Jhaveri Value Fund
(440) 356-1565
November 20, 1998
Dear Fellow Shareholders:
We have enclosed the semi-annual report for the period ended September 30, 1998.
During the last month, JVF's NAV has rallied 29.4% from its low to $11.23 as of
November 20, 1998. The Total Net Assets have risen to $13.1 million. During
this recent rally we have raised over $2 million in cash by selling securities
with limited upside potential.
Throughout 1998 JVF had accumulated almost $2.5 million in realized capital
gains despite the NAV not reflecting these gains. During October, we took some
strides to restructure our portfolio. We moved out of some weak positions and
purchased stocks in stronger positions. This accomplished two objectives: 1.
We reduced our tax liability by over $2 million. 2. It placed JVF in a stronger
position for growth in the future.
An optimist sees a glass as half full and a pessimist sees it as half empty.
Similarly, the bulls and the bears have contrasting views of the market.
The Global Market:
The Bulls look at Europe, US, Canada, and Australia and see economic growth,
declining interest rates, rising employment, steady currency value, and
increased international trade through globalization of technology.
The Bears look at the recessions, credit tightening, and declining currency
values in Asian countries, Russia, and Latin American countries. In addition
they focus on the moratorium on interest payments and default on government
bonds in many of these countries, the rising US trade deficit, uncertainty of
the new European single currency, and rising international speculation by hedge
funds.
The Domestic Market:
The Bulls see more household investing in the stock market through pension
plans, 401Ks, and personal accounts. For the last four years, $10 - $20 billion
of new money flowed into equity mutual funds every month. Corporations continue
to buy back their own stock or merge with other companies further reducing the
overall supply of stock. The domestic economy continues to be strong due to the
Federal Reserve's accommodating money supply policy, declining interest rates,
declining inflation, a balanced budget, and the balance of power in Congress and
the Executive Branch. With all these positive factors, the Bulls see the market
rising for the foreseeable future.
On the other hand, the Bears see analysts continually revising corporate
earnings downward. They see high stock price levels and high valuations based
on price/book, price/sales, and price/earnings ratios. Corporations continue to
announce layoffs and capital spending cuts. With consumer confidence declining
and consumer spending soon to follow, the Bears see a recession around the
corner.
Until this tug of war between the Bulls and the Bears is resolved, we believe
that the Dow Jones Industrials will be in a trading range between 8,200 and
9,400. The market will break out of this trading range when some external event
occurs such as another hedge fund bankruptcy, a change in monetary policy,
another foreign currency crisis, a disruption in the supply of oil, etc. With
the market in this trading range, our operating strategy has been slightly
modified to achieve the objectives of long term capital appreciation and
preservation of capital.
<PAGE>
Portfolio Management and Operating Strategy:
When the Dow Jones Industrial declined 2,000 points from 9,400 to 7,400, the
NASDAQ, Russell 2,000, and individual US stocks declined much more as detailed
in this table:
% of All US Stocks % Down from Peak
90.1% greater than 20%
79.1% greater than 30%
61.2% greater than 40%
45.3% greater than 50%
We analyzed our investment strategy to determine if we could have reduced the
35% drop in JVF's portfolio. The following is the result of this analysis:
1. Enhanced the criteria for stock selection and eliminated micro and smaller
capitalization stocks (under $500 million) from investment.
2. Incorporate three additional valuation measurements in the stock model.
3. Tighten stock monitoring system for more frequent evaluation.
During the first three years of operation, JVF achieved 19.24% average annual
return on investment. We are hopeful that with these strategic operational
changes and our stock investment model, we will return to and maintain this
level of performance.
Sincerely,
Ramesh C. Jhaveri Saumil R. Jhaveri
Chief Executive Officer President
<PAGE>
Schedule of Investments
Jhaveri Value Fund, Inc
September 30, 1998
COMMON STOCK - 99.55% 165,867
Units Description Value
Aerospace/Aircraft/Defense - 0.62%
2,100 Boeing Co. 72,056
---------
Auto Parts-Retail/Wholesale - 0.64%
1,100 Discount Auto Parts * 26,469
3,500 Pep Boys-Manny, Moe & Jack 47,687
---------
74,156
Auto/Truck Replace/Orig Parts - 1.26%
2,000 Cummins Engine Co. 59,500
7,500 Exide Corp 86,250
---------
145,750
Automobile-Manufacturing - 0.21%
400 Honda Motor LTD 24,276
---------
Banks-Money Center - 0.45%
8,000 Bank Tokyo - Mitsubishi 52,500
---------
Broadcasting-Radio/TV/Cable - 1.22%
12,500 Cabletron Systems Inc. * 140,625
Building Products-Retail/Whole - 0.16%
1,400 Building Materials * 18,375
Building-Heavy Construction - 1.62%
15,500 Empresas ICA Socie ADR 91,062
1,300 Fluor Corp. 53,381
16,600 Grupo Tribasa ADR * 42,537
---------
186,980
Chemicals-Diversified - 0.66%
7,700 Shanghai Petrochem 76,037
---------
Chemicals-Specialty - 0.18%
4,000 Borden Chemical & Plastics LP 13,500
700 Freeport McMoran Sulphur Inc * 7,219
20,719
Commercial Services - 1.43%
3,600 Computer Learning Ctrs * 28,575
400 Corrections Corp Amer * 5,425
2,800 Diebold Inc 61,600
11,300 FPA Medical Mgmt * 1,130
5,400 Medpartners Inc * 17,212
9,800 Physicians Resource Group * 18,375
4,200 Sensormatic Electronics Corp. * 24,675
1,000 Ultrak Inc * 8,875
---------
165,867
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Computer Graphics - 3.17%
2,300 Diamond Multimedia Systems * 10,781
3,300 Mentor Graphics * 22,894
5,000 S3 Inc * 14,375
18,000 Scitex Corp. LTD. Ord Israel * 222,750
8,700 Silicon Graphics Inc. * 81,562
2,000 STB Systems Inc * 14,000
---------
366,362
Computer Integrated Systems - 1.06%
3,000 Oracle Corp. * 87,375
7,000 System Software Assoc. Inc. * 35,437
122,812
Computer Optical Recognition - 0.03%
1,500 Robotic Vision * 4,031
---------
Computer Services - 0.14%
500 Electronic Data Systems 16,594
---------
Computer Software - 3.41%
500 Checkpoint Software * 9,937
1,300 Computer Associates Intl Inc 48,100
1,600 Electronics For Imaging * 33,800
6,300 Informix Corp. * 31,500
800 Integrated Systems Inc * 6,650
2,080 Learning Inc * 41,210
4,500 Novell Inc. * 55,125
2,300 Parametric Technology * 23,144
1,700 Remedy Corp * 15,300
5,000 Viasoft Inc * 37,500
6,000 Wall Data Inc. * 91,500
---------
393,766
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Computer-Local Network - 1.23%
3,500 3Com Corp. * 105,219
3,200 Madge Networks N.V. * 9,200
7,000 Shiva Corp * 28,000
---------
142,419
Computer-Mini/Micro - 1.81%
1,600 Compaq Computer Corp. 50,600
1,800 Data General Corp * 19,462
1,300 Hewlett-Packard Co. 68,819
1,500 Micron Electronics * 26,250
700 Stratus Computer * 23,581
400 Sun Microsystems * 20,276
---------
208,988
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Computer-Peripheral Eqpmt - 7.58%
8,300 Adaptec Inc. * 78,850
10,000 Alliance Semiconductor * 25,625
17,600 Applied Magnetics Corp. * 74,800
3,100 C-Cube Microsys * 54,250
5,900 Encad Inc * 37,613
500 HMT Tech Corp * 3,905
5,700 Imation Corp * 105,450
6,000 Iomega Corp * 22,500
9,000 Komag Inc. * 27,562
14,500 Read Rite Corp. * 113,281
6,800 Seagate Technology Inc. * 170,425
3,200 Security Dynamics * 38,200
11,500 Western Digital Corp. * 123,625
---------
876,086
Consumer Products-Glass/Metal - 0.23%
4,550 Samsonite Corp * 27,016
---------
Container-Metal/Glass - 0.28%
1,200 Crown Cork & Seal Co 32,100
---------
Containers-Paper/Plastic - 0.14%
500 Sealed Air Corp. * 15,937
---------
Cosmetics & Personal Care - 0.17%
500 Gillette Co. 19,125
---------
Diversified Operation - 2.96%
500 Allied Signal 17,687
3,000 Corning Inc. Glass Works 88,312
19,400 Ikon Office Solutions 139,437
700 Minnesota Mining & Manuf. Co. 51,583
7,500 Sybase Inc. * 45,234
---------
342,253
Electronic Components - 0.45%
1,100 Jabil Circuit * 38,225
500 SCI Systems * 13,469
---------
51,694
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Electronic Connectors - 1.14%
3,700 Amp Inc. 132,275
---------
Electronic Equipment - 0.17%
300 Honeywell Inc. 19,219
---------
Electronic Parts-Distributor - 0.07%
800 Kent Electronics * 8,000
---------
Electronic Products/Misc - 1.56%
3,400 Hitachi LTD 147,475
3,200 Input/Output * 25,400
500 Tektronix 7,750
---------
180,625
Electronic-Semiconductors - 9.57%
5,900 Advanced Micro Devices Inc. * 109,519
2,500 Anadigics Inc * 16,563
1,500 Applied Materials Inc. * 37,875
7,700 Atmel Corp. * 69,781
2,900 Cirrus Logic Inc. * 17,400
11,000 Cypress Semiconductor * 96,250
4,500 Electroglas Inc * 39,094
9,000 ESS Tech Inc * 30,375
3,000 Integrated Device Tech Inc * 15,938
1,000 Integrated Process Equip * 7,500
5,200 Integrated Silicon Solution * 20,800
1,700 Intel Corp. 145,775
8,100 International Rectifier * 42,019
1,600 KLA-Tencor Corp. * 39,800
1,700 Kulicke & Soffa Industries * 23,163
3,400 Lam Research Corp. * 34,000
2,100 LSI Logic Group * 26,513
6,800 MEMC Electronics * 20,400
2,700 Motorola Inc. 115,763
5,300 National Semiconductor Corp. * 51,344
5,500 Network Peripherals Inc * 16,500
6,700 Oak Technology * 13,400
6,000 OPTI Inc * 29,250
1,300 Teradyne Inc. * 23,725
400 Texas Instruments Inc. 21,200
6,200 Tseng Labs Inc. * 15,500
3,600 VLSI Technology Inc. * 27,450
---------
1,106,897
Fertilizers - 1.02%
1,100 IMC Global Inc 21,313
11,000 Phosphate Resources Partners 96,938
118,251
Finance-Consumer Loans - 0.22%
4,700 Arcadia Financial LTD. * 25,850
---------
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Finance-Mortgage & Rel Svcs - 0.57%
4,500 Aames Financial Corp 27,281
1,000 Assoc Estates Realty 18,250
11,200 Cityscape Financial * 875
2,400 United Companies Finl * 19,200
---------
65,606
Financial Services Misc - 1.11%
5,383 Advanta Corp Cl A 69,306
13,200 Medaphis Corp. * 59,400
---------
128,706
Food-Misc Preparation - 3.51%
2,702 Archer Daniels-Midland Co. 45,250
26,100 Chiquita Brands Intl Inc. 275,681
1,200 Conagra Inc 32,325
1,600 Kellogg Co. 52,700
---------
405,956
Funeral Services & Related - 0.45%
3,500 Loewen Group 51,625
---------
Hotels & Motels - 0.25%
1,700 Hilton Hotels Corp. 28,900
---------
Household Appliances - 2.10%
16,100 Singer Co. 73,456
700 Sony Corp * 48,083
17,700 Sunbeam Oster Co 121,688
---------
243,227
Housewares - 0.29%
2,900 Tupperware Corp 34,075
---------
Insurance-Life/Property/Casual - 1.78%
1,100 Aetna Life & Casualty Co. 76,450
4,216 Conseco Inc. 128,848
205,298
Lasers-Systimes/Componenets - 0.48%
3,600 Cymer, Inc * 32,850
1,581 LCA-Vision Inc Com * 2,372
5,500 Summit Technology Inc. * 20,453
---------
55,675
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Leisure Products - 1.19%
3,000 Brunswick Corp. 39,000
5,900 Callaway Golf 62,319
3,800 Oakley Inc * 36,575
---------
137,894
Leisure Services - 0.55%
800 Circus Circus Enterprises * 7,600
500 Disney (Walt) Co. 12,688
2,300 Hollywood Entertainment * 31,338
700 Mirage Resorts, Inc. * 11,725
---------
63,351
Machinery-Constrct/Mining/Farm - 0.15%
400 Caterpillar Inc. 17,800
---------
Machinery-General & Industrial - 0.18%
2,500 Presstek Inc * 20,781
---------
Medical Instruments/Products - 0.53%
1,400 St Jude Medical Inc * 32,375
8,500 Vivus Inc * 29,484
---------
61,859
Medical-Biomed/Genetics - 0.60%
500 Centocor Inc * 19,813
500 Chiron Corp. * 9,938
7,000 Liposome Inc. * 39,813
---------
69,564
Medical-Drugs - 0.95%
5,500 Carter Wallace Inc. 86,281
1,600 Dura Pharmaceutical * 17,500
700 Perrigo Co * 6,388
---------
110,169
Medical-Generic Drugs - 0.87%
11,500 Ivax Corporation * 100,625
---------
Medical-Health Maint Org - 2.62%
2,600 Columbia/HCA Healthcare Corp. 52,163
8,462 Olsten Corp. * 48,128
14,100 Oxford Health Plans * 146,288
2,300 PHP Healthcare Corp * 3,450
1,500 United Healthcare Corp. 52,500
---------
302,529
Medical-Outpatient/Home Care - 0.57%
12,554 Coram Healthcare * 20,400
5,000 Medical Resources Inc * 12,813
6,600 Phycor Inc * 33,000
---------
66,213
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Metal Ores-Gold/Non Ferrous - 6.89%
2,400 Alcan Aluminium LTD 56,250
700 Aluminum Co Of America 49,700
4,000 ASA Limited 82,500
1,300 Asarco Inc 24,862
1,500 Barrick Gold Corp 30,000
5,500 Cyprus Amax Minerals Co. 72,875
7,100 Homestake Mining Co. 86,088
16,000 Inco LTD 164,000
3,600 Newmont Mining Corp. 87,300
6,000 Pegasus Gold Inc. * 0
800 Phelps Dodge * 41,750
6,200 Placer Dome Inc. * 85,637
300 Reynolds Metals Co. 15,412
---------
796,374
Office Equipment & Supplies - 0.42%
7,700 Danka Business Systems 48,606
Oil & Gas-Drilling - 0.37%
1,000 Ensco Intl 10,875
1,500 Patterson Energy * 9,937
1,400 Santa Fe Intl 21,525
---------
42,337
Oil & Gas-Field Services - 1.26%
2,200 Baker Hughes Inc 46,200
1,000 Halliburton Co. 28,563
1,200 Schlumberger LTD. 61,050
500 Tidewater * 10,375
---------
146,188
Oil & Gas-International Integ - 0.80%
300 Chevron Corp. 25,219
300 Mobil Corp. 22,781
400 Royal Dutch 19,050
400 Texaco Inc. 25,025
---------
92,075
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Oil & Gas-Us Explore & Prod - 0.10%
10,100 Chesapeake Energy 11,994
---------
Oil & Gas-Us Integrated - 0.79%
300 Atlantic Richfield Co. 21,281
2,000 Penzoil Company 70,125
---------
91,406
Oil Refining & Marketing - 1.90%
15,100 Quaker State Corp 219,894
---------
Paper & Paper Products - 0.28%
400 International Paper 18,650
1,000 Longview Fibre Co 13,438
---------
32,088
Pollution Control-Eqpmt/Svcs - 0.29%
4,000 Philip Svcs Corp 3,250
1,600 Republic Industries * 23,300
400 United States Filter * 6,450
---------
33,000
Publishing-Books/News/Periodic - 0.20%
1,200 Readers Digest Assoc Inc Cl A 22,950
Retail-Apparel/Shoe - 1.11%
1,600 Designs Inc. * 1,100
2,000 Gucci Group NV 72,250
7,300 Gymboree Corp * 54,750
---------
128,100
Retail-Department Stores - 4.87%
46,000 K Mart Corporation * 552,000
500 Saks Holdings Inc * 11,219
---------
563,219
Retail-Discount & Variety - 0.93%
2,600 Toys-R-Us Inc. * 42,088
7,600 Venator Group, Inc. * 66,025
---------
108,113
Retail-Diversified/Misc - 0.62%
4,700 Petsmart Inc * 32,606
5,100 Sports Authority Inc * 38,888
---------
71,494
Retail-Food & Restaurant - 0.81%
9,200 Boston Chicken * 6,900
5,900 Fleming Companies Inc 71,906
3,700 Planet Hollywood * 14,800
---------
93,606
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Retail-Home Furnishings - 0.35%
7,600 Bombay Co Inc. * 40,375
---------
Retail-Mail Order & Direct - 0.35%
3,500 Cendant Corp * 40,688
---------
Retail/Wholesale Computers - 0.80%
1,500 CHS Electronics * 26,906
3,800 Compusa Inc * 65,788
---------
92,694
Retail/Wholesale-Jewelry - 0.03%
2,500 Service Merchandise Co Inc. * 3,750
Retail/Wholesale-Office Supplies - 1.01%
9,000 Corp Express * 107,438
1,000 Office Max * 9,813
---------
117,251
Rubber-Tires - 0.19%
1,200 Cooper Tire & Rubber Co. 21,600
---------
Shoes & Related Apparel - 2.01%
1,000 Donna Karan Intl * 7,310
12,200 Fila Holdings 103,700
2,000 Nike Inc. Cl B 73,625
3,500 Reebok Int'L LTD. * 47,469
---------
232,104
Steel-Producers - 2.84%
13,800 Bethlehem Steel Corp. * 113,850
10,100 Birmingham Steel 80,169
4,400 LTV Corp. New 26,950
900 Nucor Corp. * 36,563
5,500 WHX Corp. * 70,813
---------
328,345
Telecommunication Equipment - 3.04%
700 Alcatel 11,900
1,000 Andrew Corp. * 13,250
1,600 Antec Corp. * 24,600
700 California Microwave Inc. * 5,775
2,200 Digital Microwave * 6,738
6,500 Glenayre Tech * 47,125
3,000 Newbridge Networks Corp. * 53,813
960 Northern Telecom LTD. 30,960
12,000 Picturetel Corp * 77,250
3,000 Scientific-Atlanta Inc 63,375
4,196 Vtel Corporation * 17,309
---------
352,095
The accompanying notes are an integral part of these financial statements
<PAGE>
Units Description Value
Telecommunications Services - 1.40%
2,560 Hongkong Telecom 48,960
700 Mastec Inc * 11,287
14,500 Pt Telkominkasi * 42,594
3,500 Telefonos De Venezuela 59,500
---------
162,341
Textile-Apparel/Mill Products - 0.08%
4,700 Starter Corp. * 8,813
---------
Transport-Air Freight - 0.12%
300 FDX Corp * 13,443
---------
Transportation-Airline - 0.14%
300 AMR Corp * 16,631
---------
Transportation-Rail - 0.59%
1,600 Union Pacific Corp. 68,200
---------
Transportation-Truck - 0.64%
9,900 American Freightways * 74,250
---------
The accompanying notes are an integral part of these financial statements
<PAGE>
Non Income Producing
Units Description Value
Utility-Electric Power - 0.29%
1,300 Edison Intl 33,394
---------
Utility-Telephone - 0.41%
1,000 Telefonica De Argent 29,437
400 Telefonos De Mexico Ads 17,600
---------
47,037
Total Common Stocks
(Cost $16,043,847) $11,511,949
============
SHORT TERM INVESTMENTS - 0.24%
27,749 Star Treasury Fund 27,749
-----------
Total Short Term Investments
(Cost $27,749) 27,749
===========
Other assets less liabilities - 0.21% 24,600
-----------
Total Net Assets - 100.00% $11,564,298
===========
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<S> <C> <C> <C> <C>
For six For the year For the year For the period
months ending ended ended 5/1/95* through
9-30-98 3/31/98 3/31/97 3/31/96
Net asset value - beginning of period $14.07 $12.64 $12.38 $12.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.11) (.09) (.11) .00
Net gain on investments both
realized and unrealized (4.15) 3.97 1.27 .79
------ ---- ---- ---
Total from investment operations (4.26) 3.88 1.16 .79
LESS DISTRIBUTIONS
Dividends from net investment income 0.00 0.00 0.00 (.04)
Dividends from capital gains 0.00 (2.45) (.90) (.37)
---- ------ ----- -----
Net asset value - end of period $9.81 $14.07 $12.64 $12.38
===== ====== ====== ======
Total Return (20.05)% 33.74% 9.23% 7.45%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) 11,564 16,174 11,104 9,124
Ratio of expenses to average net assets 1.25% 2.50% 2.50% 2.50%**
Ratio of net investment income (loss)
to average net assets (.81)% (.70)% (.87)% (.02)%**
Portfolio turnover rate 25.45% 58.92% 54.48% 45.23%
Average commission rate paid 0.0396 0.0425 0.0363
</TABLE>
*Commencement of Operations
**Annualized
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1998
ASSETS
Investments in securities at value (cost $16,071,596) 11,539,698
Receivable for securities sold 42,709
Receivable for dividends and interest 5,820
------------
Total assets 11,588,227
LIABILITIES
Payable for investment securities purchased 0
Payable for Fund shares redeemed 0
Accrued operating expenses & other 23,929
------------
Total Liabilities 23,929
NET ASSETS
Net assets (equivalent to $9.81 per share based on
1,149,516 shares of capital stock outstanding) 11,564,298
============
Composition of Net Assets:
Paid in capital 14,436,517
Undistributed Net Investment Income (Loss) (117,303)
Accumulated net realized gain on investments 1,776,982
Net unrealized appreciation/(depreciation) on investments (4,531,898)
-------------
NET ASSETS, September 30, 1998 11,564,298
============
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF OPERATIONS
For six months ending
September 30, 1998
INVESTMENT INCOME
Interest 12,649
Dividends 50,848
----------
Total Investment Income 63,497
----------
EXPENSES
Operating Expenses (Note 3) 180,800
----------
Net investment income/(loss) (117,303)
Net realized gain on securities transactions 1,328,192
Net change in unrealized appreciation/(depreciation)
on investments (6,196,198)
Net gain on investments (4,868,006)
Net increase in net assets resulting from operations (4,985,409)
=============
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
For the six For the year
months ending ended
9/30/98 3/31/98
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investments income (loss) $(117,303) $(95,947)
Net realized gain on securities transactions 1,328,192 2,288,317
Net change in unrealized appreciation/(depreciation)
of investments (6,196,298) 1,809,583
------------- -----------
Net increase in net assets resulting from operations (4,985,409) 4,001,953
------------- -----------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income 0 0
From net realized gain investments 0 (2,234,618)
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold 981,077 2,012,817
Dividends reinvested 0 2,234,618
Payment for shares redeemed (605,193) (855,317)
------------- ------------
Net increase in net assets from fund share transactions 375,884 3,392,118
------------ -----------
Net increase in net assets (4,609,525) 5,159,453
------------- -----------
NET ASSETS:
Beginning of period 16,173,823 11,014,370
------------ -----------
End of period $11,564,298 $16,173,823
============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
JHAVERI VALUE FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 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 six months ending September 30, 1998, the Adviser has received
a fee of $180,800 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 September 30, 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 six months ending
September 30, 1998
Shares Amount
Shares sold 76,266 $981,077
Shares issued in
reinvestment of dividends 0 0
Shares redeemed (46,489) (605,193)
-------- ---------
Net increase 29,777 $375,884
====== ========
Share outstanding/Paid in capital
Beginning of Period 1,149,516 $14,060,633
End of Period 1,179,293 $14,436,517
========= ===========
Note 6. Investments
For the six months ending September 30, 1998 purchases and sales of investment
securities, other than short-term investments, aggregated $5,056,515 and
$3,665,258 respectively. The gross unrealized appreciation for all securities
totaled $693,687 and the gross unrealized depreciation for all securities
totaled $(5,225,585) or a net unrealized depreciation of $(4,531,898). The
aggregate cost of securities for federal income tax purposes at September 30,
1998 was $16,071,596.
<PAGE>
