<PAGE>
The Govett Funds, Inc.
Semi-Annual Report
June 30, 1997
[LOGO OF GOVETT INVESTMENTS APPEARS HEAR]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Letter to the Shareholders................................................. 1
Portfolio Management Review................................................ 2
Financial Statements....................................................... 9
</TABLE>
<PAGE>
LETTER TO SHAREHOLDERS
August 8, 1997
Dear Shareholder:
The first half of 1997 presented challenges and opportunities for international
investors as several historic events unfolded. The most momentous of these
appeared to be the return of control of Hong Kong to mainland China. However,
despite the political magnitude of the transfer of power and apprehensions
before the event, the economic effects, if any, are yet to be determined. The
United Kingdom also experienced its own political power shift, as the Labour
Party took the reins of government for the first time in almost twenty years.
The new government immediately gave the Bank of England power to set monetary
policy independent of the Treasury's control of fiscal policy, and higher
interest rates appear likely./1/
In the United States, larger companies' stock prices soared to unprecedented
heights while the market for smaller growth company stocks fell to the lowest
levels recorded in almost twenty years. In Asia, the Japanese economy seemed
poised on the brink of economic stabilization, while other regional economies,
notably Thailand, experienced turbulence. Latin America was the bright spot in
the emerging markets universe, with Brazil taking the lead following political
reforms which appear to promise continuation of recent economically beneficial
government policies.
The Govett Funds experienced some significant change this year as well. In
January, John Govett & Co. Limited, the Funds' investment adviser, terminated
its relationship with the subadvisor to the Smaller Companies Fund and
appointed Gareth Watts as portfolio manager. Mr. Watts, who is responsible for
all of John Govett's U.S. small company funds, repositioned the portfolio to
eliminate some of the smaller, more volatile stocks. Despite the difficulties
both the Fund and the smaller companies market experienced early in 1997, we
believe that the portfolio is now well-positioned to be profitable over the
long term and to take advantage of the benefits of investing in smaller
companies. The Funds changed transfer agent and distributor in the second
quarter and plan to introduce several shareholder service enhancements before
the year is over.
John Govett has more than seventy years of experience managing investments in
emerging markets and growth company stocks. We believe that the case for
investing in growth areas both domestically and overseas is strong, and we
look forward to working with the Funds in the coming year to maximize
opportunities for investors in these arenas.
Thank you for investing in the Funds.
/s/ Peter Pejacsevich
Peter Pejacsevich
Chief Investment Officer
John Govett & Co. Limited
- -------------------
/1/ All returns and financial information, including index comparisons, are
stated in U.S. dollar terms. Total returns are based on historical information
and do not guarantee future results. A Fund's share price and total returns
vary, so that shares, when redeemed, may be worth more or less than their
original cost. Each index is a broad-based, unmanaged index considered to
reflect the performance of the relevant markets. Investments in a Fund are not
deposits of any bank and are not guaranteed by the Federal Deposit Insurance
Corporation. FPS Broker Services, Inc. is the Funds' distributor.
1
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
GOVETT INTERNATIONAL EQUITY FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
International equity markets continued to provide good returns during the
first six months of 1997. European markets in particular kept up above-average
gains. Swiss markets starred, rising 30% during the period, followed by a rise
of 19.8% in Spain and 17.8% in the Netherlands. Austria had the worst
performance, with a paltry stock market index increase of 1.3%, followed by
Norway at 5.9%, and France by 8.1%. However, lackluster performance of U.K.
stocks, following a price rise influenced by the general election and change
of government, hurt Western non-U.S. market returns in general. Total return
from the FTSE-S & P World Europe Index rose 13.7% in the six months. In
comparison, this index excluding returns from the U.K. market rose 16.7%.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1997
The Fund achieved a total return at net asset value (without a Class A front-
end sales charge) of 9.4% for the six months, compared to 10.4% for the Morgan
Stanley Capital International ("MSCI") Europe, Australia and Far East ("EAFE")
Index. When maximum front-end sales charges of 4.95% are taken into account,
the Fund's total return was 4%.
The Fund's exposure to the Japanese and U.K. markets was a drag on performance,
while returns from Swiss, Russian and Brazilian holdings had a positive effect.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year 5.6% 11.1%
- ------------------------------------------------------
Three Year 7.4% 9.3%
- ------------------------------------------------------
Five Year 11.4% 12.6%
- ------------------------------------------------------
Since Inception (1/7/92) 10.5% 11.5%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
Developments in the U.S., especially interest rate movements, are likely to
continue to influence international equity markets. We expect that a gradual
acceleration of economic growth, in an environment of subdued inflation and
rising corporate profits, will benefit international equities. At present we
continue to prefer European markets, where corporate restructuring as well as
economic growth and more competitive currencies are factors likely to enhance
corporate profits. It is interesting to note that European companies are
beginning to emphasize maximization of shareholder value in their management
philosophies, which may lead to further restructuring. We also look for above-
average growth prospects in the emerging economies.
We expect the international stock markets to be volatile in the coming months,
because if stock prices rise investors tend to focus on individual corporate
results, especially results of growth-oriented companies. In such
environments, unexpected events create sharp price reactions. Consequently,
stock selection, as compared to geographical or industrial sector allocation,
will assume increasing importance in our portfolio management strategy.
However, it also appears that U.S. dollar appreciation is leveling off, with
some indications of stability. If this scenario materializes and continues,
U.S.-based investors will benefit from the differential between U.S. and local
currencies.
/s/ Peter Kysel
Peter Kysel
Portfolio Manager
2
<PAGE>
GOVETT EMERGING MARKETS FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
The first half of 1997 was rewarding for emerging markets investors. Price
appreciation in emerging markets equities was driven by markets in Central and
Southern Europe, Russia and Latin America. In Central Europe, especially
Hungary, and in Russia, the macroeconomic picture is improving and the
corporate sector is returning to profitability. The Czech Republic remains
weak, as pressures on the current account finally led to a 10% currency
depreciation. In Latin America, continued evidence of economic recovery in
Mexico and Chile drove the region's equity prices up. Brazil demonstrated the
strongest growth, as the momentum of privatization reassured investors about
the government's ability to push reform forward. In Southern Europe, equities
in Greece gained as inflation and interest rates fell. Turkey also performed
well, although the failure of the Erbakan government dampened the hopes
kindled by Turkish privatization programs.
In contrast, Asia continued to disappoint as most markets remained steady or
declined during the period. A slowdown in exports throughout 1996 and 1997
contributed to this trend. Also, specific negative factors contributed, as in
Thailand where continuing current account and financial sector problems and
speculative pressure on the currency culminated in devaluation of the baht in
June.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1997
Total return for the period was 16% (without a Class A front-end sales
charge), slightly behind the MSCI Emerging Markets Index gain of 16.7%. When
maximum front-end sales charges of 4.95% are taken into account, the Fund's
total return was 10.2%.
While heavy exposure to Central Europe was beneficial, the Fund's Asian
investments at the beginning of the period restrained performance overall. In
particular, the Fund's Thai and South Korean investments were disappointing. We
reduced Asian exposure in March, using the proceeds to add to Latin American,
Turkish and Russian holdings. This asset shift improved performance during the
second half of the period.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year 10.4% 16.1%
- ------------------------------------------------------
Three Year 4.5% 6.3%
- ------------------------------------------------------
Five Year 11.7% 12.8%
- ------------------------------------------------------
Since Inception (1/7/92) 12.6% 13.7%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
We expect emerging markets to maintain their positive trends for the remainder
of the year. Asian markets should begin to perform well towards the end of the
year, if exports recover and the Thai economy stabilizes. Also, while Latin
American markets may have stabilized relative to their performance at the
beginning of the year, structural economic recovery in the region should
encourage continued positive momentum. In addition, Russian, Egyptian and
Turkish markets are expected to perform well as the year goes on.
/s/ Rachael Maunder
Rachael Maunder
Portfolio Manager
3
<PAGE>
GOVETT SMALLER COMPANIES FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
Smaller companies, and smaller growth companies in particular, continued to
underperform during the first half of 1997, with some recovery toward the end
of the period. Investors became increasingly unwilling to rely on the
companies' earnings projections as justification for high prices. As a result,
the smaller companies market experienced extreme volatility at times, as
severe price corrections followed revised earnings projections even when a
company's fundamentals had actually changed very little. Overall, smaller
growth companies suffered most. By mid-April, their relative valuations had
fallen to the lowest levels in the past twenty years. A sharp recovery
occurred in May as the background for smaller growth stocks improved, but the
potential for volatility remains.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1997
Total return for the period was -12.1% (without a Class A front-end sales
charge). When maximum front-end sales charges of 4.95% are taken into account,
the Fund's total return was -16.5%. In comparison, the Russell 2000 Index
(which is indicative of the performance of smaller company stocks) rose by
9.3% over the period, compared with the rise of 19.5% in the Standard & Poor's
500 Composite Index (the "S&P 500",which measures the performance of larger
company stocks).
In January, the advisor terminated the relationship with the subadvisor. We
immediately began to restructure the portfolio to reduce the high price-earnings
ratio of the portfolio holdings and to provide greater sector diversification.
We also modified sector diversification, reducing exposure to technology stocks
and focusing on other areas, such as health care, which promise more sustained,
long-term growth. However, the sale of portfolio holdings while the smaller
companies market was unstable, combined with further redemptions sparked by the
falling market, contributed to the Fund's losses during the period. The
portfolio restructuring was completed in May.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year -30.0% -26.4%
- ------------------------------------------------------
Three Year 17.8% 19.8%
- ------------------------------------------------------
Since Inception (1/1/93) 23.4% 24.8%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
The first half of 1997 represented an extraordinary period for smaller
companies in general and smaller growth companies in particular. John Govett
continues to follow its philosophy of buying growth at a reasonable price, and
we continue to try to identify firms in rapidly growing sectors that have
strong management and proprietary products and services.
/s/ Gareth Watts
Gareth Watts
Portfolio Manager
4
<PAGE>
GOVETT PACIFIC STRATEGY FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
Strong performance in Hong Kong and mainland China dominated the first half of
the year. Despite anticipated political risk, the death of Deng Xiaoping in
February had little economic impact, while investors in Hong Kong enjoyed a
price runup before the return of sovereignty to China. This transition appears
to be going smoothly as interest rates and credit controls on the mainland
continue to drop, allowing money to flow into the stock markets. "Red chip"
stocks, owned by mainland Chinese, dominated the Hong Kong market surge. The
Taiwanese market also gained, reflecting improved relations with China as well
as the island's emergence from recession.
Japan started 1997 poorly, as analysts downgraded forecasts for economic growth
and the yen depreciated. The yen traded at 126 yen to the dollar by the end of
June. Nevertheless, improved conditions during the quarter validated the Fund's
decisions to increase Japanese holdings.
Thailand and South Korea, the region's two laggards, showed mixed returns. The
strengthened yen during the second quarter relieved Korea from competitive
pressure from Japanese exports, and the Korean market rallied. The Fund had
been increasing exposure to Korea, believing that the market had already
reflected the political scandals and industrial unrest. Subsequent events
justified this position. On the other hand, the Thai market experienced heavy
selling pressure as the currency weakened and interest rates remained high. In
July Thai authorities allowed the baht to float freely. This action promoted a
dramatic market rebound in anticipation of reduced interest rates.
FUND PERFORMANCE DURING THE PERIOD ENDED JUNE 30, 1997
Total return for the period was 9.0% (without a Class A front-end sales charge).
When maximum front-end sales charges of 4.95% are taken into account, the Fund's
total return was 3.6%. In comparison, the MSCI Pacific Index rose 6.6%. The
weighting in North Asian markets, especially Hong Kong, contributed positively
to performance. Performance of Southeast Asian markets was mixed, as Thailand
and Malaysia detracted from returns during the period.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year 2.6% 8.0%
- ------------------------------------------------------
Three Year 2.5% 4.3%
- ------------------------------------------------------
Since Inception (1/1/94) -1.0% 0.5%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
Indications are positive for the Pacific Region as a whole. The Japanese
economy appears to be settling into a pattern conducive to a sustainable growth
rate of 2%, as the government has made significant moves to deregulate the
financial sector and the real estate market appears to be picking up. Although
a recovery would not necessarily send Japanese markets significantly higher,
the smaller regional economies would benefit from increased demands for their
exports. The Fund's Singaporean holdings did not boost performance in the first
half of the year, but we expect improvement as the year goes on from this
market, which is currently trading at historically low levels. The Philippines
experienced excellent export growth in the first half, but concerns about high
real estate prices dampened the picture somewhat. The Fund retained small
holdings in trade-related companies, avoiding Philippine companies involved in
real estate and financial services.
Hong Kong's transition from British to mainland Chinese rule has generally been
positive for the stock markets. While the anticipated re-invigoration of the
mainland Chinese economy is underway, it may not take hold until 1998. This
represents a longer lead time than current market prices indicate. By contrast,
Thailand and Korea seem to be at the beginning of a positive cycle.
/s/ Peter Robson
Peter Robson
Portfolio Manager
5
<PAGE>
GOVETT LATIN AMERICA FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
Latin American markets returned 35% in first half of 1997 compared to 3.8% for
the second half of 1996, measured by the MSCI Latin America Index. This strong
showing resulted from a combination of relatively low interest rates in the
global economy and increasing optimism about the extent and sustainability of
economic recovery and adjustment in the region.
This year Brazilian markets starred. The economy responded positively to
legislation allowing the re-election of President Cardoso in 1998, which
increased the likelihood of continuity in economic policy over the next few
years. Electricity and telecommunications stocks benefited in particular, as
greater certainty about regulatory policies and privatization prospects
strongly boosted these sectors.
The Mexican picture was mixed. Economic recovery and falling interest rates
increased the attractiveness of Mexican equities. Foreign direct investment
remained strong, and the peso remained stable. On the other hand, the
important mid-term Congressional elections focused investors' attention on
changes that could result if the PRI -- which has ruled Mexico for over sixty
years -- loses its dominance. However, despite the uncertainties it appears
that economic policy will remain constant.
The Argentine and Chilean economies, as well as the smaller regional markets
of Peru, Venezuela and Colombia, also benefited from globally low interest
rates. Chilean electricity stocks received an added boost from the end of the
drought there.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1997
The Fund's total return at net asset value (without a Class A front-end sales
charge) was 34.4% for the period. In comparison, the MSCI Latin America Index
return was 39.5% for the same period. When maximum front-end sales charges of
4.95% are taken into account, the Fund's total return was 27.7%.
The Fund benefited from underweighting of its Mexican position, relative to the
MSCI Latin America Index position, but toward the end of the period
overweighting in Argentine holdings hurt performance. Increased Brazilian
holdings at the beginning of the year, especially in the telecommunications and
utility sectors, helped performance.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year 29.7% 35.4%
- ------------------------------------------------------
Three Year 9.0% 10.9%
- ------------------------------------------------------
Since Inception (3/7/94) 2.4% 4.0%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
We expect a relative slow-down in Latin American markets in the second half of
1997. Strong cyclical recovery in gross domestic product (GDP) growth
occurring internationally will bolster some markets, especially Argentina,
Mexico and Peru. Brazilian economic growth will likely be somewhat more
subdued, due to efforts to prevent further trade deficit deterioration. A
growth rate of around 3% is expected, although restructuring of the utilities
and petroleum sectors is expected to provide significant opportunities. In
Argentina, earnings continue to exceed expectations; while in Mexico, earnings
growth is anticipated to accelerate as the domestic economy picks up.
The Fund will continue to take advantage of opportunities in Venezuela and
Mexico, where we expect consumer spending to fuel the domestic economy, and in
Argentina, where we anticipate opportunities in cyclical industries such as
mining. In Brazil, we expect privatizations to present the most attractive
opportunities. We anticipate remaining underweight relative to the MSCI Latin
America Index in Chile, Peru and Colombia, as the outlook for further market
appreciation in these countries appears more limited in the short-term.
/s/ Caroline Lane
Caroline Lane
Portfolio Manager
6
<PAGE>
GOVETT GLOBAL INCOME FUND
MARKET CONDITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
In the U.S., weakness in the first quarter of 1997 reflected concerns that
markets were overheating. Investors also appeared to fear higher inflation
resulting from a tight labor market. Therefore, at the end of March the
Federal Reserve Bank, in an effort to cool the economy, raised short-term
interest rates by 0.25%, to 5.5%. In the second quarter, however, the U.S.
economy remained strong and inflation stayed under control. Investors became
less concerned about potential interest rate increases, and stock markets
rallied.
In Europe, the peripheral markets of Italy, Spain and Sweden performed best in
the first half of 1997, due to rising hopes of broad participation in the
European Single Currency on its launch date of January 1, 1999. This
development would cause yields in participant countries to "converge" towards
the lower German levels, with accompanying higher bond prices. U.K. bond
markets performed well, as the market welcomed the Labour Party victory as an
end to political uncertainty and a more pro-European government position.
Investors also viewed favorably the granting of independence to the Bank of
England to determine interest rates.
Japanese bond yields fell in the first quarter. Investors feared continuing
economic weakness following increases in consumption and income taxes imposed
to reduce the large government deficit. However, yields rose in the second
quarter as signs emerged that the tax increases would not harm the economy.
The U.S. dollar continued to appreciate against the European currencies and
the yen during the period. However, all of the gain against the yen was lost
by the end of the second quarter.
FUND PERFORMANCE DURING THE SIX MONTHS ENDED JUNE 30, 1997
The Fund's total return at net asset value (without a Class A front-end sales
charge, and assuming reinvestment of dividends) was -4.0%. This compares with
a return of -1.2% on the Salomon Brothers World Government Bond Index. When
maximum front-end sales charges of 4.95% are taken into account, the Fund's
total return was -8.8%.
The Fund suffered from a relatively high exposure to core European bond markets,
which underperformed markets in the peripheral areas. In addition, the "core"
European currencies were weaker against a strong U.S. dollar. The Fund's
exposure to yen assets increased during the period to get the benefit of yen
appreciation.
<TABLE>
<CAPTION>
- ------------------------------------------------------
Average Annual Total Return
- ------------------------------------------------------
Time At Maximum At Net
Period Offering Price Asset Value
- ------------------------------------------------------
<S> <C> <C>
One Year -7.0% -2.1%
- ------------------------------------------------------
Three Year 1.6% 3.4%
- ------------------------------------------------------
Five Year 3.3% 4.4%
- ------------------------------------------------------
Since Inception (1/7/92) 3.6% 4.5%
- ------------------------------------------------------
</TABLE>
MARKET OUTLOOK FOR THE REMAINDER OF 1997
With high consumer confidence, a strong labor market and relatively low long-
term interest rates, a major slow-down in the U.S. economy seems unlikely in
the foreseeable future. Consequently, the scope for bond yields to fall much
further, in the U.S. as well as overseas, appears limited. In addition,
further recovery in the yen is anticipated, as expectations of interest rate
increases in Japan gain further strength.
/s/ Peter Pejacsevich
Peter Pejacsevich for John Govett's fixed income team
Portfolio Managers
7
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
8
<PAGE>
GOVETT INTERNATIONAL EQUITY FUND
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- --------------------------------------------------------------------------------
Common Stocks--97.4%
<S> <C> <C>
ARGENTINA - 1.5%
6,691 Perez Companc ADR...................................... $ 106,804
7,000 Telefonica de Argentina ADR............................ 242,375
-----------
349,179
-----------
AUSTRALIA - 0.4%
15,000 TAB Corp. Holdings..................................... 81,567
-----------
AUSTRIA - 1.6%
4,500 Radex-Heraklith Industriebeteiligungs 190,443
3,000 SES AS*(a)............................................. 23,696
1,400 Wolford................................................ 135,850
-----------
349,989
-----------
BRAZIL - 3.6%
17,000 Eletrobras ADR......................................... 504,528
2,000 Telebras ADR........................................... 303,500
-----------
808,028
-----------
CHINA - 0.4%
157,000 China North Industries Investment ADR.................. 94,985
-----------
CROATIA - 0.5%
7,770 Pliva GDR*............................................. 118,104
-----------
CZECH REPUBLIC - 1.5%
2,000 Leciva Praha*.......................................... 127,364
30,400 Prazske Pivovary*...................................... 206,350
-----------
333,714
-----------
DENMARK - 0.6%
3,000 Spar Nord Holding...................................... 140,126
-----------
FRANCE - 5.8%
3,500 Cap Gemini Sogeti...................................... 184,690
1,000 Castorama Dubois....................................... 140,773
2,300 Christian Dior......................................... 379,764
2,000 Compagnie Generale des Eaux............................ 256,354
8,000 Entrelec*.............................................. 348,750
-----------
1,310,331
-----------
GERMANY - 4.9%
4,000 Adidas................................................. 447,414
3,000 Bayer.................................................. 115,639
4,300 Daimler Benz........................................... 349,999
1,300 SGL Carbon............................................. 177,624
-----------
1,090,676
-----------
GREECE - 1.9%
32,000 Hellenic Telecommunication Organization ADR*........... $ 369,600
6,770 Sfakianakis*........................................... 49,310
-----------
418,910
-----------
HONG KONG - 2.5%
100,000 First Pacific Co. ..................................... 127,787
113,000 Hong Kong Ferry Holdings............................... 218,786
75,000 New World Infrastructure*.............................. 212,009
-----------
558,582
-----------
HUNGARY - 4.0%
19,000 Euronet Services ADR*.................................. 210,188
7,000 Mezogep*............................................... 110,289
1,000 Richter Gedeon GDR*.................................... 92,000
2,000 Scala ECE*............................................. 334,162
19,556 Zalakeramia GDR*....................................... 143,248
-----------
889,887
-----------
INDIA - 2.2%
19,000 State Bank of India GDR................................ 503,500
-----------
IRELAND - 2.0%
14,600 Adare Printing Group................................... 153,765
10,000 Bank of Ireland........................................ 109,897
150,000 Waterford Wedgewood.................................... 196,442
-----------
460,104
-----------
ITALY - 6.1%
40,000 Bulgari................................................ 226,393
3,000 Fila Holding ADR....................................... 100,312
5,250 Gucci Group ADR........................................ 337,969
110,000 Pirelli................................................ 272,460
70,000 Simint*................................................ 426,252
-----------
1,363,386
-----------
JAPAN - 14.4%
10,000 Daifuku................................................ 131,803
26 DDI.................................................... 191,996
26,000 Fujikura............................................... 242,831
18,000 Fujitsu................................................ 249,814
8,000 Honda Motor............................................ 240,911
37,000 Itochu................................................. 199,267
</TABLE>
See accompanying notes to the financial statements.
9
<PAGE>
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- ------------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
JAPAN (CONTINUED)
48,000 Kawasaki Heavy Industries............................. $ 223,314
6,000 Matsumotokiyoshi...................................... 254,528
16,000 Mitsui Fudosan........................................ 220,661
50,000 Nissan Fire & Marine Insurance........................ 274,953
10,000 Omron................................................. 212,107
2,000 Rohm.................................................. 205,997
3,000 Secom................................................. 220,224
500 Softbank.............................................. 31,991
2,000 TDK................................................... 146,816
30,000 Toshiba............................................... 192,991
---------
3,240,204
---------
MALAYSIA - 0.8%
70,000 Commerce Asset Holding................................ 184,429
---------
MEXICO - 1.9%
5,600 Controladora de Farmacias............................. 8,769
12,000 Empresas ICA Sociedad Controladora ADR................ 192,750
4,000 Metalclad ADR*........................................ 6,125
4,500 Telefonos de Mexico ADR............................... 214,875
---------
422,519
---------
NETHERLANDS - 5.0%
6,000 Cap Gemini............................................ 189,670
8,750 ING Groep............................................. 403,750
24,000 VNU................................................... 531,076
---------
1,124,496
---------
NORWAY - 1.0%
18,000 Provida*.............................................. 162,138
2,000 Tandberg*............................................. 21,291
31,000 Visual Management Applications*....................... 41,039
---------
224,468
---------
POLAND - 3.3%
10,200 Agros Holding*(a)..................................... 217,252
7,000 Elektrim.............................................. 60,916
9,880 Krosno................................................ 138,287
668 Polifarb Debica Series B*(a).......................... 13,212
16,000 Stalexport*........................................... 155,789
11,279 Zaklady Elektrod Weglowych*........................... 121,833
POLAND (CONTINUED)
564 Zaklady Wiorowych ADR*(a)............................. $ 25,227
---------
732,516
---------
PORTUGAL - 1.5%
9,000 Colep*................................................ 144,501
5,000 Portugal Telecom...................................... 201,762
---------
346,263
---------
RUSSIA - 5.9%
7,000 Mosenergo ADR......................................... 297,604
7,000 Surgutneftegaz ADR.................................... 374,500
8,000 Trade House GUM ADR................................... 644,237
---------
1,316,341
---------
SINGAPORE - 2.8%
78,000 DBS Land.............................................. 246,597
28,000 Overseas Union Bank................................... 174,302
46,000 Sembawang Shipyard.................................... 209,135
---------
630,034
---------
SOUTH KOREA - 0.3%
98 Hanwha Chemical....................................... 770
28 Samsung Electronics................................... 2,223
2,423 Samsung Electronics GDR (non-voting shares)........... 65,421
---------
68,414
---------
SPAIN - 0.9%
50,000 Corp. Financiera Reunida, (COFIR)..................... 210,526
---------
SWEDEN - 3.5%
16,000 Astra B............................................... 284,485
5,000 Oxigene Europe AB*.................................... 163,578
30,000 Pandox Hotellfastigheter AB*.......................... 201,725
20,000 PartnerTech AB*....................................... 131,897
---------
781,685
---------
SWITZERLAND - 6.0%
975 Adecco................................................ 373,973
800 Danzas Holding........................................ 156,164
213 Novartis.............................................. 340,508
280 Sairgroup*............................................ 313,753
1,300 SMH................................................... 176,079
---------
1,360,477
---------
</TABLE>
See accompanying notes to the financial statements.
10
<PAGE>
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- ------------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
THAILAND - 1.0%
30,000 National Finance & Securities....................... $ 18,819
5,000 Siam Cement......................................... 86,470
97,800 Thai Military Bank.................................. 109,484
-----------
214,773
-----------
TURKEY - 1.3%
372,500 Ege Biracilik Ve Malt Sanayii....................... 86,526
5,500,000 Haci Omer Sabanci Holding........................... 199,966
-----------
286,492
-----------
UNITED KINGDOM - 8.3%
36,500 Astec............................................... 83,264
7,300 BOC Group........................................... 126,841
20,000 British Airport Authority........................... 184,328
16,000 British Telecommunications 118,823
8,800 Harvey Nichols...................................... 41,468
8,900 Lloyds TSB Group.................................... 91,436
22,000 Marks & Spencer..................................... 182,430
18,250 Reuters Holdings.................................... 192,358
13,500 RTZ................................................. 235,243
35,100 Shell Transport & Trading........................... 239,626
11,500 Zeneca Group........................................ 380,295
-----------
1,876,112
-----------
TOTAL -- COMMON STOCKS (Cost $18,012,583)........... 21,890,817
-----------
Preferred Stocks - 4.7%
FINLAND - 1.7%
5,000 Oy Nokia AB......................................... 373,674
-----------
GERMANY - 3.0%
63 Daimler Benz Conv................................... 5,421
200 Porsche............................................. 260,418
2,000 S.A.P. AG-Vorzug.................................... 412,424
-----------
678,263
-----------
HONG KONG - 0.0%
1,000 Jardine Strategic Holdings Conv..................... 1,235
-----------
TOTAL -- PREFERRED STOCKS (Cost $745,696)........... 1,053,172
-----------
Warrants and Rights - 0.0%
MALAYSIA - 0.0%
8,750 Commerce Asset Holding Warrants, expire 7/23/97*.... $ --
14,000 Commerce Asset Holding Rights, expire 7/23/97*...... 832
-----------
832
-----------
SINGAPORE - 0.0%
5,600 Overseas Union Bank Rights, expire 7/02/97*......... 7,795
-----------
TOTAL -- WARRANTS AND RIGHTS (Cost $0).............. 8,627
-----------
TOTAL INVESTMENTS -- 102.1% (Cost $18,758,279)...... 22,952,616
Other Assets and Liabilities (net) --(2.1%)......... (467,746)
-----------
TOTAL NET ASSETS --100.0%........................... $22,484,870
===========
</TABLE>
* Non-income producing security
(a) Security is valued at fair value-see Note 1 to financial statements.
ADR American Depositary Receipt
GDR Global Depositary Receipt
See accompanying notes to the financial statements.
11
<PAGE>
GOVETT INTERNATIONAL EQUITY FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
Japan.................................................................... 14.4%
United Kingdom........................................................... 8.3
Germany.................................................................. 7.9
Italy.................................................................... 6.1
Switzerland.............................................................. 6.0
Russia................................................................... 5.9
France................................................................... 5.8
Netherlands.............................................................. 5.0
Hungary.................................................................. 4.0
Brazil................................................................... 3.6
Sweden................................................................... 3.5
Poland................................................................... 3.3
Singapore................................................................ 2.8
Hong Kong................................................................ 2.5
India.................................................................... 2.2
Ireland.................................................................. 2.0
Mexico................................................................... 1.9
Greece................................................................... 1.9
Finland.................................................................. 1.7
Austria.................................................................. 1.6
Argentina................................................................ 1.5
Portugal................................................................. 1.5
Czech Republic........................................................... 1.5
Turkey................................................................... 1.3
Norway................................................................... 1.0
Thailand................................................................. 1.0
Spain.................................................................... 0.9
Malaysia................................................................. 0.8
Denmark.................................................................. 0.6
Croatia.................................................................. 0.5
China.................................................................... 0.4
Australia................................................................ 0.4
South Korea.............................................................. 0.3
-----
102.1
Other Assets and Liabilities (net)....................................... (2.1)
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
SECTOR ALLOCATION
<TABLE>
<S> <C>
Technology............................................................... 21.4%
Financial Services....................................................... 14.7
Autos & Transportation................................................... 10.9
Consumer Discretionary................................................... 9.0
Healthcare............................................................... 8.4
Producer Durables........................................................ 8.0
Materials & Processing................................................... 7.0
Consumer Staples......................................................... 6.5
Energy................................................................... 3.2
Other.................................................................... 13.0
-----
102.1
Other Assets and Liabilities (net)....................................... (2.1)
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
12
<PAGE>
GOVETT EMERGING MARKETS FUND
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- ------------------------------------------------------------------------------
Common Stocks - 94.2%
<S> <C> <C>
ARGENTINA - 6.7%
144,000 Acindar Industria Argentina de Aceros*................ $ 368,695
60,000 Banco Frances del Rio de la Plata..................... 652,298
14,300 Central Costanera ADR................................. 500,560
75,836 Perez Companc B....................................... 605,262
12,000 Quilmes Industrial ADR................................ 139,500
14,000 Siderar ADR........................................... 455,000
37,500 Telefonica de Argentina ADR........................... 1,298,438
---------
4,019,753
---------
BRAZIL - 13.8%
18,477 Aracruz Celulose ADR.................................. 376,469
680,000 Banco Itau............................................ 380,866
15,400 Cemig ADR............................................. 775,328
10,900 Disco ADR*............................................ 431,913
1,650,000 Paulista de Forca e Luz............................... 277,401
2,800,000 Petroleo Brasiliero................................... 777,659
8,000 Siderurgica Nacional ADR.............................. 262,319
18,800 Telebras ADR.......................................... 2,852,900
3,857,256 Telemig............................................... 682,526
3,387,278 Telerj................................................ 522,281
2,796,788 Telesp................................................ 914,424
---------
8,254,086
---------
CHILE - 3.1%
23,110 Banco Santander Chile ADR............................. 340,873
17,100 Compania de Telefonos de Chile ADR.................... 564,300
21,000 Empresa Nacional Electricidad ADR..................... 473,813
7,300 Quimica Minera ADR.................................... 482,713
---------
1,861,699
---------
CHINA - 2.7%
165,000 China North Industries Investment..................... $ 99,825
1,533,000 Guangshen Railway..................................... 672,776
31,700 Huaneng Power International ADR*...................... 808,350
---------
1,580,951
---------
CROATIA - 1.6%
62,900 Pliva GDR*............................................ 956,080
---------
CZECH REPUBLIC - 1.7%
12,000 CKD Praha Holding AS*................................. 326,556
56,000 Prazske Pivovary*..................................... 380,118
2,850 SPT Telekom*.......................................... 298,972
---------
1,005,646
---------
EGYPT - 3.0%
17,000 A-Ahram Beverages Co. S.A.E.*......................... 347,650
29,000 Commercial International Bank GDR..................... 599,404
5,000 Eipico*............................................... 309,320
6,000 North Cairo Mills..................................... 312,468
9,915 Torah Portland Cement................................. 250,883
---------
1,819,725
---------
HONG KONG - 5.9%
1,337,600 Asia Securities International*........................ 837,370
823,700 China Overseas Land & Investment...................... 664,506
110,000 Dah Sing Financial.................................... 609,115
604,800 Founder Hong Kong..................................... 409,846
108,000 New World Development................................. 644,044
670,000 Qingling Motors....................................... 345,927
---------
3,510,808
---------
HUNGARY - 4.2%
10,000 BorsodChem GDR*....................................... 388,750
9,200 EGIS.................................................. 593,400
3,155 Pick Szeged GDR....................................... 242,750
12,740 Richter Gedeon GDR.................................... 1,172,080
750 Scala ECE*............................................ 125,311
---------
2,522,291
---------
</TABLE>
See accompanying notes to the financial statements.
13
<PAGE>
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- -----------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
INDIA - 4.9%
68,000 Arvind Mills GDR..................................... $ 338,300
69,000 Ashok Leyland GDR.................................... 446,775
11,700 Indian Aluminum GDR.................................. 48,262
13,000 Indian Hotels GDR.................................... 308,750
30,000 Industrial Credit & Investment Corp. of India GDR*... 431,250
24,500 Larsen & Toubro GDR*................................. 422,625
11,630 Reliance Industries GDR*............................. 267,490
24,000 Steel Authority of India GDR......................... 211,800
18,500 Tata Engineering and Locomotive GDR.................. 242,813
9,000 Videsh Sanchar Nigam GDR*............................ 186,750
---------
2,904,815
---------
INDONESIA - 3.0%
275,000 Bimantara Citra...................................... 480,572
886,000 Bank Danamon Indonesia............................... 464,494
509,500 Panca Wiratama Sakti................................. 387,572
679,000 Panin Bank........................................... 446,710
---------
1,779,348
---------
MALAYSIA - 5.3%
270,000 IJM.................................................. 566,957
370,000 Kumpulan Guthrie..................................... 586,371
120,000 Malaysian Resources.................................. 330,428
274,000 Multi-Purpose Holdings............................... 384,295
298,000 Nylex................................................ 507,686
81,000 Tanjong.............................................. 279,200
154,000 Tongkah Holdings*.................................... 294,089
174,000 United Merchant Group................................ 241,283
---------
3,190,309
---------
MEXICO - 8.5%
98,000 ALFA................................................. 667,171
84,420 Desc B............................................... 615,163
28,000 Grupo Elektra........................................ 305,346
42,400 Grupo Financiero Bancomer ADR*....................... 413,400
MEXICO (CONTINUED)
42,600 Grupo Financiero Bancomer GDR*....................... $ 415,350
40,000 ICA.................................................. 637,922
223,000 Organizacion Soriana A............................... 560,593
58,000 Sanluis Corporacion.................................. 429,223
250,000 Telefonos de Mexico L................................ 598,840
23,800 Tubo de Acero de Mexico ADR*......................... 438,813
---------
5,081,821
---------
PAKISTAN - 0.0%
74 Bhukari & Co.*....................................... 30
---------
PHILIPPINES - 2.3%
82,432 Bacnotan Consolidated Industries..................... 121,885
895,000 DMCI Holdings*....................................... 295,212
302,650 First Philippine Holdings Class B.................... 418,817
582,900 International Container Terminal Services*........... 298,345
1,050,000 Petron............................................... 266,720
---------
1,400,979
---------
POLAND - 0.1%
2,835 Krosno............................................... 39,681
---------
RUSSIA - 4.0%
11,170 Mosenegro ADR........................................ 474,891
9 Rostelecom
RDC* (a)............................................ 345,938
8,100 Surgutneftegaz ADR................................... 433,350
7,706 Trade House GUM ADR.................................. 620,561
13,800 Unified Energy Systems GDR* (a)...................... 514,527
---------
2,389,267
---------
SOUTH AFRICA - 6.3%
48,000 Barlow............................................... 522,107
117,000 Murray & Roberts Holdings............................ 274,642
117,000 Pepkor............................................... 683,381
174,000 Reunert.............................................. 596,363
214,000 Safmarine & Rennies Holdings......................... 523,562
</TABLE>
See accompanying notes to the financial statements.
14
<PAGE>
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
(See Note
Shares Description 1)
- ------------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
SOUTH AFRICA (CONTINUED)
58,000 Sappi................................................. $ 524,135
48,200 Sasol................................................. 632,114
----------
3,756,304
----------
SOUTH KOREA - 4.4%
16,000 Dong-Ah Construction Industrial EDR................... 141,600
23,140 LG Semiconductor*..................................... 901,626
1,401 Mirae................................................. 320,274
5,040 Pohang Iron & Steel................................... 516,191
1,746 S1.................................................... 369,648
5,670 Samchully............................................. 363,953
----------
2,613,292
----------
TAIWAN - 2.9%
196,000 Acer*................................................. 705,036
117,000 China Development*.................................... 603,939
72,000 Delta Electronic Industrial*.......................... 445,467
----------
1,754,442
----------
THAILAND - 4.1%
362,000 Bangchak Petroleum.................................... 146,728
80,000 Bangkok Bank.......................................... 398,379
220,000 Bank of Ayudhya....................................... 343,949
47,100 Grammy Entertainment.................................. 445,150
100,000 Italian-Thai Development.............................. 225,825
50,800 Kang Yong Electric.................................... 157,862
83,300 Onpa International.................................... 205,798
20,200 Siam Cement........................................... 349,338
44,500 United Communication Industry......................... 183,806
----------
2,456,835
----------
TURKEY - 5.2%
3,347,000 Akcansa Cimento....................................... 461,966
3,750,000 Arcelik............................................... 504,965
6,000,000 Eregli Demir Ve Celik Fabrikalari..................... 999,832
594,000 Otosan Otomobil Sanayii............................... 315,947
8,500,000 Sabanci Holdings...................................... 309,039
TURKEY (CONTINUED)
23,300,000 Yapi ve Kredi Bankasi................................. $ 533,378
----------
3,125,127
----------
ZIMBABWE - 0.5%
100,000 NMBZ Holdings*........................................ 267,500
----------
TOTAL -- COMMON STOCKS (Cost $51,033,364)............. 56,290,789
----------
Preferred Stocks - 0.7%
BRAZIL - 0.7%
23,500,000 Copel (Cost $263,501)................................. 436,560
----------
Warrants and Rights - 0.5%
BRAZIL - 0.0%
95,566 Brahma Warrants, expire 4/30/03* (a).................. 4,438
----------
INDONESIA - 0.1%
205,714 Panin Bank Warrants, expire 6/26/00*.................. --
480,000 Panin Bank Rights, expire 8/1/97*..................... 34,539
----------
34,539
----------
MALAYSIA - 0.4%
120,400 Gamuda Warrants, expire 1/17/00*...................... 240,895
6,000 Multi-Purpose Holdings Warrants, 11/23/98*............ 3,447
----------
244,342
----------
TOTAL -- WARRANTS AND RIGHTS (Cost $5,769)............ 283,319
----------
</TABLE>
See accompanying notes to the financial statements.
15
<PAGE>
GOVETT EMERGING MARKETS FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Principal (See Note
Amount Description 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Convertible Bonds - 0.3%
MALAYSIA - 0.3%
USD 560,000 Multi-Purpose Holdings (Cost $224,134)............... $ 188,590
-----------
TOTAL INVESTMENTS -- 95.7% (Cost $51,526,768)........ 57,199,258
Other Assets and Liabilities (net) --4.3%............ 2,555,349
-----------
TOTAL NET ASSETS --100.0%............................ $59,754,607
===========
</TABLE>
*Non-income producing security
(a) Security is valued at fair value - see Note 1 to financial statements.
ADR American Depositary Receipt
EDR European Depositary Receipt
GDR Global Depositary Receipt
RDC Russian Depositary Certificate
USD United States Dollar
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
Brazil................................................................... 14.5%
Mexico................................................................... 8.5
Argentina................................................................ 6.7
South Africa............................................................. 6.3
Malaysia................................................................. 6.0
Hong Kong................................................................ 5.9
Turkey................................................................... 5.2
India.................................................................... 4.9
South Korea.............................................................. 4.4
Hungary.................................................................. 4.2
Thailand................................................................. 4.1
Russia................................................................... 4.0
Chile.................................................................... 3.1
Indonesia................................................................ 3.1
Egypt.................................................................... 3.0
Taiwan................................................................... 2.9
China.................................................................... 2.7
Philippines.............................................................. 2.3
Czech Republic........................................................... 1.7
Croatia.................................................................. 1.6
Zimbabwe................................................................. 0.5
Poland................................................................... 0.1
-----
95.7
Other Assets and Liabilities (net)....................................... 4.3
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
SECTOR ALLOCATION
<TABLE>
<S> <C>
Technology............................................................... 22.7%
Financial Services....................................................... 15.6
Producer Durables........................................................ 11.0
Materials & Processing................................................... 10.6
Consumer Staples......................................................... 5.3
Healthcare............................................................... 5.2
Consumer Discretionary................................................... 3.7
Autos & Transportation................................................... 3.6
Energy................................................................... 3.5
Utilities................................................................ 3.4
Other.................................................................... 11.1
-----
95.7
Other Assets and Liabilities (net)....................................... 4.3
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- -------------------------------------------------------------------------------
Common Stocks - 98.6%
<S> <C> <C>
ELECTRICAL & ELECTRONICS - 17.8%
80,000 Ascend Communications*.................................. $3,150,000
50,000 Bitstream*.............................................. 137,500
98,700 Cascade Communications*................................. 2,726,587
190,000 Cypress Semiconductor*.................................. 2,755,000
92,500 ENCAD*.................................................. 3,838,750
50,000 FORE Systems*........................................... 681,250
102,500 Intelligroup............................................ 986,563
240,000 Larscom Class A......................................... 2,580,000
100,000 Network Imaging*........................................ 203,125
100,000 S3*..................................................... 1,100,000
70,000 Synopsys*............................................... 2,572,500
81,710 Tandberg................................................ 869,837
173,800 Versant Object Technology............................... 1,042,800
40,000 Viasoft*................................................ 2,030,000
143,000 Xylan*.................................................. 2,431,000
----------
27,104,912
----------
ELECTRONIC COMPONENTS & INSTRUMENTS - 9.7%
140,000 Chips & Technologies*................................... 1,452,500
50,000 Cognos*................................................. 1,556,250
105,000 GaSonics International*................................. 1,430,625
140,000 SDL*.................................................... 2,677,500
491,400 SystemSoft*............................................. 5,282,550
83,000 Vantive*................................................ 2,344,750
----------
14,744,175
----------
ENERGY EQUIPMENT & SERVICES - 1.4%
100,000 Accent Color Sciences................................... 409,375
126,500 ESS Technology*......................................... 1,699,844
----------
2,109,219
----------
ENERGY RESOURCES - 7.1%
75,000 Comstock Resources*..................................... 782,812
81,100 ENSCO International*.................................... 4,278,025
100,000 Pride Petroleum Services*............................... 2,400,000
63,900 SEACOR SMIT*............................................ 3,342,769
----------
10,803,606
----------
FINANCIAL SERVICES - 8.9%
150,000 AMRESCO*................................................ 3,225,000
100,000 Credit Acceptance*...................................... 1,287,500
70,000 Green Tree Financial.................................... 2,493,750
FINANCIAL SERVICES (CONTINUED)
170,000 The Money Store......................................... $4,876,875
41,000 Starwood Lodging Trust.................................. 1,750,187
----------
13,633,312
----------
FOOD & HOUSEHOLD PRODUCTS - 0.7%
47,600 Hot Topic............................................... 1,071,000
----------
HEALTH & PERSONAL CARE - 15.3%
176,400 Access Health*.......................................... 4,321,800
47,500 Biofield................................................ 160,313
125,000 Coast Dental Services................................... 1,906,250
53,200 Dura Pharmaceuticals*................................... 2,121,350
130,000 EndoSonics*............................................. 1,413,750
22,000 Kos Pharmaceuticals..................................... 610,500
160,000 Medical Resources*...................................... 2,640,000
215,000 Physician Support Systems*.............................. 2,633,750
29,000 Quintiles Transnational*................................ 2,019,125
45,200 RoTech Medical*......................................... 906,825
70,000 SangStat Medical*....................................... 1,618,750
48,000 Spine-Tech*............................................. 1,782,000
50,000 Trinity Biotech*........................................ 128,125
27,000 Vertex Pharmaceuticals*................................. 1,032,750
----------
23,295,288
----------
LEISURE & TOURISM - 1.5%
82,000 Rainforest Cafe*........................................ 2,080,750
150,000 Spatializer Audio Laboratories*......................... 262,500
----------
2,343,250
----------
MULTI-INDUSTRY - 6.2%
130,000 Destron Fearing*........................................ 243,750
49,400 Global Industries*...................................... 1,153,953
49,700 Molecular Devices*...................................... 869,750
80,000 OmniQuip International.................................. 1,850,000
123,700 Personnel Group of America*............................. 3,564,106
190,000 Printrak International.................................. 1,805,000
----------
9,486,559
----------
RETAIL - 9.9%
140,000 Claire's Stores......................................... 2,450,000
129,800 The Finish Line Class A*................................ 1,898,325
65,600 Inacom.................................................. 2,041,800
115,000 Just For Feet*.......................................... 2,005,313
</TABLE>
See accompanying notes to the financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
GOVETT SMALLER COMPANIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- -------------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
RETAIL (CONTINUED)
50,000 Proffitt's*............................................ $ 2,193,750
174,000 Vans*.................................................. 2,631,750
100,000 Viking Office Products*................................ 1,900,000
------------
15,120,938
------------
SERVICES - 3.4%
300,000 Allied Waste Industries*............................... 5,212,500
------------
TECHNOLOGY - 1.8%
145,000 Aastrom Biosciences.................................... 1,033,125
75,000 JetFax................................................. 581,250
100,000 Trident Microsystems*.................................. 1,125,000
------------
2,739,375
------------
TELECOMMUNICATIONS - 14.9%
47,000 ACC*................................................... 1,451,125
60,000 ADC Telecommunications* 2,002,500
200,000 Aspect Telecommunications* 4,450,000
75,000 Digital Microwave*..................................... 2,250,000
351,600 DSP Communications*.................................... 3,867,600
95,000 Pacific Gateway Exchange............................... 2,683,750
168,800 PairGain Technologies*................................. 2,616,400
160,000 Periphonics*........................................... 3,440,000
------------
22,761,375
------------
TOTAL -- COMMON STOCKS (Cost $171,644,369)............. 150,425,509
------------
TOTAL INVESTMENTS --98.6% (Cost $171,644,369).......... 150,425,509
------------
Other Assets and Liabilities (net) -- 1.4%............. 2,076,806
------------
TOTAL NET ASSETS --100.0%.............................. $152,502,315
============
</TABLE>
*Non-income producing security
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
United States............................................................ 98.0%
Norway................................................................... 0.6
-----
98.6
Other Assets and Liabilities (net)....................................... 1.4
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
SECTOR ALLOCATION
<TABLE>
<S> <C>
Electrical & Electronics................................................. 17.8%
Health & Personal Care................................................... 15.3
Telecommunications....................................................... 14.9
Retail................................................................... 9.9
Electronic Components & Instruments...................................... 9.7
Financial Services....................................................... 8.9
Energy Resources......................................................... 7.1
Multi-Industry........................................................... 6.2
Services................................................................. 3.4
Technology............................................................... 1.8
Leisure & Tourism........................................................ 1.5
Energy Equipment & Services.............................................. 1.4
Food & Household Products................................................ 0.7
-----
98.6
Other Assets and Liabilities (net)....................................... 1.4
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- ------------------------------------------------------------------------------
Common Stocks - 98.3%
<S> <C> <C>
AUSTRALIA - 5.3%
4,700 Amcor.................................................. $31,237
20,000 National Foods......................................... 28,095
29,000 Savage Resources....................................... 26,283
9,216 WMC.................................................... 58,120
-------
143,735
-------
CHINA - 7.2%
36,000 First Tractor*......................................... 23,699
120,000 Guangshen Railway...................................... 52,663
1,500 Huaneng Power International ADR*....................... 38,250
3,250 Shandong Huaneng Power ADR............................. 34,937
14,040 Want Want Holdings*.................................... 46,613
-------
196,162
-------
HONG KONG - 16.4%
133,000 Aeon Credit Service.................................... 44,635
160,600 Asia Securities International*......................... 100,540
59,000 Bengang Steel Plate*(a)................................ 18,306
5,000 Cheung Kong............................................ 49,372
84,000 China Overseas Land & Investment....................... 67,766
46,000 China Travel International Investment.................. 26,719
7,000 Hutchison Whampoa...................................... 60,537
38,000 Peregrine Investments Holdings......................... 78,234
-------
446,109
-------
INDIA - 6.1%
4,000 Industrial Credit & Investment Corp. of India GDR*..... 56,000
1,750 Larsen & Toubro GDR.................................... 30,187
2,350 Reliance Industries GDR*............................... 54,050
1,900 Tata Engineering and Locomotive GDR.................... 24,938
-------
165,175
-------
INDONESIA - 3.4%
18,000 Bimantara Citra........................................ 31,455
18,000 Medco Energi........................................... 33,121
82,000 Sierad Produca*........................................ 26,974
-------
91,550
-------
JAPAN - 19.6%
2,000 Bank of Tokyo-Mitsubushi............................... $40,152
3,000 Daiichi Pharmaceutical................................. 52,896
5,000 Hitachi................................................ 55,863
3,000 Mitsui Fudosan......................................... 41,374
5 Nippon Telegraph & Telephone........................... 48,008
6,000 Nippon Shokubai........................................ 47,658
2,000 Ono Pharmaceutical..................................... 70,528
500 Softbank............................................... 31,990
600 Sony................................................... 52,320
4,000 Sumitomo Trust & Banking............................... 42,945
8,000 Tokyu.................................................. 49,649
-------
533,383
-------
MALAYSIA - 8.9%
29,000 Advance Synergy(a)..................................... 33,090
196 Bumi Armada*........................................... 481
5,000 Country Heights Holdings............................... 19,612
20,000 Kumpulan Guthrie....................................... 31,696
13,200 Malaysian Resources.................................... 36,347
31,000 Multi-Purpose Holdings................................. 43,479
6,800 Rashid Hussain......................................... 43,106
10,000 Tanjong................................................ 34,469
-------
242,280
-------
PAKISTAN - 0.8%
274 Pakistan Telecommunications GDR*....................... 20,687
-------
PHILIPPINES - 5.3%
140,000 Belle*................................................. 40,871
69,100 DMCI Holdings*......................................... 22,792
5,472 Far East Bank & Trust (partly paid).................... 13,693
22,000 First Philippine Holdings Class B...................... 30,444
28,000 Sime Darby Pilipinas................................... 37,155
-------
144,955
-------
SINGAPORE - 7.1%
18,600 Acma................................................... 32,004
16,000 DBS Land............................................... 50,584
3,000 Development Bank of Singapore.......................... 37,770
4,800 Overseas-Chinese Banking............................... 49,689
12,000 Van Der Horst.......................................... 22,074
-------
192,121
-------
</TABLE>
See accompanying notes to the financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- -------------------------------------------------------------------------------
Common Stocks (continued)
<S> <C> <C>
SOUTH KOREA - 6.4%
1,800 Dong-Ah Construction Industrial EDR..................... $ 15,930
880 Korea Electric Power.................................... 26,261
1,220 LG Semiconductor*....................................... 47,536
420 Pohang Iron & Steel..................................... 43,016
108 S1...................................................... 21,325
321 Samchully............................................... 20,605
----------
174,673
----------
TAIWAN - 3.5%
9,000 Acer*................................................... 32,374
12,000 China Development*...................................... 61,943
----------
94,317
----------
THAILAND - 8.3%
5,000 BEC World............................................... 42,849
2,000 Banpu................................................... 29,184
40,000 First Bangkok City Bank................................. 32,040
6,000 IFCT Finance & Securities............................... 2,316
7,500 Italian-Thai Development................................ 16,937
33,000 Jasmine International................................... 29,299
8,600 Property Perfect*....................................... 3,320
3,900 Shinawatra Computer..................................... 26,948
1,000 Siam Cement............................................. 17,294
41,000 Siam City Bank.......................................... 24,136
----------
224,323
----------
TOTAL -- COMMON STOCKS (Cost $2,541,342)................ 2,669,470
----------
Preferred Stocks - 0.2%
MALAYSIA - 0.2%
20,000 Multi-Purpose Holdings Conv (Cost $8,005)............... 6,735
----------
Warrants - 0.4%
HONG KONG - 0.1%
2,400 China Travel Warrants, expire 6/30/98*.................. 821
18,400 Oriental Press Group Warrants, expire 10/2/98*.......... 1,021
----------
1,842
----------
JAPAN - 0.2%
25 Nankai Electric Warrants, expire 12/2/97*............... $ 25
20 Optec Dai-Ichi Denko Warrants, expire 2/8/00*........... 5,500
----------
5,525
----------
MALAYSIA - 0.0%
971 Rashid Hussain Warrants, expire 12/31/02*............... --
----------
SINGAPORE - 0.1%
4,650 Acma Ltd. Warrants, expire 7/24/01*..................... 2,342
----------
TOTAL -- WARRANTS
(Cost $30,272)......................................... 9,709
----------
TOTAL INVESTMENTS --98.9% (Cost $2,579,619)............. 2,685,914
Other Assets and Liabilities (net) -- 1.1%.............. 31,036
----------
TOTAL NET ASSETS --100.0%............................... $2,716,950
==========
</TABLE>
* Non-income producing security
(a) Security is valued at fair value - see Note 1 to financial statements.
ADR American Depositary Receipt
EDR European Depositary Receipt
GDR Global Depositary Receipt
See accompanying notes to the financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
GOVETT PACIFIC STRATEGY FUND (CONTINUED)
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1997 (Unaudited)
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
Japan.................................................................... 19.8%
Hong Kong................................................................ 16.5
Malaysia................................................................. 9.1
Thailand................................................................. 8.3
China.................................................................... 7.2
Singapore................................................................ 7.2
South Korea.............................................................. 6.4
India.................................................................... 6.1
Philippines.............................................................. 5.3
Australia................................................................ 5.3
Taiwan................................................................... 3.5
Indonesia................................................................ 3.4
Pakistan................................................................. 0.8
-----
98.9
Other Assets and Liabilities (net)....................................... 1.1
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
SECTOR ALLOCATION
<TABLE>
<S> <C>
Real Estate.............................................................. 12.4%
Materials & Processing................................................... 12.2
Financial Services....................................................... 12.1
Technology............................................................... 12.0
Producer Durables........................................................ 10.7
Banks.................................................................... 8.7
Autos & Transportation................................................... 4.8
Consumer Discretionary................................................... 4.6
Consumer Staples......................................................... 3.7
Utilities................................................................ 3.7
Healthcare............................................................... 2.0
Energy................................................................... 1.9
Other.................................................................... 10.1
-----
98.9
Other Assets and Liabilities (net)....................................... 1.1
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
21
<PAGE>
GOVETT LATIN AMERICA FUND
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- --------------------------------------------------------------------------------
Common Stocks - 78.5%
<S> <C> <C>
ARGENTINA - 17.3%
30,500 Acindar Industria Argentina de Aceros*................. $ 78,092
11,300 Banco Frances del Rio de la Plata...................... 122,849
3,400 Central Costanera ADR.................................. 119,014
19,300 CIADEA................................................. 83,002
2,500 Nortel Inversora ADR*.................................. 67,813
18,401 Perez Companc B........................................ 146,866
8,400 Quilmes Industrial ADR................................. 97,650
3,140 Siderar ADR............................................ 102,050
5,900 Telefonica de Argentina ADR............................ 204,288
---------
1,021,624
---------
BRAZIL - 20.7%
2,300 Cemig ADR.............................................. 115,796
1,065 Centrais Electricas de Santa Catarina GDR*............. 145,423
260,000 Light Participacoes.................................... 103,604
40,800 Riograndense de Telecommunication*(a) 61,753
2,800 Siderurgica Nacional ADR............................... 91,812
3,650 Telebras ADR........................................... 553,888
35,472 Telesp................................................. 11,598
200,439 Telepar................................................ 139,020
---------
1,222,894
---------
CHILE - 9.0%
7,600 Banco Santander Chile ADR.............................. 112,100
4,600 Empresa Nacional Electricidad ADR...................... 103,788
2,000 Quimica Minera ADR..................................... 132,250
2,400 Santa Isabel ADR....................................... 77,400
3,300 Telecomunicacoes de Chile ADR.......................... 108,900
---------
534,438
---------
MEXICO - 25.8%
2,500 Acer Computer International Ltd. ADR*(a)............... 43,889
13,000 Apasco................................................. 92,108
7,000 Cemex ADR.............................................. 67,408
111,000 Controladora Comercial Mexicana........................ 102,436
14,100 Desc B................................................. 102,746
128 Desc C................................................. 920
7,000 Grupo Elektra.......................................... 76,336
20,500 Grupo Financiero Bancomer GDR*......................... $ 199,875
108,000 Grupo Industrial Camesa*............................... 65,355
18,000 Grupo Mexico*.......................................... 55,824
5,500 Grupo Minsa ADR(a)..................................... 71,420
2,900 Grupo Televisa GDR*.................................... 88,087
7,400 ICA.................................................... 118,016
20,000 Industrias CH, B*...................................... 82,199
13,000 Sanluis Corporacion.................................... 96,205
3,700 Telefonos de Mexico L ADR.............................. 176,675
4,600 Tubo de Acero de Mexico ADR*........................... 84,812
---------
1,524,311
---------
PERU - 2.0%
6,500 Buenaventura........................................... 54,534
2,600 Ferreyros ADR(a)....................................... 61,750
---------
116,284
---------
VENEZUELA - 3.7%
1,600 Compania Anonima Nacional Telefonos de Venezuela
ADR................................................... 69,000
7,250 Mavesa ADR............................................. 73,406
15,000 Siderurgica Venezolana Sivensa ADR..................... 77,637
---------
220,043
---------
TOTAL -- COMMON STOCKS (Cost $3,748,049)............... 4,639,594
---------
Preferred Stocks - 19.9%
BRAZIL - 19.9%
8,000,000 Cofap.................................................. 86,569
323,000 Companhia Cimento Portland Itau........................ 111,010
8,300,000 Copel.................................................. 154,189
2,402,000 Duratex................................................ 127,150
660,000 Petrobras.............................................. 183,305
9,798 Telecomunicacoes De Minas Gerais....................... 1,734
790,000 Telemig................................................ 139,787
706,703 Telerj................................................. 108,965
814,000 Telesp................................................. 266,142
---------
TOTAL PREFERRED STOCKS (Cost $806,761)................. 1,178,851
---------
</TABLE>
See accompanying notes to the financial statements.
22
<PAGE>
GOVETT LATIN AMERICA FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (See Note 1)
- ------------------------------------------------------------------------------
<S> <C> <C>
Warrants - 0.1%
MEXICO - 0.1%
20,000 Metalclad Warrants, expire 9/30/99*(a) (Cost $0)..... $ 7,500
----------
TOTAL INVESTMENTS --98.5% (Cost $4,554,810).......... 5,825,945
Other Assets and Liabilities (net) -- 1.5%........... 88,699
----------
TOTAL NET ASSETS --100.0%............................ $5,914,644
==========
</TABLE>
* Non-income producing security
(a) Security is valued at fair value - see Note 1 to financial statements.
ADR American Depositary Receipt
GDR Global Depositary Receipt
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
Brazil................................................................... 40.6%
Mexico................................................................... 25.9
Argentina................................................................ 17.3
Chile.................................................................... 9.0
Venezuela................................................................ 3.7
Peru..................................................................... 2.0
-----
98.5
Other Assets and Liabilities (net)....................................... 1.5
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
SECTOR ALLOCATION
<TABLE>
<S> <C>
National Telecommunications.............................................. 20.5%
Producer Durables........................................................ 14.0
Regional Telecommunications.............................................. 11.6
Materials & Processing................................................... 10.0
Energy................................................................... 9.4
Financial Services....................................................... 8.7
Consumer Staples......................................................... 6.7
Technology............................................................... 5.0
Consumer Discretionary................................................... 3.1
Utilities................................................................ 2.0
Other.................................................................... 7.5
-----
98.5
Other Assets and Liabilities (net)....................................... 1.5
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
23
<PAGE>
GOVETT GLOBAL INCOME FUND
Schedule of Investments
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Principal (See Note
Amount Description 1)
- -------------------------------------------------------------------------------
Government Bonds and
Notes - 84.9%
<S> <C> <C>
ARGENTINA - 8.1%
USD 1,000,000 Argentina Global Bond 9.25%, 2/23/01............. $ 1,046,875
-----------
AUSTRIA - 9.0%
ATS 13,800,000 Austrian Government 6.25%, 5/31/06............... 1,175,366
-----------
DENMARK - 7.8%
DKK 6,000,000 Kingdom of Denmark 8.00%, 11/15/01............... 1,015,052
-----------
GERMANY - 11.9%
DEM 2,470,000 Treuhandanstalt 6.75%, 5/13/04................... 1,541,350
-----------
MULTI-NATIONAL - 4.1%
JPY 52,000,000 IBRD Global Bond 4.75%, 12/20/04................. 530,769
-----------
NETHERLANDS - 4.5%
NLG 1,000,000 Netherlands Government 8.50%, 3/15/01............ 581,247
-----------
RUSSIA - 7.7%
USD 1,000,000 Russia (Ministry of Finance) 9.25%, 11/27/01..... 1,007,500
-----------
UNITED KINGDOM - 7.1%
GBP 500,000 U.K. Treasury Note 9.75%, 8/27/02................ 924,398
-----------
UNITED STATES - 24.7%
USD 1,500,000 U.S. Treasury Note 6.50%, 8/31/01................ 1,507,500
USD 1,250,000 U.S. Treasury Note 7.50%, 2/15/05................ 1,322,656
USD 400,000 U.S. Treasury Bond 6.50%, 11/15/26............... 383,375
-----------
3,213,531
-----------
TOTAL -- GOVERNMENT BONDS AND NOTES (Cost
$11,415,734) 11,036,088
-----------
Preferred Stocks - 4.9%
IRELAND - 4.9%
IEP 26,000 Bank of Ireland Conv (Cost $591,162)............. $ 635,865
-----------
Short-Term Investments - 5.2%
GERMANY - 5.2%
DEM 1,172,379 Chase Manhattan Bank Germany Time Deposit 3.00%,
7/4/97.......................................... 672,486
-----------
BRAZIL - 0.0%
USD 500,000 Constran International Commercial Paper,
10/22/96(a)..................................... --
USD 300,000 Constran International Commercial Paper,
12/12/96(a)..................................... --
-----------
--
-----------
TOTAL -- SHORT-TERM INVESTMENTS
(Cost $1,475,137)............................... 672,486
-----------
TOTAL INVESTMENTS -- 95.0% (Cost $13,482,033).... 12,344,439
Other Assets and Liabilities (net) --5.0%........ 652,062
-----------
TOTAL NET ASSETS --100.0%........................ $12,996,501
===========
</TABLE>
ATS Austrian Schilling
DEM German Mark
DKK Danish Krone
GBP British Pound
IEP Irish Punt
JPY Japanese Yen
NLG Netherland Guilder
USD United States Dollar
(a)
This Brazilian construction company defaulted on these two tranches of
debt. Following consideration of factors such as Constran's receivables and
a planned debt restructuring, the Manager determined value pursuant to fair
valuation procedures approved by the Board of Directors.
See accompanying notes to the financial statements.
24
<PAGE>
GOVETT GLOBAL INCOME FUND (CONTINUED)
Schedule of Investments
June 30, 1997 (Unaudited)
GEOGRAPHIC CONCENTRATION
<TABLE>
<S> <C>
United States............................................................ 24.7%
Germany.................................................................. 17.1
Austria.................................................................. 9.0
Argentina................................................................ 8.1
Denmark.................................................................. 7.8
Russia................................................................... 7.7
United Kingdom........................................................... 7.1
Ireland.................................................................. 4.9
Netherlands.............................................................. 4.5
Multi-National........................................................... 4.1
-----
95.0
Other Assets and Liabilities (net)....................................... 5.0
-----
Total Net Assets....................................................... 100.0%
=====
</TABLE>
See accompanying notes to the financial statements.
25
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
International Emerging
Equity Markets
Fund Fund
------------- -----------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1)--(see accompanying
Schedule of Investments).......................... $22,952,616 $57,199,258
Cash............................................... 100,160 1,173,401
Foreign currency, at value (Note 1)................ 358,006 702,793
Receivable from:
Securities sold................................... 627,972 1,183,751
Net open forward currency contracts (Note 8)...... -- 23,059
Fund shares sold.................................. 15,110 119,499
Dividends and interest............................ 55,722 168,260
Deferred organization expense (Note 1)............. -- --
Other assets....................................... 10,965 3,283
----------- -----------
Total assets...................................... 24,120,551 60,573,304
----------- -----------
LIABILITIES:
Notes payable (Note 4)............................. 750,000 --
Payable for:
Securities purchased.............................. 556,674 309,039
Fund shares repurchased........................... 105,553 259,622
Distributions declared............................ -- --
Deferred foreign country taxes.................... 212 12,683
Investment manager (Note 2)....................... 21,591 27,540
Net open forward currency contracts (Note 8)...... 99,051 --
Accrued expenses and other liabilities............. 102,600 209,813
----------- -----------
Total liabilities................................. 1,635,681 818,697
----------- -----------
NET ASSETS......................................... $22,484,870 $59,754,607
=========== ===========
NET ASSETS CONSIST OF:
Paid-in-capital.................................... $17,433,216 $54,168,181
Undistributed net investment income (loss)......... (308,309) (130,054)
Accumulated net realized gain (loss) on investments
and foreign currency transactions ................ 1,264,831 35,753
Net unrealized appreciation (depreciation) on
investments, forward currency contracts and net
other assets (net of accrued foreign country tax
unrealized appreciation).......................... 4,095,132 5,680,727
----------- -----------
NET ASSETS......................................... $22,484,870 $59,754,607
=========== ===========
SHARES OUTSTANDING................................. 1,836,689 3,772,219
=========== ===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE..... $ 12.24 $ 15.84
=========== ===========
OFFERING PRICE PER SHARE (NET ASSET VALUE DIVIDED
BY 95.05%)........................................ $ 12.88 $ 16.66
=========== ===========
Cost of investments................................ $18,758,279 $51,526,768
Cost of foreign currency........................... $ 357,404 $ 703,877
</TABLE>
See accompanying notes to the financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
Smaller Pacific Latin Global
Companies Strategy America Income
Fund Fund Fund Fund
- ------------ ---------- ---------- -----------
<S> <C> <C> <C>
$150,425,509 $2,685,914 $5,825,945 $12,344,439
53,456 43,531 81,688 572,797
-- 88,278 44,833 15,002
4,428,366 247,780 105,769 --
-- 1,453 -- --
-- -- -- 5,257
3,751 4,025 18,984 217,737
4,099 9,516 9,943 --
3,232 3,225 3,232 4,855
- ------------ ---------- ---------- -----------
154,918,413 3,083,722 6,090,394 13,160,087
- ------------ ---------- ---------- -----------
1,000,000 200,000 100,000 --
-- 80,408 -- --
804,416 4,688 4,922 --
-- -- -- 58,047
-- 862 -- 10,288
19,309 4,405 11,826 12,414
-- -- -- 2,708
592,373 76,409 59,002 80,129
- ------------ ---------- ---------- -----------
2,416,098 366,772 175,750 163,586
- ------------ ---------- ---------- -----------
$152,502,315 $2,716,950 $5,914,644 $12,996,501
============ ========== ========== ===========
$187,217,589 $4,439,838 $5,947,527 $18,563,050
(1,481,326) (49,124) 7,534 (244,502)
(12,015,088) (1,780,386) (1,313,753) (4,180,788)
(21,218,860) 106,622 1,273,336 (1,141,259)
- ------------ ---------- ---------- -----------
$152,502,315 $2,716,950 $5,914,644 $12,996,501
============ ========== ========== ===========
7,951,516 272,564 552,134 1,680,112
============ ========== ========== ===========
$ 19.18 $ 9.97 $ 10.71 $ 7.74
============ ========== ========== ===========
$ 20.18 $ 10.49 $ 11.27 $ 8.14
============ ========== ========== ===========
$171,644,369 $2,579,619 $4,554,810 $13,482,033
$ -- $ 88,606 $ 44,809 $ 15,067
</TABLE>
27
<PAGE>
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
International Emerging
Equity Markets
Fund Fund
------------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest*............................................ $ -- $ 9,751
Dividends*........................................... 208,680 620,566
---------- ----------
Total investment income............................. 208,680 630,317
---------- ----------
EXPENSES:
Management fee (Note 2).............................. 118,461 295,011
Custody and administration fees...................... 58,292 165,526
12b-1 fee Class A (Note 3)........................... 59,270 147,718
Professional fees.................................... 28,388 28,390
Transfer agency fee.................................. 49,658 133,529
Registration and filing fees......................... 13,382 14,973
Directors' fees and expenses......................... 10,565 10,572
Amortization of organization costs (Note 1).......... 226 226
Other................................................ 15,955 25,599
---------- ----------
Total expenses...................................... 354,197 821,544
---------- ----------
Less: Expenses reimbursable and fees waived by the
Manager (Note 2).................................... 57,954 80,810
---------- ----------
Net operating expenses............................... 296,243 740,734
---------- ----------
Interest and other non-operating expenses............ 17,410 19,637
---------- ----------
NET INVESTMENT INCOME (LOSS)......................... (104,973) (130,054)
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investment transactions............................. 486,873 5,965,586
Foreign currency transactions....................... 354,952 (62,051)
---------- ----------
Net realized gain (loss)............................ 841,825 5,903,535
---------- ----------
Net change in unrealized appreciation (depreciation)
on:
Investments ........................................ 1,623,990 3,099,511
Foreign currency transactions....................... (248,383) 23,982
---------- ----------
Net unrealized appreciation (depreciation) during
the period......................................... 1,375,607 3,123,493
---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS).............. 2,217,432 9,027,028
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $2,112,459 $8,896,974
========== ==========
* Net of foreign taxes withheld of................... $ 17,063 $ 25,344
</TABLE>
See accompanying notes to the financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
Smaller Pacific Latin Global
Companies Strategy America Income
Fund Fund Fund Fund
- ------------ -------- ---------- -----------
<S> <C> <C> <C>
$ 331,450 $ 1,845 $ 4,212 $ 480,013
58,440 23,357 65,749 --
- ------------ -------- ---------- -----------
389,890 25,202 69,961 480,013
- ------------ -------- ---------- -----------
932,692 15,799 24,817 58,787
226,723 58,331 34,480 23,565
464,599 8,050 12,472 27,217
28,418 28,387 28,388 28,670
660,707 15,624 13,732 39,402
27,844 14,440 13,614 12,070
10,564 10,564 10,963 10,564
4,024 3,127 2,932 225
54,241 13,663 16,441 14,271
- ------------ -------- ---------- -----------
2,409,812 167,985 157,839 214,771
- ------------ -------- ---------- -----------
571,064 128,380 95,412 77,227
- ------------ -------- ---------- -----------
1,838,748 39,605 62,427 137,544
- ------------ -------- ---------- -----------
32,468 8,480 -- 12,826
- ------------ -------- ---------- -----------
(1,481,326) (22,883) 7,534 329,643
- ------------ -------- ---------- -----------
834,151 305,962 537,799 58,182
(3,397) (5,536) (1,924) (357,956)
- ------------ -------- ---------- -----------
830,754 300,426 535,875 (299,774)
- ------------ -------- ---------- -----------
(24,809,580) (9,179) 901,578 (946,671)
-- 2,473 2,571 138,850
- ------------ -------- ---------- -----------
(24,809,580) (6,706) 904,149 (807,821)
- ------------ -------- ---------- -----------
(23,978,826) 293,720 1,440,024 (1,107,595)
- ------------ -------- ---------- -----------
$(25,460,152) $270,837 $1,447,558 $ (777,952)
============ ======== ========== ===========
$ -- $ 2,332 $ -- $ 5,595
</TABLE>
29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
International Equity Fund Emerging Markets Fund
----------------------------- -----------------------------
Six months ended Year ended Six months ended Year ended
June 30, 1997 December 31, June 30, 1997 December 31,
(Unaudited) 1996 (Unaudited) 1996
---------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income
(loss)................. $ (104,973) $ (296,545) $ (130,054) $ (483,192)
Net realized gain (loss)
on investment and
foreign currency
transactions........... 841,825 3,101,203 5,903,535 2,174,025
Net change in unrealized
appreciation
(depreciation) on
investments, forward
currency contracts,
foreign currency, and
other assets........... 1,375,607 373,048 3,123,493 6,645,009
----------- ------------ ------------ ------------
Net increase (decrease)
in net assets resulting
from operations........ 2,112,459 3,177,706 8,896,974 8,335,842
----------- ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................. -- (243,517) -- --
In excess of net
investment income...... -- (203,336) -- (247,279)
From net realized
capital gains.......... -- (2,610,505) -- --
----------- ------------ ------------ ------------
Total distributions to
shareholders.......... -- (3,057,358) -- (247,279)
----------- ------------ ------------ ------------
FUND SHARE TRANSACTIONS
(NOTE 6):
Proceeds from shares
sold................... 3,598,646 12,422,506 21,469,985 59,140,053
Net asset value of
shares issued on
reinvestment of
distributions.......... -- 2,867,255 -- 225,216
Cost of shares
repurchased............ (9,047,940) (18,134,855) (27,426,196) (86,526,905)
----------- ------------ ------------ ------------
Net increase (decrease)
in net assets resulting
from fund share
transactions........... (5,449,294) (2,845,094) (5,956,211) (27,161,636)
----------- ------------ ------------ ------------
Total change in net
assets................. (3,336,835) (2,724,746) 2,940,763 (19,073,073)
NET ASSETS:
Beginning of period.... 25,821,705 28,546,451 56,813,844 75,886,917
----------- ------------ ------------ ------------
End of period*......... $22,484,870 $ 25,821,705 $ 59,754,607 $ 56,813,844
=========== ============ ============ ============
* Including
undistributed net
investment income (loss)
of...................... $ (308,309) $ (203,336) $ (130,054) $ --
</TABLE>
See accompanying notes to the financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
Smaller Companies Fund Pacific Strategy Fund Latin America Fund Global Income Fund
- ------------------------------- ----------------------------- ----------------------------- -----------------------------
Six months ended Year ended Six months ended Year ended Six months ended Year ended Six months ended Year ended
June 30, 1997 December 31, June 30, 1997 December 31, June 30, 1997 December 31, June 30, 1997 December 31,
(Unaudited) 1996 (Unaudited) 1996 (Unaudited) 1996 (Unaudited) 1996
- ---------------- ------------- ---------------- ------------ ---------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (1,481,326) $ (5,275,475) $ (22,883) $ (122,563) $ 7,534 $ 36,421 $ 329,643 $ 2,147,950
830,754 68,713,180 300,426 1,067,644 535,875 336,262 (299,774) (1,250,202)
(24,809,580) (107,281,729) (6,706) 172,286 904,149 892,795 (807,821) (1,008,632)
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
(25,460,152) (43,844,024) 270,837 1,117,367 1,447,558 1,265,478 (777,952) (110,884)
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
-- -- -- (60,408) -- (33,214) (493,712) (2,321,770)
-- -- -- (26,241) -- -- -- (80,433)
-- (53,056,746) -- -- -- -- -- --
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
-- (53,056,746) -- (86,649) -- (33,214) (493,712) (2,402,203)
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
453,794,068 544,700,488 867,718 7,544,424 2,082,405 5,984,647 170,743 1,837,136
-- 50,005,460 -- 70,554 -- 31,901 258,785 1,359,521
(535,566,402) (756,060,744) (2,639,936) (16,918,134) (1,875,880) (7,804,895) (6,515,144) (21,510,409)
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
(81,772,334) (161,354,796) (1,772,218) (9,303,156) 206,525 (1,788,347) (6,085,616) (18,313,752)
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
(107,232,486) (258,255,566) (1,501,381) (8,272,438) 1,654,083 (556,083) (7,357,280) (20,826,839)
259,734,801 517,990,367 4,218,331 12,490,769 4,260,561 4,816,644 20,353,781 41,180,620
------------- ------------- ----------- ------------ ----------- ----------- ----------- ------------
$ 152,502,315 $ 259,734,801 $ 2,716,950 $ 4,218,331 $ 5,914,644 $ 4,260,561 $12,996,501 $ 20,353,781
============= ============= =========== ============ =========== =========== =========== ============
$ (1,481,326) $ -- $ (49,124) $ (26,241) $ 7,534 $ -- $ (244,502) $ (80,433)
</TABLE>
31
<PAGE>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
International Equity Fund
------------------------------------------------------------------------------
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Period Ended
June 30, 1997 December 31, December 31, December 31, December 31, December 31,
(Unaudited) 1996 1995 1994 1993 1992(a)
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.19 $ 11.27 $ 10.16 $ 13.23 $ 9.31 $10.00
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)................. (0.08) (0.11)+ (0.08)+ (0.12)+ (0.03) (0.01)
Net realized and
unrealized gain (loss)
on investments......... 1.13 1.45 1.20 (0.94) 5.01 (0.52)
------- ------- ------- ------- ------- ------
Total from investment
operations............ 1.05 1.34 1.12 (1.06) 4.98 (0.53)
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................. -- (0.11) -- -- -- (0.04)
In excess of net
investment income...... -- (0.09) -- -- -- --
From net realized gain.. -- (1.22) (0.01) (2.01) (1.06) (0.12)
In excess of net
realized capital gain.. -- -- -- -- -- --
------- ------- ------- ------- ------- ------
Total distributions.... -- (1.42) (0.01) (2.01) (1.06) (0.16)
------- ------- ------- ------- ------- ------
Net asset value, end of
period................. $ 12.24 $ 11.19 $ 11.27 $ 10.16 $ 13.23 $ 9.31
======= ======= ======= ======= ======= ======
TOTAL RETURN**.......... 9.38 % 12.03 % 11.01 % (8.44)% 54.50 % (5.32)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $22,485 $25,822 $28,546 $32,296 $44,610 $1,328
Net expenses to average
daily net assets
(Note A)............... 2.50 %* 2.39 % 2.50 % 2.50 % 2.50 % 2.50 %*
Net investment income
(loss) to average daily
net assets............. (0.89)%* (1.06)% (0.64)% (0.98)% (0.79)% (0.10)%*
Portfolio turnover
rate................... 34 % 84 % 101 % 155 % 151 % 140 %
Average commission
rate++................. $0.0047 $0.0158 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, a former distributor of the Funds,
reimbursed a portion of the other operating expenses of the Funds for
the years ended December 31, 1992, 1993 and 1994. For the years ended
December 31, 1995, 1996 and the six months ended June 30, 1997, 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............. 3.14 %* 3.09 % 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 the 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.
See accompanying notes to the financial statements.
32
<PAGE>
<TABLE>
<CAPTION>
Emerging Markets Fund
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Period Ended
June 30, 1997 December 31, December 31, December 31, December 31, December 31,
(Unaudited) 1996 1995 1994 1993 1992(a)
- ------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 13.66 $ 12.24 $ 13.29 $ 17.70 $ 10.72 $10.00
------- ------- ------- ------- ------- ------
(0.03) (0.13)+ (0.06)+ (0.11)+ (0.05) (0.03)
2.21 1.61 (0.98) (1.93) 8.36 0.75
------- ------- ------- ------- ------- ------
2.18 1.48 (1.04) (2.04) 8.31 0.72
------- ------- ------- ------- ------- ------
-- -- -- -- -- --
-- (0.06) -- -- -- --
-- -- (0.01) (2.33) (1.33) --
-- -- -- (0.04) -- --
------- ------- ------- ------- ------- ------
-- (0.06) (0.01) (2.37) (1.33) --
------- ------- ------- ------- ------- ------
$ 15.84 $ 13.66 $ 12.24 $ 13.29 $ 17.70 $10.72
======= ======= ======= ======= ======= ======
15.96 % 12.08 % (7.92)% (12.65)% 79.73 % 7.20 %
$59,755 $56,814 $75,887 $76,812 $71,422 $5,625
2.50 %* 2.38 % 2.50 % 2.50 % 2.50 % 2.50 %*
(0.44)%* (0.62)% (0.49)% (0.77)% (0.88)% (0.49)%*
64 % 122 % 115 % 140 % 143 % 182 %
$0.0028 $0.0011 N/A N/A N/A N/A
2.84 %* 2.62 % 2.78 % 2.65 % 2.52 % 7.52 %*
<CAPTION>
Smaller Companies Fund
- ------------------------------------------------------------------
Six Months
Ended Year Ended Year Ended Year Ended Year Ended
June 30, 1997 December 31, December 31, December 31, December 31,
(Unaudited) 1996 1995 1994 1993(b)
- -------------- ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C>
$ 21.83 $ 29.96 $ 19.06 $ 15.85 $ 10.00
- -------------- ------------ ------------ ------------ ------------
(0.19) (0.44)+ (0.30)+ (0.10)+ (0.06)
(2.46) (2.84) 13.32 4.47 5.91
- -------------- ------------ ------------ ------------ ------------
(2.65) (3.28) 13.02 4.37 5.85
- -------------- ------------ ------------ ------------ ------------
-- -- -- -- --
-- -- -- -- --
-- (4.85) (2.12) (1.16) --
-- -- -- -- --
- -------------- ------------ ------------ ------------ ------------
-- (4.85) (2.12) (1.16) --
- -------------- ------------ ------------ ------------ ------------
$ 19.18 $ 21.83 $ 29.96 $ 19.06 $ 15.85
============== ============ ============ ============ ============
(12.14)% (10.87)% 69.08 % 28.74 % 58.50 %
$152,502 $259,735 $517,990 $76,873 $39,681
1.95 %* 1.81 % 1.95 % 1.95 % 1.95 %
(1.57)%* (1.40)% (1.64)% (1.13)% (0.93)%
46 % 406 % 280 % 519 % 483 %
$ 0.0489 $ 0.0581 N/A N/A N/A
2.59 %* 2.08 % 2.12 % 2.40 % 2.44 %
</TABLE>
33
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
For a Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
Pacific Strategy Fund
-------------------------------------------------------
Six Months Ended Year Ended Year Ended Year Ended
June 30, 1997 December 31, December 31, December 31,
(Unaudited) 1996 1995 1994(c)
---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.15 $ 8.53 $ 8.79 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)................. (0.12) (0.26)+ (0.05)+ (0.18)+
Net realized and
unrealized gain (loss)
on investments......... 0.94 1.05 (0.21) (1.03)
------- ------- ------- -------
Total from investment
operations............ 0.82 0.79 (0.26) (1.21)
------- ------- ------- -------
LESS DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................. -- (0.12) -- --
In excess of net
investment income...... -- (0.05) -- --
From net realized gain.. -- -- -- --
In excess of net
realized capital gain.. -- -- -- --
Tax return of capital... -- -- -- --
------- ------- ------- -------
Total distributions.... -- (0.17) -- --
------- ------- ------- -------
Net asset value, end of
period................. $ 9.97 $ 9.15 $ 8.53 $ 8.79
======= ======= ======= =======
TOTAL RETURN**.......... 8.96 % 9.32 % (2.96)% (12.10)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $ 2,717 $ 4,218 $12,491 $13,849
Net expenses to average
daily net assets (Note
A)..................... 2.50 %* 2.50 % 2.50 % 2.50 %
Net investment income
(loss) to average daily
net assets............. (1.44)%* (1.51)% (0.67)% (1.33)%
Portfolio turnover
rate................... 92 % 170 % 163 % 213 %
Average commission
rate++................. $0.0086 $0.0102 N/A N/A
- ----------------------------------------------------------------------
Note A: John Govett & Co. Limited waived a portion of its management fees and
Govett Financial Services Limited, a former distributor of the Funds,
reimbursed a portion of the other operating expenses of the Funds for
the years ended December 31, 1992, 1993 and 1994. For the years ended
December 31, 1995, 1996 and the six months ended June 30, 1997, 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............. 11.14 %* 6.66 % 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 the 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.
See accompanying notes to the financial statements.
34
<PAGE>
<TABLE>
<CAPTION>
Latin America Fund
- -------------------------------------------------------
Six Months
Ended Year Ended Year Ended Period Ended
June 30, 1997 December 31, December 31, December 31,
(Unaudited) 1996 1995 1994(d)
------------- ------------ ------------ ------------
<S> <C> <C> <C>
$ 7.97 $ 6.44 $ 7.89 $ 10.00
---------- ------- ------- -------
0.01 0.07+ (0.01)+ (0.09)+
2.73 1.52 (1.44) (1.53)
---------- ------- ------- -------
2.74 1.59 (1.45) (1.62)
---------- ------- ------- -------
-- (0.06) -- --
-- -- -- --
-- -- -- (0.27)
-- -- -- (0.22)
-- -- -- --
---------- ------- ------- -------
-- (0.06) -- (0.49)
---------- ------- ------- -------
$ 10.71 $ 7.97 $ 6.44 $ 7.89
========== ======= ======= =======
34.38% 24.10 % (18.38)% (16.94)%
$ 5,915 $ 4,261 $ 4,817 $ 7,096
2.50%* 2.50 % 2.50 % 2.50 %*
0.30%* 0.54 % 0.00 % (1.06)%*
73% 150 % 127 % 185 %
$0.0007 $0.0005 N/A N/A
6.31%* 6.49 % 5.66 % 3.35 %*
</TABLE>
<TABLE>
<CAPTION>
Global Income Fund
- -------------------------------------------------------------------------------
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Period Ended
June 30, 1997 December 31, December 31, December 31, December 31, December 31,
(Unaudited) 1996 1995 1994 1993 1992(a)
- ------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
$ 8.32 $ 8.97 $ 8.48 $ 10.16 $ 9.77 $ 10.00
- ------------- ------------ ------------ ------------ ------------ -------------
0.13 0.57+ 0.63+ 0.76+ 0.99 0.80
(0.46) (0.54) 0.53 (1.67) 0.66 0.06
- ------------- ------------ ------------ ------------ ------------ -------------
(0.33) 0.03 1.16 (0.91) 1.65 0.86
- ------------- ------------ ------------ ------------ ------------ -------------
(0.25) (0.66) (0.63) (0.24) (0.95) (0.78)
-- (0.02) (0.04) -- -- --
-- -- -- -- (0.31) (0.31)
-- -- -- -- -- --
-- -- -- (0.53) -- --
- ------------- ------------ ------------ ------------ ------------ -------------
(0.25) (0.68) (0.67) (0.77) (1.26) (1.09)
- ------------- ------------ ------------ ------------ ------------ -------------
$ 7.74 $ 8.32 $ 8.97 $ 8.48 $ 10.16 $ 9.77
============= ============ ============ ============ ============ =============
(4.03)% 0.33 % 14.11 % (9.16)% 17.64 % 8.95 %
$12,997 $20,354 $41,181 $51,691 $82,000 $34,084
1.75 %* 1.64 % 1.75 % 1.75 % 1.72 % 1.75 %*
4.20 %* 7.17 % 7.45 % 8.30 % 9.66 % 9.75 %*
55 % 236 % 249 % 701 % 328 % 378 %
N/A N/A N/A N/A N/A N/A
2.90 %* 2.38 % 1.93 % 1.95 % 1.72 % 3.17 %*
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1-Significant Accounting Policies
The Govett Funds, Inc. (the "Company") was established as a Maryland corpora-
tion 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 se-
ries (individually a "Fund", and together the "Funds"), which are registered
with the Securities and Exchange Commission ("SEC") under the Investment Com-
pany 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 com-
panies. 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 Institutional Class Shares. On
May 16, 1997, the Board of Directors approved the reclassification of Class C
Shares as Institutional Class shares. At that time the Board also authorized
the filing of an amendment to the Fund's registration statement with the Secu-
rities and Exchange Commission, to delete references to Class C Shares and to
describe the characteristics of the Institutional Class Shares. As of June 30,
1997, only Class A shares were available to the public.
Govett International Equity Fund seeks long-term capital appreciation by in-
vesting primarily in equity securities of companies located throughout the
world. Govett Emerging Markets Fund seeks long-term capital appreciation by in-
vesting 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 se-
curities 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.
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 prep-
aration of their financial statements.
PORTFOLIO VALUATION--Portfolio securities listed or traded on domestic or for-
eign 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 se-
curities 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 comput-
ing net asset value. Securities for which there are no representative quota-
tions or valuations are valued at fair value, determined in good faith, as au-
thorized by the Company's Board of Directors.
REPURCHASE AGREEMENTS--Each Fund may engage in repurchase agreement transac-
tions. Under the terms of a typical repurchase agreement, the Fund takes pos-
session 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 dis-
pose 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 main-
tained in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the for-
eign currency exchange rates applicable on that day. Purchases and sales of se-
curities, in-
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
come receipts and expense payments are translated into U.S. dollars at the pre-
vailing 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 re-
ceived. The effect of changes in foreign currency exchange rates on investments
in securities are not segregated in the Statement of Operations from the ef-
fects of changes in market prices of those securities, but are included with
the net realized and unrealized gain or loss on investment transactions.
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 for-
ward 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 cur-
rency contract fluctuates with changes in currency exchange rates applicable on
that day. Forward currency contracts are marked-to-market daily using the for-
ward 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 ex-
posed to risk if the counterparties are unable to meet the terms of the con-
tracts 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 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 trans-
action, 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 commit-
ments 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 securi-
ties prior to delivery. Forward commitments are marked-to-market on a daily ba-
sis. The change in value is recorded by the Fund as an unrealized gain or loss.
When the Fund enters into a forward commitment transaction, it establishes a
segregated account in which it maintains appropriate 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 compa-
nies 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, 1996, the following Funds had approximate capital loss
carryforwards for Federal tax purposes available to offset future net capital
gains through the indicated expiration dates:
<TABLE>
<CAPTION>
Expiration Date December 31,
--------------------------------
2002 2003 2004 Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Emerging Markets.................... $ -- $5,125,000 $ -- $5,125,000
Pacific Strategy.................... -- 1,964,000 -- 1,964,000
Latin America....................... -- 1,791,000 -- 1,791,000
Global Income....................... 2,210,000 -- 1,583,000 3,793,000
</TABLE>
DISTRIBUTIONS TO SHAREHOLDERS--The International Equity Fund, Emerging Markets
Fund, Smaller Companies Fund, Pacific Strategy Fund and Latin America Fund in-
tend to declare and pay distributions from net investment income and net real-
ized 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.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Income and capital gains distributions are determined in accordance with in-
come tax regulations which may differ from generally accepted accounting prin-
ciples. These differences are primarily due to differing treatments for for-
eign currency transactions, post-October losses, option and forward transac-
tions, 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 invest-
ment 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 dif-
ferences 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, differ-
ences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary over-distri-
butions 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. 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 secu-
rities is amortized on a straight-line basis. Withholding taxes on foreign in-
terest and dividend income have been withheld in accordance with the applica-
ble 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 organiza-
tion 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 redemp-
tion.
EXPENSES--A significant portion of the Company's expenses are directly related
to individual Funds. Expenses of the Fund not directly attributable to the op-
erations 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 consider-
ation, 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, pro-
vides 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, 1997, to the extent that the Funds' annual ordinary oper-
ating expenses exceed 2.50%, 2.50%, 1.95%, 2.50%, 2.50%, and 1.75% of its av-
erage daily net assets, respectively.
Prior to January 9, 1997, the Manager had entered into a Subadvisory Agreement
with Berkeley Capital Management (the "Subadvisor") whereby the Subadvisor
provided day-to-day investment advisory services to the Smaller Companies
Fund. Effective January 9, 1997, John Govett assumed full investment manage-
ment control of the Smaller Companies Fund.
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 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, at-
tributable to Class A
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
shares, for providing ongoing distribution services and facilities to the
Fund's Class A shares. This is a "compensation plan" that does not provide for
continued payments to a distributor upon termination of the distribution
agreement. Effective April 1, 1997, FPS Broker Services, Inc. became the
Funds' distributor.
Note 4-Line Of Credit
The Company has entered into an agreement with Chase Manhattan Bank ("Chase")
under which Chase agrees to provide a 364 day committed line of credit to the
Funds. During the six months ended June 30, 1997, 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, 1997, under the Credit Agreement with Chase, the International
Equity Fund, Smaller Companies Fund, Pacific Strategy Fund and Latin America
Fund had $750,000, $1,000,000, $200,000, and $100,000 outstanding, respective-
ly.
For the six months ended June 30, 1997, 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>
Average Maximum
Daily Outstanding Average Interest
Balance Borrowing* Interest Rate Expense
---------- ----------- ------------- --------
<S> <C> <C> <C> <C>
International Equity.............. $ 606,008 $ 1,550,000 8.75% $17,410
Emerging Markets.................. 968,965 2,250,000 8.75 19,637
Smaller Companies................. 6,013,809 11,950,000 8.75 32,468
Pacific Strategy.................. 310,227 795,000 8.75 8,480
Latin America..................... 385,200 428,000 8.75 --
Global Income..................... 600,000 600,000 8.75 2,538
</TABLE>
* Includes overdrafts permitted by the Custodian outside the committed line of
credit on terms identical to the line of credit.
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, 1997, were as follows. Only the
Global Income Fund had U.S. Government securities transactions.
<TABLE>
<CAPTION>
Purchases Sales
----------- ------------
<S> <C> <C>
International Equity Fund............................. $ 8,097,842 $ 12,719,013
=========== ============
Emerging Markets Fund................................. $37,258,643 $ 47,912,895
=========== ============
Smaller Companies Fund................................ $82,591,024 $153,243,603
=========== ============
Pacific Strategy Fund................................. $ 2,811,265 $ 4,577,350
=========== ============
Latin America Fund.................................... $ 3,672,022 $ 3,500,624
=========== ============
Global Income Fund:
U.S. Government securities........................... $ 744,188 $ 2,324,414
Other investments.................................... 6,243,421 4,994,194
----------- ------------
$ 6,987,609 $ 7,318,608
=========== ============
</TABLE>
Note 6-Fund Share Transactions
The Company's Articles of Incorporation permit the Company's Board of Direc-
tors 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. Trans-
actions 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
6/30/97 12/31/96 6/30/97 12/31/96
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold.................... 312,102 1,045,705 1,462,053 4,501,935
Shares issued on reinvestment
of distributions.............. -- 255,018 -- 16,595
Shares repurchased............. (783,364) (1,525,675) (1,849,029) (6,561,346)
--------- ---------- ---------- ----------
Net increase (decrease)........ (471,262) (224,952) (386,976) (2,042,816)
Fund shares:
Beginning of period............ 2,307,951 2,532,903 4,159,195 6,202,011
--------- ---------- ---------- ----------
End of period.................. 1,836,689 2,307,951 3,772,219 4,159,195
========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Smaller Companies Fund Pacific Strategy Fund
------------------------ ---------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
6/30/97 12/31/96 6/30/97 12/31/96
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold.................. 23,929,218 19,765,798 93,722 828,391
Shares issued on reinvestment
of distributions............ -- 2,227,722 -- 7,841
Shares repurchased........... (27,877,136) (27,384,907) (282,231) (1,839,546)
----------- ----------- -------- ----------
Net increase (decrease)...... (3,947,918) (5,391,387) (188,509) (1,003,314)
Fund shares:
Beginning of period.......... 11,899,434 17,290,821 461,073 1,464,387
----------- ----------- -------- ----------
End of period................ 7,951,516 11,899,434 272,564 461,073
=========== =========== ======== ==========
</TABLE>
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Latin America Fund Global Income Fund
--------------------- ---------------------
Six
Six Months Months
Ended Year Ended Ended Year Ended
6/30/97 12/31/96 6/30/97 12/31/96
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold..................... 221,807 802,452 21,594 212,508
Shares issued on reinvestment of
distributions.................. -- 4,029 32,890 158,248
Shares repurchased.............. (204,209) (1,020,006) (821,687) (2,515,381)
-------- ---------- --------- ----------
Net increase (decrease)......... 17,598 (213,525) (767,203) (2,144,625)
Fund shares:
Beginning of period............. 534,536 748,061 2,447,315 4,591,940
-------- ---------- --------- ----------
End of period................... 552,134 534,536 1,680,112 2,447,315
======== ========== ========= ==========
</TABLE>
Note 7-Federal Income Tax Cost
At June 30, 1997, 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....................... $18,758,279 $51,526,768 $171,644,369
=========== =========== ============
Gross unrealized appreciation........ 5,876,838 11,314,761 15,138,520
Gross unrealized depreciation........ (1,682,501) (5,642,271) (36,357,380)
----------- ----------- ------------
Net unrealized appreciation
(depreciation)...................... $ 4,194,337 $ 5,672,490 $(21,218,860)
=========== =========== ============
<CAPTION>
Pacific Latin Global
Strategy America Income
Fund Fund Fund
------------- ----------- ------------
<S> <C> <C> <C>
Aggregate cost....................... $ 2,579,619 $ 4,554,810 $ 13,482,033
=========== =========== ============
Gross unrealized appreciation........ 362,276 1,308,745 155,586
Gross unrealized depreciation........ (255,981) (37,610) (1,293,180)
----------- ----------- ------------
Net unrealized appreciation
(depreciation)...................... $ 106,295 $ 1,271,135 $ (1,137,594)
=========== =========== ============
</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 risk, such as interest rates and foreign currency exchange rates.
These financial instruments include forward currency exchange contracts and se-
curity forward commitments.
The notional or contractual amounts of these instruments represent the invest-
ment 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 re-
lated 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.
The difference between the offsetting or closed out transactions is receivable
or payable on the original settlement date. At June 30, 1997 there were no open
security forward commitments. The forward foreign currency contracts at June
30, 1997 were as follows:
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
Net
In Unrealized
Settle Contracts to Exchange Appreciation
Date Currency Deliver/Receive Currency For (Depreciation)
-------- -------- --------------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
International Equity Fund
PURCHASES 07/16/97 USD 1,000,000 GBP 602,174 $ 2,203
01/26/98 USD 500,000 JPY 55,895,000 3,088
SALES 07/16/97 GBP 666,400 USD 1,000,000 (109,096)
01/26/98 JPY 282,150,000 USD 2,500,000 (39,515)
04/14/98 FRF 5,610,000 USD 1,000,000 25,646
04/29/98 NLG 1,515,760 USD 800,000 9,752
04/30/98 DEM 1,683,500 USD 1,000,000 11,810
04/30/98 CHF 989,520 USD 700,000 (2,939)
---------
$ (99,051)
Emerging Markets Fund =========
SALES 08/15/97 THB 88,006,347 USD 3,363,000 $ 23,059
Pacific Strategy Fund =========
SALES 08/15/97 THB 5,547,828 USD 212,000 $ 1,453
Global Income Fund =========
PURCHASES 07/18/97 USD 989,346 DKK 6,500,000 $ (8,891)
07/18/97 USD 1,566,125 DEM 2,700,000 (15,203)
07/21/97 USD 592,784 NLG 1,150,000 (5,507)
07/30/97 USD 1,736,593 JPY 196,235,000 (16,112)
SALES 07/18/97 DKK 6,500,000 USD 992,366 11,912
07/18/97 DEM 2,700,000 USD 1,572,510 21,588
07/21/97 NLG 1,150,000 USD 596,783 9,505
---------
$ (2,708)
=========
</TABLE>
The principal amounts of each non-U.S. dollar denominated contract is stated in
the currency in which the contract is denominated.
CHF--Swiss Franc FRF--French Franc NLG--Netherland Guilder
DEM--German Mark GBP--British Pound THB--Thai Baht
DKK--Danish Krone JPY--Japanese Yen USD--United States Dollar
Note 9-Portfolio Investment Risks
These risks and considerations may involve adverse political and economic de-
velopments and the possible imposition or 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 vol-
atile than securities of comparable U.S. companies and U.S. securities.
41
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
THE GOVETT FUNDS, INC.
BOARD OF DIRECTORS
Patrick Cunneen, Chairman
Elliott Atamian
Sir Victor Garland
James Oates
Frank Terzolo
OFFICERS
Brian Lee
President
Colin Kreidewolf
Vice President and Treasurer
Alice L. Schulman
Vice President and Corporate Secretary
Andrew J. Barnett
Vice President
<PAGE>
The Govett Funds, Inc.
c/o FPS Services, Inc.
P.O. Box 61503
King of Prussia, PA 19406-0903
