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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
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[Logo]
PICTET INTERNATIONAL
MANAGEMENT LIMITED
ANNUAL REPORT
DECEMBER 31, 1996
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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
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Dear Shareholders,
It is with pleasure that I present a combined 1996 Annual Report for both
Funds summarising the environment in 1996 and our outlook and strategy for
1997.
In emerging markets, 1996 may have marked an important turning point for
this asset class which after two years of negative returns resumed an upward
trend. The year also witnessed the decoupling of these markets from each other
as well as from the developed world. This process was evident across all
regions and large disparities of returns between neighbouring countries were
seen throughout the emerging universe.
We continue to believe emerging markets offer the prospect of superior
growth rates in excess of the developed world and a continued flow of
portfolio investment seeking higher returns.
Within international small companies, investors seeking to gain exposure
to the nascent recovery in certain European countries were richly rewarded for
investing in this asset class in 1996. Indeed, the Fund had an outstanding
year in Europe both from an asset allocation and stock selection perspective.
Our analysis of international small companies reveals that they are
significantly cheaper than large companies in most major countries. It is
likely that investors will eventually turn to these under valued sectors of
the market, making this potentially an opportune time to be exposed to smaller
companies.
Within Panorama Trust we have provided carefully structured investment
vehicles to meet the needs of North American investors wishing to access the
benefits of these two attractive and complementary asset classes. We look
forward to helping you the shareholders achieve your investment objectives in
1997 and beyond.
Yours sincerely,
/s/ Jean G. Pilloud
Jean G. Pilloud
President and Chairman
February 24, 1997
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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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PORTFOLIO MANAGER'S REPORT
Most emerging markets enjoyed a better year in 1996 and for the first time
since 1993 the asset class generated positive returns (+7.9%). These returns
would have been considerably higher were it not for the weakness in three major
index markets: South Korea (-32.3%), Thailand (-36.3%), and South Africa
(-16.7%). Pictet Global Emerging Markets Fund (the "Fund") successfully
underweighted these countries and focused its attentions instead on stronger
markets in emerging Europe.
The benefits of this strategy paid off particularly in the fourth quarter,
when the Fund outperformed the IFC Global Composite Index (the "Index") by
more than 400 basis points (bp). Eastern Europe was the primary contributor to
this performance, and our large exposure to Russia, which rose by nearly 20%,
enhanced returns. Holdings such as Yuganskneftegaz, which rose 22% in the
quarter, contributed 122 bp of the portfolio's outperformance. In Hungary, our
overweighted position contributed a further 30 bp as the country was one of
the top performers. Overall Europe, the Middle East and Africa represent only
15% of the Index but 42.1% of the Fund and generated a total contribution to
1996 performance of 694 bp.
A very different picture emerged in Asia where markets, in the absence of
visible foreign portfolio flows, were dominated by domestic considerations: in
South Korea, the weaker yen and the collapse in global semiconductor demand,
combined with continued deterioration of corporate balance sheets deterred
equity investors; real interest rates in excess of 8% were clearly more
attractive in such a climate. Thailand's worsening trade picture highlighted
many of the country's structural weaknesses; unlike the region's tiger
economies, the Thais have failed to invest adequately in infrastructure and
education, remaining highly dependent on low value-added exports at a time
when global demand has been waning and competition intensifying. Our
methodology had already alerted us to the risks in these two markets: first,
valuations in Thailand were overstretched and South Korean balance sheets were
overburdened; secondly, our risk control analysis underlined the inherent
macroeconomic dangers.
Elsewhere in Asia the global slowdown had a lesser effect; Malaysia
surprised on the upside (+25%) partly as a result of its new-found reputation as
a "safe haven", but also due to rampant domestic speculation in smaller
companies (the Kuala Lumpur Second Board Index rose by 93% over the year). We do
not subscribe to the "safe haven" argument and find Malaysian shares more
expensive on almost every measure than any other emerging market.
China posed problems of its own as the "B" share market (reserved for
foreigners) languished for the first nine months (+3%) while the "A" shares (for
locals only) soared (+60%). It was only the final quarter that our patience was
partially vindicated, as "B" shares outperformed by over 30%. We continue to
find deeply discounted "B" shares attractive, and believe that in the medium
term these pricing anomalies will be corrected.
Further problems were encountered in Taiwan (12% of the Index) where
foreigners cannot invest freely. This inability and the consequent
underweighting contributed a negative 336 bp to overall performance. We hope
to obtain permission for direct investment in the first half of 1997, although
our current weighting of 3% is unlikely to change much, valuations for the
most part being too rich.
The major disappointment for us in 1996 was our premature enthusiasm for
India which has consistently ranked high in our database appraisal; with
hindsight it is now clear that we underestimated local reaction to a tight
budget in July in which the introduction of a minimum rate of corporate tax
had profound implications for profitability (although the entire budget is now
under review, as the Indian government itself failed to recognize its
ramifications). India has become the largest single country weighing as stock
prices have probably over-compensated for these events and now offer
outstanding value.
As previously mentioned, emerging Europe (and Middle East/Africa) was the
largest contributor to our performance; Eastern Europe in particular dominated
performance tables (Hungary +129%, Russia +122%, Poland +62%, and the Czech
Republic +23%). The continuing stability and economic improvement have
encouraged a re-rating of equity risk; together with low valuations this formed
an explosive cocktail. For foreign investment managers this was an ideal
scenario in the emerging world -- undiscovered markets, low valuations, and an
improving macro picture. This process is not yet complete as funds continue to
target the region; our valuation methodology, however, is causing us to take
profits in the more mature markets of Hungary and Poland and re-invest in the
lesser-known markets.
Turkey had a good year (+38%) although most of the gains were confined to
the first quarter. It remains one of our favoured markets: shares are cheap,
skilled labour is abundant, and there is a renewed commitment to privatisation
which should help address some of the fiscal problems that have drained the
country's financial resources for almost ten years. These ingredients remind us
of Brazil in the early 1990s and its subsequent re-rating; if Turkey can endure
the same austerity the stock market could astonish on the upside.
Latin America, with the exception of Chile (-18%), enjoyed a dramatic
rebound (Brazil +51%, Mexico +18%, Argentina +25%, and Venezuela +98%). Lower
interest rates and inflation, the refinancing of the debt incurred at the time
of the 1994 devaluation, and an improvement in the fortunes of the export sector
reduced the perceived risk of Mexican financial assets. Brazil, which suffered
in the wake of the Mexican crisis, recovered strongly as it became clear that
fiscal reforms and privatization remained at the top of the agenda, and the
local economy was largely unaffected by events in Mexico.
Whilst the Brazilian index rose by more than 50%, only a handful of shares
outperformed -- notably Telebras and the electricity sector; investors shunned
second-tier companies (the blue chips of the early 1990s) among which we find
the best values. We believe that 1997 may see a reversal of this trend.
Argentina also surprised investors, overcoming the resignation of finance
minister Cavallo, the architect of the 1991 convertibility plan which
transformed the country. The market seems to have overlooked some of the
unpalatable consequences of this plan, such as the highest unemployment rate
in the region, and has instead focused on improving domestic liquidity as
measured by foreign exchange reserves and deposits in the banking system.
Conversely Chile, the region's best performing economy in terms of Gross
Domestic Product ("GDP") growth (+6% in 1996), was the worst performer, having
outperformed during the crisis of 1994/1995. Here real interest rates above 7%
together with expensive valuations have deterred local investors from the equity
market; foreigners who also have to contend with punitive capital restrictions
find even fewer attractions and have sought and found better returns elsewhere.
In summary, 1996 may have marked a turning point for emerging markets, and
the outlook for 1997 is better still; low real interest rates in the developed
world combined with unprecedented valuation levels (particularly in the United
States) should encourage the resumption of portfolios flows into this asset
class. Investors recognize that within the emerging universe they can buy
superior growth at a discount, and that the inherent risk premium is gradually
eroding as stability (both political and economic) settles across these
formerly volatile and tempermental countries.
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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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FUND COUNTRY WEIGHTS AS A PERCENTAGE OF NET ASSETS
AS OF DECEMBER 31, 1996
India ...................................... 10.0%
Brazil ..................................... 8.1
Turkey ..................................... 7.8
Other* ..................................... 6.9
China ...................................... 6.9
Russia ..................................... 6.7
Indonesia .................................. 5.8
South Africa ............................... 5.3
Czech Republic ............................. 4.2
Greece ..................................... 4.0
South Korea ................................ 3.6
Malaysia ................................... 3.0
Israel ..................................... 3.0
Argentina .................................. 3.0
Mexico ..................................... 2.7
Hungary .................................... 2.5
Taiwan ..................................... 2.4
Egypt ...................................... 2.2
Phillipines ................................ 2.0
Pakistan ................................... 2.0
Venezuela .................................. 1.5
Portugal ................................... 1.3
*Other is the following countries: Bangladesh, Croatia, Jordan, Kenya, Lebanon,
Peru, Poland Slovakia, Sri Lanka, Thailand and Zimbabwe.
FUND COUNTRY WEIGHTS VERSUS IFC GLOBAL COMPOSITE INDEX
AS OF DECEMBER 31, 1996
Other*...................................... 15.3%
Turkey ..................................... 6.6
India ...................................... 6.0
Czech Republic ............................. 3.6
Greece ..................................... 3.2
China ...................................... 3.1
Hungary .................................... 2.3
Pakistan ................................... 1.6
Indonesia .................................. 1.5
Venezuela .................................. 1.1
Argentina .................................. 0.8
Zimbabwe ................................... 0.6
Sri Lanka .................................. 0.4
Poland ..................................... 0.3
Peru ....................................... 0.2
Brazil ..................................... 0.1
Jordan ..................................... 0.1
Portugal ................................... -0.1
Nigeria .................................... -0.2
Columbia ................................... -0.9
Phillipines ................................ -2.4
South Africa ............................... -2.7
Chile ...................................... -3.5
Mexico ..................................... -3.8
South Korea ................................ -4.1
Thailand ................................... -5.2
Taiwan ..................................... -11.5
Malaysia ................................... -12.7
*Other is the following countries: Bangladesh, Croatia, Egypt, Israel, Kenya,
Lebanon, Russia and Slovakia.
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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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EMERGING MARKETS REVIEWS & INVESTMENT OUTLOOK
ASIA
In Malaysia, economic growth has continued to ease, although third quarter
real GDP still rose by 8.0% year-on-year. While industrial production during
the period recorded its weakest growth since 1992, domestic consumption
fuelled by strong lending growth was undiminished. October passenger car unit
sales were the highest ever, and activity in the property market remained
strong. Yet inflation dropped to only 3.3% in November, reflecting the
authorities' tight control on prices.
The year ahead is likely to prove more troublesome for corporate earnings:
interest rates are relatively high and wages are growing strongly but external
demand and product prices are weak. The government's new policy is to
encourage foreign investment in the high-technology and financial sectors and
there is a risk that a drop in foreign direct investment and strong domestic
demand may create imbalances in the economy. Nevertheless, current domestic
liquidity conditions are buoyant, and despite relatively unattractive market
valuations, share prices are likely to be well supported in the early months
of 1997.
For the second consecutive quarter Thailand was the worst performing
market in the region, dropping by some 24% over the period. Decisive policy
moves to arrest the credit crunch in the property and financial sectors were
not forthcoming, mainly because of the collapse of the Banharn government and
general elections in November. When action was taken it was poorly timed:
tight restrictions on foreign currency borrowing were announced in early
October, but just two weeks later this was delayed indefinitely as the Bank of
Thailand realised that forcing companies to borrow at higher local interest
rates would only exacerbate serious cashflow problems in the property sector.
When the newly elected Chavalit coalition formed its task force to deal
with the economic problems, the emergency measures that were announced were
disappointing in their bias toward longer term structural solutions. A
necessary sharp cut in interest rates was not considered, and this points at
the crux of all the troubles: interest rates have to remain high to support
the fixed exchange rate mechanism, and this is why so much borrowing at
cheaper, foreign interest rates occurred in the first place. Until the
currency is allowed to float, Thai monetary policy will remain inflexible.
In the meantime banks and finance companies are being asked directly, or
jointly with the government through new rescue funds, to shoulder the burden
of bad debts which ultimately casts a further shadow on credit ratings. The
best case scenario is that U.S. interest rates remain unchanged, investors
return to equities believing the worst of the troubles over, and the short-
term capital inflow this creates serves to ease liquidity conditions in the
economy. However, at this point it is still easier to see bad debts rising at
the banks than a full recovery in the equity market.
In Taiwan the economy expanded further in the third quarter, with real GDP
growing by 5.6% year-on-year. There were early signs in the fourth quarter
that the economy could be much stronger in 1997, chiefly as a result of an
acceleration in public works spending, a recovering economy in mainland China
and evidence of more robust demand for electronics in the U.S.
The stock market rose by more than 6% in the fourth quarter but proved
unable to break above the 7,000 level as investors remained cautious towards
the economy and corporate earnings. However, liquidity conditions and
valuation measures have remained broadly positive for equities, such that with
the outlook for growth in 1997 turning more optimistic the conditions appear
set for a strong move in share prices over the next three months.
South Korea dropped a further 17.5% over the quarter (plus 2% lost on the
currency for U.S. dollar-based investors) as external and domestic shocks to
the economy continued. The collapse in prices of Korea's major exports,
notably electronics and petrochemicals, was not reversed over the period and
this led to a trade deficit approaching U$14.5 billion for the year as a whole
- - -- some three times larger than in the previous year.
While it will take many months for the tangle of problems in the Korean
economy to be unravelled, there are some rays of hope: demand for electronics
products has picked-up in the United States, and while prices have not
responded due to global overcapacity, Korean companies remain ahead of much of
the competition in terms of production efficiencies and technological
innovation; inventories have begun to unwind, and domestic demand should drop
quickly given the relatively tight monetary policy that has been in place;
equity valuations are now very cheap but domestic liquidity conditions and
signs of stronger external demand will be needed for any recovery in share
prices to be sustained.
The Philippine economy expanded by 5.9% year-on-year in the third quarter,
supported by strong foreign and domestic investment. By all accounts, growth
in the fourth quarter may not disappoint either. Interest rates have continued
to ease and money growth and inflation have stabilised, the latter rising by
only 4.7% year-on-year in both October and November. The Philippines' export
performance has remained unique in Asia this year by being strong,
particularly in the electronics sector. November exports were 29.8% higher
year-on-year, with the electronics component rising 57% over the period. This
has helped alleviate some of the pressures on the trade balance caused by
strong capital imports.
In spite of these benign economic conditions, the stock market's level was
little changed over the quarter. Investors have several major concerns: the
rise in global oil prices (as the Philippines imports 98.5% of its oil
requirement), fears of oversupply in the property market (an 80%-90% increase
in Metro Manila's supply of offices and condominiums is forecast for the next
three years) and worries over the fate of much-needed tax reforms. However,
equity valuations are still compelling and liquidity conditions should remain
buoyant -- especially as bank reserve requirements are to be cut by 1% in
January 1997.
The easing of inflationary pressures has continued in Indonesia. The
Consumer Price Index (CPI) rose 6.9% year-on-year in November which was little
changed from the previous two months' growth rates. Money and credit growth
both slowed reflecting the relatively tight monetary policy, and consumption
weakened as evidenced by a contraction in unit car sales. The rise in oil
prices was a major factor in the maintenance of a trade surplus, and a
narrowing in the current account deficit (CAD) for the first nine months of
the year. For 1996 as a whole, the size of the CAD is forecast to be
equivalent to 4.0% of nominal Gross National Product, which is less than for
Thailand or Malaysia.
Improving economic numbers together with attractive equity valuations
lured foreign investors back to the market: the Jakarta Stock Exchange Index
rose by more than 11.0% over the quarter. In spite of this strong performance
the market remains cheap, trading on a prospective price-to-earnings ratio of
less than 16 times which is at the low end of the historical range. As long as
the improvements in the economy continue, investors should be rewarded with
easier money and further gains in equity prices.
A late rally made China one of the top equity markets of 1996. The highly
volatile B share indices of Shanghai and Shenzhen gained 40% and 145% in the
year respectively, while A shares rose 60% in Shanghai and 192% in Shenzhen.
Volumes on the B share markets jumped from an average of U$5 million per day
in the first three quarters to over U$50 million in the final quarter. Even
after the recent rally, B shares are still trading at an average discount of
50% to equivalent A shares.
These spectacular gains stemmed largely from rising domestic liquidity on
the back of declining interest rates and encouraging statements by the China
Securities Regulatory Commission. After three years of monetary austerity,
improving inflation allowed the government to cut rates twice during the year.
Furthermore the renminbi is now officially convertible on the current account,
and capital account convertibility can be expected in the next two to three
years.
1997 will prove to be a crucial year in the fortunes of the Chinese
capital markets. The handover of Hong Kong in July and political jostling in
Beijing should establish the direction and pace of reforms for the next few
years. We believe that these events will boost foreign investors' confidence
in China.
During the fourth quarter, the Indian stock market fell by 9% in U.S.
dollar terms, hitting a three-year low at the beginning of December. The
market now seems to have bottomed as many companies are trading below their
replacement cost value and cash rich companies have been buying back their
shares. Market concerns focus on the ballooning budget deficit, sluggish tax
collection and a shortfall in the public sector disinvestment program.
On a positive note, the economic slowdown has caused an improvement in the
trade deficit and provided leeway for easier money. The Central Bank has cut
the prime rate by 200 basis points in the last six months to 14.5% and the
cash reserve ratio will be cut by another 1% in January 1997. These positive
factors should stimulate economic growth, and, hopefully lead to a rerating of
the Indian stock market, which is still down 45% in U.S. dollar terms from its
1994 high.
LATIN AMERICA
The Mexican Bolsa ended with a 1.6% rise in December and a full year 1996
gain of 17.4%. The currency remained highly volatile, falling 7% in October
alone, yet still appreciated in real terms by nearly 22% after inflation for
the year of just over 25%. Not surprisingly, the strength of the currency took
its toll on the export sector, particularly the steel stocks, after a stellar
performance in 1995. Telmex massively underperformed the market whilst food
companies such as Maseca and the retail sector in general were strong
outperformers. In 1997 politics should once again come to the fore in Mexico,
with the mid-term Congressional elections in July likely to lead to even
greater volatility in the financial markets.
The Brazilian stock market rose 4.5% in December and 52.4% in 1996 putting
it once again amongst the world's top performing markets. Despite a weak
finish to the year Telebras rose over 61% and accounted for the bulk of the
index's performance. But the most spectacular returns were in the state
utilities sector where the pace of privatisation picked up markedly and stocks
like Coelba and Eletropaulo jumped by 138% and 213%, respectively. However,
the broad market, and smaller industrial stocks in particular, have been
disappointing.
After a short, sharp monetary adjustment early in the year the economy has
started to pick up again as real interest rates have fallen. The fear now is
that as the recovery speeds up, the government will be forced to reintroduce
credit restrictions or allow real interest rates to rise again. In addition,
President Cardoso is allowing the essential reforms in his legislative agenda
to be diluted by the opposition as he fights to change the constitution in
order to give himself the opportunity to be re-elected.
In Argentina the stock market rose 5.3% in December and 25.2% in 1996.
This year finally saw the resignation of Finance Minister Cavallo, the
architect of Argentina's convertibility plan. The reaction, particularly from
foreign investors, was muted, which was a good indicator of the new maturity
in this market. The economy has rebounded more sharply than anyone expected in
the second half of 1996 and full year growth estimates are now close to 4.5%.
The country's spectacular export performance in 1995 and 1996 has led to a
strong year for stocks in the steel and chemical sectors. High oil prices also
helped the oil sector to outperfrom. If the recovery continues, retail,
banking, telecom and food companies could perform well in 1997. The risk lies
in the politics; President Menem's popularity ratings stand at their lowest
ever level at a time when crucial reforms, particularly on labour flexibility,
are in the pipeline.
1996 was another dreadful year in Chile as the index fell 17.7% (-3.7% in
December). A combination of factors, such as high real interest rates, a
terrible drought which hurt profits in the hydroelectric sector (40% of the
index) and the dramatic fall in copper prices (35% of exports), caused the
losses. Ironically, Chile is one of the best performing economies with growth
once again exceeding 6% this year and inflation falling to a mere 6.5% with a
budget surplus and a tiny current account deficit. Valuations are consequently
beginning to look attractive again.
Venezuela rose by 98.6% in 1996 and 7% in December. After agreeing to
terms with the International Monetary Fund (IMF) in April, the government set
about reforming the economy with extraordinary zeal. Cushioned by huge
windfall oil revenues the deficit has been cut dramatically, foreign debt
rescheduled and privatisation restarted (most notably U$ 1 billion of CANTV
stock in November). Of course there is a huge task ahead, but valuations are
still cheap enough in many sectors to compensate for the high risk.
The Colombian stock market had a reasonable year rising by 9.7%. However,
all the increase came in the first quarter after which the index traded
sideways for the remainder of the year. The failure of Congress to impeach
President Samper left the country in a state of uncertainty during which
government spending rose sharply in an attempt to increase support for the
administration, and the independent Central Bank raised rates to counteract
the extra liquidity. This has held the financial markets in check in 1996, but
the outlook for 1997 looks better as the uncertainty recedes. Valuations are
compelling and the financial risk in Colombia remains low by regional
standards with steady, if somewhat high inflation, and strong foreign currency
earnings from the growing oil sector as huge new oil fields come on stream.
Peru rose a mere 1.7% in 1996 and fell 2% in December. The fall began
after the release of disappointing August GDP data and continued for the
remainder of the fourth quarter as each successive month confirmed the extent
of the slowdown. The hostage crisis in December merely added fuel to the fire.
Peruvian shares were stellar performers between 1993 and 1995 and it is only
the recent falls which have brought valuations back to attractive levels. With
real interest rates at historically low levels it should not take much to send
prices higher once negative prevailing sentiment begins to turn.
SOUTHERN EUROPE
In Turkey the market shrugged off the worsening current account and budget
deficits to finish the year at an all-time high. The Central Bank expects a
current account deficit of more than U$7 billion and the IMF anticipates a
budget deficit of U$20 billion in 1997. The market was buoyed by an extension
of the maturity of treasury bills to 12 months and a decline in yields to less
than 100%.
The market's hopes for 1997 are pinned on acceleration of the
privatization program; the stated aim is to raise some U$15 billion through
the sale of assets such as power plants and part of the telecommunications
company Turk Telecom. Also on the block are refining company Tupras, petroleum
distributor Petrol Ofisi, iron and steel maker Eregli, and tire maker Petlas.
Greece suffered a period of instability this year following the death of
prime minister Papandreou. The transition to the government of Costas Simitis
has been relatively smooth; inflation is at a 25-year low, 12-month T-bill
rates have fallen to 11.5% from 14.2% in December of 1995, the drachma has
been firm, and a tough budget has been introduced for 1997.
Unfortunately, these positive features were forgotten in the wake of a
U$10.6 million default by the Delta Securities brokerage. The scandal kept the
market closed for three days and caused a crisis in confidence; fortunately,
the immediate losses were modest as the Athens composite index fell only 2.1%.
New regulatory measures and the introduction of electronic trading in 1997
should boost transparency and make the market more attractive to international
investors.
EASTERN EUROPE
The Russian stock market was one of the world's top performing markets in
1996, closing the year with an astonishing 127% gain of which 10% came in the
last three months. The fourth quarter started with erratic drifts downward in
thin volumes and ended with a rally following President Yeltsin's initially
vigorous return to the Kremlin.
Investor interest focused on leading utility stocks, such as LUK-Oil (+26.8%
in the fourth quarter), which had suffered the biggest falls before the
resurgence of positive sentiment in November. Another important event was the
placing of Gazprom ADRs (American Depositary Receipts) which was five times
oversubscribed. Finally, the fall in GKO yields, i.e. government yields,
throughout the year has encouraged a shift from fixed income to equity.
Inside the Kremlin, political infighting has eased since Yeltsin sacked
the popular but turbulent security supremo, Alexander Lebed. Although economic
and political uncertainties remain, we expect the market to remain strong as
it is supported by important flows of fresh money. On January 1, 1997, Russia
became part of the IFC "Global" Composite Index with a weighting of
approximately 1.7%.
The Czech Republic (-5.6%) relinquished nearly all its summer gains on the
news that Agrobanka, the country's fourth largest bank, was placed under
forced administration. Despite the positive outcome of the senate elections in
November -- won by the right wing coalition -- the market was characterised by
a great deal of uncertainty: two forthcoming ADR issues, Chemapol and IPB, one
of the biggest Czech banks, were pulled.
Slower export growth has dampened GDP growth, which is forecast to rise by
4.5% this year. In the corporate sector, rising wages have eroded earnings
growth. Furthermore, as the state budget has slipped into deficit, necessary
investment projects will probably be delayed; this should have a negative
impact on the earnings of construction-related companies.
On a positive note the prime minister, Vaclav Klaus, won his first
significant victory in parliament when the balanced budget was approved with
the support of the opposition on December 13. Another positive step was the
reduction of corporate taxes and levies on investment funds.
The Hungarian market (+11.1%) set several successive all-time highs.
Although the valuation of companies became more demanding during the quarter,
the steady diet of strong corporate earnings continued to drive the market
forward. This is particularly true of the energy sector; the Hungarian
government agreed to increase electricity and gas prices in January 1997, by
24.9% and 18.8% respectively, to the evident benefit of integrated oil producer
MOL (+36%).
In Poland (-4.90%) it became clear during the fourth quarter, that the
general trend of decreasing margins and decline in profits among industrial
companies is persisting. Growth of the financials slowed down; net interest
margins for most of the financials decreased due to falling inflation and
rising real interest rates. On a positive note, the sale of Mass Privatisation
Programme (MPP) certificates ended on November 22, 1996 with a 95%
participation rate. The value of the certificates rose by more than 30% during
the quarter. The first merger of two Warsaw-listed companies, Polifarb Cieszyn
and Polifarb Wroclaw, caused a sharp run-up in those shares. Smaller companies
active in the consumer sector, such as Farm Food and Sokolov, strengthened
over the quarter.
AFRICA AND THE MIDDLE EAST
Sentiment in South Africa has been negative since Reserve Bank Governor
Stals increased base rates from 16% to 17% in November. GDP forecasts for 1996
and 1997 have been revised downward to 3% and 2%, respectively, and estimates
of earnings growth for 1997 have been trimmed to a range of 10%-15%. The rand
remains under pressure and unstable having depreciated by 3% over the quarter
and by more than 20% in 1996. These factors, and the lack of enthusiasm for
gold stocks, pushed share prices to a two and a half-year low in U.S. dollar
terms.
Egypt has been one of the driving forces in the Middle East region, with
economic growth expected to reach 6.2% growth in 1997/98, up from 5.7% in
1996/97. The economy is enjoying a boom in tourism and agricultural
production, and increased capital inflows. Privatisation has been a major
factor in Egypt's economic progress; the current aim is to privatise one third
of the 290 remaining state-owned companies. Egypt will be included in the
Index as of January 1997.
Israel, on the other hand, has seen a slowdown in GDP growth from 7.1% in
1995 to 3.8% for 1996 due to a decline in tourism brought about by the
interruption of the peace process. Inflation has come down to 6% and interest
rates decreased from a 17% high to 15.2%. Barring a resumption of violence,
conditions are favorable for the equity market and we note that the Israeli
domestic funds, i.e. Provident and Mutual Funds, moved back into the equity
market in the fourth quarter.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S REPORT
Most of the world's major equity markets, Japan excepted, enjoyed an
excellent year in 1996, led by a strong run in the U.S. and buoyed by
favourable conditions in the bond markets. However, small cap stocks failed to
keep pace in several markets, continuing a trend which has prevailed for
several years, especially in Europe. The relative underperformance of small
cap stocks indicates that investors do not perceive that the risk-adjusted
returns available from investing in the small cap segment of the equity market
are sufficiently attractive.
We perceive three principal reasons for this trend: first, a large number
of world-leading companies have initiated ambitious restructuring and value-
creating plans over the past few years; the resultant increase in earnings has
been recognised, and rewarded, by the market. Second, small cap stocks are
more closely linked to the fortunes of their respective domestic economies. As
the macro outlook in many regions was uncertain for much of 1996, investors
shied away from the asset class. Finally, the superior liquidity of blue chip
stocks has been an important consideration.
Nevertheless, the final quarter of 1996 provided some evidence that the
tide may be turning in favour of smaller companies, at least in parts of
Europe. Relatively low bond yields have increased the attractiveness of equity
markets and the resulting inflow of cash, together with tentative signs of
economic recovery, provided some much needed impetus to peripheral European
markets over the course of the fourth quarter. After an excellent final
quarter, the total return since inception of Pictet International Small
Companies Fund (the "Fund") was 2.8% compared to 3.0% for the FT/S&P World ex
US Medium-Small Cap Index (the "Index").
Our decision to increase exposure to Europe, and to Sweden and Spain in
particular, paid off handsomely in 1996. To the end of the year, the return
from Europe since inception of the Fund was 19.5% compared to 15.8% for the
Index. Our cautious stance on Japan, reflected in our underweight position,
also paid dividends as the market collapsed late in the year: the Nikkei 225
and Jasdaq indices fell 10% and 15%, respectively in the fourth quarter alone.
Problems in Japan are linked chiefly to the lack of confidence regarding
economic growth and to concerns over the precarious state of the banking
system. These concerns are keenly felt in the small cap arena and liquidity
evaporated markedly in 1996. As the new government's first major policy
initiatives failed to address major structural problems, and as the mood in
Tokyo remains sombre, we remain cautious.
Unfortunately, gains in Europe and the underweight stance in Japan were
diluted by relatively poor performance in the UK, the Americas and the Asia
Pacific Region. In the UK, our Fund return of 17% was eclipsed by the 23% gain
recorded by the benchmark. Towards the end of 1996, financial and utility
stocks left the general industrial and consumer-oriented sectors, to which the
smaller companies group has the greatest exposure, in their wake. As the
financial and utilities sectors are represented in the Index, but not in our
Fund because of size limitations, relative performance suffered.
Our approach to the UK has been predicated on expectations of a recovery
in the consumer and general industrial sectors. Based on the bullish forecasts
of mortgage lenders, even after the recent 25 basis point increase in base
rates, it is clear that activity in the housing sector has picked up. Higher
housing prices should have a knock-on effect on consumer spending, and we are
positive on the building-related and retail sectors. However, we acknowledge
the difficult trading conditions facing engineering and general industrial
companies after the sharp rise in sterling during the final quarter of 1996.
Elsewhere, the Americas and the Asian Pacific markets were a major drag on
performance. Our decision to limit portfolio exposure to dollar block markets
because of concerns over the potential for a significant correction in the
U.S. proved to be costly. The impact was exacerbated by poor stock selection
in markets such as Canada, Australia and Hong Kong early in the year. It
should be noted that returns from these markets improved markedly in the final
half of 1996.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
FUND COUNTRY WEIGHTS AS A PERCENTAGE OF NET ASSETS
AS OF DECEMBER 31, 1996
Japan ...................................... 26.2%
UK ......................................... 16.6
Sweden ..................................... 5.8
Spain ...................................... 5.7
Germany .................................... 5.6
France ..................................... 5.3
Switzerland ............................... 4.7
Australia .................................. 4.5
Netherlands ................................ 3.4
Italy ...................................... 3.2
Hong Kong .................................. 2.8
Other* ..................................... 2.6
Finland .................................... 2.1
Belgium .................................... 1.9
Denmark .................................... 1.8
Canada ..................................... 1.8
Norway ..................................... 1.5
South Africa ............................... 1.3
Singapore .................................. 1.0
*Other is the following countries: Austria, Brazil, Ireland, Mexico and New
Zealand.
FUND COUNTRY WEIGHTS VERSUS FT/S&P WORLD EX U.S. MEDIUM -- SMALL CAP INDEX
AS OF DECEMBER 31, 1996
Spain ...................................... 4.2%
Sweden ..................................... 3.9
Finland .................................... 1.6
Australia .................................. 1.6
Denmark .................................... 1.3
Norway ..................................... 1.0
Italy ...................................... 1.0
Belgium .................................... 0.9
Austria .................................... 0.7
Switzerland ............................... 0.6
New Zealand ................................ 0.3
Germany .................................... 0.2
Ireland .................................... 0.1
South Africa ............................... -0.1
Phillipines ................................ -0.2
Thailand ................................... -0.2
Mexico ..................................... -0.3
France ..................................... -0.4
Indonesia .................................. -0.4
Netherlands ................................ -0.4
Singapore .................................. -0.7
Brazil ..................................... -0.7
Hong Kong .................................. -1.2
UK ......................................... -1.9
Malaysia ................................... -2.5
Canada ..................................... -2.9
Japan ...................................... -5.8
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
SELECTED MARKET REVIEWS & INVESTMENT OUTLOOK
JAPAN
Having witnessed a significant change in sentiment in Japan half way
through the year, the equity market continued to decline in the fourth quarter
to close the year more than 10% below its opening level in yen terms. The
reversal was especially dramatic in small caps; the Jasdaq Over the Counter
("OTC") market closed the year 13% lower despite having risen by 16% in the
first half and the Tokyo Stock Exchange ("TSE") Second Section fell 13.5% in
the final quarter alone.
The sharp decline in small caps in the fourth quarter resulted from the
same factors that had precipitated weakness last summer, notably:
deteriorating expectations for the economy, concern about the stability of the
banking system and the dwindling of investor activity.
An annualised quarterly growth rate of GDP of over 12% in the first
quarter had led to forecasts of 3.5% growth for the year as a whole, but these
projections were trimmed aggressively as statistical anomalies became apparent
and as public spending fell sharply in the second half. Consequently, growth
for the 1996 fiscal year ("FY") is likely to come in below 2.5% while the
Economic Planning Agency's forecast for FY 1997 is 1.9%, the lowest on record.
Even these modest forecasts may prove to be too optimistic given the
unexpectedly tight fiscal stance signalled by the re-elected Hashimoto
government. Since the October lower-house elections, a flurry of policy
initiatives have been announced, especially in the area of deregulation and
taxation. To the chagrin of investors, however, it has become clear that the
government's emphasis was primarily on the latter, the consumption tax will
increase and there are no signs of respite from other income taxes. In
aggregate, these tax measures alone are likely to take nearly 0.7% off GDP
growth in 1997.
The decline in the equity market as investors weighed the implications of
these fiscal measures focused attention on the banking system and the real
estate market. The bankruptcy of Nichiei Finance and huge losses declared at
Biwako Bank in October emphasised the sensitivity of Japanese banks to
unrealised securities gains, assets that were being eroded daily as the market
declined. Further, expectations of aggressive reform of the banking sector and
reflation of the real estate market were dashed when the government announced
preliminary deregulation measures.
This bad news led investors to shun the shares of companies linked to the
domestic economy to the benefit of safe haven, so-called "internationally
competitive" blue chips. Conversely, small cap stocks suffered collectively
due to the continued issuance of equity in the OTC market and to the flow of
disappointing earnings announcements.
Japan is starting 1997 with a deep sense of self-doubt and pessimism --
indeed in its New Year's Day leading article the Nihon Keizai Shinbun
described Japan as "quietly moving towards ruin". Outsiders remain frustrated
at the apparent inability of the government to offer an effective response to
the crisis. A bail-out of the banks would alienate the electorate and moves to
lift the shackles of bureaucracy and corruption would leave the new government
vulnerable to the withdrawal of coalition partners.
Profit downgrades in November 1996 notwithstanding, valuations of OTC
companies relative to larger companies remain relatively attractive. However,
given the current economic environment, small caps are unlikely to rebound
until sufficient confidence has returned to allow a resumption in credit
growth. The new fiscal year, which begins in April 1997, should see more
Japanese institutional funds allocated to equities, but in the meantime
investors will be watching the Hashimoto government closely.
TARGET WEIGHTING: UNDERWEIGHT
UNITED KINGDOM
The FT-SE All Share Index appreciated 16.7% in 1996, led by service
companies (+51.8%), oil exploration and production companies (+47.8%) and
engineers (+25.8%). Excellent returns from these sectors mask investor
uncertainty towards other industries, such as housing and retail, even with
evidence of a strong recovery in real estate prices over the course of 1996.
The absence of pre-election handouts in the government's final budget
before general elections in 1997 resulted in a lukewarm response from the
market. A 25 basis point increase in base rates (now at 6.0%) caused concern,
especially as the Bank of England is expected to seek higher rates again in
the near term. Concerns over the impact on exporters of the strong rally in
sterling have had a major impact; the currency raced to a four-year high
against the dollar and deutschemark before slipping early in 1997.
Poor sentiment in the industrial and retail sectors had a particularly
damaging effect on the small cap market; the FT-SE Small Cap Index, which is
relatively under-exposed to financials, oil stocks, and utilities, eked out a
gain of only 0.7% in the fourth quarter. Indeed, small companies have lagged
the broad market by a wide margin in the second half of 1996. Nevertheless, we
see reasons to be optimistic about segments of the small cap sector.
Foremost among the promising sectors are the housing and building-related
groups. While the financial markets have already accounted for a possible
further increase in base rates, activity in the residential housing market has
picked up and prices are rising. Builders report strong take-up of new
projects and we expect companies in these and related industries to report
strong growth in earnings; we have maintained significant exposure to these
sectors.
Based on expectations of a period of renewed growth in global industrial
production in 1997, prospects for industrial and engineering companies are
good. However, the appreciation of sterling clouds the outlook for exporters;
a selective approach is appropriate. However, given the spate of bids
announced recently, UK corporate managers appear to believe that current
valuations are attractive.
TARGET WEIGHTING: NEUTRAL
CONTINENTAL EUROPE
Continental European equities performed well in the latter part of 1996,
consistent with our view of benign liquidity conditions and attractive
valuations relative to prevailing bond yields. The pessimists who fretted over
tremors in the U.S. were confounded, as the weight of money in Europe had its
predictable effect on security prices.
The FT/S&P Medium-Small Cap Europe ex-UK Index rose by 16.1% in dollar
terms and the James Capel Europe ex-UK Index, which is more reflective of
smaller company behaviour, by 15.8%. Following the weakness of 1994 and 1995,
this improvement in the fortunes of smaller companies is clearly welcome.
However, the broad picture of gains requires some qualifications. Firstly,
smaller companies again underperformed their main index counterparts,
continuing a trend of some five years. Secondly, major discrepancies occurred
in performance among the European markets, with "core" Europe (especially
Austria, Switzerland and Italy) achieving only mediocre rises, while
"peripheral" Europe (Scandinavia, Spain and Ireland) soared.
RETURNS ON FT/S&P MEDIUM-SMALL CAP
COUNTRY INDICES IN U.S. DOLLARS
FROM MARCH 1, 1996 TO DECEMBER 31, 1996
%
Austria -9.4
Switzerland -0.4
Italy -2.8
Ireland 31.7
Norway 25.0
Spain 27.9
Sweden 34.6
The first observation is perplexing to those directly concerned with small
caps. Relative underperformance has been a European phenomenon, rather than a
global one. Of the possible explanatory factors, there are two we favour: that
larger European companies have achieved considerable efficiency gains through
restructuring during the recession period, with this increase in efficiency
and profitability being inexorably reflected in equity prices; and that small
caps show a strong correlation with increasing economic activity, which is
conspicuously lacking in parts of Europe.
The "two-tier" view of Europe is clearly related. The burden of tight
monetary policy, combined with relative currency strength imposed by the
demands of the European Monetary Union ("EMU") system, has delayed the
recovery in Germany. This effect was complicated by the hangover of
unification; monetary stimulus applied at that time was absorbed by the
demands of annexing East Germany, and was in the final count insufficient to
engender growth, causing the recovery to be partially aborted. It is
interesting to note that cyclical, construction-related firms are over-
represented among German small caps and that few observers see growth in that
sector before the end of 1997, and then only if a broad-based recovery occurs.
Conversely, the peripheral European countries have experienced an easier
resumption of growth, based on plentiful money supply, yet with their bond
markets unworried by inflation. Consistent with this picture we ran overweight
peripheral European positions throughout the year, in particular a bet on
Sweden and Finland which proved highly successful. We focused on top-quality
companies whose growth was self-financed and moderately priced. After the
first quarter's spectacular gains in France, we took profits and remained
underweight, based on our view that the EMU strictures are unsustainable
there. In the final quarter we boosted Spain, where equities saw 20% growth.
Throughout the year we analysed as many new issues as possible, and enjoyed
significant gains in the process.
This year we anticipate that Europe will remain a favoured investment
arena but that returns for the major indices are not likely to be higher than
those of 1996 -- developments in bond yields and the gradual dawning of
inflationary pressures will see to that. We do believe, however, that the
underperformance of small companies will come to an end. In the past they have
usually responded to a revival in growth -- and this year should be no
exception. If one thinks of smaller companies as having a cyclical character,
this would be the appropriate time for a rebound to occur.
TARGET WEIGHTING: OVERWEIGHT
FAR EAST
Hong Kong enjoyed an outstanding run as 1996 drew to a close as the market
benefited from a boom in the property market, the related surge in bank
lending and improving consumer sentiment. Confidence in the post-handover
environment is running high; in November property transactions doubled from
year ago levels with mainland buyers conspicuously active in both the luxury
residential and commercial sectors. Prices regained and surpassed the highs
reached at the beginning of 1994.
Warning shots over the potential introduction of new anti-speculation
measures to cool the property market have not fazed equity investors.
Nevertheless, a cautious approach is warranted; the incoming administration
cannot afford to let speculative excesses reduce the availability of already
scarce housing. Attempts to "talk down" the market have not had much impact
and there is a real risk that more concrete steps could be taken.
Better value can be found in the industrial sector. The Chinese economy
appears to be gaining momentum and recent talk of an extension to the
moratorium on import duties on capital goods should boost the fortunes of Hong
Kong-based equipment exporters. Industrial stocks have been overlooked in the
recent rally, and barring a major correction in the U.S., investors may rotate
into the industrial group in the coming months.
Nevertheless, we have elected to remain defensive in Hong Kong. The market
is tightly linked to the U.S. and we are concerned over valuations in that
market. A correction in the U.S., combined with a sustained effort to curb the
appreciation in property prices, could have a devastating impact on the Hong
Kong market.
Sentiment remains depressed in Singapore. Consensus economic forecasts
were cut again in October; growth is expected to fall to approximately 4% in
1997 from 6.7% in 1996. While these growth rates are relatively attractive
from a global perspective, weak retail spending and a subdued property market
reflect consumer concerns about the slowdown.
Singaporean equities, as measured by the Development Bank of Singapore
("DBS") 50, suffered a loss of 1% in 1996. Anti-speculation measures continued
to keep a lid on the property market, but developers of luxury properties in
prime locations continue to find ready buyers. Industrial stocks were
volatile, falling heavily on news of weak demand in the electronics sector
before recovering as U.S. book-to-bill statistics improved late in the year.
In Malaysia, economic growth has continued to ease, although third quarter
real GDP still rose by 8.0% year-on-year. While industrial production recorded
its weakest growth since 1992, domestic consumption fuelled by strong lending
growth was undiminished. October passenger car unit sales were the highest
ever, and activity in the property market remained strong. Yet inflation
dropped to only 3.3% in November, reflecting the authorities' tight control on
prices.
The year ahead is likely to prove more troublesome for corporate earnings:
interest rates are relatively high and wages are growing strongly but external
demand and product prices are weak. The government's new policy is to
encourage foreign investment in the high-technology and financial sectors and
there is a risk that a drop in foreign direct investment and strong domestic
demand may create imbalances in the economy. Nevertheless, current domestic
liquidity conditions are buoyant, and despite relatively unattractive market
valuations, share prices are likely to be well supported in the early months
of 1997.
TARGET WEIGHTING: UNDERWEIGHT
AUSTRALIA AND CANADA
Equity markets in Australia and Canada were influenced by similar factors:
a favourable interest rate environment, an uncertain outlook for consumer
spending, changeable sentiment in the industrial sector, reasonably stable
base metal prices, weak gold prices and a continued rally in the energy
sector.
The Reserve Bank of Australia reduced base rates by 50 basis points on
three separate occasions in 1996 while the Bank of Canada cut rates
independently of its U.S. counterpart on two occasions in the final quarter
alone. Canadian base rates are now at their lowest level since 1963, and bank
prime rates are at 40-year lows. The rally in bond markets following rate cuts
pushed banks and utilities to new highs; foreign interest also helped the blue
chip conglomerates.
However, the reaction was muted in other industry sectors; investors have
yet to agree that easier money warrants higher market valuations. Consumers
remain concerned over job security and consensus opinion has been changeable
in the industrial and base metals sectors. Nevertheless, the outlook for
global industrial production remains positive, and base metals prices appear
to have stabilised after a turbulent period. Crude oil prices are firm and
gold appears to be the only weak link. Barring a major correction in the U.S.,
the outlook for these markets is positive.
TARGET WEIGHTING: NEUTRAL
The opinions and statistics expressed by the Advisor in this report are from
sources believed to be reliable, but cannot be guaranteed as to accuracy or
correctness.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS -- DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
PICTET GLOBAL EMERGING MARKETS FUND
VS.
INTERNATIONAL FINANCE CORPORATION GLOBAL COMPOSITE INDEX
TOTAL RETURN+
International Finance
Pictet Global Corporation Global
Emerging Markets Fund* Composite Index Total Return*
--------------------- -----------------------------
10/95 10.00 10.00
12/95 9.53 9.70
3/96 10.30 10.30
6/96 10.76 11.01
9/96 10.05 10.65
12/96 10.32 10.47
+International Finance Corporation Global Composite Index Total Return is an
index composed of 1,650 stocks covering 27 markets.
Index information is available at month-end only; therefore, the closest
month-end to inception date of the Fund has been used.
NOTE: The performance shown represents past performance and is not a guarantee
of future results. The Fund's share price and investment return will vary with
market conditions, and the principal value of shares, when redeemed, may be more
or less than original cost.
- - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN*
PICTET GLOBAL EMERGING MARKETS FUND ACTUAL
----------------------------------- ------
Year Ended 12/31/96 ................................ 8.32%
Inception (10/04/95) through 12/ 31/96 ............. 2.58%
- - --------------------------------------------------------------------------------
*Assumes the reinvestment of all dividends and distributions.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS -- DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
PICTET INTERNATIONAL SMALL COMPANIES FUND
VS.
FINANCIAL TIMES/S&P WORLD EX U.S. MEDIUM --
SMALL CAPITALIZATION INDEX+
Financial Times/S&P World
Pictet International S&P World ex U.S.
Small Companies Fund* Medium-Small Cap Index
--------------------- -------------------------
2/96 10.00 10.00
3/96 10.04 10.30
6/96 10.76 10.57
9/96 10.08 10.40
12/96 10.28 10.30
+The Financial Times/S&P World Indices are capitalization weighted indices. The
Financial Times/S&P World ex U.S. Medium -- Small Capitalization Index
represents the bottom 25% of the World Index in terms of market capitalization.
Index information is available at month-end only; therefore, the closest
month-end to inception date of the Fund has been used.
NOTE: The performance shown represents past performance and is not a guarantee
of future results. The Fund's share price and investment return will vary with
market conditions, and the principal value of shares, when redeemed, may be more
or less than original cost.
- - -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN*
PICTET INTERNATIONAL SMALL COMPANIES FUND ACTUAL
----------------------------------------- ------
Inception (02/07/96) through 12/31/96 2.85%
- - -------------------------------------------------------------------------------
*Assumes the reinvestment of all dividends and distributions.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- - --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS -- 88.3%
<S> <C> <C>
ARGENTINA -- 3.0%
133,084 Bagley SA, Class B $ 272,873
410,000 Ledesma SA 512,595
100,500 Massalin Particulares SA, Class B 469,422
142,918 Molinos Rio de La Plata, Class B 508,883
196,500 Nobleza Piccardo SA 746,838
155,500 Sevel Argentina SA, Series C+ 391,933
16,520 Siderar SA, Class A+ 47,586
413,000 Siderca SA 753,864
----------------
3,703,994
----------------
BANGLADESH -- 0.6%
31,500 Beximco Pharmaceuticals Ltd. 187,033
1,750 Chittagong Cement Company, Ltd. 546,932
----------------
733,965
----------------
BRAZIL -- 1.5%
4,000 Companhia Antarctica Paulista Industria 384,948
6,500,000 Companhia Petroquimica Sul Copesul 387,836
24,000 Makro Atacadista, GDR+ 162,000
82,000 Souza Cruz SA 538,197
39,000 Votorantim Celulose e Papel SA, ADR 348,465
----------------
1,821,446
----------------
CHINA -- 6.9%
360,000 China International Marine Containers Ltd., Class B 418,902
190,000 China Resources Beijing Land+ 120,370
15,200 China Yuchai International Ltd., ADR 72,200
1,120,000 Founder Hong Kong Ltd.+ 430,797
500,000 Guangdong Electric Power Development Company, Ltd.,
Class B 442,175
2,450,000 Harbin Power Equipment, Class H 399,121
24,800 Huaneng Power International, ADR+ 558,000
1,090,000 Inner Mongolia Erdos Cashmere Products Company Ltd.,
Class B 686,700
1,960,000 Jilin Chemical Industrial Company Ltd., Class H 304,092
1,500,000 Luoyang Glass Company Ltd., Class H 460,599
930,000 Quingling Motor Company Ltd., Class H 514,028
300,000 Shanghai Dazhong Taxi Company, Class B 247,800
920,100 Shanghai Diesel Engine Company Ltd., Class B+ 436,127
131,500 Shanghai Jin Jiang Tower Company, Ltd., Class B+ 39,976
225,400 Shanghai Narcissus Electric Appliances Company, Ltd.,
Class B+ 47,334
1,059,000 Shanghai New Asia (Group), Class B 461,724
1,950,000 Shanghai Petrochemical, H Shares 592,475
1,000,000 Shanghai Refrigerator, Class B 544,000
723,000 Shanghai Sanmao Textile Company, Ltd., Class B+ 166,290
760,000 Shanghai Shangling Electric Appliances Company Ltd.,
Class B 329,840
662,500 Shanghai Yaohua Pilkington Glass Company Ltd., Class B 315,350
150,000 Weifu Fuel Injection Company Ltd., Class B 84,362
548,700 Wharf Holdings Ltd., Class B 390,180
300,000 Wuxi Little Swan Company Ltd., Class B+ 302,540
----------------
8,364,982
----------------
CROATIA -- 0.6%
14,275 Pliva D.D. GDR 762,856
----------------
CZECH REPUBLIC -- 4.2%
53,300 Ceska Sporitelna AS 642,475
5,200 Ceske Energeticke Zavody AS+ 187,086
5,400 Chemopetrol Group AS 234,170
670 Cokoladovny AS 85,317
2,100 Deza Valasske Mezirici AS 164,614
18,415 Fatra Napajedla AS+ 461,542
5,650 Galena AS+ 193,310
5,200 Kaucuk Group AS 228,364
5,150 Komercni Banka AS 428,867
18,000 Nova Hut AS+ 297,674
23,200 Skoda Koncern Plzen AS+ 822,756
9,810 SPT Telekom AS+ 1,220,707
450 Tabak AS 113,281
----------------
5,080,163
----------------
EGYPT -- 2.2%
69,000 Commercial International Bank, GDR+ 978,420
6,970 Eastern Tobacco Company+ 107,850
4,900 Egyptian Financial and Industrial+ 155,251
10,329 Egyptian International Pharmaceuticals+ 517,226
18,950 Starch & Glucose+ 220,615
18,078 Uni Arab Spinning & Weaving+ 415,598
14,395 Upper Egypt Flour Mills+ 275,774
----------------
2,670,734
----------------
GREECE -- 4.0%
10,000 Alpha Credit Bank 639,381
8,000 Aluminum Company Of Greece 299,572
23,000 Arcadia Metal Industries SA 159,703
48,500 Athens Medical Center SA 341,702
71,400 Bank Of Piraeus 814,172
20,070 Edrassi Psallidas SA 171,643
94,000 Epilektos Textile Industry Association SA+ 269,884
16,000 Fourlis SA 201,996
10,000 Hellas Can Packaging Manufacturers SA 140,705
38,190 Hellenic Sugar Industry SA 356,160
11,150 Hellenic Technodomiki 135,771
18,000 Heracles General Cement 224,313
10,500 National Investment Bank for Industrial Development 305,101
9,890 OTE 169,767
22,000 Sarantis SA 237,426
31,000 Shelman Hellenic SA 167,593
5,000 Titan Cement Company SA 273,162
----------------
4,908,051
----------------
HUNGARY -- 2.5%
23,500 BorsodChem RT, GDR 591,025
4,981 Danubius Hotels and Spa RT+ 130,917
4,580 Egis Gyogyszergyar 267,521
60,453 Fotex RT+ 37,386
1,500 Gedeon Richter, GDR 87,750
32,700 Mol Magyar Olay Es Gazipari, GDR 408,750
41,620 Mol Magyar Olay Es Gazipari, GDS 519,928
26,250 Tiszai Vegyi Kombinat, GDR+ 296,625
22,000 Zagrebacka Banka, GDR+ 452,320
5,000 Zalakeramia RT 196,296
----------------
2,988,518
----------------
INDIA -- 10.0%
143,900 Ashok Leyland Ltd., GDR 1,349,063
418,700 Arvind Mills Ltd., GDR 1,896,711
150,000 Crompton Greaves Ltd., GDR+ 596,250
80,400 Dr. Reddy's Labs, GDR 351,750
39,105 Hindalco Industries, GDR 962,961
94,000 Indian Aluminum Company, GDR 474,700
375,000 Kesoram Industries Ltd., GDR+ 465,000
64,000 Larsen & Toubro, GDR 932,800
79,134 Mahindra & Mahindra Ltd., GDR 929,820
162,400 Southern Petrochemical, GDR 596,820
106,000 State Bank of India, GDR+ 1,865,600
910 Tata Electric Companies, GDR 304,850
82,700 Tata Engineering and Locomotive Company Ltd., GDR 883,898
33,700 Tata Engineering and Locomotive Company Ltd., GDR 357,658
40,000 Wockhardt Limited, GDR 265,000
----------------
12,232,881
----------------
INDONESIA -- 5.8%
181,000 Bank Bali (F) 452,117
1,345,414 Bank International of Indonesia (F)+ 1,324,339
1,150,000 Bank Negara Indonesia (F)+ 608,594
116,000 Bank Niaga (F) 275,021
500,000 Barito Pacific Timber (F) 306,943
420,000 Dankos Laboratories (F) 328,958
87,500 Fajar Surya Wisesa (F) 37,971
750,000 Gadjah Tunggal (F) 325,466
70,000 Hanjaya Mandala Sampoerna (F) 373,412
360,000 Herosupermarket (F) 266,723
10,800 Indostat, ADR 295,650
313,333 Jababeka (F) 364,803
438,000 Lippo Bank (F) 352,329
480,000 Lippo Life Insurance (F) 441,998
700,000 Mayora Indah (F) 325,995
90,000 Modern Photo Film (F) 285,775
343,000 Sierad Produce (F)+ 119,803
400,000 Sinar Mas Resource & Technology (F) 279,424
245,000 Roda Vivatex (F) 158,182
130,000 Tigaraksa Satira (F) 181,626
----------------
7,105,129
----------------
ISRAEL -- 3.0%
14,000 Agan Chemical Ilsi Ltd. 258,230
165,000 Bank Hapoalim Ltd. 261,560
202,000 Bank Leumi Le Israel+ 276,301
43,500 Bio-Technology General Corporation, ADR+ 570,938
82,000 Dead Sea Works 211,201
2,150 First International Bank of Israel 238,515
1,785 First International Mortgages Bank Ltd. 247,063
12,000 Koor Industries Ltd., ADR 204,000
40,000 Lanoptics Ltd.+ 295,000
39,107 Osem Investment, ORD 220,900
13,000 Teva Pharmaceuticals Ltd., ADR 653,250
87,300 Ytong Industries Ltd. 203,049
----------------
3,640,007
----------------
JORDAN -- 0.4%
15,000 Jordan Petroleum Refinery+ 201,832
46,500 Jordan Phosphate Mines+ 219,479
12,000 Jordan Worsted Mills+ 120,888
----------------
542,199
----------------
KENYA -- 0.2%
177,639 Kenya Breweries Ltd. 163,179
13,593 Kenya Commercial Bank Ltd.+ 17,803
----------------
180,982
----------------
LEBANON -- 0.4%
18,400 Banque Audi Sal, GDR+ 246,008
20,700 Solidere, GDR+ 238,050
----------------
484,058
----------------
MALAYSIA -- 3.0%
31,000 AMMB Holdings 260,277
100,000 Commerce Asset Holding Berhad 752,475
25,000 Kian Joo Can Factory Berhad 138,614
215,500 NYLEX Berhad 486,475
135,000 O'Connor's Engineering and Trading 446,436
75,750 Perlis Plantations Berhad 235,500
56,000 Perusahaan Otomobil Nasional Berhad 354,851
19,000 Road Builders Holdings 107,604
44,000 United Engineers (Malaysia) Berhad 397,307
100,000 YTL Corporation Berhad 538,614
----------------
3,718,153
----------------
MEXICO -- 2.7%
340,000 Emboteladores del Valle de Anahuac SA, Class B+ 184,319
130,000 Fomento Economico Mexicano, Class B 444,585
212,500 Grupo Casa Autrey 411,811
51,700 Grupo Elektra SA, Class L+ 405,349
84,000 Grupo Financiero Banamex, Class B+ 176,831
93,000 Grupo Financiero Banamex, Class L+ 176,223
898,125 Grupo Herdez SA, Class B 245,719
460,000 Grupo Industrial Maseca SA, Class B 580,317
71,000 Industrias Penoles SA 250,906
132,000 Nacionale de Drogas SA, Class L 392,907
----------------
3,268,967
----------------
PAKISTAN -- 2.0%
890,500 DG Khan Cement+ 205,518
210,000 Fauji Fertilizer Company Ltd.+ 353,669
11,400 Indus Motor Company Ltd. 4,053
565,000 Karachi Electric Supply Company 264,316
814,000 Maple Leaf Cement+ 218,326
396,500 Nishat Textile+ 158,284
114,247 Pakistan Refinery, Ltd. 185,281
69,680 Pakistan State Oil Company Ltd. 450,279
820,500 Sui Northern Gas Pipelines Ltd.+ 624,384
----------------
2,464,110
----------------
PERU -- 0.9%
573,000 Cerveceria del Sur SA+ 293,959
480,000 Cia Nacional de Cerveza, T Shares+ 251,761
75,000 Southern BZ 259,858
23,550 Southern Peru Copper Corporation 344,419
----------------
1,149,997
----------------
PHILIPPINES -- 2.0%
3,300,000 Cosmos Bottling Company+ 978,707
986,000 Filinvest Land Inc. 307,422
26,875 Metropolitan Bank & Trust Company 664,211
1,500,000 Republic Glass Holdings Corporation 290,874
787,000 William Gothong & Aboitiz Inc.+ 155,605
----------------
2,396,819
----------------
POLAND -- 0.8%
2,400 Bank Rozwoju EksPortu SA 71,956
2,320 Bank Slaski 236,173
1,054 Banka Przemslowo - Handlowy 67,979
37,500 Elektrim SA 339,911
3,300 Jelfa+ 52,346
2,600 Krosno SA, ORD 49,854
3,220 Relpol SA 67,355
3,900 Stalexport SA, Class A+ 38,206
----------------
923,780
----------------
PORTUGAL -- 1.3%
24,900 Banco Espirito Santo 437,816
13,000 Cellulosa Do Caima 222,881
12,300 Lusotur+ 190,267
29,800 Sonae Industria SA+ 278,697
21,200 Tranquilidade 453,651
----------------
1,583,312
----------------
RUSSIA -- 6.7%
22,000 AO Norilsk Nickel, Credit Suisse Financial Products
Finance Limited, Certificates++ 118,140
720,000 AO Surgutneftegaz, Series 3, Credit Suisse Financial
Products Finance Limited, Certificates++ 309,600
40,000 Gazprom, ADR 706,000
5,000 GUM, ADR (1 ADR = 2 Shares)+ 270,000
39,500 LUkoil Holdings, ADR (Represents 4 Shares) 1,856,500
40 Moscow City Telecom, RDC (Represents 10,000 Shares) 1,500,000
25,900 Mosenergo, Sponsored, ADR (Represents 30 Ordinary
Shares) 799,663
5,412,116 RAO Unified Energy Systems of Russia, Series 2, Credit
Suisse Financial Products Finance Limited,
Certificates++ 495,209
65 Rostelecom, RDC (Represents 10,000 Shares), REG+ 1,592,500
165,000 Rostelecom, Series 3, Credit Suisse Financial Products
Finance Limited, Certificates+ ++ 394,350
9,000 Yuganskneftegaz, Credit Suisse Financial Products
Finance Limited, Certificates, Series 3+ ++ 87,750
----------------
8,129,712
----------------
SLOVAKIA -- 0.8%
2,700 Chirana Prema AS+ 65,809
5,326 Nafta Gbely AS 265,947
10,000 Slovnaft AS+ 199,423
26,000 VSZ AS 484,419
----------------
1,015,598
----------------
SOUTH AFRICA -- 5.3%
229,000 Automakers Ltd. 112,579
215,159 Avgold Ltd.+ 574,862
35,700 Buffelsfontein Gold Mines Ltd.+ 120,183
506,000 Deelkral Gold Mining Company Ltd.+ 351,502
105,000 East Rand Gold & Uranium Company Ltd. 181,789
814,000 East Rand Proprietary Mines+ 289,689
86,953 Evander Gold Mines Ltd. 743,427
76,700 Free State Consolidated Gold Mines 561,499
97,200 Harmony Gold Mining Company, Ltd.+ 805,066
267,000 Illovo Sugar Ltd. 477,958
64,000 Metro Cash and Carry Ltd. 212,034
26,300 Nedcor Ltd. 359,773
114,000 Polifin Ltd. 190,061
88,500 Randfontein Estates Gold Mining Company 457,775
134,000 Romatex Ltd. 78,478
14,668 Rustenburg Platinum Holdings 200,652
90,500 Sentrachem Ltd. 161,714
30,000 Tiger Wheels Ltd. 109,009
33,000 Toyota South Africa Ltd. 165,758
37,000 Trans Natal Coal Corporation Ltd. 273,635
----------------
6,427,443
----------------
SOUTH KOREA -- 3.6%
3,733 Asia Paper Manufacturing Company, New 121,930
9,000 Asia Paper Manufacturing Company 314,201
10,000 DaiYang Metal Company 295,858
4,050 Il Shin Spinning Company 373,367
20,380 Kookmin Bank, GDS 380,495
15,000 Korea Export Packaging Industrial Company+ 301,775
2,500 Korea Green Cross Corporation+ 186,391
290 Korea Mobile Telecom Corporation 156,497
24,720 Korea Mobile Telecom Corporation, ADR 318,270
45,000 Kum Kyung Company Ltd. 460,651
24,200 Kyongnam Bank+ 257,751
7,970 Rocket Electric Company 211,276
393 Samsung Electronics Company Ltd., GDR+ 16,245
15,000 SsangYong Cement Industrial Company Ltd. 211,243
18,000 Tai Lim Packaging and Industrial Company 383,432
3,373 Tai Lim Packaging and Industrial Company, New 65,464
13,000 Yoosung Enterprise Company+ 370,769
----------------
4,425,615
----------------
SRI LANKA -- 0.5%
150,100 Distilleries Company Ltd.+ 17,860
65,000 John Keells Holdings Ltd.+ 224,859
450,000 Sampath Bank Ltd.+ 364,886
----------------
607,605
----------------
TAIWAN -- 2.4%
41,381 Macronix International Company Ltd., ADR 550,885
237,000 ROC Taiwan Fund+ 2,429,250
----------------
2,980,135
----------------
THAILAND -- 0.9%
59,400 Alucon Manfacturing Company 285,955
40,000 Matichon Company 103,688
26,000 Serm Suk Public Company Ltd. 377,017
41,000 Thai German Ceramic Industries, Ltd. (F) 47,946
69,000 Thai Glass Industries, Ltd. (F) 236,688
----------------
1,051,294
----------------
TURKEY -- 7.8%
8,000,000 Akbank 1,088,059
4,992,484 Akcansa Cimento 460,349
1,547,000 Aksa 210,403
5,485,000 Ardem Pisirici ve Isitici Cihazalar Sanyaii AS 809,221
1,631,250 Bati Cimento 123,340
3,525,000 Beko Elektronik AS 333,160
14,585,950 Bolu Cimento Sanayaii AS 410,209
784,000 Brisa Bridgestone Sabanci 350,613
350,000 Cukurova Elektrik 419,548
3,800,000 Eczacibasi Yapi Gerecleri 154,172
2,666,000 Esem Spor Glyim 174,538
1,084,000 Goltas Goller Bolgesi Cimento AS 202,407
575,000 Goodyear Lastikleri 259,797
820,000 Otosan Otomibil Sanayii 332,688
7,630,030 Peg Profolio Elektrikli AS 703,553
1,590,000 Petrol Ofisi AS 425,173
10,600,000 Sabah Yayincilik AS 136,837
3,100,000 Sasa Suni Ve Sentetik Elyaf Sanayii 208,668
10,732,500 Tofas Otomobil Ticaret 420,591
3,003,000 Turcas Petroculuk AS 249,212
1,568,000 Tupras Turkiye Petrol Rafinerileri AS+ 390,373
3,200,000 Turkiye Is Bankasi 494,237
5,000,000 Turk Sise ve Cam Fabrikacari 530,198
6,525,000 Turk Tuborg Bira ve Maut Sanayii 255,705
16,170,000 Yapi Kredi Bankasi, New 402,573
----------------
9,545,624
----------------
VENEZUELA -- 1.5%
110,000 Ceramica Carabobo, ADR, Class A 110,000
107,425 Ceramica Carabobo, Class A 117,292
26,770 Cia Anonima Telefonos de Venezuela, ADR 752,906
473,397 Electricidad de Caracas 480,102
1,371,435 Venezolana de Pulp Y Papel, Class A 427,624
----------------
1,887,924
----------------
ZIMBABWE -- 0.8%
237,000 Bindura Nickel Corporation 173,742
266,600 Meikles African Ltd.+ 394,568
156,000 Trans Zambesi Industries+ 382,200
----------------
950,510
----------------
TOTAL COMMON STOCKS (COST $108,975,201) 107,746,563
----------------
PREFERRED STOCKS -- 6.6%
BRAZIL -- 6.6%
3,500 Bardella SA 333,428
11,000,000 Bombril SA 179,963
1,200,000 Brasmotor SA 333,173
3,918,720 Caemi Mineracao e Metal SA+ 192,259
11,100,000 Companhia Energetica de Minas Gerais 378,154
375,000 Embraco 198,489
1,286,000 Frigobras 569,300
1,500,000 Iochpe Maxion SA+ 84,448
30,000,000 Osa SA 164,710
60,000 Oxiteno SA 173,227
74,745,000 Paranapanema SA+ 802,047
7,191,000 Petroleo Brasileiro 1,145,328
43,000,000 Petroleo Ipiranga 624,454
186,247,000 Refrigeracao Parana SA+ 421,211
744,000 Sadia Concordia 572,803
100,000 Telefonica Borda do Campo+ 38,976
12,500,000 Telebras 962,371
46,400 Vale do Rio Doce 893,081
----------------
TOTAL PREFERRED STOCKS (COST $8,076,980) 8,067,422
----------------
WARRANTS -- 0.0%# (COST $0)
INDONESIA -- 0.0%#
112,000 Surabaya Agung Indonesia, Warrants, Expire 03/13/01+ 11,854
----------------
PRINCIPAL
AMOUNT
- - --------
TIME DEPOSIT - 3.7% (COST $4,479,000)
$4,479,000 Morgan Guaranty (London), 5.000% due 01/02/97 4,479,000
----------------
TOTAL INVESTMENTS (COST $121,531,181*) 98.6% 120,304,839
OTHER ASSETS AND LIABILITIES (NET) 1.4 1,742,062
- - ------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $122,046,901
- - ------------------------------------------------------------------------------------------------
</TABLE>
* Aggregate cost for Federal tax purposes was $121,567,396.
+ Non-income producing security.
++The valuations of these securities have been determined by procedures
established by the Pricing Committee of the Trust's Board of Trustees. The
cost of these denoted securities at December 31, 1996 was $570,595 with a
value of $1,405,049, representing 1.2% of total net assets.
# Amount represents less than 0.1%.
Abbreviations:
ADR American Depositary Receipt
ADS American Depositary Share
(F) Foreign Shares
GDR Global Depositary Receipt
GDS Global Depositary Share
ORD Ordinary
RDC Russian Depositary Certificates
See Notes to Financial Statements.
<PAGE>
- - --------------------------------------------------------------------------------
AT DECEMBER 31, 1996, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (NOTE 1)
- - ------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS:
Banking 13.5% $ 16,440,870
Energy 6.4 7,798,961
Telecommunications 5.0 6,104,997
Automobiles 4.9 5,960,905
Chemicals 4.6 5,570,607
Utilities - Electrical and Gas 4.5 5,542,841
Multi-Industry 4.4 5,441,796
Textiles and Apparel 4.4 5,378,642
Beverages and Tobacco 4.4 5,327,628
Metals 4.2 5,065,757
Building Materials and Components 3.8 4,589,102
Food and Household Products 3.7 4,544,153
Gold Mines 3.5 4,236,123
Machinery and Engineering 3.5 4,235,822
Miscellaneous Materials and Commodities 2.6 3,238,695
Health and Personal Care 2.4 2,890,286
Forest Products and Paper 2.3 2,818,649
Electrical and Electronics 1.5 1,855,484
Appliances and Household Durables 1.1 1,381,696
Merchandising 1.0 1,160,621
Transportation 0.9 1,100,458
Pharmaceuticals 0.8 956,166
Industrial Components 0.7 822,756
Broadcasting and Publishing 0.6 781,894
Construction and Housing 0.6 720,345
Real Estate 0.5 672,225
Leisure and Tourism 0.5 632,617
Electronic Components and Instruments 0.5 550,885
Financial Services 0.4 543,325
Insurance 0.4 453,651
Software 0.3 430,797
Recreation, Other Consumer Goods 0.2 285,775
Wholesale and International Trade 0.2 212,034
- - -----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 88.3 107,746,563
PREFERRED STOCKS 6.6 8,067,422
WARRANTS 0.0# 11,854
TIME DEPOSIT 3.7 4,479,000
- - -----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.6% 120,304,839
OTHER ASSETS AND LIABILITIES (NET) 1.4 1,742,062
- - -----------------------------------------------------------------------------------------------
NET ASSETS 100.0% $122,046,901
- - -----------------------------------------------------------------------------------------------
# Amount represents less than 0.1%.
</TABLE>
See Notes to Financial Statements.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
PORTFOLIO OF INvESTMENTS DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- - -----------------------------------------------------------------------------------------------
COMMON STOCKS -- 96.3%
AUSTRALIA -- 4.5%
<C> <S> <C>
39,205 Aerodata Holdings Ltd. $ 33,350
48,000 Burns Philp & Company Ltd. 85,478
99,046 Croesus Mining 64,568
110,000 Datacraft Ltd.+ 82,203
25,000 Email Ltd. 80,891
40,711 Futuris Corporation Ltd. 55,668
31,000 Hardie (James) Industries Ltd. 97,594
51,020 Herald Resources Ltd. 37,722
45,000 Just Jeans Holdings Ltd. 66,184
100,000 MacMahon Holdings Ltd. 89,040
28,000 McPherson's Ltd.+ 77,910
37,500 New Cap Reinsurance Corporation Holdings Ltd.+ 84,966
68,840 Perseverance Corporation Ltd. 44,330
38,000 Portman Mining Ltd.+ 71,296
77,000 Savage Resources Ltd. 84,477
11,080 Siddons Ramset Ltd. 59,018
141,996 Titan Resources, Inc.+ 42,897
---------------
1,157,592
---------------
AUSTRIA -- 0.9%
900 Mayer Melnhof AG 44,063
2,310 Semperit Holding AG 115,228
500 VA Technologie AG 78,495
---------------
237,786
---------------
BELGIUM -- 1.9%
2,000 Deceuninck Plastics Industries SA 345,289
308 Tessenderlo Chemie 132,209
---------------
477,498
---------------
CANADA -- 1.8%
175,230 Black Hawk Mining, Inc.+ 83,108
40,401 Breakwater Resources Inc.+ 76,940
31,200 Dylex Ltd.+ 83,777
2,600 Hummingbird Communications
Ltd.+ 74,936
10,000 Premdor, Inc.+ 94,126
5,800 United Westburne, Inc.+ 52,054
---------------
464,941
---------------
DENMARK -- 1.8%
467 Cheminova Holdings AS, B Shares 124,292
170 Jamo AS+ 13,266
1,080 Jyske Bank AS 81,164
700 Kansas Erhv Berlae, Class B 49,281
870 Neurosearch AS, New+ 38,758
4,880 Scandinavian Mobility International AS 80,302
480 Superfos AS+ 60,664
---------------
447,727
---------------
FINLAND -- 1.7%
3,000 KCI Konecranes International Oy 93,632
5,000 Nokian Tyres 107,660
1,789 Tietotehdas Oy 148,247
3,700 Werner Soderstrom Osakeyhtio-Wsoy, Class B 92,544
---------------
442,083
---------------
FRANCE -- 5.3%
320 Brioche Pasquier SA 40,940
200 But SA 11,753
1,035 Compagnie de Fives-Lille 97,717
700 Deveaux SA 97,110
500 Equipements et Composants pour Industrie Automobile 77,264
600 Europeenne D'Extinteurs SA 37,225
458 Gautier France SA 21,620
2,128 Groupe Zannier SA 48,054
1,080 Infogrames Entertainment SA+ 124,856
2,302 Ingenico SA 38,588
300 Le Carbone-Lorraine 56,763
2,000 Louis Dreyfus Citrus+ 65,511
200 Manitou BF SA 21,965
605 NRJ SA 76,703
600 Radiall SA 56,763
650 Rochefortaise Communication SA 33,677
900 Sylea 98,671
1,200 Synthelabo 129,711
458 Thermador Holdings 22,591
1,000 UBI Soft Entertainment SA+ 68,401
1,290 Union Financiere de France Banque SA 139,191
---------------
1,365,074
---------------
GERMANY -- 4.7%
224 Andreae-Noris Zahn AG 82,909
232 Balcke Duerr AG 39,922
8,000 Bausch AG 101,299
50 Bien-Haus AG 13,312
449 Bijou Brigitte Modische Accessoires AG 62,977
680 Brilliant AG 123,195
350 Cewe Color Holding AG 79,545
1,340 Duerr Beteiligungs AG 42,375
1,600 Effeff Fritz Fuss GmbH & Company 67,013
5,800 Fag Kugelfischer Georg Schaefer AG 78,903
3,350 Gerresheimer Glas AG 72,873
63 Gerry Weber International AG 2,496
400 Leica Camera AG+ 12,532
1,000 Leifheit AG 38,312
250 Leonische Drahtwerke AG 75,812
1,008 SGL Carbon AG 126,982
500 Simona AG 90,909
1,790 Vossloh AG 63,347
155 WMF Wuerttembergische Metallwarenfabrik AG 27,175
---------------
1,201,888
---------------
HONG KONG -- 2.8%
70,000 ASM Pacific Technology 54,302
330,000 Champion Technology Holdings 62,719
134,000 Chen Hsong Holdings 81,427
32,800 Dickson Concepts International, Ltd. 122,982
186,000 Goodwill Investment Holdings Ltd. 81,162
260,000 Grand Hotel Holdings Ltd., Class A 109,251
166,000 International Bank of Asia 110,531
10,000 Tungtex Holdings Company Ltd. 1,099
190,000 Wo Kee Hong Holdings Ltd.+ 15,476
240,000 Yue Yuen Industrial Holdings 91,538
---------------
730,487
---------------
IRELAND - 0.4%
60,500 Heiton Holdings Plc 100,467
---------------
ITALY -- 3.2%
18,000 Carraro SpA 83,004
20,000 Esaote Biomedica SpA+ 63,241
25,200 Falck Acciaierie & Ferriere Lombarde 100,850
15,000 Industrie Zignago, ORD 91,996
19,750 La Giovanni Crespi SpA 71,168
6,000 Marzotto (Gaetano) & Figli SpA 38,735
1,700 Recordati Di Risp 12,431
1,900 Saes Getters Priv SpA 29,414
20,000 Saipem 91,963
60,000 Snia BPD SpA 62,055
21,500 Tecnost SpA 57,787
11,000 UNICEM SpA+ 71,739
30,000 Vianini Lavori SpA 51,779
---------------
826,162
---------------
JAPAN -- 26.2%
500 Aichi Bank Ltd. 42,212
60 Almetax Manufacturing Company 486
7,000 Amatsuji Steel Ball Manufacturing Company, Ltd. 92,867
3,000 Aoki Marine Company, Ltd. 14,731
5,300 Asahi Printing & Packaging Company 70,770
15,000 Biofermin Pharmaceuticals 139,559
5,000 Bourbon Corporation 30,195
3,000 B-R 31 Ice Cream Company 27,524
15,000 Cesar Company 78,179
7,000 Charle Company 78,394
7,000 Chiyoda Shoe Company Ltd. 108,546
6,600 Chofu Seisakusuo 123,949
4,000 Circle K Japan Company Ltd. 172,295
8,800 Daiseki Company, Ltd. 209,235
8,000 Daito Bank Ltd. 34,390
2,000 Daiwa Rakuda Industry Company Ltd. 19,297
11,000 Denkyosh Company 75,999
6,000 Denny's Japan 182,977
9,000 Denyo Company, Ltd. 113,973
5,000 Enix Corporation 112,853
6,300 Fast Retailing Company Ltd. 161,191
1,000 Fuji Glass Company Ltd. 12,233
300 Fuji Hensokuki Company, Ltd. 1,344
6,000 Fukuda Denshi Ltd. 133,098
12,000 Futaba Industrial Company 199,518
6,000 Geomatec Company Ltd. 154,549
20,000 Hibiya Engineering 171,434
8,000 Higashi Nihon House 102,688
12,000 Hokkaido Coca-Cola Bottling Company 147,829
12,000 Isamu Paint Company Ltd. 72,364
3,000 Inaba Denkisangyo 57,374
10,000 Japan Airport Terminal Company 122,329
7,000 Japan Digital Laboratory Company 106,737
3,000 Jastec Company Ltd. 37,603
300 Kagawa Bank 1,098
9,000 Key Coffee Inc. 108,546
4,000 Max Company 66,851
7,000 Meitec Corporation 133,270
26,000 Meiwa Industry Company Ltd. 121,399
4,000 Nagawa Company, Ltd. 49,621
16,000 Nakakita Seisakusho Company 50,310
10,000 NHK Precision Company Ltd. 58,580
6,000 Nichiden Corporation 128,188
10,000 Nihon Dempa Kogyo 161,957
12,000 Nihon Electric Wire & Cable Company Ltd. 101,413
5,000 Nippon Filing Company, Ltd. 53,842
10,000 Nissei Industries Ltd. 71,502
5,000 Nitto Electric Works Ltd. 84,425
7,000 Odawara Engineering Company Ltd. 72,967
2,200 OYO Corporation 95,331
4,000 Ricoh Elemex Corporation 55,824
7,000 Riken Corundum Company Ltd. 22,674
5,000 Ryoyo Electric Corporation 90,455
11,000 Sanden Corporation 87,939
8,700 Santen Pharmaceutical Company 179,876
3,000 Seiwa Electric Manufacturing 35,665
4,000 Shibazaki Seisakusho Ltd. 17,901
500 Shimizu Bank Ltd. 31,228
3,000 Shingakukai Company 21,838
8,000 Shinkigosei Company, Ltd. 62,026
800 Shohkoh Fund and Company 173,673
14,000 Sodick Company+ 115,782
7,000 Sonton Foods Industry 90,455
5,000 SRL Inc. 75,810
16,000 Taisei Prefab Construction Company Ltd. 60,648
15,000 Takara Standard Company 124,699
3,000 Takeda Machinery Company, Ltd. 19,642
9,000 Technology Eight Company Ltd. 43,186
14,000 Teikoku Hormone Manufacturing Company Ltd. 156,788
6,000 Toa Medical Electronics Company Ltd. 96,141
11,000 TOC Company 97,605
3,150 Tokushima Bank Ltd. 24,966
2,000 Tokyo Kisen Company Ltd. 12,061
11,000 Tokyo Style Company Ltd. 153,515
2,000 Tomato Bank Ltd. 6,892
19,000 Tsukiji Uochiba Company Ltd. 63,017
13,000 Tsurumi Soda Company, Ltd. 67,195
14,000 Uehara Sei Shoji 73,449
11,000 Yokogawa Construction Company 114,662
---------------
6,743,634
---------------
MEXICO -- 0.5%
15,000 Grupo Financiero Banamex, Class B+ 31,577
16,500 Grupo Financiero Banamex, Class L+ 31,265
25,000 Nacionale de Drogas SA de CV, Class L 74,414
---------------
137,256
---------------
NETHERLANDS -- 3.4%
5,650 BE Semiconductor Industries NV+ 72,574
1,998 Cap Gemmi NV 58,034
1,240 Content Beheer 47,353
548 Eriks Holdings 47,403
1,560 Gamma Holding NV 75,279
630 Git Holding+ 79,648
1,045 Hoek's Machine & Zuurstoffab 99,161
490 IHC Caland NV 27,983
1,000 KloninklijkeVan Ommeren NV 45,131
3,816 Macintosh Confectie NV 83,902
1,535 NKF Holdings NV 53,200
4,200 Toolex Alpha NV+ 43,742
890 Wegener NV 82,496
2,236 Welna NV 62,359
---------------
878,265
---------------
NEW ZEALAND -- 0.6%
22,300 Fisher & Paykel Industries Ltd. 87,415
14,700 Independent News Ltd. 73,717
---------------
161,132
---------------
NORWAY -- 1.5%
6,092 Ark AS 43,024
3,000 Blom AS 84,513
2,791 Bolig-Og Naerings Kredit 66,580
5,000 Fesilas Asa 64,738
1,950 Nera AS 84,466
1,400 Rieber & Sons AS, Class B 40,428
---------------
383,749
---------------
SINGAPORE -- 1.0%
34,724 First Capital Corporation 104,720
4,942 Robinson & Company 20,131
53,100 Venture Manufacturing Ltd. 132,057
---------------
256,908
---------------
SOUTH AFRICA -- 1.3%
19,520 Avgold Ltd.+ 52,152
66,000 Deelkral Gold Mining Company Ltd. 45,848
35,000 East Rand Gold & Uranium Company Ltd. 60,596
7,031 Evander Gold Mines Ltd. 60,115
9,000 Free State Consolidated Gold Mines 65,887
6,500 Harmony Gold Mining Company, Ltd. 53,837
---------------
338,435
---------------
SPAIN -- 5.7%
780 Azkoyen SA 95,961
1,031 Banco Pastor 66,040
4,790 Banco de Valencia SA 93,484
3,000 Elec Reunidas de Zaragoza SA 120,102
14,200 Grupo Duro Felguera SA+ 144,853
5,000 Hullas del Coto Cortes SA 96,235
7,270 Iberica de Autopista SA+ 155,318
3,040 Miquel Y Costas SA+ 100,171
5,960 Prosegur, Cia de Seguridad SA 55,062
3,800 Sol Melia SA+ 136,038
104,920 Tubacex SA+ 178,515
3,355 Vidrala SA 231,949
---------------
1,473,728
---------------
SWEDEN -- 5.8%
2,680 Allgon AB, B Shares Free 64,425
3,210 Array Printers AB, B Shares+ 30,022
6,900 Catena AB, A Shares 86,717
6,000 Dahl International AB+ 125,823
2,000 Elekta Instruments AB, B Shares 70,876
3,500 Enator AB+ 89,252
3,600 Esselte AB, B Shares Free 79,439
22,560 Frontec AB, B Shares+ 389,025
10,010 Frontline AB Free+ 34,523
6,000 Garphyttan Industrier AB 78,037
1,330 Hoeganaes AB, B Shares 46,452
6,000 Lindab AB, B Shares 74,091
6,641 Om Gruppen AB 198,950
6,000 Scandiaconsult AB 41,210
4,000 Svedala Industri AB Free 67,515
---------------
1,476,357
---------------
SWITZERLAND -- 4.7%
108 Bucherer AG PC 42,724
24 Daetwyler Holdings Bearer 38,873
70 Disetronic Holding AG+ 154,656
50 Gurit Heberlein AG Bearer 100,019
70 Huber Suhner AG Registered 70,536
75 Keramik Holding AG Bearer 38,011
35 Kuoni Reisen Holding, Class B Registered 84,904
83 Orell Fuessli Graph Betr, Class R Registered+ 68,147
79 Orior Holdings SA Bearer 42,603
290 Phoenix Mecano AG Bearer 151,521
180 Saurer AG Arbon Registered+ 77,925
168 Siegfried AG Registered 156,620
309 Societe Generale D'Affichage PC 132,157
3,500 Von Roll Holding AG Bearer+ 59,825
---------------
1,218,521
---------------
UNITED KINGDOM -- 16.6%
19,000 Admiral Plc 118,762
32,000 Alexon Group Plc+ 95,626
50,000 Amec Plc 79,203
9,860 Atlas Converting Equipment Plc 112,287
6,658 Berkeley Group Plc 69,950
9,703 Bespak Plc 78,928
22,800 Bradford Property Trust Plc 103,274
25,091 British Vita Plc 91,952
1,500 BTP Plc 7,873
120,000 Budgens Plc 91,447
19,706 Carclo Engineering Group Plc 69,687
25,042 Castings Plc 115,145
21,160 Chemring Group Plc 103,636
10,700 Cook (William) Plc 65,507
60,540 Crest Packaging Plc 86,568
10,641 Epwin Group Plc 43,005
26,900 Great Portland Estates Plc 96,048
127,000 Hampson Industries, Inc. 137,017
16,200 Hardys & Hanson Plc 78,234
96,000 Heath (CE) Plc 141,384
27,000 ISA International Plc 110,970
33,684 John Maunders Group Plc 96,620
66,317 Keller Group Plc 208,397
53,428 Kunick Plc 23,331
41,520 Leigh Interests Plc 78,213
45,000 Life Sciences International Plc 68,586
38,000 Lloyd Thompson Group Plc 121,690
32,000 London International Group Plc 91,242
6,721 Macro 4 Plc 56,398
7,247 Mayborn Group Plc 24,821
6,500 McKechnie Group Plc 61,723
10,000 Meyer International Plc 61,907
6,161 Micro Focus Group Plc+ 102,342
2,800 MJ Gleeson Group Plc 41,237
13,100 MTL Instruments Group Plc 38,137
16,308 Oxford Instruments Plc 117,295
70,000 Perkins Foods Plc 88,108
19,103 RCO Holdings Plc 73,606
5,601 Redrow Group Plc 14,004
214,695 Regalian Properties Plc 121,329
40,000 Ricardo Group Plc 75,350
48,989 Shanks & McEwan Group Plc 109,481
63,700 TBI Plc 82,633
24,800 The Body Shop International, Plc 86,002
31,500 Thorntons Plc 110,585
14,002 Trinity Holdings Plc 66,900
25,081 Tunstall Group Plc 115,324
16,580 Wilson Bowden Plc 134,442
10,204 Wilson Holdings Plc 28,920
13,691 Yorklyde Plc 45,133
7,841 Yorkshire Group Plc 29,272
---------------
4,269,531
---------------
TOTAL COMMON STOCKS (COST $24,565,983) 24,789,221
---------------
PREFERRED STOCKS -- 1.5%
BRAZIL -- 0.2%
156,000 Copene-Petroquimica do Nordeste SA 60,052
---------------
FINLAND -- 0.4%
2,000 Huhtamaki Oy, Class I 93,523
---------------
GERMANY -- 0.9%
2,040 Berentzen Gruppe AG 76,831
2,000 Biotest AG 70,130
1,323 Gerry Weber International AG 54,123
91 Hans Einhell AG 11,818
78 WMF Wuerttembergische Metallwarenfabrik AG 13,118
---------------
226,020
---------------
TOTAL PREFERRED STOCKS (COST $368,728) 379,595
---------------
WARRANTS -- 0.0%#
HONG KONG -- 0.0%#
66,000 Champion Technology Holdings, Expire 06/30/98+ 2,475
62,800 Wo Kee Hong Holdings Ltd., Expire 06/03/98+ 698
---------------
3,173
---------------
SINGAPORE -- 0.0%#
4,800 Haw Par Brothers International, Inc., Expire 07/18/01+ 4,219
---------------
TOTAL WARRANTS (COST $4,053) 7,392
---------------
PRINCIPAL
AMOUNT
- - ----------------
TIME DEPOSIT -- 0.6% (COST $146,000)
$146,000 Morgan Guaranty (London), 5.000% due 01/02/97 146,000
---------------
TOTAL INVESTMENTS (COST $25,084,764*) 98.4% 25,322,208
OTHER ASSETS AND LIABILITIES (NET) 1.6 421,019
- - ------------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $25,743,227
- - ------------------------------------------------------------------------------------------------------
</TABLE>
* Aggregate cost for Federal tax purposes was $25,101,293.
+ Non-income producing security.
# Amount represents less than 0.1%.
Abbreviations:
ORD Ordinary
PC Participation Certificates
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
% OF NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (NOTE 1)
- - ---------------------------------------------------------------------------------------------
COMMON STOCKS:
<S> <C> <C>
Multi-Industry 16.9% $ 4,341,785
Machinery and Engineering 7.5 1,921,256
Building Materials and Components 6.1 1,559,595
Chemicals 4.7 1,209,927
Business and Public Services 4.6 1,195,446
Electrical and Electronics 4.2 1,071,120
Health and Personal Care 3.7 952,585
Wholesale and International Trade 3.6 918,524
Data Processing and Reproduction 3.2 813,686
Food and Household Products 3.1 807,978
Electronics Components and Instruments 3.1 805,659
Metals 3.0 768,213
Industrial Components 2.9 756,174
Construction and Housing 2.9 750,317
Real Estate 2.7 710,285
Financial Services 2.4 613,856
Broadcasting and Publishing 2.4 606,068
Merchandising 2.3 600,195
Textiles and Apparel 2.1 541,823
Gold Mines 1.8 465,626
Appliances and Household Durables 1.6 420,397
Miscellaneous Materials and Commodities 1.4 363,715
Banking 1.4 348,622
Insurance 1.4 348,040
Utilities - Electrical and Gas 1.1 272,216
Automobiles 1.0 266,334
Beverages and Tobacco 0.9 226,063
Recreation, Other Consumer Goods 0.8 216,393
Forest Products and Paper 0.8 206,140
Telecommunications 0.7 176,388
Leisure and Tourism 0.6 149,890
Energy 0.5 136,665
Transportation 0.5 135,953
Aerospace and Military Technology 0.4 112,287
- - ----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 96.3 24,789,221
PREFERRED STOCKS 1.5 379,595
WARRANTS 0.0# 7,392
TIME DEPOSIT 0.6 146,000
- - ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.4% 25,322,208
OTHER ASSETS AND LIABILITIES (NET) 1.6 421,019
- - ----------------------------------------------------------------------------------------------
NET ASSETS 100.0% $25,743,227
- - ----------------------------------------------------------------------------------------------
</TABLE>
# Amount represents less than 0.1%.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
PICTET PICTET
GLOBAL EMERGING INTERNATIONAL SMALL
MARKETS FUND COMPANIES FUND
- - ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost
$121,531,181 and $25,084,764,
respectively) (Note 1) See
accompanying schedules $120,304,839 $25,322,208
Cash 102,608 53
Foreign currency (Cost $1,281,112
and $349,294, respectively) 1,262,058 337,665
Receivable from investment
securities sold 1,691,975 86,585
Receivable from investment
adviser (Note 2) -- 56,678
Dividends receivable 204,303 40,135
Interest receivable 616 20
Unamortized organization costs
(Note 1) 33,635 982
Prepaid expenses 3,256 7,355
- - ------------------------------------------------------------------------------
TOTAL ASSETS 123,603,290 25,851,681
- - ------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities
purchased 800,752 45,282
Investment advisory fee payable
(Note 2) 518,877 --
Payable for Fund shares redeemed 96,184 --
Custodian fees payable (Note 2) 40,216 8,165
Administration fee payable (Note 2) 19,267 7,400
Transfer agent fees payable (Note 2) 2,519 1,000
Other accrued expenses and payables 78,574 46,607
- - ------------------------------------------------------------------------------
TOTAL LIABILITIES 1,556,389 108,454
- - ------------------------------------------------------------------------------
NET ASSETS $122,046,901 $25,743,227
- - ------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Undistributed net investment
income/(accumulated
distributions in excess of net
investment income) (Note 1) $ 32,907 $ (16,660)
Accumulated net realized loss on
investments sold (Note 1) (163,973) (5,659)
Net unrealized appreciation/
(depreciation) of investments (1,250,046) 225,815
Par value 120,510 25,375
Paid-in capital in excess of par
value (Notes 1 and 4) 123,307,503 25,514,356
- - ------------------------------------------------------------------------------
TOTAL NET ASSETS $122,046,901 $25,743,227
- - ------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (NOTE 4) 12,050,960 2,537,510
- - ------------------------------------------------------------------------------
NET ASSET VALUE:
Net asset value, offering and
redemption price per share (Note 4) $10.13 $10.15
- - ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- - --------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
PICTET PICTET
GLOBAL EMERGING INTERNATIONAL SMALL
MARKETS FUND COMPANIES FUND*
- - ------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign $2,044,131 $ 443,626
withholding taxes of $88,713
and $65,963, respectively)
Interest 406,633 46,492
- - ------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,450,764 490,118
- - ------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2) 1,185,585 218,700
Custodian fees (Note 2) 442,801 122,142
Administration fee (Note 2) 230,789 84,039
Professional fees 43,866 26,649
Transfer agent fees (Note 2) 24,628 10,759
Trustees' fees and expenses (Note 2) 21,418 5,122
Amortization of offering costs 30,857 --
Amortization of organization 8,970 196
costs (Note 1)
Other 102,028 70,050
- - ------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE WAIVERS
AND/OR REIMBURSEMENTS 2,090,942 537,657
- - ------------------------------------------------------------------------------
Fees waived and/or expenses
reimbursed by investment
adviser (Note 2) (478,599) (275,378)
- - ------------------------------------------------------------------------------
NET EXPENSES 1,612,343 262,279
- - ------------------------------------------------------------------------------
NET INVESTMENT INCOME 838,421 227,839
- - ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized gain/(loss) on:
Securities transactions 1,131,232 43,883
Forward foreign currency (353,760) 11,773
contracts
Foreign currency transactions 213,098 35,163
- - ------------------------------------------------------------------------------
Net realized gain on investments
during the year 990,570 90,819
- - ------------------------------------------------------------------------------
Change in unrealized
appreciation/(depreciation) of:
Securities (758,195) 237,444
Foreign currency transactions
and other assets, net (23,579) (11,629)
- - ------------------------------------------------------------------------------
Net unrealized appreciation/
(depreciation) of investments
during the year (781,774) 225,815
- - ------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 208,796 316,634
- - ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,047,217 $ 544,473
- - ------------------------------------------------------------------------------
*Pictet International Small Companies Fund commenced operations on February 7,
1996.
See Notes to Financial Statements.
<PAGE>
PICTET GLOBAL EMERGING MARKETS FUND
- - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
INCREASE/(DECREASE) IN NET ASSETS DECEMBER 31, 1996 DECEMBER 31, 1995*
- - ------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 838,421 $ 15,778
Net realized gain/(loss) on investments
during the period 990,570 (24,365)
Change in unrealized depreciation of
investments during the period (781,774) (468,272)
- - ------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 1,047,217 (476,859)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders from net
investment income (838,421) (15,778)
Distributions to shareholders in excess
of net investment income (4,335) (5,483)
Distributions to shareholders from net
realized gains on investments (990,570) --
Distributions to shareholders in excess
of net realized gains on investments (129,364) --
Net increase in net assets from Fund share
transactions (Note 4) 113,339,297 10,021,197
- - ------------------------------------------------------------------------------
Net increase in net assets 112,423,824 9,523,077
NET ASSETS:
Beginning of period 9,623,077 100,000**
- - ------------------------------------------------------------------------------
End of period (including undistributed net
investment income/(accumulated
distributions in excess of net investment
income) of $32,907 and ($2,020),
respectively) $122,046,901 $ 9,623,077
- - ------------------------------------------------------------------------------
*Pictet Global Emerging Markets Fund commenced operations on October 4, 1995.
**Original capital September 26, 1995.
See Notes to Financial Statements.
<PAGE>
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
PERIOD ENDED
INCREASE IN NET ASSETS DECEMBER 31, 1996*
- - --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 227,839
Net realized gain on investments during the period 90,819
Change in unrealized appreciation of investments
during the period 225,815
- - --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 544,473
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to shareholders from net investment income (227,839)
Distributions in excess of net investment income (63,792)
Distributions from net realized gains on investments (49,542)
Distributions from tax return of capital (6,172)
Net increase in net assets from Fund share transactions (Note 4) 25,545,999
- - --------------------------------------------------------------------------------
Net increase in net assets 25,743,127
NET ASSETS:
Beginning of period (original capital January 29, 1996) 100
- - --------------------------------------------------------------------------------
End of period (including accumulated distributions in excess
of net investment income of $16,660) $25,743,227
- - --------------------------------------------------------------------------------
*Pictet International Small Companies Fund commenced operations on
February 7, 1996.
See Notes to Financial Statements.
<PAGE>
PICTET GLOBAL EMERGING MARKETS FUND
- - --------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
YEAR ENDED PERIOD ENDED
12/31/96(b) 12/31/95*(b)
- - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
Net asset value, beginning of year (Note 4) $ 9.51 $10.00
- - --------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07 0.02
Net realized and unrealized gain/(loss) on
investments 0.71 (0.49)
- - --------------------------------------------------------------------------------
Total from investment operations 0.78 (0.47)
- - --------------------------------------------------------------------------------
Distributions to shareholders:
Distributions from net investment income (0.07) (0.02)
Distributions in excess of net investment
income (0.00)# (0.00)#
Distributions from net realized gains
on investments (0.08) --
Distributions in excess of net realized
gains on investments (0.01) --
- - --------------------------------------------------------------------------------
Total distributions (0.16) (0.02)
- - --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.13 $ 9.51
- - --------------------------------------------------------------------------------
Total return++ 8.32% (4.72)%
- - --------------------------------------------------------------------------------
Ratios to average daily net assets/supplemental data:
Net assets, end of year (in 000's) $122,143 $9,623
Ratio of operating expenses 1.70% 1.95%+
Ratio of operating expenses without
waivers and/or reimbursements 2.20% 8.39%+
Ratio of net investment income 0.88% 0.68%+
Ratio of income/(loss) without
waivers and/or reimbursements 0.38% (5.77)%+
Net investment income/(loss) without
waivers and/or reimbursements $ 0.03 $ (0.13)
Portfolio turnover rate 48% 5%
Average commission rate (per share of
security)(a) $0.0009 $0.0010
- - ----------
*Pictet Global Emerging Markets Fund commenced operations on October 4, 1995.
+Annualized.
++Total return represents aggregate total return for the period.
#Amount represents less than $0.00 per share.
(a)Average commission rate paid per share of securities purchased and sold by
the Fund.
(b)Per share amounts have been restated to reflect the stock dividend of 9
additional shares for each share outstanding (Note 4).
See Notes to Financial Statements.
<PAGE>
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD ENDED
12/31/96*(b)
- - --------------------------------------------------------------------------------
Net asset value, Beginning of period (Note 4) $10.00
- - --------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.09
Net realized and unrealized gain on investments 0.20
- - --------------------------------------------------------------------------------
Total from investment operations 0.29
- - --------------------------------------------------------------------------------
Distributions to shareholders:
Distributions from net investment income (0.09)
Distributions in excess of net investment income (0.03)
Distributions from net realized gains on investments (0.02)
Distributions from tax return of capital (0.00)#
- - --------------------------------------------------------------------------------
Total distributions (0.14)
- - --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.15
- - --------------------------------------------------------------------------------
Total return++ 2.85%
- - --------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $25,743
Ratio of operating expenses 1.20%+
Ratio of operating expenses without waivers and reimbursements 2.46%+
Ratio of net investment income 1.04%+
Ratio of net investment loss without waivers and reimbursements (0.22)%+
Net investment loss per share without waivers and reimbursements $ (0.02)
Portfolio turnover rate 53%
Average commission rate (per share of security)(a) $0.0152
- - ----------
*Pictet International Small Companies Fund commenced operations on
February 7, 1996.
+Annualized.
++Total return represents aggregate total return for the period.
#Amount represents less than $0.00 per share.
(a)Average commission rate paid per share of securities purchased and sold by
the Fund.
(b)Per share amounts have been restated to reflect the stock dividend of 9
additional shares for each share outstanding (Note 4).
See Notes to Financial Statements.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES 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, Pictet Global Emerging Markets Fund and Pictet
International Small Companies Fund (individually a "Fund", collectively the
"Funds"). The accompanying financial statements and financial highlights are
those of the Funds. The Funds' 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 consistently by the Funds in the preparation of their
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 New York Stock 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. Portfolio
securities primarily traded on the London Stock Exchange are generally valued
at the mid price between the current bid and asked prices. Price information
on listed securities is taken from the exchange where the security is
primarily traded. Generally, 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
approved by the Board of Trustees. In the absence of readily ascertainable
market values for such securities, inherent uncertainty of valuation exists.
Methods for valuing these securities may differ from the values that would
have been used had a ready market for the securities existed, and the
differences could be material. One or more pricing services may be used to
provide security valuations in connection with the determination of the net
asset value of the Funds. Short-term investments that mature in 60 days or
less are valued at amortized cost.
Repurchase Agreements: Each 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 and the
seller agrees 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 Funds' 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 Funds enter into
repurchase agreements to evaluate potential risks.
Forward Foreign Currency Contracts: Each Fund may enter into 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 the Funds' 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 Funds could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts.
Each 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 Funds 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 Funds 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 the 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. Each Fund's net
realized capital gain (including net short-term capital gain), unless offset
by any available capital loss carryforward, is distributed to shareholders
annually. Additional distributions of net investment income and capital gain
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 a Fund. Dividends and other
distributions are automatically reinvested in additional shares of the Funds
at the net asset value next determined after such dividend or distribution is
declared.
Permanent differences incurred during the year ended December 31, 1996,
resulting from differences in book and tax accounting have been reclassified
at year end to undistributed net investment income, accumulated net realized
gain/(loss) and paid-in capital as follows:
INCREASE DECREASE
DECREASE UNDISTRIBUTED ACCUMULATED
PAID-IN NET INVESTMENT NET REALIZED
CAPITAL INCOME GAIN/(LOSS)
------- -------------- -----------
Pictet Global Emerging Markets
Fund $(31,032) $39,262 $ (8,230)
Pictet International Small
Companies Fund (196) 47,132 (46,936)
Paid-in capital was reduced by $6,172 for the Pictet International Small
Companies Fund due to a tax return of capital.
Income Taxes: Each 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 provision is required.
Organization Costs: Expenses incurred in connection with the organization
of each Fund are being amortized on the straight-line method over a period of
five years from the commencement of operations. In the event that any of the
shares issued by the Funds 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.
Expenses: General expenses of the Trust are allocated between the Funds
based upon relative net assets. Operating expenses directly attributable to a
Fund are charged to that Fund's operations.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER PARTY TRANSACTIONS
The Trust, on behalf of the Funds, has entered into Investment Advisory
Agreements (the "Advisory Agreements") 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
Agreements, Pictet Global Emerging Markets Fund and Pictet International Small
Companies Fund pay Pictet International a fee, computed daily and payable
monthly, at an annual rate of 1.25% and 1.00%, respectively, of the average
daily net assets of each Fund. Pictet International has voluntarily agreed to
waive its fees and reimburse expenses to the extent necessary to ensure that
the ordinary operating expenses of Pictet Global Emerging Markets Fund and
Pictet International Small Companies Fund do not exceed 1.70% and 1.20%,
respectively, of each Fund's average daily net assets.
For the year ended December 31, 1996, Pictet International waived fees and
reimbursed expenses as follows:
EXPENSES
FEES WAIVED REIMBURSED
- - --------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund $478,599 --
Pictet International Small Companies Fund 218,700 $56,678
First Data Investor Services Group, Inc. ("FDISG"), 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 each Fund, subject to a $50,000 annual minimum from each
Fund. 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 International, 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 who is not an
affiliated person of Pictet International an annual fee of $5,000, plus an
additional $500 for each board and committee meeting attended. The Trust also
reimburses expenses incurred by each Trustee in attending such meetings.
Brown Brothers Harriman & Co. serves as the Funds' custodian. 440
Financial Distributors, Inc., a wholly-owned subsidiary of FDISG, serves as
the Funds' 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 year
ended December 31, 1996 were as follows:
PURCHASES SALES
- - --------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund $146,764,743 $40,476,392
Pictet International Small Companies Fund 36,116,390 11,215,868
At December 31, 1996, aggregate gross unrealized appreciation and
unrealized depreciation for tax purposes were as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
- - --------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund $14,753,535 $16,016,092
Pictet International Small Companies Fund 2,774,897 2,553,982
4. SHARES OF BENEFICIAL INTEREST
Each Fund has one class of shares of beneficial interest, par value $0.001
per share, of which an unlimited number of shares is authorized. Transactions
in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995*
SHARES AMOUNT SHARES AMOUNT
- - -----------------------------------------------------------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund:
<S> <C> <C> <C> <C>
Sold 11,215,170 $115,282,514 1,000,000 $10,000,000
Issued as reinvestment of dividends 194,200 1,962,690 2,230 21,197
Redeemed (370,640) (3,905,907) -- --
- - -----------------------------------------------------------------------------------------------------------------------------------
Net increase 11,038,730 $113,339,297 1,002,230 $10,021,197
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1996**
SHARES AMOUNT
- - -----------------------------------------------------------------------------------------------------------------------------------
Pictet International Small Companies Fund:
Sold 2,502,950 $25,198,654
Issued as reinvestment of dividends 34,550 347,345
- - -----------------------------------------------------------------------------------------------------------------------------------
Net increase 2,537,500 $25,545,999
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On December 2, 1996, the Board of Trustees declared a stock dividend of
nine additional shares for each share outstanding. The record date of the
stock dividend was December 31, 1996, payable on January 1, 1997. All per
share and shares of beneficial interest outstanding amounts in the financial
statements and financial highlights of the Funds have been restated to reflect
the stock dividend.
At December 31, 1996, Pictet Global Emerging Markets Fund had 3
institutional shareholders owning 35.9%, 19.3% and 12.7%, respectively, of the
outstanding shares of beneficial interest of the Fund.
At December 31, 1996, Pictet International Small Companies Fund had 2
institutional shareholders owning 59.9% and 40.1%, respectively, of
outstanding shares of beneficial interest of the Fund.
*Pictet Global Emerging Markets Fund commenced operations on October 4, 1995.
**Pictet International Small Companies Fund commenced operations on February
7, 1996.
5. FOREIGN SECURITIES
Pictet Global Emerging Markets Fund invests primarily in foreign emerging
markets securities and Pictet International Small Companies Fund invests
primarily in foreign 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, 1996, the
Funds have elected to defer capital losses and currency losses occurring
between November 1, 1996 and December 31, 1996 as follows:
CAPITAL LOSSES CURRENCY LOSSES
----------------- -----------------
Pictet Global Emerging Markets Fund $154,958 --
Pictet International Small Companies
Fund 5,659 $131
Such losses will be treated as arising on the first day of the year ending
December 31, 1997.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
- - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- - --------------------------------------------------------------------------------
To the Board of Trustees and the Shareholders of Panorama Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments of each of the series of Panorama
Trust (in this report comprised of Pictet Global Emerging Markets Fund and
Pictet International Small Companies Fund) as of December 31, 1996, and the
related statements of operations, the statements of changes in net assets and
the financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
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 securities
owned as of December 31, 1996, 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
Pictet Global Emerging Markets Fund and Pictet International Small Companies
Fund as of December 31, 1996, the results of their operations, the changes in
their net assets and the financial highlights for the periods indicated
therein in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 25, 1997
<PAGE>
- - --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
- - --------------------------------------------------------------------------------
Year Ended December 31, 1996
The amount of long-term capital gain paid for the year ended December 31,
1996, was as follows:
Pictet Global Emerging Markets Fund ........................ $20,801
See Notes to Financial Statements.
