821
Other Assets and Liabilities (net) -- 4.0%........ 224,252
-----------
TOTAL NET ASSETS -- 100.0%........................ $ 5,621,073
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING SECURITY
ADR AMERICAN DEPOSITARY RECEIPT
ADS AMERICAN DEPOSITARY SHARE
GDR GLOBAL DEPOSITARY RECEIPT
GDS GLOBAL DEPOSITARY SHARE
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
37
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C>
Japan....................... 25.4%
Thailand.................... 13.5
Hong Kong................... 10.9
Malaysia.................... 10.0
Taiwan...................... 8.2
Philippines................. 8.0
Singapore................... 5.0
South Korea................. 4.5
Australia................... 3.9
Indonesia................... 2.3
India....................... 1.9
China....................... 1.4
Pakistan.................... 1.0
-----
96.0
Other Assets and Liabilities
(net)...................... 4.0
-----
Total Net Assets........ 100.0%
-----
-----
SECTOR ALLOCATION
Electrical & Electronics.... 11.8%
Banking..................... 9.6
Financial Services.......... 8.5
Real Estate................. 7.7
Telecommunication........... 7.7
Construction & Housing...... 7.0
Miscellaneous Materials..... 4.9
Leisure & Tourism........... 4.5
Conglomerates............... 4.4
Metals...................... 4.2
Machinery & Engineering..... 4.1
Transportation.............. 3.9
Food & Household Products... 3.3
Insurance................... 2.6
Business & Public
Services................... 2.0
Forest Products............. 1.8
Broadcasting & Publishing... 1.3
Health & Personal Care...... 1.2
Wholesale & International
Trade...................... 1.2
Retail...................... 1.1
Automobiles................. 0.8
Utilities................... 0.7
Beverages & Tobacco......... 0.6
Chemicals................... 0.6
Energy Sources.............. 0.5
-----
96.0
Other Assets and Liabilities
(net)...................... 4.0
-----
Total Net Assets........ 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
38
<PAGE>
- --------------------------------------------------------------------------------
GOVETT LATIN AMERICA FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 80.6%
ARGENTINA - 9.3%
9,100 Banco Frances................................... $ 87,574
14,300 Perez Companc B................................. 94,773
6,900 Quilmes Industrial ADR.......................... 70,725
5,500 Quilmes Industrial.............................. 56,375
4,650 Siderar ADR*.................................... 95,325
3,600 Telefonica de Argentina ADR..................... 106,650
35,900 Transportadora de Gas del Sur B................. 88,347
4,600 YPF ADR......................................... 103,500
-----------
703,269
-----------
BOLIVIA - 1.8%
3,500 Compania Boliviana Energia...................... 137,374
-----------
BRAZIL - 21.4%
1,000 Antarctica Paulista Industria................... 114,548
10,314 Cemig ADR....................................... 292,762
4,500 Cia Vale Rio Doce ADR........................... 87,750
760,000 Electrobras..................................... 204,393
2,680,000 Paulista de Forca e Luz*........................ 245,590
4,060 Telebras ADR.................................... 282,678
660,000 Telefonica da Borda do Campo.................... 207,082
28,900 Telemig A....................................... 2,360
17,000 Usiminas ADR.................................... 184,550
-----------
1,621,713
-----------
CHILE - 12.0%
3,900 Antofagasta Holdings............................ 19,569
9,000 Banco Osorno ADR................................ 121,500
6,600 Cia Cerveceria Unidas ADR....................... 155,100
2,000 Telefonos de Chile ADR.......................... 196,250
7,650 Enersis ADR..................................... 237,150
3,200 Quimica y Minera ADR............................ 173,600
-----------
903,169
-----------
COLOMBIA - 3.1%
5,000 Cadenalco ADR................................... 68,125
7,400 Cemento Argos SA................................ 41,265
5,500 Cia Nacional de Chocolates...................... 45,619
4,500 Suramericana de Seguros......................... 82,240
-----------
237,249
-----------
MEXICO - 25.2%
15,006 Cemex ADR....................................... 118,388
18,800 Desc B.......................................... 101,655
391 Desc C.......................................... 2,057
4,000 Empresas la Moderna ADR......................... 72,000
18,500 Grupo Carso*.................................... 131,019
29,000 Grupo Financiero Banamex B...................... 60,429
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
39
<PAGE>
- --------------------------------------------------------------------------------
GOVETT LATIN AMERICA FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEXICO (CONTINUED)
10,000 Grupo Financiero Bancomer ADS*.................. $ 86,250
155,000 Grupo Industrial Camesa B*...................... 73,386
6,000 Grupo Profesional Planeacion B.................. 32,839
1,480 Grupo Televiasa GDS............................. 45,510
3,500 Hylsamex GDR.................................... 91,875
8,500 ICA............................................. 119,387
20,000 Industrias Penoles*............................. 91,527
21,700 Internacional de Ceramica....................... 29,191
70,008 Organizacion Soriana A*......................... 103,038
2,500 Panamerican Beverages Inc; A.................... 111,875
45,000 Sears Roebuck de Mexico*........................ 116,914
42,000 Tablex.......................................... 101,143
8,000 Telefonos de Mexico ADR......................... 268,000
16,000 Tubo de Acero de Mexico ADR*.................... 151,000
-----------
1,907,483
-----------
PERU - 5.5%
10,000 Banco Weise ADR................................. 71,250
10,880 Buenaventura.................................... 97,087
3,100 Credicorp....................................... 61,613
27,625 Enrique Ferreyros............................... 37,316
90,564 Fima............................................ 18,165
8,217 Minsur.......................................... 73,156
30,000 Telefonica de Peru*............................. 60,417
-----------
419,004
-----------
URUGUAY - 1.0%
4,150 Banco Commercial GDR............................ 76,774
-----------
VENEZUELA - 1.3%
50,000 Ceramica Carabobo ADR........................... 51,160
8,000 Venprecar GDS................................... 42,400
-----------
93,560
-----------
TOTAL -- COMMON STOCKS (Cost $5,792,827)........ 6,099,595
-----------
PREFERRED STOCKS - 15.4%
BRAZIL - 15.4%
14,500,000 Banco Bradesco.................................. 118,432
350,000 Banco Itau...................................... 142,235
153,513 Brahma.......................................... 91,592
435,000 Brasmotor....................................... 136,053
24,780,000 Cia Acos Especias Itabira*...................... 71,826
140,000 Dixie Toga...................................... 135,266
1,030,000 Petroleo Brasiliero............................. 126,705
2,140,000 Telemig......................................... 220,640
556,999 Telesp.......................................... 119,284
-----------
TOTAL -- PREFERRED STOCKS (Cost $1,094,624)..... 1,162,033
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
40
<PAGE>
- --------------------------------------------------------------------------------
GOVETT LATIN AMERICA FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------------------
WARRANTS AND RIGHTS - 0.8%
<C> <S> <C>
BRAZIL - 0.0%
32,088 Brahma Warrants, expire 4/30/03*................ $ 1,598
3,723 Telefonica da Borda do Campo Rights, expire
7/1/96*....................................... 0
-----------
1,598
-----------
MEXICO - 0.8%
30,000 Metaclad Warrants, expire 9/30/99*.............. 61,500
-----------
TOTAL -- WARRANTS AND RIGHTS (Cost $1,624)...... 63,098
-----------
TOTAL INVESTMENTS -- 96.8% (Cost $6,889,075)...... 7,324,726
Other Assets and Liabilities (net) -- 3.2%........ 239,024
-----------
TOTAL NET ASSETS -- 100.0%........................ $ 7,563,750
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING SECURITY
ADR AMERICAN DEPOSITARY RECEIPT
ADS AMERICAN DEPOSITARY SHARE
GDR GLOBAL DEPOSITARY RECEIPT
GDS GLOBAL DEPOSITARY SHARE
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
41
<PAGE>
- --------------------------------------------------------------------------------
GOVETT LATIN AMERICA FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C>
Brazil...................... 36.8%
Mexico...................... 26.0
Chile....................... 12.0
Argentina................... 9.3
Peru........................ 5.5
Colombia.................... 3.1
Bolivia..................... 1.8
Venezuela................... 1.3
Uruguay..................... 1.0
-----
96.8
Other Assets and Liabilities
(net)...................... 3.2
-----
Total Net Assets........ 100.0%
-----
-----
SECTOR ALLOCATION
Telecommunications.......... 21.0%
Utilities................... 10.5
Conglomerates............... 9.9
Banking..................... 9.1
Metals...................... 8.0
Beverages & Tobacco......... 7.0
Energy Sources.............. 6.8
Construction & Housing...... 5.4
Machinery & Engineering..... 4.0
Retail...................... 3.5
Financial Services.......... 3.0
Electrical & Electronics.... 2.8
Chemicals................... 2.0
Food & Household Products... 2.0
Forest Products............. 1.8
-----
96.8
Other Assets and Liabilities
(net)...................... 3.2
-----
Total Net Assets........ 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
42
<PAGE>
- --------------------------------------------------------------------------------
GOVETT GLOBAL INCOME FUND
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -----------------------------------------------------------------------------------
GOVERNMENT BONDS AND NOTES - 49.3%
<C> <S> <C>
DENMARK - 9.0%
DKK 14,000,000 Kingdom of Denmark 8.00%, 3/15/06............... $ 2,486,551
-----------
GERMANY - 9.3%
DEM 3,800,000 Treuhandanstalt 6.75%, 5/13/04.................. 2,552,000
-----------
NETHERLANDS - 8.7%
NLG 3,900,000 Netherlands Government 7.00%, 6/15/05........... 2,385,304
-----------
SPAIN - 4.6%
ESP 150,000,000 Spanish Government 10.10%, 2/28/01.............. 1,258,140
-----------
UNITED STATES - 17.7%
US$ 4,600,000 U.S. Treasury Note, 7.50%, 2/15/05.............. 4,837,185
-----------
TOTAL -- GOVERNMENT BONDS AND NOTES (Cost
$14,042,743).................................. 13,519,180
-----------
SHORT-TERM INVESTMENTS - 41.9%
ARGENTINA - 5.5%
US$ 800,000 Banco Bansud Commercial Paper, 3/11/97.......... 756,166
US$ 800,000 Banco de Credito Argentina Commercial Paper,
4/17/97........................................ 744,075
-----------
1,500,241
-----------
BRAZIL - 12.5%
US$ 800,000 Boavista Banking Commercial Paper, 12/27/96..... 762,765
US$ 800,000 Banco Itau Commercial Paper, 1/6/97............. 771,053
US$ 800,000 Cia Hering Commercial Paper, 2/6/97............. 748,125
Cia Paranaense Energia Commercial Paper,
US$ 400,000 3/6/97........................................ 376,431
Constran International Commercial Paper,
US$ 500,000 10/22/96...................................... 484,515
Constran International Commercial Paper,
US$ 300,000 12/12/96...................................... 286,552
-----------
3,429,441
-----------
JAPAN - 2.8%
US$ 800,000 Semp Toshiba Commercial Paper, 3/15/97.......... 753,600
-----------
MEXICO - 2.9%
US$ 800,000 Bufete Industrial Commercial Paper, 7/16/96..... 796,506
-----------
PERU - 2.7%
US$ 800,000 Interbanc Peru Commercial Paper, 4/25/97........ 746,346
-----------
POLAND - 15.5%
PLZ 6,050,000 Polish Treasury Bill, 7/3/96.................... 2,223,391
PLZ 5,580,000 Polish Treasury Bill, 7/31/96................... 2,023,122
-----------
4,246,513
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
43
<PAGE>
- --------------------------------------------------------------------------------
GOVETT GLOBAL INCOME FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -----------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (CONTINUED)
<C> <S> <C>
TOTAL -- SHORT-TERM INVESTMENTS (Cost
$11,575,203).................................. $11,472,647
-----------
TOTAL INVESTMENTS -- 91.2% (Cost $25,617,946)..... 24,991,827
Other Assets and Liabilities (net) -- 8.8%........ 2,419,599
-----------
TOTAL NET ASSETS -- 100.0%........................ $27,411,426
-----------
-----------
</TABLE>
DKK DANISH KRONE
DEM GERMAN MARK
NLG NETHERLAND GUILDER
PLZ POLISH ZLOTY
ESP SPANISH PESETA
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
44
<PAGE>
- --------------------------------------------------------------------------------
GOVETT GLOBAL INCOME FUND (CONTINUED)
Schedule of Investments
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
GEOGRAPHIC CONCENTRATION
<S> <C> <C>
United States........................................ 17.7%
Poland............................................... 15.5
Brazil............................................... 12.5
Germany.............................................. 9.3
Denmark.............................................. 9.0
Netherlands.......................................... 8.7
Argentina............................................ 5.5
Spain................................................ 4.6
Mexico............................................... 2.9
Japan................................................ 2.8
Peru................................................. 2.7
-----
91.2
Other Assets and Liabilities (net)................... 8.8
-----
Total Net Assets................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
45
<PAGE>
- -----------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
For the six months ended June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING
EQUITY FUND MARKETS FUND
------------- -------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1)* -- (see accompanying Schedule of Investments)............. $ 28,568,372 $ 83,169,582
Repurchase agreement...................................................................... -- --
------------- -------------
Total investments....................................................................... 28,568,372 83,169,582
Cash...................................................................................... 4,235 906,658
Cash in overnight time deposit............................................................ -- --
Foreign currency, at value (Note 1)**..................................................... 164 1,525,014
Receivable from:
Securities sold......................................................................... 642,740 309,359
Net open forward currency contracts (Note 8)............................................ 457,572 --
Fund shares sold........................................................................ 695,431 542,637
Dividends and interest.................................................................. 88,287 204,633
Investment manager (Note 2)............................................................. 3,177 19,132
Deferred organization expense............................................................. 7,360 7,360
Other assets.............................................................................. 7,658 --
------------- -------------
Total assets............................................................................ 30,474,996 86,684,375
------------- -------------
LIABILITIES:
Notes payable (Note 4).................................................................... 1,020,000 --
Payable for:
Securities purchased.................................................................... 195,893 1,104,066
Fund shares repurchased................................................................. 30,898 190,998
Distributions declared.................................................................. -- --
Investment manager (Note 2)............................................................. -- --
Accrued expenses and other liabilities.................................................... 49,570 320,051
------------- -------------
Total liabilities....................................................................... 1,296,361 1,615,115
------------- -------------
NET ASSETS................................................................................ $ 29,178,635 $ 85,069,260
------------- -------------
------------- -------------
NET ASSETS CONSIST OF:
Paid-in-capital........................................................................... $ 23,525,947 $ 88,009,862
Undistributed net investment income (loss)................................................ 45,198 (190,551)
Accumulated net realized gain (loss) on investments, foreign currency
transactions, and forward purchase commitments........................................... 2,059,434 (5,732,766)
Net unrealized appreciation (depreciation) on investments, forward currency contracts and
net other assets......................................................................... 3,548,056 2,982,715
------------- -------------
NET ASSETS................................................................................ $ 29,178,635 $ 85,069,260
------------- -------------
------------- -------------
SHARES OUTSTANDING........................................................................ 2,344,590 6,198,796
------------- -------------
------------- -------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE............................................ $ 12.45 $ 13.72
------------- -------------
------------- -------------
OFFERING PRICE PER SHARE (NET ASSET VALUE DIVIDED BY 95.05%).............................. $ 13.10 $ 14.43
------------- -------------
------------- -------------
* Cost of investments..................................................................... $ 25,479,735 $ 80,183,772
** Cost of foreign currency............................................................... $ 165 $ 1,525,144
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
46
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALLER PACIFIC LATIN
COMPANIES STRATEGY AMERICA GLOBAL
FUND FUND FUND INCOME FUND
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1)* -- (see accompanying Schedule of
Investments)................................................................. $379,953,968 $5,396,821 $ 7,324,726 $ 24,991,827
Repurchase agreement........................................................... 38,162,132 -- -- --
------------ ----------- ----------- ------------
Total investments............................................................ 418,116,100 5,396,821 7,324,726 24,991,827
Cash........................................................................... -- 237,426 233,990 27,638
Cash in overnight time deposit................................................. -- -- -- 1,804,987
Foreign currency, at value (Note 1)**.......................................... 79 228,649 57,682 189,285
Receivable from:
Securities sold.............................................................. 10,974,509 5,595 12,840 1,803
Net open forward currency contracts (Note 8)................................. -- 22,665 -- 222,482
Fund shares sold............................................................. 708,934 547 134,045 --
Dividends and interest....................................................... 18,699 15,468 21,579 256,034
Investment manager (Note 2).................................................. 53,862 15,243 --
Deferred organization expense.................................................. 12,227 15,831 15,856 7,360
Other assets................................................................... -- 20,225 41,851 1,622
------------ ----------- ----------- ------------
Total assets................................................................. 429,830,548 5,997,089 7,857,812 27,503,038
------------ ----------- ----------- ------------
LIABILITIES:
Notes payable (Note 4)......................................................... -- 240,000 200,000 --
Payable for:
Securities purchased......................................................... 12,028,652 21,035 -- --
Fund shares repurchased...................................................... 449,758 114,981 94,062 68,154
Distributions declared....................................................... -- -- -- 5,698
Investment manager (Note 2).................................................. 690,888 -- -- 14,263
Accrued expenses and other liabilities......................................... 523,352 -- -- 3,497
------------ ----------- ----------- ------------
Total liabilities............................................................ 13,692,650 376,016 294,062 91,612
------------ ----------- ----------- ------------
NET ASSETS..................................................................... $416,137,898 $5,621,073 $ 7,563,750 $ 27,411,426
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
NET ASSETS CONSIST OF:
Paid-in-capital................................................................ $272,270,718 $7,487,651 $ 8,997,748 $ 31,883,825
Undistributed net investment income (loss)..................................... (2,549,737) (63,081 ) 43,378 (427,047)
Accumulated net realized gain (loss) on investments, foreign currency
transactions, and forward purchase commitments............................... 99,639,867 (2,217,400 ) (1,910,072) (3,645,650)
Net unrealized appreciation (depreciation) on investments, forward currency
contracts and net other assets............................................... 46,777,050 413,903 432,696 (399,702)
------------ ----------- ----------- ------------
NET ASSETS..................................................................... $416,137,898 $5,621,073 $ 7,563,750 $ 27,411,426
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
SHARES OUTSTANDING............................................................. 13,008,718 598,075 955,735 3,239,532
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE................................. $ 31.99 $ 9.40 $ 7.91 $ 8.46
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
OFFERING PRICE PER SHARE (NET ASSET VALUE DIVIDED BY 95.05%)................... $ 33.66 $ 9.89 $ 8.32 $ 8.90
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
* Cost of investments.......................................................... $371,339,050 $5,005,658 $ 6,889,075 $ 25,617,946
** Cost of foreign currency.................................................... $ 79 $ 228,352 $ 57,367 $ 185,148
</TABLE>
47
<PAGE>
- -----------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING
EQUITY FUND MARKETS FUND
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest................................................................................... $ 8,969 $ 63,155
Dividends*................................................................................. 238,717 783,116
------------- -------------
Total investment income.................................................................. 247,686 846,271
------------- -------------
EXPENSES:
Management fee (Note 2).................................................................... 101,248 297,727
Custody and administration fees............................................................ 43,359 210,807
12b-1 fee Class A (Note 3)................................................................. 71,841 215,348
Professional fees.......................................................................... 13,463 20,840
Transfer agency fee........................................................................ 109,399 328,197
Registration and filing fees............................................................... 22,371 40,978
Directors' fees and expenses............................................................... 9,697 9,697
Amortization of organization costs......................................................... 7,056 7,056
Other...................................................................................... 8,856 22,323
------------- -------------
Total expenses........................................................................... 387,290 1,152,973
Less: Expenses reimbursable and fees waived by the Manager (Note 2)........................ 55,748 161,014
------------- -------------
Net operating expenses..................................................................... 331,542 991,959
------------- -------------
Interest expense........................................................................... 2,487 19,514
------------- -------------
NET INVESTMENT INCOME (LOSS)............................................................... (86,343) (165,202)
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investment transactions.................................................................. 1,735,257 2,863,967
Foreign currency transactions............................................................ (4,210) (379,748)
------------- -------------
Net realized gain (loss)............................................................... 1,731,047 2,484,219
------------- -------------
Net change in unrealized appreciation (depreciation) on:
Investments.............................................................................. 846,428 7,041,371
Foreign currency transactions............................................................ 355,151 29,119
------------- -------------
Net unrealized appreciation (depreciation) during the period........................... 1,201,579 7,070,490
------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS).................................................... 2,932,626 9,554,709
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 2,846,283 $ 9,389,507
------------- -------------
------------- -------------
* Net of foreign taxes withheld of......................................................... $ 26,674 $ 88,011
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
48
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALLER PACIFIC LATIN
COMPANIES STRATEGY AMERICA GLOBAL
FUND FUND FUND INCOME FUND
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest....................................................................... $ 960,155 $ 8,036 $ 4,342 $ 1,714,491
Dividends*..................................................................... 54,496 58,687 142,820 --
------------ ---------- ---------- -----------
Total investment income...................................................... 1,014,651 66,723 147,162 1,714,491
------------ ---------- ---------- -----------
EXPENSES:
Management fee (Note 2)........................................................ 1,443,164 36,523 30,779 88,149
Custody and administration fees................................................ 311,121 77,835 28,716 34,183
12b-1 fee Class A (Note 3)..................................................... 1,037,172 27,959 20,608 61,742
Professional fees.............................................................. 56,761 11,589 10,962 14,267
Transfer agency fee............................................................ 827,544 17,055 13,261 59,203
Registration and filing fees................................................... 33,313 21,883 19,255 24,505
Directors' fees and expenses................................................... 9,697 9,697 9,697 9,697
Amortization of organization costs............................................. 4,061 3,154 2,948 7,056
Other.......................................................................... 28,646 2,829 1,936 9,712
------------ ---------- ---------- -----------
Total expenses............................................................... 3,751,479 208,524 138,162 308,514
Less: Expenses reimbursable and fees waived by the Manager (Note 2)............ 187,091 68,890 35,238 29,516
------------ ---------- ---------- -----------
Net operating expenses......................................................... 3,564,388 139,634 102,924 278,998
------------ ---------- ---------- -----------
Interest expense............................................................... -- 4,495 860 1,389
------------ ---------- ---------- -----------
NET INVESTMENT INCOME (LOSS)................................................... (2,549,737) (77,406) 43,378 1,434,104
------------ ---------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investment transactions...................................................... 83,452,284 701,834 322,843 (378,328)
Foreign currency transactions................................................ (2) 76,381 (22,318) (585,338)
------------ ---------- ---------- -----------
Net realized gain (loss)................................................... 83,452,282 778,215 300,525 (963,666)
------------ ---------- ---------- -----------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................. (64,095,399) 475,386 959,247 (735,397)
Foreign currency transactions................................................ -- (2,525) (2,943) (339,499)
------------ ---------- ---------- -----------
Net unrealized appreciation (depreciation) during the period............... (64,095,399) 472,861 956,304 (1,074,896)
------------ ---------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................ 19,356,883 1,251,076 1,256,829 (2,038,562)
------------ ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................ $ 16,807,146 $1,173,670 $1,300,207 $ (604,458)
------------ ---------- ---------- -----------
------------ ---------- ---------- -----------
* Net of foreign taxes withheld of............................................. $ -- $ 7,139 $ 8,370 $ --
</TABLE>
49
<PAGE>
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND EMERGING MARKETS FUND
----------------------------- ------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss)............................ $ (86,343) $ (194,558) $ (165,202) $ (364,534)
Net realized gain (loss) on investment and foreign
currency transactions.................................. 1,731,047 1,067,050 2,484,219 (7,515,905)
Net change in unrealized appreciation (depreciation) on
investments, forward currency contracts, foreign
currency, and other assets............................. 1,201,579 2,278,456 7,070,490 1,472,582
------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................. 2,846,283 3,150,948 9,389,507 (6,407,857)
------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.............................. -- -- -- --
In excess of net investment income...................... -- -- -- --
From net realized capital gains......................... -- (23,679) -- (53,799)
------------- -------------- -------------- --------------
Total distributions to shareholders................... -- (23,679) -- (53,799)
------------- -------------- -------------- --------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from shares sold............................... 6,948,141 9,996,843 37,707,464 72,812,483
Assets acquired from Govett Developing Markets Bond Fund
(Note 10).............................................. -- -- -- --
Net asset value of shares issued on reinvestment of
distributions.......................................... -- 22,100 -- 49,891
Cost of shares repurchased.............................. (9,162,240) (16,895,695) (37,914,628) (67,325,397)
------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
fund share transactions................................ (2,214,099) (6,876,752) (207,164) 5,536,977
------------- -------------- -------------- --------------
TOTAL CHANGE IN NET ASSETS.............................. 632,184 (3,749,483) 9,182,343 (924,679)
NET ASSETS:
Beginning of period..................................... 28,546,451 32,295,934 75,886,917 76,811,596
------------- -------------- -------------- --------------
End of period *......................................... $ 29,178,635 $ 28,546,451 $ 85,069,260 $ 75,886,917
------------- -------------- -------------- --------------
------------- -------------- -------------- --------------
* Including undistributed net investment income (loss)
of..................................................... $ 45,198 $ 131,541 $ (190,551) $ (25,349)
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
50
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALLER COMPANIES FUND PACIFIC STRATEGY FUND
---------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss)..................... $ (2,549,737) $ (5,240,921) $ (77,406) $ (80,187)
Net realized gain (loss) on investment and
foreign currency transactions.................. 83,452,282 50,116,140 778,215 (1,798,840)
Net change in unrealized appreciation
(depreciation) on investments, forward currency
contracts, foreign currency, and other
assets......................................... (64,095,399) 101,603,021 472,861 1,464,299
------------- ------------- ------------- ------------
Net increase (decrease) in net assets resulting
from operations................................ 16,807,146 146,478,240 1,173,670 (414,728)
------------- ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income....................... -- -- -- --
In excess of net investment income............... -- -- -- --
From net realized capital gains.................. -- (35,821,751) -- --
------------- ------------- ------------- ------------
Total distributions to shareholders............ -- (35,821,751) -- --
------------- ------------- ------------- ------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from shares sold........................ 210,045,379 617,309,409 6,107,406 11,102,393
Assets acquired from Govett Developing Markets
Bond Fund (Note 10)............................ -- -- -- --
Net asset value of shares issued on reinvestment
of distributions............................... -- 32,731,146 -- --
Cost of shares repurchased....................... (328,704,994) (319,579,803) (14,150,772) (12,046,042)
------------- ------------- ------------- ------------
Net increase (decrease) in net assets resulting
from fund share transactions................... (118,659,615) 330,460,752 (8,043,366) (943,649)
------------- ------------- ------------- ------------
TOTAL CHANGE IN NET ASSETS....................... (101,852,469) 441,117,241 (6,869,696) (1,358,377)
NET ASSETS:
Beginning of period.............................. 517,990,367 76,873,126 12,490,769 13,849,146
------------- ------------- ------------- ------------
End of period *.................................. $ 416,137,898 $ 517,990,367 $ 5,621,073 $ 12,490,769
------------- ------------- ------------- ------------
------------- ------------- ------------- ------------
* Including undistributed net investment income
(loss) of...................................... $ (2,549,737) $ -- $ (63,081) $ 14,325
<CAPTION>
LATIN AMERICA FUND GLOBAL INCOME FUND
---------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss)..................... $ 43,378 $ 217 $ 1,434,104 $ 3,379,018
Net realized gain (loss) on investment and
foreign currency transactions.................. 300,525 (2,011,812) (963,666) 1,425,417
Net change in unrealized appreciation
(depreciation) on investments, forward currency
contracts, foreign currency, and other
assets......................................... 956,304 938,382 (1,074,896) 1,200,564
------------- ------------ ------------- ------------
Net increase (decrease) in net assets resulting
from operations................................ 1,300,207 (1,073,213) (604,458) 6,004,999
------------- ------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income....................... -- -- (1,505,809) (3,379,018)
In excess of net investment income............... -- -- -- (43,384)
From net realized capital gains.................. -- -- -- --
------------- ------------ ------------- ------------
Total distributions to shareholders............ -- -- (1,505,809) (3,422,402)
------------- ------------ ------------- ------------
FUND SHARE TRANSACTIONS (NOTE 6):
Proceeds from shares sold........................ 3,784,622 6,916,699 1,150,625 4,442,943
Assets acquired from Govett Developing Markets
Bond Fund (Note 10)............................ -- -- -- 903,675
Net asset value of shares issued on reinvestment
of distributions............................... -- -- 1,075,688 2,072,302
Cost of shares repurchased....................... (2,337,723) (8,123,019) (13,885,240) (20,512,230)
------------- ------------ ------------- ------------
Net increase (decrease) in net assets resulting
from fund share transactions................... 1,446,899 (1,206,320) (11,658,927) (13,093,310)
------------- ------------ ------------- ------------
TOTAL CHANGE IN NET ASSETS....................... 2,747,106 (2,279,533) (13,769,194) (10,510,713)
NET ASSETS:
Beginning of period.............................. 4,816,644 7,096,177 41,180,620 51,691,333
------------- ------------ ------------- ------------
End of period *.................................. $ 7,563,750 $ 4,816,644 $ 27,411,426 $ 41,180,620
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
* Including undistributed net investment income
(loss) of...................................... $ 43,378 $ -- $ (427,047) $ (355,342)
</TABLE>
51
<PAGE>
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
1996 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994 1993 1992(A)
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 11.27 $ 10.16 $ 13.23 $ 9.31 $ 10.00
------------ ------------- ------------- ------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........................... (0.03) (0.08)+ (0.12)+ (0.03) (0.01)
Net realized and unrealized gain (loss) on
investments........................................... 1.21 1.20 (0.94) 5.01 (0.52)
------------ ------------- ------------- ------------- -------------
Total from investment operations................... 1.18 1.12 (1.06) 4.98 (0.53)
------------ ------------- ------------- ------------- -------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................. -- -- -- -- (0.04)
In excess of net investment income..................... -- -- -- -- --
From net realized gain................................. -- (0.01) (2.01) (1.06) (0.12)
In excess of net realized gain......................... -- -- -- -- --
Tax return of capital.................................. -- -- -- -- --
------------ ------------- ------------- ------------- -------------
Total distributions................................ -- (0.01) (2.01) (1.06) (0.16)
------------ ------------- ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD......................... $ 12.45 $ 11.27 $ 10.16 $ 13.23 $ 9.31
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
TOTAL RETURN**......................................... 10.38% 11.01% (8.44)% 54.50% (5.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)...................... $ 29,179 $ 28,546 $ 32,296 $ 44,610 $ 1,328
Net expenses to average daily net assets (Note A)...... 2.31%* 2.50% 2.50% 2.50% 2.50%*
Net investment income (loss) to average daily net
assets................................................ (0.60)%* (0.64)% (0.98)% (0.79)% (0.10)%*
Portfolio turnover rate................................ 48% 101% 155% 151% 140%
Average commission rate++.............................. $ 0.03 N/A N/A N/A N/A
- -------------------------------------------------------
Note A: John Govett & Co. Limited waived a portion of
its management fees and Govett Financial Services
Limited reimbursed a portion of the other
operating expenses of the Funds for the years
ended December 31, 1992, 1993 and 1994. For the
year ended December 31, 1995 and the six months
ended June 30, 1996, John Govett & Co. Limited
waived a portion of its management fee and
reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and
reimbursement of expenses, the expense ratios as
a percentage of average net assets for the
periods indicated would have been:
Expenses........................................ 2.69%* 2.75% 2.74% 2.65% 13.85%*
</TABLE>
(A) COMMENCEMENT OF OPERATIONS WAS JANUARY 7, 1992.
(B) COMMENCEMENT OF OPERATIONS WAS JANUARY 1, 1993.
(C) COMMENCEMENT OF OPERATIONS WAS JANUARY 1, 1994.
(D) COMMENCEMENT OF OPERATIONS WAS MARCH 7, 1994.
* ANNUALIZED
** TOTAL RETURN CALCULATIONS EXCLUDE FRONT END SALES LOAD.
+ PER SHARE NET INVESTMENT INCOME (LOSS) DOES NOT REFLECT THE CURRENT PERIOD'S
RECLASSIFICATION OF PERMANENT DIFFERENCES BETWEEN BOOK AND TAX BASIS NET
INVESTMENT INCOME (LOSS). SEE NOTE 1.
++ FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A PORTFOLIO IS
REQUIRED TO DISCLOSE THE AVERAGE COMMISSION RATE PER SHARE IT PAID FOR
TRADES ON WHICH COMMISSIONS WERE CHARGED. BASED ON MARKETS IN WHICH THE FUND
TRADES, THE COMMISSION RATE PER SHARE MAY APPEAR LOWER OR HIGHER IN RELATION
TO A DOMESTIC FUND.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
52
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING MARKETS FUND
------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
1996 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994 1993 1992(A)
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 12.24 $ 13.29 $ 17.70 $ 10.72 $ 10.00
------------ ------------- ------------- ------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........................... (0.03) (0.06)+ (0.11)+ (0.05) (0.03)
Net realized and unrealized gain (loss) on
investments........................................... 1.51 (0.98) (1.93) 8.36 0.75
------------ ------------- ------------- ------------- -------------
Total from investment operations................... 1.48 (1.04) (2.04) 8.31 0.72
------------ ------------- ------------- ------------- -------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................. -- -- -- -- --
In excess of net investment income..................... -- -- -- -- --
From net realized gain................................. -- (0.01) (2.33) (1.33) --
In excess of net realized gain......................... -- -- (0.04) -- --
Tax return of capital.................................. -- -- -- -- --
------------ ------------- ------------- ------------- -------------
Total distributions................................ -- (0.01) (2.37) (1.33) --
------------ ------------- ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD......................... $ 13.72 $ 12.24 $ 13.29 $ 17.70 $ 10.72
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
TOTAL RETURN**......................................... 12.02% (7.92)% (12.65)% 79.73% 7.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)...................... $ 85,069 $ 75,887 $ 76,812 $ 71,422 $ 5,625
Net expenses to average daily net assets (Note A)...... 2.30%* 2.50% 2.50% 2.50% 2.50%*
Net investment income (loss) to average daily net
assets................................................ (0.38)%* (0.49)% (0.77)% (0.88)% (0.49)%*
Portfolio turnover rate................................ 77% 115% 140% 143% 182%
Average commission rate++.............................. $ 0.00 N/A N/A N/A N/A
Note A: John Govett & Co. Limited waived a portion of
its management fees and Govett Financial Services
Limited reimbursed a portion of the other
operating expenses of the Funds for the years
ended December 31, 1992, 1993 and 1994. For the
year ended December 31, 1995 and the six months
ended June 30, 1996, John Govett & Co. Limited
waived a portion of its management fee and
reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and
reimbursement of expenses, the expense ratios as
a percentage of average net assets for the
periods indicated would have been:
Expenses........................................ 2.68%* 2.78% 2.65% 2.52% 7.52%*
<CAPTION>
SMALLER COMPANIES FUND
---------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED YEAR ENDED
1996 DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994 1993(B)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 29.96 $ 19.06 $ 15.85 $ 10.00
------------ ------------- ------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........................... (0.20) (0.30)+ (0.10)+ (0.06)
Net realized and unrealized gain (loss) on
investments........................................... 2.23 13.32 4.47 5.91
------------ ------------- ------------- -------------
Total from investment operations................... 2.03 13.02 4.37 5.85
------------ ------------- ------------- -------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................. -- -- -- --
In excess of net investment income..................... -- -- -- --
From net realized gain................................. -- (2.12) (1.16) --
In excess of net realized gain......................... -- -- -- --
Tax return of capital.................................. -- -- -- --
------------ ------------- ------------- -------------
Total distributions................................ -- (2.12) (1.16) --
------------ ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD......................... $ 31.99 $ 29.96 $ 19.06 $ 15.85
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
TOTAL RETURN**......................................... 6.68% 69.08% 28.74% 58.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)...................... $ 416,138 $ 517,990 $ 76,873 $ 39,681
Net expenses to average daily net assets (Note A)...... 1.72%* 1.95% 1.95% 1.95%
Net investment income (loss) to average daily net
assets................................................ (1.23)%* (1.64)% (1.13)% (0.93)%
Portfolio turnover rate................................ 230%* 280% 519% 483%
Average commission rate++.............................. $ 0.06 N/A N/A N/A
Note A: John Govett & Co. Limited waived a portion of
its management fees and Govett Financial Services
Limited reimbursed a portion of the other
operating expenses of the Funds for the years
ended December 31, 1992, 1993 and 1994. For the
year ended December 31, 1995 and the six months
ended June 30, 1996, John Govett & Co. Limited
waived a portion of its management fee and
reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and
reimbursement of expenses, the expense ratios as
a percentage of average net assets for the
periods indicated would have been:
Expenses........................................ 1.81%* 2.12% 2.40% 2.44%
</TABLE>
53
<PAGE>
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
For a Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
PACIFIC STRATEGY FUND
------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED
1996 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994(C)
------------ ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................................ $ 8.53 $ 8.79 $ 10.00
------------ ------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................................ (0.12) (0.05)+ (0.18)+
Net realized and unrealized gain (loss) on investments...................... 0.99 (0.21) (1.03)
------------ ------------- -------------
Total from investment operations........................................ 0.87 (0.26) (1.21)
------------ ------------- -------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................. -- -- --
In excess of net investment income.......................................... -- -- --
From net realized gain...................................................... -- -- --
In excess of net realized gain.............................................. -- -- --
Tax return of capital....................................................... -- -- --
------------ ------------- -------------
Total distributions..................................................... -- -- --
------------ ------------- -------------
NET ASSET VALUE, END OF PERIOD.............................................. $ 9.40 $ 8.53 $ 8.79
------------ ------------- -------------
------------ ------------- -------------
TOTAL RETURN**.............................................................. 10.19% (2.96)% (12.10)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................... $ 5,621 $ 12,491 $ 13,849
Net expenses to average daily net assets (Note A)........................... 2.50%* 2.50% 2.50%
Net investment income (loss) to average daily net assets.................... (1.38)%* (0.67)% (1.33)%
Portfolio turnover rate..................................................... 94% 163% 213%
Average commission rate++................................................... $ 0.01 N/A N/A
- ----------------------------------------------------------------------------
Note A: John Govett & Co. Limited waived a portion of its management fees
and Govett Financial Services Limited reimbursed a portion of the
other operating expenses of the Funds for the years ended December 31,
1992, 1993 and 1994. For the year ended December 31, 1995 and the six
months ended June 30, 1996, John Govett & Co. Limited waived a portion
of its management fee and reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and reimbursement of
expenses, the expense ratios as a percentage of average net assets for
the periods indicated would have been:
Expenses............................................................. 3.73%* 3.62% 2.66%
</TABLE>
(A) COMMENCEMENT OF OPERATIONS WAS JANUARY 7, 1992.
(B) COMMENCEMENT OF OPERATIONS WAS JANUARY 1, 1993.
(C) COMMENCEMENT OF OPERATIONS WAS JANUARY 1, 1994.
(D) COMMENCEMENT OF OPERATIONS WAS MARCH 7, 1994.
* ANNUALIZED
** TOTAL RETURN CALCULATIONS EXCLUDE FRONT END SALES LOAD.
+ PER SHARE NET INVESTMENT INCOME (LOSS) DOES NOT REFLECT THE CURRENT PERIOD'S
RECLASSIFICATION OF PERMANENT DIFFERENCES BETWEEN BOOK AND TAX BASIS NET
INVESTMENT INCOME (LOSS). SEE NOTE 1.
++ FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A PORTFOLIO IS
REQUIRED TO DISCLOSE THE AVERAGE COMMISSION RATE PER SHARE IT PAID FOR
TRADES ON WHICH COMMISSIONS WERE CHARGED. BASED ON MARKETS IN WHICH THE FUND
TRADES, THE COMMISSION RATE PER SHARE MAY APPEAR LOWER OR HIGHER IN RELATION
TO A DOMESTIC FUND.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
54
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
LATIN AMERICA FUND
-----------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED PERIOD ENDED
1996 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994(D)
----------- ------------ ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................................ $ 6.44 $ 7.89 $ 10.00
----------- ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................................ 0.05 (0.01)+ (0.09)+
Net realized and unrealized gain (loss) on investments...................... 1.42 (1.44) (1.53)
----------- ------------ ------------
Total from investment operations........................................ 1.47 (1.45) (1.62)
----------- ------------ ------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................. -- -- --
In excess of net investment income.......................................... -- -- --
From net realized gain...................................................... -- -- (0.27)
In excess of net realized gain.............................................. -- -- (0.22)
Tax return of capital....................................................... -- -- --
----------- ------------ ------------
Total distributions..................................................... -- -- (0.49)
----------- ------------ ------------
NET ASSET VALUE, END OF PERIOD.............................................. $ 7.91 $ 6.44 $ 7.89
----------- ------------ ------------
----------- ------------ ------------
TOTAL RETURN**.............................................................. 22.83% (18.38)% (16.94)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................... $ 7,564 $ 4,817 $ 7,096
Net expenses to average daily net assets (Note A)........................... 2.50%* 2.50% 2.50%*
Net investment income (loss) to average daily net assets.................... 1.05%* 0.00% (1.06)%*
Portfolio turnover rate..................................................... 71% 127% 185%
Average commission rate++................................................... $ 0.00 N/A N/A
Note A: John Govett & Co. Limited waived a portion of its management fees
and Govett Financial Services Limited reimbursed a portion of the
other operating expenses of the Funds for the years ended December 31,
1992, 1993 and 1994. For the year ended December 31, 1995 and the six
months ended June 30, 1996, John Govett & Co. Limited waived a portion
of its management fee and reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and reimbursement of
expenses, the expense ratios as a percentage of average net assets for
the periods indicated would have been:
Expenses............................................................. 3.36%* 5.66% 3.35%*
<CAPTION>
GLOBAL INCOME FUND
-----------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED
1996 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1995 1994
----------- ------------ ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................................ $ 8.97 $ 8.48 $ 10.16
----------- ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................................ 0.30 0.63+ 0.76+
Net realized and unrealized gain (loss) on investments...................... (0.45) 0.53 (1.67)
----------- ------------ ------------
Total from investment operations........................................ (0.15) 1.16 (0.91)
----------- ------------ ------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................. (0.36) (0.63) (0.24)
In excess of net investment income.......................................... -- (0.04) --
From net realized gain...................................................... -- -- --
In excess of net realized gain.............................................. -- -- --
Tax return of capital....................................................... -- -- (0.53)
----------- ------------ ------------
Total distributions..................................................... (0.36) (0.67) (0.77)
----------- ------------ ------------
NET ASSET VALUE, END OF PERIOD.............................................. $ 8.46 $ 8.97 $ 8.48
----------- ------------ ------------
----------- ------------ ------------
TOTAL RETURN**.............................................................. (1.50)% 14.11% (9.16)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................... $27,411 $41,181 $51,691
Net expenses to average daily net assets (Note A)........................... 1.58%* 1.75% 1.75%
Net investment income (loss) to average daily net assets.................... 8.13%* 7.45% 8.30%
Portfolio turnover rate..................................................... 107% 249% 701%
Average commission rate++................................................... N/A N/A N/A
Note A: John Govett & Co. Limited waived a portion of its management fees
and Govett Financial Services Limited reimbursed a portion of the
other operating expenses of the Funds for the years ended December 31,
1992, 1993 and 1994. For the year ended December 31, 1995 and the six
months ended June 30, 1996, John Govett & Co. Limited waived a portion
of its management fee and reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and reimbursement of
expenses, the expense ratios as a percentage of average net assets for
the periods indicated would have been:
Expenses............................................................. 1.75%* 1.93% 1.95%
<CAPTION>
YEAR ENDED, PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1993 1992(A)
------------ ------------
NET ASSET VALUE, BEGINNING OF PERIOD........................................ $ 9.77 $ 10.00
------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................................ 0.99 0.80
Net realized and unrealized gain (loss) on investments...................... 0.66 0.06
------------ ------------
Total from investment operations........................................ 1.65 0.86
------------ ------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................. (0.95) (0.78)
In excess of net investment income.......................................... -- --
From net realized gain...................................................... (0.31) (0.31)
In excess of net realized gain.............................................. -- --
Tax return of capital....................................................... -- --
------------ ------------
Total distributions..................................................... (1.26) (1.09)
------------ ------------
NET ASSET VALUE, END OF PERIOD.............................................. $ 10.16 $ 9.77
------------ ------------
------------ ------------
TOTAL RETURN**.............................................................. 17.64% 8.95%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................... $82,000 $34,084
Net expenses to average daily net assets (Note A)........................... 1.72% 1.75%*
Net investment income (loss) to average daily net assets.................... 9.66% 9.75%*
Portfolio turnover rate..................................................... 328% 378%
Average commission rate++................................................... N/A N/A
Note A: John Govett & Co. Limited waived a portion of its management fees
and Govett Financial Services Limited reimbursed a portion of the
other operating expenses of the Funds for the years ended December 31,
1992, 1993 and 1994. For the year ended December 31, 1995 and the six
months ended June 30, 1996, John Govett & Co. Limited waived a portion
of its management fee and reimbursed a portion of the other operating
expenses of the Funds. Without the waiver and reimbursement of
expenses, the expense ratios as a percentage of average net assets for
the periods indicated would have been:
Expenses............................................................. 1.72% 3.17%*
</TABLE>
55
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
The Govett Funds, Inc. (the "Company") was established as a Maryland corporation
on November 13, 1990. The Company's Articles of Incorporation permit the
Directors to create an unlimited number of series, each of which may issue one
or more separate classes of shares. The Company presently consists of six series
(individually a "Fund", and together the "Funds"), which are registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"). Govett International Equity Fund, Govett
Emerging Markets Fund, Govett Smaller Companies Fund and Govett Pacific Strategy
Fund are all diversified, open-end management investment companies. Govett Latin
America Fund and Govett Global Income Fund are both non-diversified, open-end
management investment companies. Each of the Funds has authorized the issuance
of Class A, Class B and Class C shares, each with its own sales charge
structure. As of June 30, 1996, only Class A shares were available to the public
and Class B and Class C shares were inactive.
Govett International Equity Fund seeks long-term capital appreciation by
investing primarily in equity securities of companies located throughout the
world. Govett Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers located in emerging markets.
Govett Smaller Companies Fund seeks long-term capital appreciation by investing
primarily in equity securities of smaller companies. Govett Pacific Strategy
Fund seeks long-term capital appreciation by investing primarily in equity
securities of companies located in the Pacific Rim. Govett Latin America Fund
seeks long-term capital appreciation by investing primarily in equity and debt
securities of companies located in Latin America. Govett Global Income Fund
seeks primarily a high level of current income, consistent with preservation of
capital, by investing primarily in foreign debt securities, and has a secondary
objective of capital appreciation.
On June 1, 1996, Chase Global Funds Services, Inc. assumed responsibility for
fund accounting and fund administration, succeeding Investors Bank & Trust
Company.
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. The following is a summary of
significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION--Portfolio securities listed or traded on domestic or
foreign securities exchanges are valued at the last quoted sales price.
Securities listed or traded on the over-the-counter market are valued at the
mean between the latest available current bid and asked prices. Bonds and
short-term debt securities with remaining maturities in excess of 60 days are
valued at the mean of representative quoted bid and asked prices for such
securities or, if such prices are not available, they are valued based on prices
for securities of comparable maturity, quality and type. Prices are obtained
from pricing services as authorized by the Company's Board of Directors.
Short-term debt securities which mature in 60 days or less are valued at
amortized cost. Foreign securities quoted in foreign currency are translated
into U.S. dollars at the foreign currency rates applicable on that day or at
such other rates as John Govett & Co. Limited (the "Manager") may determine to
be appropriate in computing net asset value. Securities for which there are no
representative quotations or valuations are valued at fair value, determined in
good faith, as authorized by the Company's Board of Directors.
56
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
REPURCHASE AGREEMENTS--Each Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. In the event of counterparty default, the Fund has the right
to use the collateral to offset losses incurred. The Fund may experience a loss
if the Fund is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the Fund seeks to assert its
rights. The Manager, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the Fund enters into repurchase agreements to evaluate
potential risks.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Funds are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
foreign currency exchange rates applicable on that day. Purchases and sales of
securities, income receipts and expense payments are translated into U.S.
dollars at the prevailing exchange rate on the respective dates of the
transactions. Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. The effect of changes in foreign currency
exchange rates on investments in securities are not segregated in the Statement
of Operations from the effects of changes in market prices of those securities,
but are included with the net realized and unrealized gain or loss on investment
in securities.
FORWARD CURRENCY EXCHANGE CONTRACTS--The Funds may enter into forward currency
exchange contracts in connection with planned purchases or sales of securities
or to hedge the value of some or all of a Fund's portfolio securities. A forward
currency contract is an agreement between two parties to buy and sell a currency
at a set price on a future date. The market value of a forward currency contract
fluctuates with changes in currency exchange rates applicable on that day.
Forward currency contracts are marked-to-market daily using the forward foreign
currency exchange rates applicable on that day or at such other rates as the
Manager may determine to be appropriate. The change in value is recorded by the
Funds as an unrealized gain or loss. When a forward currency contract is
extinguished, either by delivering the currency or by entering into another
forward currency contract, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value of the contract at settlement date. The Funds could be exposed to risk if
the counterparties are unable to meet the terms of the contracts or if the value
of the currency changes unfavorably relative to the U.S. dollar.
OPTIONS--The Smaller Companies Fund may purchase option contracts to manage its
exposure to general market conditions. Exchange-traded options are valued using
the last sale price or, in the absence of a sale, the last offering price.
The maximum exposure to loss for any purchase option is limited to the premium
initially paid for the option. Risks may arise if counterparties do not perform
under the contract's terms, or if the
57
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Fund is unable to offset a contract with a counterparty on a timely basis
("liquidity risk"). Exchange-traded options have minimal credit risk as the
exchanges act as counterparties to each transaction, and only present liquidity
risk in highly unusual market conditions.
SECURITY FORWARD PURCHASE COMMITMENTS--The Global Income Fund may enter into
security forward purchase commitments ("forward commitments"). Forward
commitments are securities purchased for delivery beyond the normal settlement
date at a stated price or yield, and no income accrues to the Fund on such
securities prior to delivery. Forward commitments are marked-to-market on a
daily basis. The change in value is recorded by the Funds as an unrealized gain
or loss. When the Fund enters into a forward commitment transaction, it
establishes a segregated account in which it maintains high quality liquid debt
securities in an amount at least equal in value to the Fund's commitment to
purchase such security. It is the Fund's intention to sell securities purchased
on a forward commitment basis prior to settlement date. The Fund may experience
a loss if a counterparty does not perform under the contract's terms, or if the
Fund is unable to offset a contract with a counterparty on a timely basis.
TAXES--The Funds intend to continue to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as amended. It is the
policy of the Funds to distribute all of their taxable income, including any net
realized gain on investments, to shareholders within the prescribed time
periods. Therefore, no provision for income or excise tax is necessary. At
December 31, 1995, Emerging Markets Fund, Pacific Strategy Fund, Latin America
Fund, and Global Income Fund had a capital loss carryforward of approximately
$6,522,728, $2,704,485, $1,934,781 and $2,647,018, respectively. The following
carryforwards will expire on December 31, 2002: $464,940 (Pacific Strategy); and
$2,647,018 (Global Income). The following carryforwards will expire on December
31, 2003: $6,522,728 (Emerging Markets); $2,239,545 (Pacific Strategy) and
$1,934,781 (Latin America).
DISTRIBUTIONS TO SHAREHOLDERS--The International Equity Fund, Emerging Markets
Fund, Smaller Companies Fund, Pacific Strategy Fund and Latin America Fund
intend to declare and pay distributions from net investment income and net
realized capital gains, if any, annually. The Global Income Fund seeks to
declare dividends daily and to pay dividends monthly from net investment income,
if any, and to declare and pay distributions from net realized capital gains, if
any, annually.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, post-October losses, option and forward transactions, currency
contracts, organization costs, losses deferred due to wash sales transactions,
market discount and realized gains on sales of investments in passive foreign
investment companies.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid-in capital, undistributed net
investment income (loss) and accumulated net realized gain (loss) on investments
and foreign currency transactions. Undistributed net investment income (loss)
and accumulated net realized gain (loss) may include temporary book and tax
differences which will reverse in a subsequent period.
Distributions in excess of tax basis earnings and profits will be reported in
the Fund's financial statements as a return of capital. Furthermore, differences
in the recognition or classification of
58
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
income between the financial statements and tax earnings and profits which
result in temporary over-distributions for financial statement purposes are
classified as distributions in excess of net investment income or in excess of
accumulated net realized gains.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME--Security transactions are
recorded as of the trade date. Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are recorded as soon
as the Funds are informed of the ex-dividend date. Interest income is recorded
on an accrual basis. In determining the net gain or loss on securities sold, the
cost of securities is determined on the identified cost basis. Original issue
discount and premium on debt securities is amortized using the yield to maturity
method. Market discount on debt securities is amortized on a straight-line
basis. Withholding taxes on foreign interest and dividend income have been
withheld in accordance with the applicable country's tax treaty with the U.S.
ORGANIZATION EXPENSES--Organization expenses are amortized on a straight line
basis over a period of 60 months from commencement of operations of each Fund.
In the event that any of the initial shares purchased by the Manager or its
affiliated companies are redeemed during the amortization period by any holder
thereof, the Funds will be reimbursed for any remaining unamortized organization
expenses in the same proportion as the number of initial shares redeemed bears
to the total number of initial shares outstanding at the time of redemption.
EXPENSES--A significant portion of the Company's expenses are directly related
to individual Funds. Expenses of the Fund not directly attributable to the
operations of specific class of shares are allocated pro rata to each class on
the basis of the relative net assets of the respective classes. Expenses which
are not readily attributable to a specific Fund are allocated in such manner as
deemed equitable by the Company's Board of Directors, taking into consideration,
among other things, the nature and type of expense.
NOTE 2-MANAGEMENT FEES AND AFFILIATED SERVICE PROVIDERS
The Manager, pursuant to the terms of an investment management contract,
provides all investment management services to the Funds. As compensation for
these services, the Manager earns a monthly fee computed at an annual rate of
1.00% (0.75% for the Global Income Fund) of the value of the daily average net
assets of each Fund. The Manager has agreed to voluntarily waive a portion of
its management fee and to reimburse a portion of the other operating expenses of
the International Equity Fund, Emerging Markets Fund, Smaller Companies Fund,
Pacific Strategy Fund, Latin America Fund, and Global Income Fund through
December 31, 1996, to the extent that the Funds' annual ordinary operating
expenses exceed 2.50%, 2.50%, 1.95%, 2.50%, 2.50%, and 1.75% of its average
daily net assets, respectively.
The Manager has entered into a Subadvisory Agreement with Berkeley Capital
Management (the "Subadvisor") whereby the Subadvisor provides day-to-day
investment advisory services to the Smaller Companies Fund. Effective February
23, 1996, a new fee arrangement was approved in which the Manager pays the
Subadvisor an amount equal to the difference, if any, between the investment
advisory and management fees actually received by the Manager, and all revenue
actually received by the Manager under an agreement between the Manager and Van
Kampen American Capital Distributors, Inc. (the "Distributor"), and 0.10% of the
Smaller Companies Fund's average daily net assets. Under the prior agreement the
Manager paid the Subadvisor an annual fee of 0.50% of the Smaller Companies
Fund's average daily net assets. The Smaller Companies Fund does not compensate
the Subadvisor directly for its subadvisory services. In
59
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
addition, the Manager and Subadvisor agreed neither would be paid any advisory
fees in connection with its investment advisory services to the Funds and no
such fees were accrued during the interm period between the closing of the sale
of the Manager to John Govett Holdings Limited, a newly-formed, majority-owned
subsidiary of Allied Irish Banks plc ("AIB"), on December 29, 1995 and
shareholder approval of the agreements on February 23, 1996.
John Govett & Co. Limited, Berkeley Financial Services (formerly Govett
Financial Services Limited), and the Subadvisor were affiliated companies prior
to the sale of John Govett & Co. Limited to AIB. No officer, director or
employee of the Manager or its affiliates receives any compensation from the
Company for serving as an officer or director of the Company. The compensation
of the unaffiliated directors of the Company is borne by the Company.
NOTE 3-DISTRIBUTION AGREEMENT/12B-1 PLAN
The Funds have adopted a Distribution and Service Plan (the "Plan") for their
Class A shares pursuant to Rule 12b-1 of the 1940 Act. The Funds pay the
Distributor a quarterly distribution fee equal to an annual rate of 0.50% (0.35%
for the Global Income Fund) of the value of each Fund's average daily net
assets, attributable to Class A shares, for providing ongoing distribution
services and facilities to the Fund's Class A shares.
NOTE 4-LINE OF CREDIT
On December 1, 1995, the Company entered into an agreement with Chase Manhattan
Bank ("Chase") under which Chase agreed to provide a 364 day committed line of
credit to the Funds. During the period ended June 30, 1996, maximum loan amounts
under the terms of the agreement could not exceed 10% of each Fund's net asset
value at the time of borrowing. Borrowing under the agreement cannot exceed
$30,250,000 in the aggregate. Interest on amounts loaned are calculated at the
Chase New York Prime Rate plus 0.25% per annum. The Funds also pay to Chase a
commitment fee of 0.20% per annum on the unused amount of the line of credit.
As of June 30, 1996, under the Credit Agreement with Chase, the International
Equity Fund, Pacific Strategy Fund and Latin America Fund had $1,020,000,
$240,000 and $200,000 outstanding, respectively.
For the six months ended June 30, 1996, the Funds had borrowings from Chase
under the arrangement as follows. The average daily balance is calculated by
totaling the amount of money advanced and dividing by the number of days the
loan was outstanding.
<TABLE>
<CAPTION>
MAXIMUM
AVERAGE DAILY OUTSTANDING AVERAGE INTEREST
BALANCE BORROWING* INTEREST RATE EXPENSE
------------- ------------- --------------- ---------
<S> <C> <C> <C> <C>
International Equity.............................. $ 478,986 $ 1,020,000 8.50% $ 2,487
Emerging Markets.................................. 275,000 275,000 8.50 19,514
Smaller Companies................................. -- -- -- --
Pacific Strategy.................................. 434,730 1,000,000 8.50 4,495
Latin America..................................... 203,333 220,000 8.50 860
Global Income..................................... 1,065,000 1,065,000 8.50 1,389
</TABLE>
* INCLUDES OVERDRAFTS PERMITTED BY THE CUSTODIAN OUTSIDE THE COMMITTED LINE OF
CREDIT, ON TERMS IDENTICAL TO THE LINE OF CREDIT.
60
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5-PURCHASES AND SALES OF SECURITIES
Costs of purchases and proceeds from sales of securities, excluding short-term
obligations, for the six months ended June 30, 1996, were as follows. Only the
Global Income Fund had U.S. Government securities transactions.
<TABLE>
<CAPTION>
PURCHASES SALES
------------------ ------------------
<S> <C> <C>
International Equity Fund.......................................... $ 13,582,609 $ 15,666,149
------------------ ------------------
------------------ ------------------
Emerging Markets Fund.............................................. $ 64,702,769 $ 63,934,917
------------------ ------------------
------------------ ------------------
Smaller Companies Fund............................................. $ 899,964,793 $ 1,006,626,838
------------------ ------------------
------------------ ------------------
Pacific Strategy Fund.............................................. $ 10,020,973 $ 17,973,549
------------------ ------------------
------------------ ------------------
Latin America Fund................................................. $ 6,908,540 $ 5,381,206
------------------ ------------------
------------------ ------------------
Global Income Fund:
U.S. Government securities....................................... $ 9,717,439 $ 44,022,436
Other investments................................................ 24,174,104 38,033,833
------------------ ------------------
$ 33,891,543 $ 82,056,269
------------------ ------------------
------------------ ------------------
</TABLE>
NOTE 6-FUND SHARE TRANSACTIONS
The Company's Articles of Incorporation permit the Company's Board of Directors
to establish separate series (or Funds) and to issue up to a total of three
billion shares, with 250 million shares authorized for each Fund. Transactions
in fund shares for the periods indicated below are as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND EMERGING MARKETS FUND
------------------------------ --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
6/30/96 12/31/95 6/30/96 12/31/95
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Shares sold.................................. 591,176 938,909 2,873,936 5,899,218
Shares issued on reinvestment of
distributions.............................. -- 2,020 -- 3,905
Shares repurchased........................... (779,489) (1,585,336) (2,877,151) (5,481,043)
-------------- -------------- ------------ ------------
Net increase (decrease)...................... (188,313) (644,407) (3,215) 422,080
Fund shares:
Beginning of period........................ 2,532,903 3,177,310 6,202,011 5,779,931
-------------- -------------- ------------ ------------
End of period.............................. 2,344,590 2,532,903 6,198,796 6,202,011
-------------- -------------- ------------ ------------
-------------- -------------- ------------ ------------
</TABLE>
61
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SMALLER COMPANIES FUND PACIFIC STRATEGY FUND
------------------------------ --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
6/30/96 12/31/95 6/30/96 12/31/95
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Shares sold.................................. 6,914,407 23,879,944 671,334 1,363,983
Shares issued on reinvestment of
distributions.............................. -- 1,157,423 -- --
Shares repurchased........................... (11,196,510) (11,779,342) (1,537,646) (1,474,634)
-------------- -------------- ------------ ------------
Net increase (decrease)...................... (4,282,103) 13,258,025 (866,312) (110,651)
Fund shares:
Beginning of period........................ 17,290,821 4,032,796 1,464,387 1,575,038
-------------- -------------- ------------ ------------
End of period.............................. 13,008,718 17,290,821 598,075 1,464,387
-------------- -------------- ------------ ------------
-------------- -------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
LATIN AMERICA FUND GLOBAL INCOME FUND
------------------------------ --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
6/30/96 12/31/95 6/30/96 12/31/95
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Shares sold.................................. 689,088 1,078,726 110,034 506,309
Shares issued for acquisition of the net
assets of the Govett Developing Markets
Bond Fund (see Note 10).................... -- -- -- 101,651
Shares issued on reinvestment of
distributions.............................. -- -- 123,400 235,489
Shares repurchased........................... (481,414) (1,230,104) (1,585,842) (2,348,046)
-------------- -------------- ------------ ------------
Net increase (decrease)...................... 207,674 (151,378) (1,352,408) (1,504,597)
Fund shares:
Beginning of period........................ 748,061 899,439 4,591,940 6,096,537
-------------- -------------- ------------ ------------
End of period.............................. 955,735 748,061 3,239,532 4,591,940
-------------- -------------- ------------ ------------
-------------- -------------- ------------ ------------
</TABLE>
62
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7-FEDERAL INCOME TAX COST
At June 30, 1996 the cost and gross unrealized appreciation and depreciation in
value of investments owned by the Funds, as computed on a federal income tax
basis, were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING SMALLER
EQUITY MARKETS COMPANIES
FUND FUND FUND
-------------- -------------- ----------------
<S> <C> <C> <C>
Aggregate cost.......................................... $ 25,479,735 $ 80,183,772 $ 371,339,050
-------------- -------------- ----------------
-------------- -------------- ----------------
Gross unrealized appreciation........................... 4,187,607 9,793,246 58,616,140
Gross unrealized depreciation........................... (1,098,970) (6,807,436) (11,839,090)
-------------- -------------- ----------------
Net unrealized appreciation (depreciation).............. $ 3,088,637 $ 2,985,810 $ 46,777,050
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PACIFIC LATIN GLOBAL
STRATEGY AMERICA INCOME
FUND FUND FUND
-------------- -------------- ----------------
<S> <C> <C> <C>
Aggregate cost.......................................... $ 5,005,658 $ 6,889,075 $ 25,617,946
-------------- -------------- ----------------
-------------- -------------- ----------------
Gross unrealized appreciation........................... 572,477 869,265 25,694
Gross unrealized depreciation........................... (181,314) (433,614) (651,813)
-------------- -------------- ----------------
Net unrealized appreciation (depreciation).............. $ 391,163 $ 435,651 $ (626,119)
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>
NOTE 8-FINANCIAL INSTRUMENTS
The Funds regularly trade financial instruments with off-balance sheet risk in
the normal course of their investing activities to assist in managing exposure
to market risks, such as interest rates and foreign currency exchange rates.
These financial instruments include forward currency exchange contracts and
security forward commitments.
The notional or contractual amounts of these instruments represent the
investments the Funds have in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risk associated with these instruments is meaningful only
when all related and offsetting transactions are considered. Security forward
commitments involve purchasing or selling securities on a delayed delivery
basis, which may be settled on their original terms or closed out with an
offsetting transaction on or before the settlement date.
63
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The difference between the offsetting or closed out transations is receivable or
payable on the original settlement date. At June 30, 1996 there were no open
security forward commitments. The forward foreign currency contracts at June 30,
1996 were as follows:
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
IN NET UNREALIZED
SETTLE CONTRACTS TO EXCHANGE APPRECIATION
DATE CURRENCY DELIVER/RECEIVE CURRENCY FOR (DEPRECIATION)
---------- --------- ---------------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY FUND
PURCHASES 9/24/96 US$ 1,000,000 JPY 105,610,000 $ (21,798)
11/13/96 US$ 1,500,000 JPY 158,910,000 (17,066)
11/13/96 US$ 500,000 JPY 52,470,000 (10,355)
11/13/96 US$ 1,000,000 JPY 106,380,000 (7,271)
SALES 9/24/96 JPY 98,900,000 US$ 1,000,000 83,949
9/24/96 JPY 6,710,000 US$ 63,711 1,560
11/13/96 JPY 239,350,000 US$ 2,500,000 266,407
11/13/96 JPY 94,850,000 US$ 1,000,000 114,868
11/13/96 JPY 19,900,000 US$ 190,176 4,471
11/13/96 SEK 4,803,050 US$ 700,000 (25,973)
1/24/97 JPY 202,900,000 US$ 2,000,000 88,654
4/11/97 FRF 5,007,000 US$ 1,000,000 12,184
7/16/97 GBP 666,400 US$ 1,000,000 (32,058)
--------------
$ 457,572
--------------
--------------
<CAPTION>
GLOBAL INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
PURCHASES 8/20/96 US$ 2,701,800 AUD 3,600,000 $ 118,786
8/20/96 US$ 3,484,559 DEM 5,100,000 (118,311)
8/20/96 US$ 1,426,809 ESP 185,000,000 15,182
8/20/96 US$ 2,834,763 SEK 19,000,000 36,295
10/21/96 US$ 2,590,502 DEM 3,900,000 (6,402)
10/21/96 US$ 2,407,567 DKK 14,000,000 (3,898)
10/21/96 US$ 1,242,043 ESP 160,000,000 2,215
10/21/96 US$ 3,834,134 JPY 410,214,000 (19,245)
10/21/96 US$ 2,392,777 NLG 4,028,000 (10,035)
SALES 8/20/96 AUD 3,600,000 US$ 2,715,480 (105,107)
8/20/96 DEM 9,000,000 US$ 6,217,187 276,750
8/20/96 DKK 14,000,000 US$ 2,462,404 65,887
8/20/96 ESP 345,000,000 US$ 2,739,400 50,282
8/20/96 SEK 19,000,000 US$ 2,791,860 (79,198)
10/21/96 NLG 4,028,000 US$ 2,382,022 (719)
--------------
$ 222,482
--------------
--------------
<CAPTION>
PACIFIC STRATEGY FUND
<S> <C> <C> <C> <C> <C> <C>
SALES 7/22/96 JPY 160,950,000 US$ 1,500,000 $ 22,665
--------------
--------------
</TABLE>
64
<PAGE>
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The principal amounts of each non-U.S. dollar denominated contract is stated in
the currency in which the contract is denominated.
AUD--Australian Dollar
DEM--German Mark
DKK--Danish Krone
ESP--Spanish Peseta
FRF--French Franc
GBP--British Pound
JPY--Japanese Yen
NLG--Netherland Guilder
SEK--Swedish Krona
NOTE 9-PORTFOLIO INVESTMENT RISKS
These risks and considerations may involve adverse political and economic
developments and the possible imposition of currency exchange blockages or other
foreign governmental laws or restrictions. In addition, the securities of some
foreign companies and securities markets are less liquid and at times more
volatile than securities of comparable U.S. companies and U.S. securities.
NOTE 10-REORGANIZATION
On June 29, 1995, the Govett Global Income Fund completed the acquisition of the
net assets of the Govett Developing Markets Bond Fund, pursuant to a plan of
reorganization approved by the Developing Markets Bond Fund's shareholders on
June 14, 1995. Shareholders of the Developing Markets Bond Fund received 0.6412
Class A shares of the Global Income Fund in exchange for one share of the
Developing Markets Bond Fund. Before the merger, the Developing Markets Bond
Fund had total net assets of $903,911 and the Global Income Fund had total net
assets of $45,106,892. Following the merger, the Global Income Fund's total net
assets were $46,010,863. After completion of this reorganization the operations
of the Developing Markets Bond Fund were terminated. This transaction was
taxable to the shareholders of the Developing Markets Bond Fund.
65
<PAGE>
- --------------------------------------------------------------------------------
MEETING OF SHAREHOLDERS
On February 23, 1996, a Special Meeting of Shareholders of The Govett Funds,
Inc. was held. The following matters were proposed and all were approved by the
required majority.
PROPOSAL I: In connection with the acquisition of the Manager by AIB, to
approve the adoption of a new Investment Management Contract between the Company
and the Manager with respect to all Funds. The following votes were cast:
<TABLE>
<CAPTION>
BY FUND FOR AGAINST ABSTAIN
- ------------------------------------------------------- ------------------ ------------- --------------
<S> <C> <C> <C>
International Equity Fund.............................. 1,364,251.562 10,177.898 23,126.855
Emerging Markets Fund.................................. 3,732,405.649 37,778.831 79,325.049
Smaller Companies Fund................................. 10,116,895.581 98,188.963 238,774.817
Pacific Strategy Fund.................................. 1,093,208.490 2,840.815 7,351.040
Latin America Fund..................................... 555,842.346 9,991.877 6,649.835
Global Income Fund..................................... 2,517,101.827 20,000.232 85,366.538
</TABLE>
PROPOSAL IA: In connection with the acquisition of the Manager by AIB, to
approve the adoption of a new Investment Subadvisory Agreement between the
Manager and the Subadvisor with respect to the Govett Smaller Companies Fund.
The following votes were cast:
<TABLE>
<CAPTION>
BY FUND FOR AGAINST ABSTAIN
- ------------------------------------------------------ ------------------ -------------- --------------
<S> <C> <C> <C>
Smaller Companies Fund................................ 10,091,959.777 118,749.758 243,149.826
</TABLE>
PROPOSAL II: To elect five Directors to the Board of Directors of the Company,
with respect to all Funds. The following votes were cast:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND AFFIRMATIVE WITHHOLD
------------------ --------------
<S> <C> <C>
Elliott L. Atamian.................................................... 1,377,168.550 20,387.765
Sir Victor Garland.................................................... 1,375,536.163 22,020.152
James M. Oates........................................................ 1,377,461.060 20,095.255
Kevin J.T. Pakenham................................................... 1,375,078.163 22,478.152
Frank R. Terzolo...................................................... 1,377,919.060 19,637.255
EMERGING MARKETS FUND AFFIRMATIVE WITHHOLD
------------------ --------------
Elliott L. Atamian.................................................... 3,782,630.551 66,878.978
Sir Victor Garland.................................................... 3,783,819.966 65,689.563
James M. Oates........................................................ 3,787,664.817 61,844.712
Kevin J.T. Pakenham................................................... 3,785,095.913 64,413.616
Frank R. Terzolo...................................................... 3,786,502.498 63,007.031
<CAPTION>
SMALL COMPANIES FUND AFFIRMATIVE WITHHOLD
------------------ --------------
<S> <C> <C>
Elliott L. Atamian.................................................... 10,302,425.577 151,433.784
Sir Victor Garland.................................................... 10,300,425.447 153,433.914
James M. Oates........................................................ 10,313,329.205 140,530.156
Kevin J.T. Pakenham................................................... 10,306,992.198 148,867.163
Frank R. Terzolo...................................................... 10,313,717.567 140,141.794
</TABLE>
66
<PAGE>
- -----------------------------------------------------------------------------
MEETING OF SHAREHOLDERS (CONTINUED)
<TABLE>
<CAPTION>
PACIFIC STRATEGY FUND AFFIRMATIVE WITHHOLD
------------------ --------------
Elliott L. Atamian.................................................... 1,099,754.918 3,645.427
<S> <C> <C>
Sir Victor Garland.................................................... 1,098,103.829 5,296.516
James M. Oates........................................................ 1,099,801.910 3,598.435
Kevin J.T. Pakenham................................................... 1,098,103.829 5,296.516
Frank R. Terzolo...................................................... 1,099,754.918 3,645.427
<CAPTION>
LATIN AMERICA FUND AFFIRMATIVE WITHHOLD
------------------ --------------
<S> <C> <C>
Elliott L. Atamian.................................................... 560,022.225 12,461.833
Sir Victor Garland.................................................... 556,397.824 16,086.234
James M. Oates........................................................ 560,327.099 12,156.959
Kevin J.T. Pakenham................................................... 556,397.824 16,086.234
Frank R. Terzolo...................................................... 560,186.099 12,297.959
<CAPTION>
GLOBAL INCOME FUND AFFIRMATIVE WITHHOLD
------------------ --------------
<S> <C> <C>
Elliott L. Atamian.................................................... 2,520,402.115 102,066.482
Sir Victor Garland.................................................... 2,516,904.729 105,563.868
James M. Oates........................................................ 2,521,682.971 100,785.626
Kevin J.T. Pakenham................................................... 2,514,684.969 107,783.628
Frank R. Terzolo...................................................... 2,520,747.079 101,721.518
</TABLE>
PROPOSAL III: To ratify the selection of Price Waterhouse LLP as independent
auditors of the Company for the current fiscal year end with respect to all
Funds. The following votes were cast:
<TABLE>
<CAPTION>
BY FUND FOR AGAINST ABSTAIN
- ------------------------------------------------------- ------------------ ------------- --------------
<S> <C> <C> <C>
International Equity Fund.............................. 1,375,397.765 2,914.567 19,243.983
Emerging Markets Fund.................................. 3,764,306.916 24,520.996 60,681.617
Smaller Companies Fund................................. 10,198,505.124 55,901.117 199,453.120
Pacific Strategy Fund.................................. 1,093,165.792 1,586.597 8,647.956
Latin America Fund..................................... 560,644.100 6,671.860 5,168.098
Global Income Fund..................................... 2,524,762.286 10,976.642 86,729.669
</TABLE>
67
<PAGE>
<TABLE>
<S> <C>
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. BULK RATE
ONE PARKVIEW PLAZA U.S.
OAKBROOK TERRACE, ILLINOIS 60181 POSTAGE
PAID
VAN KAMPEN
AMERICAN
CAPITAL
</TABLE>
