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GOVETT INTERNATIONAL SMALLER COMPANIES FUND
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Statement of Assets and Liabilities
December 31, 1998
ASSETS:
Cash............................................................... $749,982
LIABILITIES: --
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Net assets........................................................... $749,982
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Institutional Class Shares:
Net assets........................................................... $749,982
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Shares Outstanding................................................... 74,998
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Net Asset Value, offering and redemption price per share............. $ 10.00
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See accompanying notes to the financial statements.
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Notes to Financial Statements
Note 1--Significant Accounting Policies
The Govett Funds, Inc. (the "Company") was established as a Maryland corporation
on November 13, 1990. The Company's Articles of Incorporation permit the
Directors to create an unlimited number of series, each of which may issue one
or more separate classes of shares. The Company presently consists of seven
series which are registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"). Five
series are currently being offered to the public (individually a "Fund" and
collectively the "Funds"): Govett International Equity Fund, Govett Emerging
Markets Equity Fund, Govett Smaller Companies Fund and Govett International
Smaller Companies Fund (each a diversified, open-end management investment
company), and Govett Global Income Fund (a non-diversified, open-end management
investment company). The accompanying financial statement relates only to the
Govett International Smaller Companies Fund.
Each Fund has authorized the issuance of Class A, Class B and Institutional
Class shares. Presently, none of the Funds offer Class B shares and only the
International Equity Fund and International Smaller Companies Fund have
Institutional Class shares outstanding. Each class of shares has equal rights
as to assets and voting privileges. Class A and Class B have exclusive voting
rights for their respective distribution plan. Each class of shares differs in
its respective service, distribution and transfer agent expenses.
Govett International Smaller Companies Fund seeks long-term capital appreciation
by investing primarily in equity securities of smaller companies located outside
the U.S.
On December 31, 1998, Govett International Smaller Companies Fund issued 74,998
shares to the Manager for $749,982 ($10.00/share). The Fund had no other
operations as of that date. The Manager has agreed to bear all organization
costs in connection with the Fund.
Note 2--Management Fees and Affiliated Service Providers
AIB Govett, Inc. serves as the Fund's Manager and AIB Govett Asset Management
Limited serves as the Fund's Subadviser. The Manager and Subadviser, pursuant
to the terms of their respective investment management contracts, provide 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% of the value
of the average daily net assets of each Fund. For Fiscal Year 1999, the
Manager has agreed to waive a portion of its management fees and to reimburse a
portion of the other operating expenses of the Fund to the extent that the
Fund's annual ordinary operating expenses exceed 1.85% of the average daily net
assets for the Class A Retail Shares and 1.50% of the average daily net assets
of the Institutional Class Shares.
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Report of Independent Accountants
To the Board of Directors and Shareholders
of The Govett Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Govett International
Smaller Companies Fund (one series of The Govett Funds, Inc., hereafter referred
to as the "Fund") at December 31, 1998, in conformity with generally accepted
accounting principles. This financial statement is the responsibility of the
Fund's management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of the financial statement
in accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 12, 1999
