<PAGE>
Jhaveri Value Fund
(216) 356-1565
November 3, 1997
Dear Fellow Shareholders:
The Jhaveri Value Fund has completed three years of successful operation. The
Fund declared a dividend of $2.45 in December 1997 and closed at $14.07 on March
31, 1998. The annualized return for JVF since inception on May 3, 1995 was
19.24% . JVF's performance for its fiscal year ended March 31, 1998 was 33.7%.
This performance was achieved with an average cash position 24.1%. On an
invested dollar basis, JVF's return was 44.4%. Currently, JVF's cash position
has been reduced down to under 5%.
March 31, 1996 March 31, 1997 March 31, 1998
-------------- -------------- --------------
Total Net Assets $9,059,632 $10,939,999 $16,373,823
Net Asset Value $12.38* $12.64** $14.07***
* After payment of $0.41 dividend
** After payment of $0.90 dividend
*** After payment of $2.45 dividend
Although JVF had a successful year, the Fund lagged the S&P 500 performance.
Much of the S&P 500 gains were due to excessive rises in the large cap stocks.
JVF is invested in large cap stocks, but is also invested in undervalued mid and
small cap stocks. This combined with the large cash position contributed to the
divergence in performance.
The current market environment is a rotationally correcting market. Many
industries are making new highs while other industries are approaching their
bottom. This is an ideal environment for the Jhaveri Value Fund's investment
strategy. We are able to sell many stocks that are entering the "Optimum Sell
Range"; simultaneously, we are buying stocks that are entering the "Optimum Buy
Range". This allows us to maintain an undervalued portfolio even as the market
continues to rise. With market valuation and volatility reaching new highs, it
is paramount that the adviser keep in focus the goals of preservation of capital
and long term capital appreciation. The following table shows the year to date
returns of the major averages compared with JVF:
Year to Date Return
as of 4/30/98
Dow Jones Industrial 14.61%
Standard & Poors 500 14.56%
Jhaveri Value Fund 17.60%
This good performance was achieved at a low turnover rate of 59% in the latest
fiscal year and 55% and 45% in the previous two years. This low turnover rate is
a direct result of our optimum Buy/Sell/Hold investment strategy. With this
strategy, it usually takes between one and three years for a stock to move from
the "Optimum Buy Range" to the "Optimum Sell Range". This low turnover rate will
take advantage of the recent tax changes.
Market Outlook:
With the market above 9000, investors are asking "Is the stock market
overvalued?", "Why does the market keep going up?", and "How will JVF manage
this overvaluation?"
<PAGE>
Is the Stock Market Overvalued?
The market is overpriced and extended when you compare current fundamental and
technical valuations with historical benchmarks. The following fundamental and
technical benchmarks are at various levels of overvaluation:
Fundamental Benchmarks Technical Benchmarks
---------------------- --------------------
o Price/Dividend o Bullish/Bearish Advisers
o Price/Earnings o Insider Buy/Sell
o Price/Sales o Call-to-Put Ratio
o Price/Book o Short Interest
o Price/Cashflow o % Stocks above 200 Day Mvg Avg
o Price/Earnings Growth o % Stocks above 50 Day Mvg Avg
o Price/Revenue Growth o Premium over 200 Day Mvg Avg
For example, dividend yields are at all-time lows with the S&P 500's dividend
yield at 1.6% The current Price/Earnings ratio on the S&P 500 is at 21 times
versus the 25-year average of 13 times. Similarly, other fundamental ratios are
approaching multi-year highs.
The overall technical picture is approaching overvaluation. The percent of
stocks above their 200 day and 50 day moving averages is exceeding 70%. The
market has historically corrected when the percentage exceeds 80%. Similarly,
other technical factors are approaching overvaluation.
"Is the stock market overvalued?" From a historical perspective, the answer is
yes.
Why does this market keep going up?
This market continues to rise because of two major factors:
1) Excessive cash flowing into in the stock market, and
2) Strong economic fundamentals.
In 1997, $18 - $20 billion flowed into equity mutual funds every month for a
total of $218 billion. Another $220 billion inflow is expected in 1998. There
are many reasons and sources from which cash is flowing into the market:
1. The long bull market has attracted average investors to invest their maturing
bank CDs and money market funds into equity mutual funds. Retirement funds like
401Ks, IRAs, and College Endowment Funds are also allocating higher percentages
into stocks versus other asset classes.
2. The real interest rate in the US is higher than in other industrialized
nations such as Japan and Germany. As a result of higher interest rates and
lower inflation, the dollar is strengthening against other countries'
currencies. This strong dollar and higher interest rates are attracting foreign
funds into the US market.
3. Both the merger and acquisition activity, as well as the repurchase of stock
by US companies, is continuing to increase. This further reduces the supply of
stock and increases the cashflow available for investment in US stocks.
4. Over the last eight years, every market decline has been followed by a
greater rise in the market. As a result, investors have been rewarded every time
for purchasing when the market dips, which further fuels the market.
5. Direct investment by individual investors has increased dramatically due to
electronic trading, very low transaction costs, and easy access to stock
information.
<PAGE>
This increase in demand for stock with shrinking supply of stock is occurring
during a strong economic environment:
1. Low CPI, PPI, and GDP deflator indices, indicators of overall inflation,
suggests that the economy may continue on a low inflation track for a while.
2. With a balanced or surplus budget and a declining deficit as a percentage of
GDP, the Federal Reserve may continue to support low interest rates.
3. As the demand for US dollars and dollar denominated investments continues to
rise from industrialized and emerging nations, the dollar may continue to
strengthen against world currencies.
Thus, under low inflation, low interest rates, a strengthening dollar, and large
cashflow into stocks, the market may continue to move higher in spite of
overvaluation.
How will JVF manage this overvaluation?
The JVF portfolio has over 200 companies in over 40 different industries. Not
only is the portfolio diversified, it is well balanced in terms of stocks in the
Buy/Sell/Hold ranges. With the current rotationally correcting market, we are
continually replacing stocks in the Optimum Sell Range with stocks in the
Optimum Buy Range. With this strategy JVF participates in the upside momentum of
the market, selling stocks that have limited upside potential. These stocks are
replaced with undervalued stocks with lower downside risk. As a result of this
strategy, JVF's portfolio continues to be undervalued even as the market
continues to rise.
We are confident that JVF's prudent market strategy of stock selection, value
investing, risk management, diversification, and dollar cost averaging, will
perform well under any market conditions.
Sincerely,
Ramesh C. Jhaveri Saumil R. Jhaveri
Chief Executive Officer President
<PAGE>
Schedule of Investments
Jhaveri Value Fund, Inc
March 31, 1998
COMMON STOCK - 92.36%
Units Description Value
Aerospace/Aircraft/Defense - 0.23%
700 Boeing Co. 36,488
---------
Auto Parts-Retail/Wholesale - 0.56%
2,100 Discount Auto Parts * 50,925
1,700 Pep Boys-Manny, Moe & Jack 39,419
---------
90,344
Auto/Truck Replace/Orig Parts - 0.78%
600 Cummins Engine Co. 33,075
5,500 Exide Corp 93,156
---------
126,231
Banks-Money Center - 0.19%
2,500 Bank Tokyo - Mitsubishi 30,156
---------
Beverages-Alcoholic/Soft Drink - 0.21%
900 Seagram Co. Ltd 34,369
---------
Broadcasting-Radio/TV/Cable - 1.48%
2,360 Ascend Communications * 89,385
10,300 Cabletron Systems Inc. * 149,994
---------
239,379
Building Products-Retail/Whole - 0.30%
1,400 Building Materials * 19,075
1,700 Eagle Hardware & Gar * 29,963
49,038
Building Products-Wood - 0.16%
400 Georgia Pacific Corp. 25,900
---------
Building-Heavy Construction - 2.19%
15,500 Empresas ICA Sociedad SA ADR 186,000
1,300 Fluor Corp. 64,675
16,600 Grupo Tribasa SA ADR * 102,713
---------
353,388
Chemicals-Diversified - 0.54%
5,700 Shanghai Petrochem 87,994
---------
Chemicals-Specialty - 0.15%
2,000 Borden Chemical & Plastics Lp 14,375
700 Freeport McMoran Sulphur Inc * 10,150
24,525
Commercial Services - 1.23%
400 Corrections Corp Amer * 13,650
<PAGE>
Units Description Value
1,000 FPA Medical Mgmt * 15,438
5,400 Medpartners Inc * 55,350
9,800 Physicians Resource Group * 36,750
4,200 Sensormatic Electronics Corp. 68,775
1,000 Ultrak Inc * 9,281
---------
199,244
Computer Graphics - 2.62%
2,300 Diamond Multimedia Systems * 34,213
3,300 Mentor Graphics * 32,381
5,000 S3 Inc * 35,313
18,000 Scitex Corp. Ltd. Ord Israel * 200,250
8,700 Silicon Graphics Inc. * 121,256
423,413
Computer Integrated Systems - 0.92%
3,000 Oracle Corp. * 94,688
7,000 System Software Assoc. Inc. * 54,031
148,719
Computer Services - 0.48%
600 Computer Sciences Corp. 33,000
6,200 Intelligent Electronics Inc. * 44,756
77,756
Computer Software - 2.95%
1,000 Broderbund Software * 18,250
1,600 Electonics For Imaging * 41,600
6,300 Informix Corp. * 53,550
800 Integrated Systems Inc * 17,250
1,600 Learning Inc * 37,000
5,400 Macromedia Inc. * 80,325
2,300 Netscape Communications * 41,831
6,000 Novell Inc. * 64,313
1,700 Remedy Corp * 33,363
6,000 Wall Data Inc. * 90,000
---------
477,482
Computer-Local Network - 1.20%
1,800 3 Com Corp. * 64,688
600 Bay Networks Inc. * 16,275
1,500 Fore Systems * 23,625
3,200 Madge Networks N.V. * 19,800
7,000 Shiva Corp * 70,000
---------
194,388
Computer-Mainframes - 0.12%
1,000 Unisys Corp * 19,000
---------
<PAGE>
Units Description Value
Computer-Mini/Micro - 1.64%
2,800 Apple Computer Inc. * 77,000
800 Compaq Computer Corp. 20,700
1,800 Data General Corp * 32,063
700 Gateway 2000 * 32,725
300 Hewlett-Packard Co. 19,013
2,700 Micron Electronics * 34,256
500 NCR Corp. * 16,531
800 Sun Microsystems * 33,375
---------
265,663
Computer-Peripheral Eqpmt - 6.22%
4,300 Adaptec Inc. * 84,387
10,000 Alliance Semiconductor * 75,000
12,600 Applied Magnetics Corp. * 145,687
3,100 C-Cube Microsys * 57,738
2,200 Encad Inc * 28,738
500 HMT Tech Corp * 6,469
800 Hutchinson Technology Inc. * 21,200
5,700 Imation Corp * 105,450
3,500 Iomega Corp * 24,281
2,300 Komag Inc. * 33,350
6,200 Read Rite Corp. * 85,638
6,800 Seagate Technology Inc. * 171,700
9,500 Western Digital Corp. * 166,844
---------
1,006,482
Container-Metal/Glass - 0.10%
300 Crown Cork & Seal Co 16,050
---------
Diversified Operation - 2.63%
900 Allied Signal 37,800
2,200 Corning Inc. Glass Works 97,350
5,500 Ikon Office Solutions 190,094
300 Minnesota Mining & Manuf. Co. 27,300
7,500 Sybase Inc. * 72,422
424,966
Electronic Components - 0.21%
500 Jabil Circuit * 16,656
500 SCI Systems * 17,813
---------
34,469
Electronic Connectors - 0.41%
1,500 AMP Inc. 65,719
---------
Electronic Equipment - 0.15%
300 Honeywell Inc. 24,806
---------
Electronic Parts-Distributor - 0.10%
800 Kent Electronics * 16,850
---------
<PAGE>
Units Description Value
Electronic Products/Misc - 1.92%
1,600 Hitachi Ltd 117,600
8,200 Inco Ltd 153,238
1,700 Input/Output * 39,738
---------
310,576
Electronic-Semiconductors - 10.43%
4,900 Advanced Micro Devices Inc. * 142,406
1,000 ANADIGICS Inc * 13,063
1,500 Applied Materials Inc. * 52,969
5,700 Atmel Corp. * 85,856
2,900 Cirrus Logic Inc. * 29,362
11,000 Cypress Semiconductor * 110,687
700 DSP Communications * 11,944
4,500 Electroglas Inc * 72,000
9,000 Ess Tech Inc * 57,375
1,800 Integrated Device Tech Inc. * 25,313
5,200 Integrated Silicon Solution * 47,125
1,700 Intel Corp. 132,706
1,000 Integrated Process Equip * 20,125
4,600 International Recti- Fier * 54,050
1,600 KLA-Tencor Corp. * 61,200
1,700 Kulicke & Soffa Industries * 36,975
2,400 Lam Research Corp. * 67,500
2,100 LSI Logic Group * 53,025
3,500 MEMC Electronics * 55,563
2,300 Micron Technology Inc. * 66,844
2,200 Motorola Inc. 133,650
3,100 National Semiconductor Corp. * 64,906
5,500 Network Peripherals Inc * 37,813
6,700 Oak Technology * 42,294
6,000 OPTI Inc * 43,125
1,300 Teradyne Inc. * 52,081
400 Texas Instruments Inc. 21,650
6,200 Tseng Labs Inc. * 12,981
3,600 VLSI Technology Inc. * 67,500
400 Xilinx Inc. * 14,975
---------
1,687,063
Fertilizers - 0.51%
500 IMC Global Inc 19,031
9,000 Phosphate Resources Parners Lp 64,125
83,156
Finance-Consumer Loans - 0.18%
4,700 Arcadia Financial Ltd. * 29,669
---------
Finance-Investment Brokers - 0.09%
600 E Trade Group * 14,963
---------
Finance-Mortgage & Rel Svcs - 1.76%
4,500 Aames Financial Corp 62,438
11,200 Cityscape Financial * 5,950
4,600 Green Tree Financial Corp. 130,813
800 Money Store Inc 25,550
3,400 United Companies Finl 60,563
---------
285,314
<PAGE>
Units Description Value
Financial Services Misc - 1.25%
2,883 Advanta Corp 64,867
13,200 Medaphis Corp. * 137,775
---------
202,642
Food-Misc Preparation - 2.50%
1,351 Archer Daniels-Midland Co. 29,637
26,100 Chiquita Brands Intl Inc. 357,244
400 Kellogg Co. 17,250
---------
404,131
Funeral Services & Related - 0.34%
2,200 Loewen Group 55,550
---------
Hotels & Motels - 0.14%
700 Hilton Hotels Corp. 22,312
---------
Household Appliances - 1.40%
14,100 Singer Co. 148,931
700 Sony Corp 59,544
400 Sunbeam Oster Co 17,650
---------
226,125
Housewares - 1.06%
500 Rubbermaid Inc. 14,250
7,600 Shaw Industries Inc. 111,625
1,700 Tupperware Corp 45,263
---------
171,138
Insurance-Life/Property/Casual - 0.57%
1,100 Aetna Life & Casualty Co. 91,781
Lasers-Systems/Components - 0.80%
4,800 Cymer, Inc * 96,900
1,581 Lca-Vision Inc Com * 2,816
5,500 Summit Technology Inc. * 29,906
---------
129,622
Leisure Products - 0.38%
600 Callaway Golf 17,400
3,800 Oakley Inc * 43,700
---------
61,100
Leisure Services - 0.62%
6,000 Hollywood Entertainment * 84,000
700 Mirage Resorts, Inc. * 17,019
---------
101,019
<PAGE>
Units Description Value
Machinery-Constrct/Mining/Farm - 0.14%
400 Caterpillar Inc. 22,025
---------
Machinery-Electrical Eqpmt - 0.17%
800 CBS Corp 27,150
---------
Medical Instruments/Products - 1.36%
800 Boston Scientific Corp. * 54,000
1,800 Idexx Laboratories Inc * 32,400
600 St Jude Medical Inc * 20,062
2,900 U.S. Surgical Corp. 95,700
1,500 Vivus Inc * 17,625
---------
219,787
Medical-Biomed/Genetics - 0.90%
900 Amgen Inc. * 54,787
400 Biogen Inc. * 19,275
500 Centocor Inc * 22,313
500 Chiron Corp. * 10,469
7,000 Liposome Inc. * 38,937
---------
145,781
Medical-Drugs - 1.04%
5,500 Carter Wallace Inc. 100,719
800 Dura Pharmaceutical * 19,700
300 Lilly, Eli & Co. 17,888
700 Perrigo Co * 8,575
500 Pharmacia Upjohn 21,875
---------
168,757
Medical-Generic Drugs - 0.95%
2,900 Copley Pharmaceutical * 20,300
11,500 Ivax Corporation * 100,625
1,400 Mylan Laboratories Inc. 32,200
---------
153,125
Medical-Health Maint Org - 2.25%
2,600 Columbia/HCA Healthcare Corp. 83,850
1,300 Humana Inc. * 32,256
5,962 Olsten Corp. 94,647
9,100 Oxford Health Plans * 135,931
1,000 PHP Healthcare Corp * 16,500
---------
363,184
Medical-Outpatient/Home Care - 0.83%
7,500 Apria Healthcare Group * 66,563
12,554 Coram Healthcare * 32,954
3,500 Medical Resources Inc * 18,484
700 Phycor Inc * 15,794
---------
133,795
<PAGE>
Units Description Value
Metal Ores-Gold/Non Ferrous - 3.62%
1,700 Alcan Aluminium Ltd 53,125
4,000 ASA Limited 90,000
1,300 Asarco Inc 34,694
1,500 Barrick Gold Corp 32,437
4,000 Cyprus Amax Minerals Co. 66,500
7,100 Homestake Mining Co. 77,212
2,600 Newmont Mining Corp. 79,462
6,000 Pegasus Gold 0
800 Phelps Dodge 51,650
6,200 Placer Dome Inc. 81,762
300 Reynolds Metals Co. 18,431
---------
585,273
Office Equipment & Supplies - 0.11%
1,000 Danka Business Systems 18,375
Oil & Gas-Drilling - 0.11%
1,500 Patterson Energy * 17,250
---------
Oil & Gas-Field Services - 0.26%
400 Halliburton Co. 20,050
300 Schlumberger Ltd. 22,725
---------
42,775
Oil & Gas-International Integ - 0.44%
300 Chevron Corp. 24,094
300 Mobil Corp. 22,987
400 Texaco Inc. 24,100
---------
71,181
Oil & Gas-Us Explore & Prod - 0.30%
8,100 Chesapeake Energy 48,094
---------
Oil & Gas-Us Integrated - 0.16%
300 Amoco Corp. 25,912
---------
Oil Refining & Marketing - 0.07%
600 Quaker State Corp 11,287
---------
Paper & Paper Products - 0.10%
1,000 Longview Fibre Co 15,563
---------
Photo Equipment & Supplies - 0.56%
1,400 Eastman Kodak Co. 90,825
---------
Pollution Control-Eqpmt/Svcs - 0.34%
1,600 Republic Industries * 41,300
400 United States Filter * 14,050
---------
55,350
Publishing-Books/News/Periodic - 0.67%
1,200 Readers Digest Assoc Inc 32,775
1,800 Scholastic Corp * 76,050
108,825
Retail-Apparel/Shoe - 1.14%
3,800 Ann Taylor Stores Corp. * 62,462
1,600 Designs Inc. * 3,200
2,500 Gucci Group Nv 118,750
-------
184,412
<PAGE>
Units Description Value
Retail-Department Stores - 4.97%
46,000 K Mart Corporation * 767,625
500 Saks Holdings Inc * 12,500
400 Sears Roebuck & Co. 22,975
---------
803,100
Retail-Discount & Variety - 1.12%
1,600 Toys-R-Us Inc. * 48,200
5,300 Woolworth Corp. * 132,500
---------
180,700
Retail-Diversified/Misc - 0.98%
5,700 Petsmart Inc * 60,919
5,100 Sports Authority Inc * 83,513
1,300 Sunglass Hut Intl Inc * 13,650
---------
158,082
Retail-Food & Restaurant - 1.37%
9,200 Boston Chicken * 46,287
5,900 Fleming Companies Inc 116,894
3,700 Planet Hollywood * 40,122
1,200 Rainforest Cafe Inc * 18,000
---------
221,303
Retail-Home Furnishings - 0.24%
7,600 Bombay Co Inc. * 38,000
---------
Retail-Mail Order & Direct - 0.30%
3,000 Micro Warehouse Inc. * 48,937
Retail-Supermarkets - 0.11%
700 American Stores 18,200
---------
Retail/Wholesale Computers - 0.17%
1,500 CHS Electronics * 28,125
---------
Retail/Wholesale-Jewelry - 0.03%
2,500 Service Merchandise Co Inc. * 5,000
Retail/Wholesale-Office Supplies - 0.67%
9,000 Corp Express * 89,719
1,000 Office Max * 17,875
---------
107,594
Rubber-Tires - 0.18%
1,200 Cooper Tire & Rubber Co. 28,500
---------
<PAGE>
Units Description Value
Shoes & Related Apparel - 2.23%
900 Brown Group Inc 12,937
1,000 Donna Karan Int'l * 13,313
7,900 FILA Holdings 185,156
2,000 Nike Inc. 88,500
1,400 Reebok Int'l Ltd. * 42,700
1,300 Stride Rite Corp. 17,631
---------
360,237
Soap & Cleaning Preparations - 0.19%
2,200 USA Detergents, Inc * 30,113
Steel-Producers - 2.59%
15,800 Bethlehem Steel Corp. * 214,287
3,500 Birmingham Steel 57,313
2,900 LTV Corp. New 38,063
500 USX - U.S. Steel Group New 18,875
5,500 WHX Corp. * 89,719
---------
418,257
Telecommunication Equipment - 3.87%
1,800 ADC Telecommunications Inc. * 49,612
1,000 Andrew Corp. * 19,813
7,700 Antec Corp. * 115,500
1,400 California Microwave Inc. * 29,925
1,000 Dsc Communications Corp. * 18,187
5,500 Glenayre Tech * 68,750
3,000 Newbridge Networks Corp. * 80,625
12,000 Picturetel Corp * 81,000
7,000 Scientific-Atlanta Inc 136,937
4,196 Vtel Corporation * 25,701
---------
626,050
Telecommunications Services - 1.47%
1,000 Excel Communications * 23,563
2,560 Hongkong Telecom 53,600
800 MCI Communications Corp. 39,600
12,300 PT Telkominkasi 120,694
---------
237,457
Textile-Apparel/Mill Products - 0.40%
1,600 Fruit Of The Loom Inc. * 49,000
4,700 Starter Corp. * 15,275
---------
64,275
Tobacco - 0.10%
400 Philip Morris Companies Inc. 16,675
<PAGE>
Units Description Value
* Non Income Producing.
Transport-Air Freight - 0.13%
300 Fdx Corp * 21,338
---------
Transportation-Rail - 0.14%
400 Union Pacific Corp. 22,525
---------
Transportation-Truck - 0.67%
9,900 American Freightways * 108,900
---------
Utility-Electric Power - 2.82%
1,300 Edison Intl 38,187
1,600 Entergy Corp. New 47,600
4,122 First Energy 127,009
2,000 Niagara Mohawk * 26,000
9,100 Northeast Utility * 130,244
2,200 PG & E Corp 72,600
400 Public Services Enterprises 15,100
456,740
Utility-Telephone - 0.37%
1,000 Telefonica De Argentina 38,063
400 Telefonos De Mexico Ads 22,550
---------
60,613
Total Common Stocks
(Cost $13,274,027) $14,938,427
===========
SHORT TERM INVESTMENTS - 8.26%
1,336,382 Star Treasury Fund 1,336,382
-----------
Total Short Term Investments
(Cost $1,336,382) 1,336,382
===========
Other assets less liabilities - (0.62)% (100,986)
-----------
Total Net Assets - 100.00% $16,173,823
===========
<PAGE>
JHAVERI VALUE FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
For the year For the year For the period
ended ended 5/1/95* through
3/31/98 3/31/97 3/31/96
Net asset value - beginning of period $12.64 $12.38 $12.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.09) (.11) .00
Net gain on investments both
realized and unrealized 3.97 1.27 .79
------- ------ ------
Total from investment operations 3.88 1.16 .79
LESS DISTRIBUTIONS
Dividends from net investment income - - (.04)
Dividends from capital gains (2.45) (.90) (.37)
------ ------ ------
Net asset value - end of period $14.07 $12.64 $12.38
======= ======= =======
Total Return 33.74% 9.23% 7.45%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) 16,174 11,104 9,124
Ratio of expenses to average net assets 2.50% 2.50% 2.50%**
Ratio of net investment income (loss)
to average net assets (.70)% (.87)% (.02)%**
Portfolio turnover rate 58.92% 54.48% 45.23%
Average commission rate paid .0425 .0363 -
*Commencement of Operations
**Annualized
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
ASSETS
Investments in securities at value (cost $14,610,409) 16,274,809
Receivable for securities sold 50,013
Receivable for dividends and interest 9,799
-------------
Total assets 16,334,621
LIABILITIES
Payable for investment securities purchased 127,065
Payable for Fund shares redeemed 0
Accrued operating expenses & other 33,733
------------
Total Liabilities 160,798
NET ASSETS
Net assets (equivalent to $14.07 per share based on
1,149,516 shares of capital stock outstanding) 16,173,823
============
Composition of Net Assets:
Paid in capital 14,060,633
Accumulated net realized gain on investments 448,790
Net unrealized appreciation/(depreciation) on investments 1,664,400
------------
NET ASSETS, March 31, 1998 16,173,823
============
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF OPERATIONS
For year ended
March 31, 1998
INVESTMENT INCOME
Interest 173,629
Dividends 74,832
-----------
Total Investment Income 248,461
-----------
EXPENSES
Operating Expenses (Note 3) 344,408
-----------
Net investment income/(loss) (95,947)
Net realized gain on securities transactions 2,288,317
Net change in unrealized appreciation/(depreciation)
on investments 1,809,583
Net gain on investments 4,097,900
Net increase in net assets resulting from operations 4,001,953
===========
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year For the year
ended ended
3/31/98 3/31/97
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investments income (loss) $(95,947) $(91,581)
------------- ------------
Net realized gain on securities transactions 2,288,317 1,118,701
Net change in unrealized appreciation/(depreciation)
of investments 1,809,583 (98,063)
------------ ------------
Net increase in net assets resulting from operations 4,001,953 929,057
------------ -----------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income 0 0
From net realized gain investments (2,234,618) (731,713)
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold 2,012,817 1,883,314
Dividends reinvested 2,234,618 730,776
Payment for shares redeemed (855,317) (921,415)
------------- ------------
Net increase in net assets from fund
share transactions 3,392,118 1,692,675
------------ -----------
Net increase in net assets 5,159,453 1,890,019
------------ -----------
NET ASSETS:
Beginning of period 11,014,370 9,124,351
------------ -----------
End of period $16,173,823 $11,014,370
============= ==============
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
NOTES TO FINANCIAL STATEMENTS
March 31,1998
Note 1. Organization
The Jhaveri Trust (the "Trust") is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management Investment Company.
The Trust was established under the laws of Ohio by an Agreement and Declaration
of Trust dated January 18, 1995 (the "Trust Agreement"). The Trust Agreement
permits the Trustees to issue an unlimited number of shares of beneficial
interest of separate series without par value. Shares of one series have been
authorized, which shares constitute the interests in the Jhaveri Value Fund (the
"Fund"). The Fund's investment objective is to provide long term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
a broad range of common stocks believed by its Adviser to have above average
prospects for appreciation, based on a proprietary investment model developed by
the Adviser.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation-Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Adviser
believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
Federal Income Taxes-The Fund intends to qualify each year as a "Regulated
Investment Company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions-The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Estimates-The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Other-The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrued
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
<PAGE>
Note 3. Investment Advisory Agreement
The Trust has an investment advisory agreement with Investments Technology, Inc
Ramesh C. Jhaveri and Saumil R. Jhaveri may be deemed to be controlling persons
and affiliates of the Adviser due to their ownership of its shares and their
positions as officers and directors of the Adviser. They, because of such
affiliation, may receive benefits from the management fees paid to the Adviser.
Under the terms of the management agreement, (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest, expenses
incurred in connection with the organization and initial registration of its
shares and extraordinary expenses. As compensation for its management services
and agreement to pay the Fund's expenses, the Fund is obligated to pay the
Adviser a fee computed and accrued daily and paid monthly at an annual rate of
2.50% of the average daily net assets of the Fund. In this regard, it should be
noted that most investment companies pay their own operating expenses directly,
while the Fund's expenses, except those specified above, are paid by the
Adviser. For the year ended March 31, 1998, the Adviser has received a fee of
$344,408 from the Fund.
Note 4. Distributions to Shareholders
On December 12, 1997, a distribution of $2.4496 aggregating $2,234,618 was
declared from net realized gains from investment transactions (including $1.758
applicable to short-term gains that are taxable to shareholders as ordinary
income dividends) during 1997. The dividend was paid December 12, 1997, to
shareholders of record on December 11, 1997.
Note 5. Capital Share Transactions
As of March 31, 1998 there was an unlimited number of no par value shares of
capital stock authorized for the Fund. Transactions in capital stock were as
follows:
For the year ended
March 31, 1998
Shares Amount
Shares sold 157,149 $2,012,817
Shares issued in
reinvestment of dividends 183,768 2,234,618
Shares redeemed (62,530) (855,317)
-------- ---------
Net increase 278,387 $3,392,118
======= ==========
Share outstanding/Paid in capital
Beginning of Period 871,129 $10,668,515
End of Period 1,149,516 $14,060,633
========= ===========
Note 6. Investments
For the year ended March 31, 1998 purchases and sales of investment securities,
other than short-term investments, aggregated $11,477,349 and $8,117,271
respectively. The gross unrealized appreciation for all securities totaled
$2.582,135 and the gross unrealized depreciation for all securities totaled
$917,735 or a net unrealized appreciation of $1,664,400. The aggregate cost of
securities for federal income tax purposes at March 31, 1998 was $14,610,409.
<PAGE>
Note 7. Reclassification of Capital Accounts
The Fund has adopted Statement of Position 93-2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. As a result of this statement, the Fund
changed the classification of distributions to shareholders to better disclose
the difference between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, undistributed net
investment loss and undistributed capital gains have been adjusted as of March
31, 1998 in the following amounts. These restatements did not affect net
investment income, net realized gain (loss) or net assets for the year ended
March 31, 1998.
Undistributed Net Investment Loss Realized Capital Gains
95,947 (95,947)
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Jhaveri Value Fund
We have audited the accompanying statement of assets and liabilities of
Jhaveri Value Fund, including the schedule of portfolio investments, as
of March 31, 1998, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the
two years and for the period from May 1, 1995 (commencement of operations)
to March 31, 1996 in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments
and cash held by the custodian as of March 31, 1998, by
correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Jhaveri Value Fund as of March 31, 1998, the
results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended,
and the financial highlights for each of the two years and for the
period from May 1, 1995 (commencement of operations) to March 31,
1996 in the period then ended, in conformity with generally
accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
April 21, 1998
<PAGE>
