PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL
MANAGEMENT LIMITED
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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- -------------
Dear Shareholders,
It is with pleasure that I present the first Annual Report for
the Pictet
Global Emerging Markets Fund (the "Fund"), the first of a range of
international funds in the newly established PANORAMA TRUST. The
following
report from the portfolio manager not only covers the fourth
quarter of 1995,
the period since inception of the Fund, but also gives a broader
review of the
Emerging Markets environment in 1995 and, importantly, summarizes
our strategy
and outlook as we enter 1996.
The establishment of this Fund is a particularly important
milestone for
Pictet International Management Limited ("Pictet"), providing a
carefully
structured investment vehicle to meet the needs of North American
investors
wishing to access the benefits of this asset class. Pictet's
reputation as a
significant and pioneering force in the area of Emerging Markets
management
has ensured that there is a strong pipeline of interest from
investors wishing
to participate in this Fund. We are therefore very optimistic
about the
outlook for 1996, not only in terms of the asset class but also
prospects for
the growth of the Fund.
We continue to believe that the case for Emerging Markets
remains
compelling, based on the prospects of superior growth rates in
excess of the
developed world, and that the last two years of relative
underperformance have
marked the low point for this asset class. Investors were clearly
overly
optimistic in the final quarter of 1993 when Emerging Market
Indices rose by
almost 40%, and the collapse of the Mexican market in late 1994
sealed the
fate of these markets for the following year; added to which the
attractions
of their own domestic equity market kept the all important U.S.
investors at
home.
Already in 1996, many markets, including Mexico, Brazil, South
African
golds, Turkey and especially Eastern Europe, have rebounded
sharply, in some
cases by more than 30%. We believe that investors are now poised
to be
rewarded with potentially handsome returns.
Yours sincerely,
Jean G. Pilloud
President and Chairman
February 16, 1996
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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PORTFOLIO MANAGER'S REPORT
EMERGING MARKETS were again weak in 1995, down 12%, bringing
the
cumulative two year underperformance relative to the major world
markets to
almost 40%. This is due to the steady erosion of sentiment since
1993 from
mania to disenchantment and finally despair at the time of the
Mexican crisis
in 1994. The variance has been further increased of course by the
attractions
of the domestic market for U.S. investors.
In the first quarter of 1995, non-European Emerging Markets
continued to
suffer an across-the-board shock, primarily driven by the collapse
of Mexico
and its loss of control over its currency which occurred in
December 1994. The
result was a fall of 13% of the IFC Global Composite Index. The
European
Emerging Markets fared much better, Turkey continued its contra-
cyclical
progress against the IFC Global Composite Index, gaining 25% while
Greece
(+5%) and Portugal (+4%) also gained over that quarter.
The main feature of the second quarter was the dramatic
rebound in Latin
America; Mexico rose by almost 30% and Brazil by over 16%. There
were also
significant upward moves in Europe and, outside the Index, Russia
gained
substantially.
The third quarter saw the Latin American continent continuing
to
outperform the other regions of the IFC markets. Brazil and Mexico
were
leading the upward trend whereas smaller countries like Colombia
and Chile
were affected by currency weakness. European Emerging Markets were
badly
shaken by political instability which was the reason for the
volatility in
Turkey and Portugal.
In the fourth quarter the Fund declined by 4.72% versus the
IFC Global
Composite Index which declined 2.98%. Politics continued to weigh
negatively
on a few markets. Turkey was the worst hit by the uncertainty
caused ahead of
the general election where the Islamic Refah party obtained the
largest share
of votes. A similar nervousness shook the Russian market ahead of
the
elections in December, where we saw the communists obtain the
highest
percentage of votes. Greece fell by almost 6%, due to continuing
concern over
the prime minister's ill health and his future successor, although
his very
illness helped speed up the succession process. The Latin American
regions
performed very badly over the quarter, the only exception being
Argentina, the
best performing Emerging Market, up over 17% fueled by falling
inflation.
Brazil suffered from what has become known as the "pink file"
scandal. After
the collapse of Banco Economico, the central bank tried to
privatize it and
saw opposition from a powerful local politician. She was going to
reveal the
list of names of politicians who had used money from Banco
Economico for their
election campaigns if the government pressed ahead with the
privatization. The
market drifted down slowly all through the month of November for
this reason.
Asian markets as well had their toll of scandal over the
quarter. In
Korea, prolonged political scandals plagued the stock market
during the last
three months of 1995 and the beginning of 1996. The discovery of a
U.S. $650
million slush fund amassed by the ex-president, Roh, initiated a
widespread
investigation into the political donations of corporate Korea. The
ensuing
court cases resulted in a jail sentence for the former president
and -- more
damaging to the stock market -- heavy fines for many of the
country's leading
businessmen. Although market sentiment has not fully recovered
yet, improving
domestic liquidity and expectations of increased foreign ownership
limits
should allow for much better performance in 1996.
India saw its stock market hit by the duplicate share
certificates
scandal, where share certificates and the underlying shares were
being traded
at the same time in Reliance Industries. The shares were suspended
for several
days and the management of the company was threatening to delist
its shares
from the Bombay Stock Exchange to protest against the inefficiency
of the
administration in India.
All these scandals and uncertainties were opportunities for us
to
accumulate positions in the affected countries.
Below are outlined the major adjustments and changes in the
country
weights of the IFC Global Composite Index that took place during
1995.
<TABLE>
<CAPTION>
---------------------------------------------------------------
- -------------------------------------------
WEIGHT IN IFC GLOBAL
COMPOSITE INDEX GROSS DOMESTIC
------------------------------
- -------------------- PRODUCT
MARKET DECEMBER 1994
DECEMBER 1995 ("GDP") WEIGHT
%
% %
---------------------------------------------------------------
- -------------------------------------------
<S> <C>
<C> <C>
Brazil 11.5
9.5 10.5
---------------------------------------------------------------
- -------------------------------------------
Mexico 8.8
6.0 9.1
---------------------------------------------------------------
- -------------------------------------------
Taiwan/China 17.0
9.9 18.8
---------------------------------------------------------------
- -------------------------------------------
South Africa 14.6
10.6 2.8
---------------------------------------------------------------
- -------------------------------------------
</TABLE>
These new weights are more realistic because they have lowered
the very
high exposures in countries like Taiwan/China and South Africa
especially; we
do not have an optimal index yet, although improvements and
changes are being
made all the time.
We strongly believe the case for Emerging Markets remains
compelling based
on the prospects for superior growth rates in excess of the
developed world;
but volatility will remain an outstanding and, at times, painful
feature of
this asset class. Many smaller markets are routinely penalized by
short-term
political developments which in the long run have little or no
effect on
growth rates and hence valuation. We referred in our country
commentaries to
the many (unrelated) hiccoughs which plagued markets during the
year including
Korea, India, Greece and Turkey. Only when valuations become so
attractive as
to overcome these perceived risks will markets recover; we could
and do argue
that such undervaluation is now prevalent. We therefore believe
that 1995
marked the low point for Emerging Markets, precisely because such
discounts
are now inhere.
CURRENT STRATEGY
THE CHART BELOW ILLUSTRATES THE FUND'S COUNTRY WEIGHTS
AS A PERCENTAGE OF NET ASSETS AT DECEMBER 31, 1995.
Korea 12.8
Turkey 12.4
Greece 10.5
South Africa 9.6
Cash 7.0
Indonesia 6.4
China 6.0
India 5.5
Israel 4.6
Russia 4.3
Mexico 3.9
Hungary 3.4
Portugal 3.2
Brazil 3.1
Thailand 2.6
Poland 2.0
Malaysia 1.9
Pakistan 1.7
Bangladesh 1.2
Lebanon 0.6
o GREECE AND TURKEY REPRESENT THE KEY OVERWEIGHT POSITIONS IN THE
PORTFOLIO AS
THESE ARE THE MARKETS WHERE OUR PROPRIETARY DATABASE HIGHLIGHTS
THE LARGEST
NUMBER OF ATTRACTIVE VALUATIONS. WE HAVE ALSO INCREASED OUR
POSITION IN
CHINA AS THE CORRECTION IN THAT MARKET PROVIDED FURTHER
OPPORTUNITIES.
o WE HAVE ALSO TAKEN POSITIONS IN THE EAST EUROPEAN MARKETS AS THE
RECENT
DECLINES HAVE IMPROVED VALUATIONS AND WE ARE FINDING
ATTRACTIVELY PRICED
SHARES.
o WE CONTINUE TO UNDERWEIGHT THE LATIN AMERICAN MARKETS AS THERE
ARE
RELATIVELY FEW ATTRACTIVE OPPORTUNITIES IN THESE COUNTRIES.
FUND COUNTRY WEIGHTS VERSUS IFC GLOBAL COMPOSITE
INDEX
AS OF DECEMBER 31, 1995
Other 14.0
Turkey 11.0
Greece 9.7
Indonesia 3.9
China 3.4
Hungary 3.4
Portugal 2.2
Poland 1.8
Pakistan 1.1
Korea 0.5
India 0.3
Sri Lanka - 0.1
Nigeria - 0.1
Zimbabwe - 0.1
Venezuela - 0.2
Jordan - 0.3
Peru - 0.7
Columbia - 0.8
Argentina - 1.9
Mexico - 2.1
Philippines - 2.9
Chile - 4.3
South Africa - 5.1
Thailand - 5.8
Brazil - 6.3
Taiwan - 9.9
Malaysia -11.0
SELECTED COUNTRY REVIEWS AND OUTLOOK
BRAZIL
During 1995 the Bovespa Index fell by 14% in US Dollar terms.
The market
was one of the most volatile in the region. The volatility was
mainly caused
by two corruption scandals involving senior government officials
relating to
the collapse of Banco Economico and the surveillance project over
the Amazon.
The inflation rate for the year of 22%, compared to 941% in
1994, is the
lowest for 20 years. The first quarter saw dramatic GDP growth of
10.5%,
although this eased towards a more manageable level of 4.5% for
the year.
Brazil has broken with its tradition of trade surpluses by posting
a trade
deficit in December of US $51 million. Nevertheless, year-end
foreign exchange
reserves were at a record level of over US $50.4 billion.
A program is under way to reduce government bureaucracy, to
cut government
spending and to increase the effectiveness of road, rail and port
infrastructure. In addition, with the continuing progress of
privatization,
which should progress more efficiently this year, we should see
some upside in
the market.
TARGET WEIGHTING: NEUTRAL
MEXICO
During the fourth quarter the Bolsa Index rose by 20% amid low
trading
volumes ending higher than the pre-crisis level in local currency
terms.
However, the currency has been in constant decline this year
further weakening
to 7.5 pesos per US Dollar causing the market to end the year down
more than
20% in US Dollar terms.
Inflation for December was 3.3% bringing the annual inflation
rate to
52.0% for 1995, lower than recent predictions. This has in turn
allowed Cetes
one-month yields to fall to around 42%. Clearly lower or even
negative real
interest rates will propel the market higher in the short term.
Mexico's trade surplus for November was US $675 million,
bringing the
year-to-November surplus to US $6.9 billion. This clearly
demonstrates
Mexico's export potential at current exchange rates.
TARGET WEIGHTING: NEUTRAL
SOUTH AFRICA
The South African stock market had a very good fourth quarter,
finishing
up 12.5% and reaching a new high for the year. The outlook is
still promising.
Inflation has fallen from a high of 11% in April to 6.4% in
November. Money
supply growth, which is inflated by capital inflows, seems to have
peaked in
September at 15.7% and is on a downward trend. The South African
Rand has been
very stable against the US Dollar.
Attention is now focused on the current account deficit and
the very high
level of real interest rates. Stronger domestic economic growth
and improving
import growth have led to a widening of the current account
deficit.
Fortunately, the level of foreign borrowing which represents 23%
of GDP is
still low. Despite the better than expected increase in gold and
foreign
exchange reserves in December, the reserves-to-imports ratio
remains fragile
at five weeks compared to the Reserve Bank's target of three
months. The
Reserve Bank has, however, negotiated access to longer term credit
facilities
from private banks and the International Monetary Fund, which
places the
country in a better position to support the South African Rand
against short-
term fluctuations.
The second concern is the level of real interest rates which
at over 12%
are at their highest level since 1985. Given the low foreign
exchange reserves
the Reserve Bank will bring rates down in 1996, but with caution.
GDP growth is expected to have reached 3.2% in 1995 and to
peak at 4% in
1996. Combined with a probable fall in interest rates and the
strong recent
move in the gold price this should benefit the equity market.
TARGET WEIGHTING: OVERWEIGHT GOLDS
INDIA
The Indian stock market lost 9.8% in local currency terms
aggravated by a
3.8% depreciation of the Indian Rupee. India is facing a liquidity
crunch;
foreign capital inflows have fallen significantly. Real interest
rates have
been rising throughout the year in response to slowing deposit
growth, booming
credit demand and a perception of increased political risk from
1.8% in
January to 7.5% currently. These factors have led to a slowdown in
the money
supply growth from 17% year-on-year in April to less than 15% in
October,
which in turn has helped inflation come down from 12% at the
beginning of the
year to 7.3%. Prime lending rates are now at 16.5%. The trade
deficit has been
widening but is not yet a cause for concern at 2% of GDP. The
current account
deficit has worsened which, combined with the Reserve Bank of
India's
intervention and falling foreign exchange reserves, is putting
pressure on the
Indian Rupee; this should ease after the early general elections
due in April
because the government's borrowing needs will fall.
Meanwhile, despite interest rate hikes the economy is booming;
GDP is
expected to grow by 6% this financial year mainly due to the
industrial
sector. The stock market at current levels is therefore looking
very
attractive (the market fell by 30% in 1995). Our proprietary
database is
highlighting many undervalued shares.
TARGET WEIGHTING: INCREASE
GREECE
The Greek stock market finished the quarter down 5.6%. Market
sentiment
was dominated by the prime minister's ill health and concern over
his
successor. Politics and the surrounding intrigue exerted pressure
on the Greek
Drachma. The Bank of Greece has been intervening to defend the
currency which
depreciated by 2% over the quarter despite higher interest rates.
Politics
have also forced interest rates up, arresting the decline in real
rates we had
seen since June 1994. Although inflation fell in December (at 8.1%
year-on-
year) and the 1996 budget forecasts an optimistic 5% level for
year-end 1996,
the Bank of Greece reiterated that inflation would have to fall
further for
interest rates to be reduced. Nevertheless, the finance minister
is expecting
the 12-month T-bill rate to fall to 11.5% in 1996 from its current
level of
13.9%. Some concern is still voiced about the current account
deficit widening
to US $2.75 billion in September compared to a surplus of US $233
million in
the same period of 1994. This is largely attributable to a
deterioration in
the trade balance. Only the large net surplus on tourism, private
transfers
and EU grants maintain the situation.
Industrial production continued its upward trend, rising by
8.5% in
October; GDP is expected to have reached growth rates of 2% and
2.3% in 1995
and 1996, respectively. The market is likely to recover further,
boosted by
the improving macroeconomic environment and following the election
of a new
prime minister in 1996.
TARGET WEIGHTING: NEUTRAL
TURKEY
The Turkish market ended the last quarter down 19%. The
macroeconomic
picture has been clouded by political uncertainty ahead of the
general
election in December where the Islamic party made substantial
gains causing
the market to fall 6% in one day.
Better than expected Consumer Price Index figures in December
at 78.9%
year-on-year compared to 91.3% in September would suggest that
inflation is on
a downward trend. But the incumbent government's election spending
feeds
through with a two-month lag so the impact of higher government
spending will
likely be seen in the first quarter of 1996.
Three-month Treasury bill rates have been rising since July
1995 and
traded at a record high of 240% on a compounded basis, just after
the election
week in December. The central bank is likely to keep real interest
rates high
to protect against devaluation of the Turkish Lira. The
uncertainty over the
quarter and the difficulties in repaying domestic debt have forced
the
Treasury to shorten the maturity of Treasury bills to 50 days. The
Treasury's
redemption schedule remains extremely heavy in the first quarter
of 1996
forcing it to be an aggressive borrower in the domestic debt
market.
To limit speculation over devaluation, the central bank
announced forward
Turkish Lira/US Dollar rates for the first time in November. In
order to
maintain the strength of the Turkish Lira the bank has been
intervening in the
money markets. As a result, foreign reserves have fallen from a
high of just
over US $17 billion to US $12.3 billion.
On the positive side Turkey's customs union with the European
Community
commencing January, 1996 improves its long-term outlook and will
increase its
productivity. GDP grew by 10% in the first 9 months of 1995. The
stock market
has been depressed and with the new coalition pursuing fiscal
restraint and
continuing privatization we remain optimistic in the longer term.
TARGET WEIGHTING: NEUTRAL
KOREA
Domestic investment and trade have been the two pillars of
growth in the
economy, which expanded by some 9.5% in 1995. A strong rise in
exports was led
by the electronics sector and stimulated by a relatively strong
Japanese Yen.
This in turn supported huge manufacturing investment, the main
cause of
accelerating imports of capital equipment during the year. As a
result, the
current account deficit widened, but to only some 3.0% of GDP and
this was
amply covered by foreign direct investment. In spite of the
overheating,
inflation hovered at the 5.0% level, held down by a decline in
food prices.
With money growth stable, domestic interest rates eased
progressively after a
sharp rise seen in the first two months of the year.
This, together with strong earnings growth and further
relaxation of
foreign investment limits, provided the impetus for a rally in
equities from
May to October. However, in the fourth quarter the discovery of a
slush fund
belonging to former President Roh and of contributions made to it
by leaders
of blue-chip companies, precipitated a sharp sell-off in the
market. Although
political uncertainty may undermine equities in the shorter term,
evidence is
beginning to emerge of slowing domestic investment and demand. As
economic
activity subsides during the first half of 1996, improving
liquidity
conditions should see investors return to the stock market.
TARGET WEIGHTING: NEUTRAL
TAIWAN
Domestic economic activity in Taiwan slowed markedly over the
year, as
tight liquidity conditions adversely affected private investment
and
performance in the property and stock markets. In addition, local
confidence
was undermined by escalating political tensions with mainland
China. However,
overall growth was supported by trade which was stimulated by
improving
competitiveness against a strong Japanese Yen. For the economy as
a whole,
real GDP is estimated to have grown by 6.3% over the year, after a
6.5% rise
in 1994. In response to falling inflation and money growth, the
Bank of China
eased credit controls three times. Nevertheless, liquidity
conditions remain
poor and further easing is expected in the first quarter of 1996,
especially
before President Lee seeks re-election in March, an event mainland
China aims
to upset. The prolonged weakness in equities this year has
resulted in the
market's price to earnings valuation falling to an historic low
level. As
economic activity slows and monetary conditions improve in early
1996, the
market should find support for a sustained recovery.
TARGET WEIGHTING: INCREASE
INDONESIA
The Jakarta stock market index increased by 9.4% for the year
in local
currency terms (+5.2% in US Dollars) with a 4.2% gain in the last
quarter.
Real GDP grew by 7.5 to 8.0% in 1995, with strong private
investment and
consumption. Inflation was brought down from 11% to below 9%,
while foreign
capital inflows nearly doubled to over US $30 billion.
Interest rates increased sharply in the early part of the year
from 11% to
15.5% but were unchanged in the last six months and seem to have
peaked. The
strong growth in the private sector has led to problems of
overheating and an
expanding current account deficit which increased to 3.5% of GDP.
We remain positive on Indonesia as our proprietary database
shows many
undervalued companies which, with the improving macro-economic
picture, should
begin to perform well.
TARGET WEIGHTING: NEUTRAL/REDUCE
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
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- -------------
VALUE
SHARES
(NOTE 1)
- ------------------------------------------------------------------
- -------------
COMMON STOCKS -- 92.6%
BANGLADESH -- 1.2%
41,500 Beximco Pharmaceuticals $
87,970
1,300 Chittagong Cement
23,555
--
- --------
111,525
--
- --------
CHINA -- 6.0%
180,000 Guangdong Electric Power Development, Class B
86,130
460,000 Jilin Chemical Industries, H Shares<F2>
95,183
430,000 Quingling Motor Company, Ltd., H Shares
125,121
200,000 Shanghai New Asia (Group), Class B<F2>
105,600
330,000 Shanghai Petrochemical, H Shares
94,956
195,000 Shanghai Refrigerator, Class B
69,420
--
- --------
576,410
--
- --------
GREECE -- 10.5%
15,000 AEGEK
128,886
3,200 Alpha Credit Bank
184,652
3,000 Aluminum Company Of Greece
128,886
6,950 Bank Of Piraeus
98,065
5,800 Commercial Bank Greece
217,176
8,000 Hellas Can
160,054
10,000 Heracles General Cement
94,769
--
- --------
1,012,488
--
- --------
HUNGARY -- 3.4%
3,200 Egis Gyogyszergyar
71,082
5,000 Gedeon Righter
96,611
540 Mol Magyar Olay Es Gazipari, GDS
4,466
6,200 Pannonplast Muan
81,680
4,300 Soproni Sorgyar
75,218
--
- --------
329,057
--
- --------
INDIA -- 5.5%
19,000 Finolex Cables Industries, GDR
114,000
3,500 Hindalco, GDR
119,455
18,000 Indian Aluminum Company, GDR
103,500
8,000 Mahindra & Mahindra, GDR
102,960
17,000 Wockhardt Limited, GDR
93,500
--
- --------
533,415
--
- --------
INDONESIA -- 6.4%
41,000 Bank Bali (F)
80,691
56,000 Bank Niaga (F)
111,437
130,000 Fajar Surya Wisesa (F)
61,120
10,000 Hanjaya Mandala Sampoerna (F)
104,089
29,000 Indorama Synthetic (F)
101,782
45,500 Lippo Bank (F)
70,145
198,000 Surabaya Agung Indonesia (F)
86,595
--
- --------
615,859
--
- --------
ISRAEL -- 4.6%
6,000 Agan Chemical Ilsi
103,308
55,000 Bank Hapoalim Ltd.
90,770
25,000 Dead Sea Works
70,483
39,568 Kitan
83,871
16,307 Osem Investment, ORD
97,498
--
- --------
445,930
--
- --------
KOREA -- 12.8%
26,000 Korea Fund, Inc.
572,000
52,700 Korean Investment Fund, Inc.
533,588
1,300 Samsung Electronics Company, GDR<F2>
122,002
--
- --------
1,227,590
--
- --------
LEBANON -- 0.6%
5,000 Banque Audi Sal, GDR
61,250
--
- --------
MALAYSIA -- 1.9%
11,000 Matsushita Electric Company Malaysia Berhad
94,479
40,000 RJ Reynolds Berhad
90,662
--
- --------
185,141
--
- --------
MEXICO -- 3.9%
50,000 Fomento Economico Mexicana, Sponsored ADR
112,914
30,000 Industrias Penoles
124,594
19,000 Tubos de Acero de Mexico, ADR
133,000
--
- --------
370,508
--
- --------
PAKISTAN -- 1.7%
130,000 Indus Motor
62,690
50,000 Nishat Textile<F2>
42,743
21,000 Pakistan Refinery Ltd.
63,216
--
- --------
168,649
--
- --------
POLAND -- 2.0%
2,400 Bank Rozwoju Eks Portu SA
36,504
3,300 Jelfa
38,013
2,600 Krosno, ORD
36,909
11,800 Mostostal Zabrze<F2>
39,724
5,000 Rafako<F2>
39,951
--
- --------
191,101
--
- --------
PORTUGAL -- 3.2%
7,000 Banco Espirito Santo
105,630
4,600 Lusotur<F2>
95,130
6,200 Unicer
103,402
--
- --------
304,162
--
- --------
RUSSIA -- 4.3%
22,000 AO Norilsk Nickel, Credit Suisse Financial
Products Finance Limited,
Certificates<F2><F3>
107,800
23,000 AO Rostelekom, Series 2, Credit Suisse
Financial Products Finance Limited,
Certificates<F3>
101,200
720,000 AO Surgutneftegaz, Series 3, Credit Suisse
Financial Products Finance Limited,
Certificates<F3>
86,400
12,377 RAO Unified Energy Systems of Russia, Series 2,
Credit Suisse Financial Products Finance
Limited, Certificates<F3>
114,363
--
- --------
409,763
--
- --------
SOUTH AFRICA -- 9.6%
60,000 Automakers Ltd.<F2>
88,877
35,000 East Rand Gold & Uranium Company Ltd.
93,609
10,500 Harmony Gold Mining Company Ltd.
95,049
9,500 Kinross Mines Ltd.
89,906
55,000 Kolosus Holdings Ltd.
90,523
16,500 Randfontein Estates Gold Mining Co.
106,364
15,000 Servgro International Ltd.
92,580
23,500 Telemetrix, ORD
46,736
10,000 Toyota South Africa Ltd.
87,779
6,700 Trans Natal Coal Corporation Ltd.<F2>
43,190
12,000 Winkelhaak Mines Ltd.
85,585
--
- --------
920,198
--
- --------
THAILAND -- 2.6%
64,000 Bang Chak Petroleum Company
89,384
41,000 Thai German Ceramic Industries Ltd.
109,865
10,900 Thai Glass Industries Ltd. (Local)
51,925
--
- --------
251,174
--
- --------
TURKEY -- 12.4%
294,000 Akcimento
112,139
380,000 Aksa
118,159
830,000 Anadolu Cam Sanayii
68,823
215,000 Bagfas Bandirma
66,853
200,000 Cemtas Celik Makina, ORD
63,018
350,000 Cukurova Elektrik
226,368
800,000 Eczacibasi Yapi Gerecleri
88,889
670,000 Eczacibasi Yatirim Holding
80,000
360,000 Ege Seramik, ORD
89,552
300,000 Goltas Goller
50,995
3,800,000 Izmir Demir Celik
72,471
310,000 Koc Yatirim
66,832
940,000 Marshall Boya, ORD
91,973
--
- --------
1,196,072
--
- --------
TOTAL COMMON STOCKS (COST $9,382,877)
8,910,292
--
- --------
PREFERRED STOCKS -- 3.1%
BRAZIL -- 3.1%
40,000,000 Refrigeracao Parana SA
79,840
2,500,000 Telebras
120,377
600,000 Vale do Rio Doce
98,771
--
- --------
TOTAL PREFERRED STOCKS (COST $294,550)
298,988
--
- --------
PRINCIPAL
AMOUNT
--------
TIME DEPOSIT -- 7.0% (COST $678,000)
$678,000 Brown Brothers Harriman & Company, (Cayman
Islands) 4.75% due 01/01/96
678,000
--
- --------
TOTAL INVESTMENTS (COST $10,355,427<F1>) 102.7%
9,887,280
OTHER ASSETS AND LIABILITIES (NET) (2.7)
(264,203)
- ------------------------------------------------------------------
- ------------
NET ASSETS 100.0%
$9,623,077
==================================================================
============
<F1> Aggregate cost for Federal tax purposes.
<F2> Non-income producing security.
<F3> The valuation of these securities has been determined by the
Valuation
Committee of the Fund's Board of Trustees. The cost of these
denoted
securities at December 31, 1995 was $406,267.
Abbreviations:
ADR American Depositary Receipt
(F) Foreign
GDR Global Depositary Receipt
GDS Global Depositary Share
ORD Ordinary
<PAGE>
AT DECEMBER 31, 1995, SECTOR DIVERSIFICATION OF THE FUND WAS AS
FOLLOWS:
% OF NET
VALUE
INDUSTRY DIVERSIFICATION (UNAUDITED) ASSETS
(NOTE 1)
- ------------------------------------------------------------------
- ------------
COMMON STOCKS:
Financial Services 13.0%
$1,252,420
Banking 11.0
1,056,320
Metals 8.3
790,421
Building Materials and Components 7.5
720,673
Gold Mines 6.2
600,045
Beverages and Tobacco 5.1
486,285
Health and Personal Care 5.0
482,306
Utilities - Electrical and Gas 4.4
426,861
Automobiles 4.2
404,737
Energy 3.9
377,146
Chemicals 3.5
335,827
Conglomerates 3.5
336,047
Construction and Housing 3.1
302,539
Miscellaneous Materials and Commodities 2.9
280,802
Textiles and Apparel 2.7
262,684
Leisure and Tourism 2.1
198,180
Forest Products and Paper 1.5
147,715
Electrical and Electronics 1.5
141,215
Telecommunications 1.1
101,200
Food and Household Products 1.0
97,498
Appliances and Household Durables 0.7
69,420
Machinery and Engineering 0.4
39,951
- ------------------------------------------------------------------
- ------------
TOTAL COMMON STOCKS 92.6
8,910,292
PREFERRED STOCKS 3.1
298,988
TIME DEPOSIT 7.0
678,000
- ------------------------------------------------------------------
- ------------
TOTAL INVESTMENTS 102.7
9,887,280
OTHER ASSETS AND LIABILITIES (NET) (2.7)
(264,203)
- ------------------------------------------------------------------
- ------------
NET ASSETS 100.0%
$9,623,077
==================================================================
============
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- ------------------------------------------------------------------
- -------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- ------------------------------------------------------------------
- -------------
ASSETS:
Investments, at value (Cost $10,355,427) (Note 1)
$ 9,887,280
Cash
3,007
Receivable from investment adviser (Note 2)
120,948
Dividends receivable
20,911
Interest receivable
3,496
Unamortized organization costs (Note 1)
73,462
- ------------------------------------------------------------------
- ------------
TOTAL ASSETS
10,109,104
==================================================================
============
LIABILITIES:
Payable for investment securities purchased $326,985
Administration fee payable (Note 2) 45,000
Organizational cost payable 40,665
Legal and audit fees payable 25,000
Custodian fees payable (Note 2) 19,567
Transfer agent fees payable (Note 2) 2,000
Other accrued expenses and payables 26,810
- ------------------------------------------------------------------
- ------------
TOTAL LIABILITIES
486,027
- ------------------------------------------------------------------
- ------------
NET ASSETS
$ 9,623,077
- ------------------------------------------------------------------
- ------------
NET ASSETS CONSIST OF:
Accumulated distributions in excess of net
investment income (Note 1)
$ (2,020)
Accumulated net realized loss on investments sold
(Note 1)
(26,379)
Net unrealized depreciation of investments
(468,272)
Par value
101
Paid-in capital in excess of par value
(Notes 1 and 4)
10,119,647
- ------------------------------------------------------------------
- ------------
TOTAL NET ASSETS
$ 9,623,077
==================================================================
============
NET ASSET VALUE:
Net asset value, offering and redemption price per
share ($9,623,077 / 101,223 shares of beneficial
interest outstanding)
$95.07
==================================================================
============
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- ------------------------------------------------------------------
- ------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------
- ------------
FOR THE PERIOD ENDED DECEMBER 31, 1995*
INVESTMENT INCOME:
Interest
$ 34,925
Dividends (net of foreign withholding taxes
of $2,248)
26,269
- ------------------------------------------------------------------
- ------------
TOTAL INVESTMENT INCOME
61,194
- ------------------------------------------------------------------
- ------------
EXPENSES:
Administration fee (Note 2) $ 65,323
Investment advisory fee (Note 2) 29,114
Professional fees 28,037
Custodian fees (Note 2) 19,567
Trustees' fees and expenses (Note 2) 13,324
Insurance expense 12,750
Amortization of organization costs (Note 1) 3,866
Transfer agent fees (Note 2) 2,903
Other 20,594
- ------------------------------------------------------------------
- ------------
TOTAL EXPENSES BEFORE WAIVERS AND REIMBURSEMENTS
195,478
- ------------------------------------------------------------------
- ------------
FEES WAIVED AND EXPENSES REIMBURSED BY INVESTMENT
(150,062)
ADVISER (NOTE 2)
- ------------------------------------------------------------------
- ------------
NET EXPENSES
45,416
- ------------------------------------------------------------------
- ------------
NET INVESTMENT INCOME
15,778
- ------------------------------------------------------------------
- ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized gain/(loss) on:
Securities transactions
(26,379)
Foreign currency contracts
(8,782)
Foreign currency transactions
10,796
- ------------------------------------------------------------------
- ------------
Net realized loss on investments during the period
(24,365)
- ------------------------------------------------------------------
- ------------
Net change in unrealized depreciation of:
Securities
(468,147)
Foreign currency transactions and other
assets, net
(125)
- ------------------------------------------------------------------
- ------------
Net unrealized depreciation of investments during
the period
(468,272)
- ------------------------------------------------------------------
- ------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS
(492,637)
- ------------------------------------------------------------------
- ------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$(476,859)
==================================================================
============
*The Fund commenced operations on October 4, 1995.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMEREGING MARKETS FUND
- ------------------------------------------------------------------
- ------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------
- ------------
PERIOD
ENDED
INCREASE/DECREASE IN NET ASSETS
12/31/95*
- ------------------------------------------------------------------
- ------------
OPERATIONS:
Net investment income
$ 15,778
Net realized loss on investments during the period
(24,365)
Net unrealized depreciation of investments during
the period
(468,272)
- ------------------------------------------------------------------
- ------------
Net decrease in net assets resulting from operations
(476,859)
Distributions to shareholders:
Distributions to shareholders from net investment
income
(15,778)
Distributions in excess of net investment income
(5,483)
Net increase in net assets from Fund share
transactions (Note 4)
10,021,197
- ------------------------------------------------------------------
- ------------
Net increase in net assets
9,523,077
NET ASSETS:
Beginning of period (original capital
September 26, 1995)
100,000
- ------------------------------------------------------------------
- ------------
End of period (including accumulated distributions
in excess of net investment income of $2,020)
$ 9,623,077
==================================================================
============
*The Fund commenced operations on October 4, 1995.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- ------------------------------------------------------------------
- -----------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------
- -----------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
12/31/95<F1>
- ------------------------------------------------------------------
- -----------
Net asset value, beginning of period
$100.00
- ------------------------------------------------------------------
- -----------
Income from investment operations:
Net investment income
0.16
Net realized and unrealized loss on investments
(4.88)
- ------------------------------------------------------------------
- -----------
Total from investment operations
(4.72)
- ------------------------------------------------------------------
- -----------
Distributions to shareholders:
Distributions from net investment income
(0.16)
Distributions in excess of net investment
income
(0.05)
- ------------------------------------------------------------------
- -----------
Total distributions
(0.21)
- ------------------------------------------------------------------
- -----------
NET ASSET VALUE, END OF PERIOD
$ 95.07
==================================================================
===========
Total return<F3>
(4.72)%
==================================================================
===========
Ratios to average daily net assets/supplemental data:
Net assets, end of period (in 000's)
$9,623
Ratio of net operating expenses to average
daily net assets
1.95%<F2>
Ratio of operating expenses to average daily
net assets without waivers and reimbursements
8.39%<F2>
Ratio of net investment income to average daily
net assets
0.68%<F2>
Net investment loss per share without waivers
and reimbursements
$ (1.33)
Portfolio turnover rate
5%
Average commission rate (per share of security)
$ .001
- ----------
<F1>The Fund commenced operations on October 4, 1995.
<F2>Annualized.
<F3>Total return represents aggregate total return for the period.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- ------------------------------------------------------------------
- -------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------
- -------------
1. SIGNIFICANT ACCOUNTING POLICIES
Panorama Trust (the "Trust"), a Massachusetts business trust
registered
under the Investment Company Act of 1940, as amended (the "1940
Act"), is a
no-load, diversified, open-end management investment company which
currently
offers shares of two series, the Pictet Global Emerging Markets
Fund and
Pictet International Small Companies Fund (commenced operations on
February 7,
1996). The accompanying financial statements and financial
highlights are
those of the Pictet Global Emerging Markets Fund (the "Fund"). The
Fund's
financial statements are prepared in accordance with generally
accepted
accounting principles which require the use of management
estimates. The
following is a summary of the significant accounting policies
followed by the
Fund in the preparation of its financial statements.
Securities Valuations: Equity securities listed on a U.S.
securities
exchange for which market quotations are available are valued at
the last
quoted sale price as of the close of the Exchange's regular
trading hours on
the day the valuation is made. Generally, securities listed on a
foreign
exchange and unlisted foreign securities are valued at the latest
quoted sales
price available before the time when assets are valued. Price
information on
listed securities is taken from the exchange where the security is
primarily
traded. Unlisted U.S. equity securities and listed securities not
traded on
the valuation date for which market quotations are readily
available are
valued at the mean between the asked and bid prices. The value of
securities
for which no quotations are readily available (including
restricted
securities) is determined in good faith at fair value using
methods determined
by the Board of Trustees. One or more pricing services may be used
to provide
securities valuations in connection with the determination of the
net asset
value of the Fund. Short-term investments that mature in 60 days
or less are
valued at amortized cost.
Repurchase Agreements: The Fund may engage in repurchase
agreement
transactions. Under the terms of a typical repurchase agreement,
the Fund pays
a counterparty cash for, and takes possession of, a 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 held by the Fund at all times,
is at least
equal, to the total amount of the repurchase obligations,
including interest.
In the event of counterparty default, the Fund generally has the
right to use
the collateral to offset losses incurred. There is potential loss
to the Fund
in the event the Fund is delayed or prevented from exercising its
rights to
dispose of the collateral securities, including the risk of a
possible decline
in the value of the underlying securities during the period while
the Fund
seeks to assert its rights. The Fund's Investment Adviser, acting
under the
supervision of the Board of Trustees, 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.
Forward Foreign Currency Contracts: The Fund may invest in
forward foreign
currency contracts to hedge against anticipated future changes in
exchange
rates which otherwise might either adversely affect the value of
the portfolio
securities of the Fund or adversely affect the prices of
securities which the
Fund intends to purchase or sell at a later date. Forward foreign
currency
contracts are valued at the forward rate and are marked-to-market
daily. The
change in market value is recorded by the Fund as an unrealized
gain or loss.
When the contract is closed, 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 at the time it was closed.
The use of forward foreign currency contracts does not
eliminate
fluctuations in the underlying prices of a Fund's investment
securities, but
it does establish a rate of exchange that can be achieved in the
future.
Although forward foreign currency contracts limit the risk of loss
due to a
decline in the value of the hedged currency, they also limit any
potential
gain that might result should the value of the currency increase.
In addition,
the Fund could be exposed to risks if the counterparties to the
contracts are
unable to meet the terms of their contracts.
The Fund may enter into spot foreign currency contracts for
the purchase
or sale of securities denominated in foreign currencies to "lock"
in the U.S.
exchange rate of the transaction covering the period between trade
date and
settlement date.
Foreign Currency: The books and records of the Fund are
maintained in
United States (U.S.) dollars. Foreign currencies, investments and
other assets
and liabilities are translated into U.S. dollars at the bid prices
of such
currencies against U.S. dollars last quoted by a major bank.
Unrealized gains
and losses on investments which result from changes in foreign
currency
exchange rates have been included in the unrealized appreciation/
(depreciation) of investments. Net realized foreign currency gains
and losses
resulting from changes in exchange rates include foreign currency
gains and
losses between trade date and settlement date of investment
securities
transactions, foreign currency transactions and the difference
between the
amounts of interest and dividends recorded on the books of the
Fund and the
amount actually received. The portion of foreign currency gains
and losses
related to fluctuation in exchange rates between the initial
purchase trade
date and subsequent sale trade date is included in realized gains
and losses
on investment securities sold.
Securities Transactions and Investment Income: Securities
transactions are
recorded on a trade date basis. Realized gains and losses from
securities
transactions are recorded on the identified cost basis. Interest
income is
recorded on the accrual basis. Dividend income is recorded on ex-
dividend
date, except that certain dividends from foreign securities are
recorded as
soon as the Fund is informed of the ex-dividend date.
Dividends and Distributions to Shareholders: Distributions
from net
investment income, if any, are declared and paid annually. The
Fund's net
realized capital gains (including net short-term capital gains),
unless offset
by any available capital loss carryforward, are distributed to
shareholders
annually. Additional distributions of net investment income and
capital gains
may be made at the discretion of the Board of Trustees in order to
avoid the
application of a 4% non-deductible Federal excise tax. Income
distributions
and capital gain distributions are determined in accordance with
income tax
regulations which may differ from generally accepted accounting
principles.
These differences are primarily due to timing differences and
differing
characterization of distributions made by the Fund.
Permanent differences incurred during the period ended
December 31, 1995
resulting from differences in book and tax accounting have been
reclassified
at year end to reflect an increase to undistributed net investment
income of
$3,463, an increase to accumulated realized loss of $2,014 and a
decrease to
paid-in capital of $1,449.
Income Taxes: The Fund intends to qualify each year as a
regulated
investment company by complying with the requirements of the
Internal Revenue
Code of 1986, as amended, applicable to regulated investment
companies and by
distributing substantially all of its earnings to shareholders.
Therefore, no
Federal income tax or excise tax provision is required.
Organization Costs: The Fund bears all costs in connection
with its
organization including the fees and expenses of registering and
qualifying its
shares for distribution under Federal and state securities
regulations. All
such costs are being amortized on the straight-line method over a
period of
five years from the commencement of operations of the Fund. In the
event that
any of the shares issued by the Fund are redeemed by any holders
thereof
during such amortization period, the redemption proceeds will be
reduced by
any unamortized costs in the same proportion as the number of
shares redeemed
bears to the number of initial shares outstanding at the time of
the
redemption.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS
The Trust, on behalf of the Fund, has entered into an
Investment Advisory
Agreement (the "Advisory Agreement") with Pictet International
Management
Limited ("Pictet International"), a wholly-owned subsidiary of
Pictet (Canada)
& Company ("Pictet Canada"). Pictet Canada is a partnership, whose
principal
activity is investment accounting, custody and securities
brokerage. Pictet
Canada has two general partners, Pictet Advisory Services Overseas
and
FINGEST, and seven limited partners, each of whom is also a
partner of Pictet
& Cie, a Swiss private bank founded in 1805. Under the terms of
the Advisory
Agreement the Fund will pay Pictet International a fee, computed
daily and
payable monthly, at an annual rate of 1.25% of the average daily
net assets of
the Fund. Pictet International has voluntarily agreed to waive its
fees and
reimburse expenses to the extent necessary to assure that the
Fund's total
ordinary operating expenses do not exceed 1.95% of the Fund's
average daily
net assets. For the period ended December 31, 1995, Pictet
International
waived fees and reimbursed expenses of $29,114 and $120,948,
respectively.
First Data Investor Services Group, Inc. ("FDISG", formerly,
The
Shareholder Services Group, Inc.), a wholly-owned subsidiary of
First Data
Corporation, serves as the Trust's administrator, accounting agent
and
transfer agent. FDISG, as accounting agent, is paid a fee computed
daily and
payable monthly at an annual rate of 0.04% of the average daily
net assets of
the Fund, subject to a $50,000 annual minimum. For administrative
services,
FDISG is entitled to receive $220,000 per annum from the Trust. In
addition,
for its services as transfer agent, FDISG is paid separate
compensation.
No officer, director or employee of Pictet, FDISG, or any
affiliate
thereof, receives any compensation from the Trust for serving as
Trustee or
officer of the Trust. The Trust pays each Trustee an annual fee of
$5,000 plus
an additional $500 for each board meeting attended. The Trust also
reimburses
expenses incurred by the Trustees in attending such meetings.
Brown Brothers Harriman & Co. serves as the Trust's custodian.
440
Financial Distributors, Inc., a wholly-owned subsidiary of FDISG,
serves as
the Trust's principal underwriter and distributor.
3. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment
securities,
excluding short-term securities and U.S. government securities,
for the period
ended December 31, 1995 amounted to $10,031,548 and $327,742,
respectively.
At December 31, 1995, aggregate gross unrealized appreciation
for all
securities in which there is an excess of value over tax cost
amounted to
$367,746, and the aggregate gross unrealized depreciation for all
securities
in which there is an excess of tax cost over value amounted to
$835,893.
4. SHARES OF BENEFICIAL INTEREST
The Fund has one class of shares of beneficial interest, par
value $0.001
per share, of which an unlimited number of shares are authorized.
Transactions
in shares of beneficial interest were as follows:
PERIOD
ENDED
DECEMBER 31,
1995<F1>
SHARES
AMOUNT
- ------------------------------------------------------------------
- -------------
Sold 100,000
$10,000,000
Issued as reinvestment of dividends 223
21,197
- ------------------------------------------------------------------
- -------------
Net increase 100,223
$10,021,197
==================================================================
=============
<F1>The Fund commenced operations on October 4, 1995.
At December 31, 1995, 100,221 shares were owned by Dominion
Resources, Inc.
5. FOREIGN EMERGING MARKETS SECURITIES
The Fund invests primarily in foreign emerging markets
securities.
Investing in securities of foreign companies and foreign
governments involves
special risks and considerations not typically associated with
investing in
U.S. companies and the U.S. government. These risks include re-
valuation of
currencies, less reliable information about issuers, varying
securities
transaction clearance and settlement practices, and future adverse
political
and economic developments. These risks are heightened for
investments in
emerging markets countries. Moreover, securities of many foreign
companies and
foreign governments and their markets may be less liquid and their
prices more
volatile than those of securities of comparable U.S. companies and
the U.S.
government.
6. POST OCTOBER LOSS
Under the current tax law, capital and currency losses
realized after
October 31 may be deferred and treated as occurring on the first
day of the
following fiscal year. For the fiscal period ended December 31,
1995, the Fund
has elected to defer capital losses and currency losses occurring
between
November 1, 1995 and December 31, 1995 of $26,379 and $1,906,
respectively,
under these rules. Such losses will be treated as arising on the
first day of
the year ending December 31, 1996.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MRKETS FUND
- ------------------------------------------------------------------
- -------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------
- -------------
To the Board of Trustees of Panorama Trust and
the Shareholders of Pictet Global Emerging Markets Fund:
We have audited the accompanying statement of assets and
liabilities,
including the portfolio of investments, of Pictet Global Emerging
Markets
Fund, as of December 31, 1995, and the related statement of
operations, the
statement of changes in net assets and the financial highlights
for the period
from October 4, 1995 (commencement of operations) to December 31,
1995. 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 audit.
We conducted our audit 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
securities
owned as of December 31, 1995, 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 audit
provides 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
Pictet Global Emerging Markets Fund as of December 31, 1995, the
results of
its operations, the changes in its net assets and the financial
highlights for
the period October 4, 1995 (commencement of operations) to
December 31, 1995
in conformity with generally accepted accounting principles.
Coopers &
Lybrand L.L.P.
Boston, Massachusetts
February 28, 1996
