<PAGE>
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PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN FUND
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[Graphic Omitted]
ANNUAL REPORT
DECEMBER 31, 1998
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN FUND
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Dear Shareholders,
It is with pleasure that I present a combined 1998 Annual Report which
also includes a summary for the new Pictet Eastern European Fund launched in
April. The report summarizes the performance last year together with our 1999
outlook for all three Funds.
In emerging markets, Asia is now clearly benefiting from the structural
changes brought by the 1997 crisis with stunning out-performance in the fourth
quarter of 1998 and in early 1999. The enormous valuation disparity between
this region, Latin America and Europe is finally starting to reverse. At the
time of writing, the massive overvaluation of the Latin American region
compared with Asia and Europe has partially unwound and the year should see
positive returns for investors.
Pictet International Small Companies Fund began and closed the year on a
positive note. Valuations in the smaller companies marketplace are clearly
attractive compared with larger companies and our outlook for this asset class
continues to be positive.
Since its inception earlier this year, Pictet Eastern European Fund
performed favorably in what was a turbulent year for these markets, gaining
from an asset allocation and stock selection perspective. With progress made
in market reforms and institutional restructuring underway in most Central
European countries, we are optimistic of the potential opportunities to find
value within these markets in the coming year.
The addition of the new Fund within Panorama Trust reflects the continuing
demand by investors for access to carefully structured investment vehicles
which offer attractive and complementary specialist asset classes. We look
forward to helping you, the shareholders, achieve your investment objectives
in 1999.
Yours sincerely,
/s/ Jean Pilloud
Jean Pilloud
President and Chairman
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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PORTFOLIO MANAGER'S REPORT
In a second disappointing year for emerging markets, the IFC Global
Composite Index fell by 21.2% and the value of the Fund declined by 23.1%.
The Fund rebuilt its positions in Asia in the latter months of 1997, and
was well placed to benefit from a strong rebound in the region's markets in
the first quarter of 1998, particularly in Korea, Thailand and China. This
technical recovery from oversold levels coincided with a bottoming-out in
currencies, although it did not extend to Indonesia, where the Rupiah currency
continued to sell off sharply. Indian GDR positions also suffered as foreign
premia dropped, exacerbating market weakness. The poor performance from the
subcontinent continued into the second quarter as the nuclear stand-off
between India and Pakistan resulted in the West's imposition of economic
sanctions. Other Asian markets also suffered during this period, as Yen
weakness, concerns over the Japanese economy and the problems in Russia
reversed the gains seen earlier in the year. Uncertainty continued into the
third quarter, although the early signs of corporate/bank restructuring
coupled with strong trade accounts and currencies, and easing interest rates
underwrote strength in Thailand and Korea. Additions were made to the
portfolio to further reinforce the overweight strategy in Asia, and this
resulted in a strong performance contribution to the Fund in the final three
months of the year as lower interest rates spurred a sharp rebound in
equities.
In contrast to the strong position in Asia, the portfolio maintained an
aggressive under-weighting to Latin America throughout 1998. Regional equities
began the year generally overvalued, particularly against their Asian
counterparts. The comparison with Asia also extended to macro-economic
conditions: after the Far Eastern currencies devalued in 1997, the risk of
similar events occurring in Latin America seemed high given the large budget
and current account deficits in the region. Our strategy proved beneficial to
the portfolio, particularly in the second half of the year as rising capital
outflows from Brazil, together with a major downgrading in the foreign debt
rating from Moody's, set the scene for weak regional markets and currencies.
This culminated in early 1999 with a mini-devaluation in the Brazilian Real.
In the rest of the universe -- Europe, Middle East and Africa -- there was
a huge divergence in market performances over the year. During this time the
portfolio remained broadly overweight in these regions, particularly in
Greece, Israel, South Africa and -- in the second half -- Turkey. Greece and
Portugal (which are not considered emerging markets by most definitions) were
the major gainers in the region over the period, buoyed by enthusiasm over
lower interest rates as European nations prepared for the single currency. At
the other end of the scale, the collapse in Russia, following the credit
crisis in August, impacted other financially-stretched countries in the
region, such as Turkey. The portfolio began the year very underweight in
Russia, a position that was maintained until September when the extremely
cheap levels to which stocks had fallen could no longer be ignored, and a
neutral position was rebuilt. Elsewhere returns were mixed in the African
continent, with the gold shares in South Africa performing well in the first
three quarters of the year before selling off sharply in the final three
months in response to a strengthening of the Rand.
At the time of writing, the massive overvaluation of the Latin American
region compared with Asia and Europe has partially unwound. Positions in
Brazil and Mexico are being rebuilt at a measured pace, while holdings in
Russia have also been increased further. This may appear to be the start of a
major shift in strategy. However a recovery from a credit shock is never
quick, judging by Asia's experience, so caution needs to be exercised with
regard to timing re-entry into these markets. In Asia, the portfolio over-
weighting remains into 1999: the restructuring of banks and corporates has
only just begun, holding the potential for balance sheet de-leveraging and
higher returns on equity in the year ahead.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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FUND COUNTRY WEIGHTS AS A PERCENTAGE OF NET ASSETS
AT DECEMBER 31, 1998
South Korea 17.4
Taiwan 10.3
South Africa 8.5
Indonesia 6.7
India 6.0
Thailand 5.9
China 5.6
Philippines 5.1
Cash 4.5
Brazil 3.8
Israel 3.1
Mexico 3.1
Egypt 2.1
Poland 1.8
Malaysia 1.6
Morocco 1.6
Greece 1.5
Argentina 1.4
Czech Republic 1.4
Russia (Fed.) 1.4
Pakistan 1.1
Chile 1.0
Miscellaneous 1.0
Venezuela 0.8
Lebanon 0.7
Hungary 0.6
Kenya 0.6
Sri Lanka 0.5
Peru 0.4
Jordan 0.3
Turkey 0.2
Slovak Republic 0.0
FUND COUNTRY WEIGHTS VERSUS IFC GLOBAL COMPOSITE INDEX
AT DECEMBER 31, 1998
Taiwan -6.5
Brazil -5.3
Mexico -4.2
Portugal -3.8
Malaysia -3.2
Chile -3.0
Saudi Arabia -2.8
Greece -2.5
Turkey -1.8
Morocco -1.1
Argentina -0.9
Colombia -0.7
China -0.7
Hungary -0.6
Peru -0.4
Nigeria -0.2
Jordan -0.2
Zimbabwe -0.1
Slovak Republic 0.0
Other 0.0
South Africa 0.2
Sri Lanka 0.4
Venezuela 0.4
Russia (Fed.) 0.4
Pakistan 0.9
Czech Republic 0.9
Poland 0.0
India 1.1
Israel 1.4
Egypt 1.8
Philippines 2.9
Thailand 4.1
Indonesia 5.9
South Korea 13.2
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
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MARKET REVIEWS & INVESTMENT OUTLOOK
Although 1998 was a poor year for emerging stock markets it may well have
served as a springboard for the restructuring required in many of the emerging
economies. With a few exceptions, Asia is now clearly benefiting from the
structural changes brought by the 1997 crisis. Latin America, on the other
hand, has a substantial amount of homework left to do, in particular BRAZIL.
Europe is a mixed bag, with TURKEY resembling a cheaper version of BRAZIL,
whilst GREECE and POLAND are gradually being pulled into the orbit of the Euro
and the beneficial effects of convergence. The end game in emerging markets is
being played out as we write. The Brazilian equity market will probably have
to fall further before the country swallows the medicine it requires but, if
it does, a spectacular buying opportunity could develop, as it did in Asia a
year earlier. This holds out the possibility that both Asia and Latin America
could be on the recovery track together within the next twelve months,
representing the bulk of the emerging markets universe.
The stunning outperformance of the Asian markets in the fourth quarter,
and in early 1999, has finally started to reverse the enormous valuation
disparity between this region, Latin America and Europe. Both currencies and
stock markets were strong, in stark contrast to the rest of the emerging
world.
KOREA (+122%) and INDONESIA (+121%) stood out although PHILIPPINES and
THAILAND were not far behind. Trade and current accounts continued to improve
across the region and recent Yen strength has added to the competitiveness of
Asia. Liquidity remains abundant everywhere as real and nominal interest rates
continue to fall. This has underpinned the domestic impetus behind the stock
market rallies. The restructuring story is being played out faster in some
countries than others. The Korean chaebols have now committed themselves to
drastically reduced gearing levels financed by asset sales and a reduction in
the number of business units. However, delays in the implementation of proper
bankruptcy laws are hindering the restructuring of the finance sector in
THAILAND and INDONESIA. The Korean government capped this year with the early
repayment of US $ 2.5 billion of the IMF loan, well ahead of market
expectations considering the nation's effective bankruptcy at the end of 1997.
Valuations are moving up rapidly and stock picking is likely to become more
difficult this year.
Moving to Eastern Europe, the declining interest rate trend continues
unabated and has provided solid support for equities after the August/
September setbacks. However POLAND, which has seen perhaps the most aggressive
rate cuts, has recently suffered a sharp deterioration in its trade balance.
Declining corporate profits also point to a potential competitiveness problem.
In this environment, a scandal at Elektrim, where the management apparently
concealed a 1996 option agreement giving a local businessman the right to buy
a stake in the GSM mobile phone subsidiary at a nominal price, has not helped
sentiment, and corporate governance remains a major issue. The Hungarian
economy has remained buoyant, as reflected in the stock market, but the
country's dependence on capital flows could yet come back to haunt it,
especially if the impending Brazilian crisis once again cuts off credit to the
emerging world. Although the CZECH market remains mired in the structural
problems of the country, it remains cheap. Unlike HUNGARY, its dependence on
capital flows is small and could be a saving grace in the unsettled climate.
Russian valuations appear to discount all conceivable political and economic
risks and there has been some tentative interest in the stock market despite
anaemic volumes. One ray of hope has been the continued inflow of FDI as
evidenced by the purchase of 2.5% of Gazprom by Ruhrgas of GERMANY, and the
25% purchase of Vimpelcom by NORWAY's Telenor.
The Greek convergence story appears intact although equity valuations,
particularly in an emerging markets context, are painfully stretched. This is
the overriding reason for our underweight position. The 1999 budget aims to
meet all the Maastricht criteria by the end of the year and, judging by the
remarkable success of last year's budget, few would bet against GREECE
achieving its goals. At 12%, interest rates are far above the European average
leaving ample room for cuts when the time comes. Standard & Poors upgraded the
sovereign debt rating to BBB in recognition of its economic performance and it
is hard to see the outlook improving much further. In TURKEY, by contrast, it
is hard to see a worse outlook, tempered only by our view that the country is
home, once again, to possibly one of the world's cheapest stock markets. The
investment community's lack of consensus is evident in the violent volatility
of stock prices. After the fall of the Yilmaz government in November, the
possibility of a four party coalition finally reared its head this year giving
some ground for optimism. The political instability has so far overshadowed some
notable economic improvements, especially on the inflation front. The treasury's
vast borrowing requirement hangs over the market and further instability in the
emerging world could easily damage the slowly improving sentiment. A buying
opportunity is close at hand.
In the Middle East, our main area of focus has been ISRAEL, where currency
weakness forced a massive hike in interest rates (+400 basis points) in an
effort to curb inflationary expectations now running as high as 10% for next
year. The stock market took a big hit before recovering about half of its
losses in the last two months of the year. In SOUTH AFRICA, the bewildering
movements in the rand have bedevilled the stock market, which is split between
exporters (mainly mines) benefiting from rand weakness and domestic stocks
stifled by the high interest rate policies aimed at stabilising the currency.
Our preference for mining shares cost us dearly as the currency strengthened
over 10% from its August lows while falling rates boosted the banks and the
retailers where we are underexposed. Corporate activity continued apace, but
not all of it positively. In particular the trend towards overseas listings by
companies such as Anglo American is not a good sign.
INDIA remains a big disappointment. Despite encouraging signs that some
economic reform might be implemented, such as opening the insurance sector or
recognizing patents, politics intervened in the form of the November state
elections where the BJP did poorly. Foreign investors took US $ 102 million
out of the equity market last quarter, reflecting concern about declining
industrial output and excess capacity. In addition, the overvalued US 64 Fund
continues to hang over the market and will need a multi-billion dollar
refinancing in the medium term. With a budget deficit still at 6% of gross
domestic product, only decisive action on the part of the government will
revive this ailing market.
The cause of the most recent volatility is Latin America, and specifically
BRAZIL. As we write BRAZIL is in the middle of a full blown currency crisis
but its effect on the rest of the region and the emerging world is unclear.
Even as the stock market recovered in the fourth quarter the political and
economic climate was deteriorating, culminating in the failure by congress to
pass one of the IMF program key tax raising measures in early December.
Confidence was destroyed. The mini-devaluation engineered in January will
probably be insufficient to restore confidence and the country will continue
to lose foreign exchange reserves, yet will have to maintain interest rates at
punitively high levels. The effect on the rest of South America has been
severe, and in MEXICO the currency is also under heavy pressure. Our asset
allocation has heavily underweighted the region for some time so relative
performance should benefit, barring any serious contagion in Asia. More
importantly, the massive overvaluation of the Latin American region compared
with Asia and Europe is gradually being unwound. Our experience in Asia
suggests that this process can take some time, and it is easy to buy into
distressed markets too early. But the process of valuing companies in Latin
America as the crisis unfolds over the next few months should be easier than
the equivalent Asian exercise in 1997 and 1998. Transparency is better and
companies are largely unleveraged. By and large, creditors will be negotiating
with one borrower, the government.
A good illustration of the way valuations have changed in the last 12
months are the telephone companies of Sao Paulo (Telesp) in BRAZIL and
INDONESIA (PT Telekom). As recently as June 1998 Telesp sold for over US $
2000 per access line whereas PT Telekom was worth less than one quarter, at US
$ 500 per line. Today the equivalent valuations are US $ 891 for Telesp and US
$ 736 for PT Telekom. Both now trade substantially below replacement cost and
at significant discounts to global averages. At the current pace it should not
be long before a buying opportunity emerges in Brazilian stocks such as these.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
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PORTFOLIO MANAGER'S REPORT
The Fund appreciated 5.4% in 1998 compared with 3.3% for the HSBC James
Capel World ex-U.S. Smaller Companies Index (the "Index").
Equity market sentiment explored the full range of possibilities in 1998;
the year began and ended on a wave of optimism, but uncertainty and negativity
dominated the mood in the second and third quarters. Nevertheless, the end
result was generally satisfying, as major market indices in the U.S. and
Europe recorded gains in Dollar terms ranging from 15% (the UK) to 50% (Italy)
and Asian markets stemmed the slide initiated in 1997.
1998 started on a positive note, especially in Europe, where investors
swept away concerns relating to the collapse of Asian economies to focus on
the positive effects of falling bond yields and favorable liquidity
conditions. Japan also recovered on the strength of expectations that
government measures to stimulate the economy would bear fruit. Some of the
markets which had suffered severe losses in 1997, such as Thailand, Malaysia
and the Philippines bounced back as speculative attacks on currencies abated
and local governments began to implement measures to promote stability.
Unfortunately, the period of calm in Asia proved to be short-lived. Unrest
in Indonesia, dire economic news and the decline in the value of the Yen,
which stoked fears of another currency rout, resulted in losses of more than
35% in Dollar terms in Hong Kong and Singapore in the second quarter of 1998.
Japan rallied late in the quarter to emerge relatively unscathed, again
because investors kept their faith in the government's capacity to implement
meaningful reform. Europe sailed through the first two months of the second
quarter before faltering slightly in June with a round of profit taking,
especially in peripheral markets such as Italy.
June's pause was the precursor to a severe deterioration in sentiment in
Europe. Turmoil in Russia and concerns over Latin America finally forced
analysts to acknowledge that the region could not remain unscathed from the
deterioration in global economic conditions. Earnings expectations were pared
back and the MSCI Europe Index fell almost 15% in Dollar terms in the third
quarter. Asian markets actually held up reasonably well during this turbulent
period, not because of any improvement in the economic environment but because
valuations already reflected the worst case scenario.
The final quarter of the year started as badly as the third quarter had
ended. The gloom dissipated quickly though as interest rate cuts in the U.S.
and Europe underlined the highly favorable interest rate environment and
heralded the return of a semblance of stability to emerging markets. The
asset-based equity markets of Asia responded best and Hong Kong and Singapore
recorded strong gains. Japan also performed well in relative terms, largely
because of the Yen's 15% gain against the Dollar in the final quarter. In
Europe, equity markets were the led by the countries with the most to gain
from the convergence of Euroland interest rates to the 3% level, namely Italy,
Spain and Ireland. Results were mixed elsewhere; France performed well on the
strength of excellent conditions in the consumer sector while the UK and
Germany lagged because of their relatively heavy exposure to the manufactured
goods sector.
Looking ahead, we remain bearish on Japan because economic conditions
faced by smaller companies are terrible and because we remain unconvinced that
the hard medicine needed to revitalize the banking sector will not be taken.
We are neutral on Hong Kong and Singapore, not because economic fundamentals
have improved, but because it is unwise to oppose the momentum that falling
interest rates and improving sentiment can have in these equity markets. While
we harbor reservations about valuations in certain European markets,
especially at the blue chip end of the market, we remain positive on the
outlook for the region. Low bond yields, expectations that interest rates will
continue to fall, the continuing flow of cash into market-oriented savings
vehicles and the emergence of a European equity culture should underpin the
performance of regional equity markets.
While 1998 closed on a positive note, it was a difficult year for smaller
companies. The asset class has failed to keep pace with large caps for several
years now but the degree of under-performance accelerated in the second half
of 1998 with a performance from the MSCI EAFE Index of more than 18%. It is no
surprise that investors elected to seek safety in bonds and blue chip stocks
during the turbulent third quarter but it is disappointing that small caps
failed to make up lost ground in the fourth quarter. Valuations in the smaller
companies marketplace are clearly attractive and we are hopeful that
institutional investors will be attracted back to this asset class.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
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FUND COUNTRY WEIGHTS AS A PERCENTAGE OF NET ASSETS
AT DECEMBER 31, 1998
UK 20.8
France 12.7
Germany 10.2
Italy 7.3
Netherlands 5.7
Australia 5
Spain 4.9
Sweden 4.9
Belgium 4.5
Cash 4.1
Switzerland 4.1
Ireland 3.3
Hong Kong 2
Japan 2
Norway 1.9
Portugal 1.7
Denmark 1.7
Austria 1.6
Singapore 1.1
Finland 0.5
FUND COUNTRY WEIGHTS VERSUS HSBC JAMES CAPEL WORLD EX-U.S. SMALLER COMPANIES
AT DECEMBER 31, 1998
Japan -12.3
Switzerland -2.5
New Zealand -1.4
Finland -0.9
Denmark -0.8
Singapore -0.6
Norway -0.6
Austria -0.2
Malaysia 0.0
Other 0.0
Hong Kong 0.2
Spain 0.3
Sweden 0.4
Portugal 0.4
Netherlands 0.8
Australia 1.3
Ireland 1.4
Belgium 2.1
Germany 2.3
Italy 2.6
UK 3.3
France 4.2
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
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MARKET REVIEWS & INVESTMENT OUTLOOK
JAPAN
The Japanese equity market enjoyed a firm rebound in the final quarter of
the year, rising by over twenty percent in Dollar terms. Much of the rise is
attributable to the strength of the currency, which appreciated from nearly
140 Yen to the Dollar to 115 Yen in the early weeks of the period, a rise of
over 15%. Smaller companies modestly outperformed in spite of the gloomy
economic background, proving their time-honoured correlation with the bond
market, which also saw a spectacular reversal in trend and a doubling of
yields at the long end in the last six weeks of the year.
The quarter began miserably with October bringing the weakest Tankan
survey in four years, bankruptcies at record levels and the sharpest reversal
ever in a GDP growth forecast by the EPA (from 1.9% to -2% for the calendar
year). The final straw came with the resurgence of the Yen, which appeared to
extinguish one of the few sources of hope for the economy, namely exports.
Against this background the benchmark bond yield fell as low as 0.7%, equities
touched ten-year lows and the threat of major financial instability resurfaced
as the value of banks' hidden assets plunged.
Fortunately, these developments forced the Government into its most
aggressive measures to date, promising a huge 60 trillion Yen to recapitalise
the banks and a doubling of the fiscal stimulus package to 30 trillion Yen.
Allied to interest rate cuts in the U.S. and Europe and the easing of pressure
on Asian currencies as the Yen rose, these announcements gave grounds for
guarded optimism, though no relief will be apparent on the earnings front for
some time. The reporting of interim results in November was followed by many
shocking downgrades and overall earnings are expected to fall by nearly 40%
this year (excluding financials).
Rather than focus on the dreadful economic background and profit outlook,
therefore, investors were encouraged by the authorities to pin their hopes on
a coalition of the LDP and Liberal parties and the corresponding possibility
of income tax cuts. Consumption-related shares performed strongly on the
strength of expectations that the newly imposed 5% sales tax might be
abolished. Construction shares remained buoyant too with the banks' much
publicized acceptance of public money easing concerns of more financial
failures in the sector. However, pouring money into virtually bankrupt
construction companies merely perpetuates the problems of overcapacity in both
the industry itself and in banking. Until these issues are tackled, with
others such as over-employment and excess capital investment, corporate
returns are bound to remain weak and the likelihood of economic recovery low.
Thus, we are disinclined to change our underweight stance in Japan. The
structural inadequacies of the Japanese economy are still being "papered-over"
- -- unfortunately it may require widespread industrial and financial bankruptcy
to bring about the required shift in priorities. With most Japanese companies
offering uncompetitive returns on demanding multiples, our attention should
remain on growth areas such as services (in particular software development
and outsourcing) and consumer finance.
ASIA PACIFIC
The third quarter had been exceptionally volatile in Asia and ended with
measures being taken by the authorities in Malaysia and Hong Kong to reduce
the sense of panic that threatened to overwhelm regional currency and equity
markets. The final three months, however, presented a completely different
picture. Falling interest rates reduced the risk of deflation and the buoyancy
of the Yen took the pressure off regional currencies. As a result, equity
markets in Asia posted strong gains, led by Singapore (+50%) and Hong Kong
(+28%).
In Hong Kong, the October interest rate cut by the U.S. Federal Reserve
allowed the prime rate to fall for the first time since March, and inter-bank
rates there fell sharply as a result. Equities rose nearly 30% in this month
alone as solid institutional buying and short covering by speculative funds
combined to drive prices higher in a thin market. With evidence mounting that
confidence and liquidity were returning to the residential property market,
domestic asset plays led the market.
The pattern was similar in Singapore, where banking and property stocks
witnessed a huge re-rating and contributed to the large cap index rising by
around 50% in the first two months of the quarter. This was after inter-bank
rates touched a forty-one month low and the Monetary Authority of Singapore
eased capital adequacy requirements which should allow banks to boost their
historically low returns on equity.
In both markets, investors chose to focus on interest rates rather than
economics. The Hong Kong economy contracted by 7% in the third quarter and
unemployment has risen sharply to 5.3%. As is usual when markets are driven by
liquidity in relatively light trading volumes, small caps tended to lag the
larger benchmarks, particularly so in Hong Kong where they managed a
relatively modest rise of just 17% in Dollar terms.
Australia continues to live up to its safe-haven billing. Business
investment and personal consumption have shown unexpected resilience to the
region's problems and Australia is the only OECD economy to benefit from
upward forecasts in GDP growth, to around 5%. The positive background was
further improved by interest rate cuts, though the currency de-coupled from
the Yen to hit a low of 55 cents against the U.S. Dollar as the outlook for
commodity prices remained depressed. The market's rise of just 6.5% appears
miserly given the huge rises elsewhere, but reflects the stability of the
Australian market in the previous quarter.
CONTINENTAL EUROPE
Continental markets started the final quarter of 1998 as badly as they had
ended the third; by October 8, the big gains recorded earlier in the year had
been wiped out. This reversal was at least partially warranted by a more
careful assessment of the economic prospects for the region in the wake of the
slowdown in global economic growth. Business confidence has fallen, capacity
utilization appears to have peaked, producer prices are falling and leading
indicators now suggest that economic expansion will fall below 2% in 1999.
On their own, these indicators refute the strength of the recovery in
regional equity markets since the lows of October. However, other factors are
at work, not the least of which is the continuing resilience of European
consumer confidence and household spending. This divergence of opinion between
consumers and manufacturers is unusual, and given this dichotomy, the question
is whether industrial gloom will eventually infect consumer sentiment, or
whether continued strength in household spending will support the economy
until conditions in the industrial sector improve. The current environment
favors the latter scenario. The absence of inflation is underlined by the
coordinated move to reduce Euroland interest rates to 3% (3.5% in Italy) on
December 3 and while inflationary pressures are significant in some Euroland
markets, Ireland and Spain in particular, we do not expect a shift to a more
restrictive monetary stance in the near term.
On balance, we believe that the prospects for European equity markets in
1999 are positive. In addition to the support provided by low interest rates,
inflows to mutual funds continue to grow and the "equitization" of Europe
ensures a steady flow of cash out of bonds and into stocks. The biggest risk
lies in earnings forecasts and valuations. Consensus expects 12% earnings
growth in Europe in 1999 and the recent rally has stretched valuations to
levels which proved to be unsustainable earlier on.
Fund flows into European equities have worked to the advantage of large
companies and as a result, valuation differentials are pronounced in favor of
smaller companies. This valuation gap confers a degree of defensiveness on the
small cap sector and we are hopeful that continued strength in regional
markets will eventually persuade investors to seek out the value available at
the smaller end of the market.
We have steadily reduced exposure to manufacturers of basic industrial
goods over the course of the past few months and positioned the portfolio to
take advantage of more favorable conditions prevailing in the services and
consumer goods sectors.
UNITED KINGDOM
The deterioration in UK economic indicators gathered pace in the fourth
quarter. Manufacturing output fell 1.5% in the three months to the end of
October, unemployment has started to creep up, consumer confidence has
deteriorated and growth in retail sales has declined.
Conditions in the manufacturing sector are terrible. Confederation of
British Industry (CBI) surveys highlight the extent to which competitiveness
was impaired by the relative strength of Sterling in 1997. Business confidence
has fallen to levels not seen since 1980, the CBI measure of inventory
"adequacy" has risen to levels witnessed during the 1990-1992 recession and as
producer prices actually fell 0.5% in the year to the end of November, the
risk of deflation is real.
With all this bad news, the Bank of England Monetary Policy Committee
(MPC) was forced to reverse course. Base interest rates rose 150 basis points
(bps) to 7.5% between January 1997 and October 1998. Exporters protested as
the currency rose, but the MPC cited the risk of inflationary pressure arising
from above-trend wage increases to tighten the monetary screws. Rate cutting
finally started with a modest 25 bps in October followed by 50 bps cuts in
each of November and December to bring rates down to 6.25%.
Now that wage settlements appear to have fallen back to levels consistent
with MPC inflation targets, there appears to be further scope to cut rates in
the coming months. Sterling has retreated from its highs, but as inflation is
virtually non-existent in most of Continental Europe, and rates in Euroland
are only 3%, the yield differential will limit the benefit to exporters and
conditions in the manufacturing sector will remain difficult over the course
of the next 12 months.
The impact of lower rates will be more keenly felt in the consumer sector.
Rising household confidence and higher spending, together with continued
growth in the service segment of the economy, albeit at a slower pace, should
allow the economy to avoid outright recession. Most economists now expect GDP
to expand less than 1% this year, down from 2.7% in 1998.
We have remained neutral on the UK equity market despite the economic
environment because valuations appeared to have factored in the worst case
scenario. This is especially true in the smaller companies market; according
to Warburg Dillon Read, small cap share prices are at their lowest level for
20 years relative to large caps. Based on Pictet valuation measures, UK small
caps are the cheapest in our investment universe. The small cap market appears
to have found firmer footing over the past few weeks and we are hopeful that
improving sentiment should help restore valuations to more reasonable levels
in the coming months.
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S REPORT
Since inception in April 1998, the portfolio declined by 34% compared to
over 60% for the IFC Global Eastern Europe Index, producing an out-performance
over the period of 27%.
Although Russia was the worst performing market over the period, the
portfolio's underweight positon in this market resulted in an overall positive
contribution of 1295 bps and was also the major contributor to the out-
performance of the portfolio. Since the crisis of August 17th, Russian stocks
still remain very illiquid and average daily volumes fluctuate around an
average of US $2 million.
In Poland, good stock selection coupled with the positive impact of an
overweight postion contributed to the portfolio's overall out-performance by
659 bps. During the last quarter we moved to gradually accumulate Hungary, but
in doing so in a rising market we lost 238 bps on the stock selection. In the
Czech Republic and Poland, stock selection provided a positive contribution of
87 bps and 223 bps respectively.
The other main factor for the out-performance of the portfolio was the
larger than average cash position which gave more flexibility in a volatile
environment and added performance in weak and volatile markets (480 bps). We
are currently increasing our exposure to the markets of Central Eastern Europe
which will reduce the cash balance to normal operating levels. The Fund should
emerge well positioned to benefit from the convergence play of Central Eastern
Europe into an enlarged European Union.
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
FUND COUNTRY WEIGHTS AS A PERCENTAGE OF NET ASSETS
AT DECEMBER 31, 1998
Hungary 32.7
Croatia 26.8
Russia (Fed.) 15.8
Cash 10.2
Czech Republic 9.4
Poland 5.1
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
MARKET REVIEWS & INVESTMENT OUTLOOK
For the countries of central and eastern Europe, the Baltics and the CIS,
1998 has been a year of stresses and contrasts. The crisis of confidence in
emerging markets sparked a collapse of the Russian financial system, forced
Ukraine to renegotiate its domestic debt, unhinged the Slovak Republic's fixed
exchange rate and required countries across the region to brace themselves
against the dangers of contagion. The crisis is far from over and many of its
effects are yet to be revealed. The end game in emerging markets is being
played out as we write. The Brazilian crisis jarred the emerging markets and
introduced a new wave of uncertainty. However, while the initial market
reaction was severe across the region, a number of the transition economies
have demonstrated an impressive resilience. Eurobond spreads, domestic money
market rates and exchange rate shifts -- key indicators of domestic and
foreign investor confidence -- already show a pattern of striking variation
across the region as investors have begun to adopt greater selectivity in the
wake of a broad reassessment of economic fundamentals and risk.
In POLAND, the aftershocks of the Russian crisis have faded enough to
allow for several substantial interest rate cuts. On December 9th, for the
fifth time this year, the Monetary Policy Council (MPC) cut the 28-day
intervention rate from 17.0 per cent to 15.5 per cent. It also lowered the
discount rate and the Lombard rate. The interest rate cuts were expected to
increase local consumption and improve earnings growth which has been one of
the main drawbacks for the market. Contrary to these expectations, slowing
economic growth pushed November earnings below forecasts. The growth slowdown
has intensified; industrial production adjusted for working days fell around 6
per cent in November versus a 3 per cent decline in October. October exports
were off 7.3 per cent in dollar terms from a year ago. The 3 per cent GDP
growth forecast for 1999, which was once at the bottom of consensus forecasts,
may need to be revised down further. We expect another 150 basis points rate
cut before the end of the first-quarter 1999. However, this may be the last
cut for some time as we believe it will be difficult for the central bank to
further reduce rates in the face of a widening current account deficit.
Corporate governance problems were recently highlighted by the scandal with
Elektrim, the management of which apparently intentionally concealed a 1996
option agreement with a local businessman, allowing him to purchase 6.5 per
cent of Elektrim's GSM business at nominal price. Despite this negative
background, the stock market gained ground with selected stocks recovering
some of the losses incurred in the beginning of the quarter.
The CZECH economy continues to suffer from deep structural problems -
recession (2 per cent negative GDP forecast for 1999), high corporate
indebtedness (65 per cent of GDP), bankrupt banking sector, and strong crown.
The government has made timid attempts to push forward with the privatisation,
but as a minority government it lacks political leverage. Nevertheless a bail-
out plan for the banks was finally put in place (the subordinated debt issue
to Ceska Sporitelna gives it some breathing room, at least until privatisation
in 1999). The government has also reiterated its intention to help out some
debt-burdened companies. Yet, the measures proposed do not offer comprehensive
solutions mostly because they do not provide an answer to the main question as
to who is to restructure and run the ailing banks and corporates. The economic
data is poor, and the Czech National Bank is aggressively cutting rates.
Industrial production fell 7.6 per cent year on year in October, while
industrial producer prices fell by 0.4 per cent month on month in November,
implying a drop in the annual rate to 2.8 per cent from 3.3 per cent in the
previous month. The current account deficit fell to US $27 million in third-
quarter 1998, from US $676 million in third-quarter 1997. The investable
universe remains limited to telecoms and utilities.
Our belief that the structural reform success story will ultimately reward
HUNGARY is being supported by the recent strong economic growth. The economy
is less unbalanced than its neighbors with the 4 per cent GDP growth forecast
in 1999 leading to only 4.3 per cent current account deficit, up just 0.3 per
cent from our 1998 forecast. On the bottom-up side, the earnings profile of
Hungary is less cyclical and more domestically oriented than most emerging
markets. Earnings growth should be around 37 per cent in 1998, trailing off to
only 28 per cent in the 1999 and 2000. Hungarian corporates have been the best
in the region at delivering on earnings. While the smaller cap names may
represent better value (NABI), we believe the big caps offer enough upside to
let us avoid chasing smaller less liquid stocks. On the negative side, the
Hungarian market remains highly exposed to developments in Western Europe and
capital movements. This makes it significantly more volatile than other Eastern
European markets. An eventual slow-down in export growth, combined with
increased domestic consumption will put pressure on the current account, and on
the Forint accordingly.
The RUSSIAN stock market rally, which began in September, continued
through November, mostly on the back of extremely low valuations which appear
to discount all conceivable political risks, and for the very negative
economic outlook exacerbated by the further collapse in oil prices and the
worst grain harvest in decades. We believe that neither oil prices nor
economic reform will rescue Russia quickly. The main issue appears to be one
of politics. Russian policy-makers have a distinct interest in sounding
market-friendly to the West in order to maximise the chances of IMF lending
even though the domestic political agenda calls for more protectionism,
industrial policy and monetary emission. With Duma elections in 1999 and
presidential elections in 2000 or sooner, the importance of winning votes is
paramount. Russia's actions over the (still unsettled) GKO restructuring and
international debt defaults are more indicative of actual policy than any
statement that Russia is planning to pass a tight budget and planning on IMF
aid in the short term. It is unlikely that Russian politics will revert to
market reforms prior to the presidential elections. On the other side Russia
continues to attract FDI and December saw the closure of two large deals --
Germany's Ruhrgas bought 2.5 per cent of Gazprom, and Telenor of Norway bought
25 per cent of Vimpelcom. The latter confirmed our consistently positive
outlook for the company.
In Eastern Europe, convergence remains the prevailing theme. Inflation and
nominal interest rates will continue their decline, whilst the economic growth
backdrop for the region ex-Russia is positive. External imbalances, although
prevalent, are modest. Stock markets are well placed. Corporate earnings
should modestly recover in Poland and rise in Hungary, our two overweights. A
recovery will be priced into the Czech Republic, a neutral weighting, moving
through the second half of 1999. Russia, however, remains a "political wild
card" and uncertainty over the timing of any political fall-out in Moscow will
be a tempering influence for many investors.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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
--------------------- ----------------------------
Oct. 04, 1995 $10,000 $10,000
Dec. 31, 1995 9,528
Dec. 31, 1996 10,321 10,260
Dec. 31, 1997 9,156 8,768
March 31, 1998 9,589 9,413
June 30, 1998 7,195 7,379
Sept. 30, 1998 5,977 5,942
Dec. 31, 1998 7,040 7,060
+ 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 12/31/98 ....................................... -23.22%
Inception (10/04/95) through 12/31/98 ..................... -10.26%
- --------------------------------------------------------------------------------
* Assumes the reinvestment of all dividends and distributions.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
PICTET INTERNATIONAL SMALL COMPANIES FUND
VS.
HSBC JAMES CAPEL WORLD EXCLUDING U.S. SMALL COMPANIES INDEX+
&
FINANCIAL TIMES/S&P WORLD EX-U.S. MEDIUM-SMALL CAP INDEX++
HSBC James Financial
Capel World Times/S&P
Pictet excluding World-ex-U.S.
International Small U.S. Small Medium-Small
Companies Fund* Companies Index Cap Index
-------------- ---------------- ----------
Feb. 07, 1996 $10,000 $10,000 $10,000
Dec. 31, 1996 10,285 10,649 10,297
Dec. 31, 1997 9,495 9,284 9,207
March 31, 1998 11,294 10,837 10,732
June 30, 1998 11,006 10,503 10,445
Sep. 30, 1998 9,136 8,738 9,093
Dec. 31, 1998 10,003 9,590 10,540
+ The HSBC James Capel World excluding U.S. Small Companies Index is an index
composed of 1,200 smaller company stocks covering 21 markets.
++ 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
----------------------------------- ------
Year Ended 12/31/98 ............................................. 5.35%
Inception (02/07/96) through 12/31/98 ........................... 0.01%
- --------------------------------------------------------------------------------
* Assumes the reinvestment of all dividends and distributions.
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
PICTET EASTERN EUROPEAN FUND
VS.
INTERNATIONAL FINANCE CORPORATION GLOBAL EASTERN EUROPE INDEX+
&
BARINGS EASTERN EUROPE INDEX++
International
Pictet Finance
Eastern Corporation Barings
European Global Eastern Eastern
Fund Europe Index Europe Index
---- ------------ ------------
April 2, 1998 $10,000 $10,000 $10,000
June 30, 1998 7,790 6,365 6,916
Sept. 30, 1998 5,360 3,097 4,033
Dec. 31, 1998 6,607 3,977 5,051
+ The International Finance Corporation Global Eastern Europe Index is an
index composed of 141 stocks covering 5 markets.
++ The Barings Eastern Europe Index is an index composed of 88 stocks covering
4 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 EASTERN
EUROPEAN FUND ACTUAL
----------------------------------- ------
Inception (04/07/98) through 12/31/98 ........................... -33.93%
* Assumes the reinvestment of all dividends and distributions.
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1998
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 92.3%
ARGENTINA - 1.4%
63,500 Nobleza Piccardo SA@ $ 216,102
197,290 Siderca SA 225,121
32,000 YPF SA, Sponsored ADR, Class D 894,000
------------
1,335,223
------------
BRAZIL - 0.9%
47,400 Cia Vale Do Rio Doce 439,379
8,556,000 Embratel Participacoes SA 74,354
8,556,000 Tele Celular Sul Participacoes 7,931
8,556,000 Tele Centro Oeste Celular Participacoes 6,727
8,556,000 Tele Centro Sul Participacoes 56,651
8,556,000 Tele Leste Celular Participacoes 3,399
8,556,000 Tele Nordeste Celular Participacoes 4,320
8,556,000 Tele Norte Celular Participacoes 2,762
8,556,000 Tele Norte Leste Participacoes 70,105
8,556,000 Tele Sudeste Celular Participacoes 24,077
8,556,000 Telemig Celular Participacoes 6,019
8,556,000 Telesp Celular Participacoes SA 36,823
8,556,000 Telesp Participacoes SA 109,760
------------
842,307
------------
CHILE - 1.0%
11,390 Cia Cervecerias Unidas SA, Sponsored ADR 219,258
9,050 Gener SA, Sponsored ADR 144,800
29,160 Masisa SA, Sponsored ADR 185,895
12,550 Quimica y Minera de Chile SA, Sponsored ADR, B Shares 422,778
------------
972,731
------------
CHINA - 5.6%
3,018,000 Anhui Conch Cement Company Ltd., Class H+ 335,004
2,095,000 Beijing Datang Power Generation Company Ltd., Class H 628,695
38,200 China International Marine Containers Ltd., Class B 18,046
245,000 China Telecom Ltd. 423,744
1,716,000 Founder Hong Kong Ltd. 380,959
1,054,000 Guangdong Kelon Electric Holding, Class H 938,691
1,636,500 Heilongjiang Electric Power Company Ltd., Class B+ 523,680
1,190,000 Huaneng Power International, Inc., Class H 422,389
450,000 Ng Fung Hong Ltd. 403,673
1,807,000 Qingling Motor Company Ltd., Class H 317,198
800,000 Shanghai Dazhong Taxi Company, Class B+@ 337,600
2,158,000 Zhejiang Expressway Company, Ltd., Class H 437,305
518,000 Zhenhai Refining & Chemical Company, Ltd., Class H 79,563
------------
5,246,547
------------
CZECH REPUBLIC - 1.4%
41,700 Ceska Sporitelna AS 159,757
21,700 Ceske Energeticke Zavody AS+ 479,796
12,560 Ceske Radiokomunikace, GDR+ 405,060
17,000 SPT Telecom AS+ 259,382
------------
1,303,995
------------
EGYPT - 2.1%
150,000 Al Ezz Porcelain 356,305
7,100 Alexandria Real Estate Investment Company 264,761
93,999 Arabian International Construction 634,011
200 Egyptian Financial and Industrial 3,308
1,229 Egyptian International Pharmaceuticals Investments
Company 61,709
67,268 Egyptian Mobile Phone Network 409,329
50 Egyptian Starch & Glucose Manufacturing Company+ 652
13,260 Oriental Weavers Company 295,570
------------
2,025,645
------------
GREECE - 1.5%
5,600 National Bank of Greece SA 1,260,540
6,300 Panafon Hellenic Telecom SA 168,822
------------
1,429,362
------------
HUNGARY - 0.6%
20,000 BorsodChem RT, GDR 520,500
------------
INDIA - 6.0%
27,000 Bajaj Auto, GDR 421,875
188,647 India Access Fund+ 1,344,110
35,000 ITC, Ltd., Sponsored GDR 779,625
44,000 Mahanagar Telephone Nigam, Ltd., GDR 536,800
150,000 Reliance Industries Ltd., GDR 840,000
281,800 The India Fund, Inc. 1,778,863
------------
5,701,273
------------
INDONESIA - 6.7%
6,190,000 Asuransi Lippo Life Tbk 251,469
8,660,000 Bank Internasional Indonesia 243,562
49,000 Freeport-McMoran Copper & Gold, Inc., Class B 511,438
510,000 Gudang Garam Tbk 742,687
1,400,000 Indofood Sukses Makmur Tbk 708,750
2,444,500 Pabrik Kertas Tjiwi Kimia 634,042
5,425,000 Ramayana Lestari Sentosa@ 1,305,391
555,000 Semen Gresik 575,812
210,100 Telekomunikasi Indonesia, ADR, Series B 1,365,650
------------
6,338,801
------------
ISRAEL - 3.1%
18,000 ECI Telecommunication, Ltd. 641,250
23,200 Gilat Satellite Networks Ltd.+ 1,278,900
390,949 Makhteshim-Agan Industries Ltd. 845,194
8,600 Nice Systems, Ltd., Sponsored ADR 185,975
------------
2,951,319
------------
JORDAN - 0.3%
36,100 Jordan Phosphate Mines Company@ 76,560
50,000 The Housing Bank 194,522
------------
271,082
------------
KENYA - 0.6%
214,000 Kenya Breweries Ltd.@ 232,100
118,026 Kenya Commercial Bank Ltd.@ 116,545
104,708 Kenya Power & Lighting Company Ltd.@ 210,179
------------
558,824
------------
LEBANON - 0.7%
23,400 Banque Liban, GDR, B Shares 666,900
------------
LUXEMBORG - 0.7%
75,000 Quilmes Industrial SA, ADR 698,438
------------
MALAWI - 0.1%
17,000 Press Corporation, GDR@ 113,050
------------
MALAYSIA - 1.6%
382,000 Kuala Lumpur Kepong Berhad@## 496,600
70,000 Nestle Malaysia Berhad@## 212,800
247,000 Star Publications (Malaysia) Berhad@## 266,760
252,000 Telekom Malaysia Berhad@## 504,000
------------
1,480,160
------------
MEXICO - 3.1%
238,000 Consorcio ARA, SA de CV 600,707
643,000 Controladora Comercial Mexicana SA de CV 453,119
174,000 Corporation GEO, SA de CV 483,089
290,000 Grupo Mexico SA, Class B 761,232
78,000 Pepsi-Gemex SA, Sponsored ADR 609,375
------------
2,907,522
------------
MOROCCO - 1.6%
6,000 Ona SA@ 698,481
6,300 Wafabank@ 789,192
------------
1,487,673
------------
PAKISTAN - 1.1%
570,500 Engro Chemicals Pakistan Ltd.@ 1,031,487
125,000 Hub Power Company, Ltd.@ 32,035
72 Pakistan State Oil Company, Ltd.@ 113
------------
1,063,635
------------
PERU - 0.4%
42,100 Southern Peru Copper Corporation 397,319
------------
PHILIPPINES - 5.0%
2,125,000 Ayala Land, Inc. 600,900
8,374,500 International Container Terminal Services, Inc.+@ 699,669
309,780 Manila Electric Company, Class B 995,437
84,000 Metropolitan Bank & Trust Company 604,627
3,793,000 Philippine Long Distance Telephone 351,023
431,000 San Miguel Corporation, Class B 830,977
3,392,400 SM Prime Holdings Inc. 645,341
------------
4,727,974
------------
POLAND - 1.8%
28,000 Bank Polska Kasa Opieki SA 350,997
38,300 Elektrim SA 414,644
48,000 KGHM Polska Miedz SA 170,940
49,000 KGHM Polska Miedz SA, GDR 352,800
79,910 Telekomunikacja Polska, GDR, Series A 407,541
------------
1,696,922
------------
RUSSIA - 1.4%
34,000 Gazprom, ADR 288,150
20,000 LUKOil Holdings, Sponsored ADR+ 320,000
82,000 Rostelecom, Sponsored ADR $ 343,375
3,000,000 Unified Energy Systems 91,500
24,000 Unified Energy Systems, GDR 78,000
16,780 Vimpel Communications, Sponsored ADR 217,091
------------
1,338,116
------------
SLOVAKIA - 0.0%#
2,700 Chirana Prema AS+@## 733
5,326 Nafta Gbely AS@ 46,248
------------
46,981
------------
SOUTH AFRICA - 8.5%
96,000 Anglo American Platinum Corporation Ltd. 1,315,258
30,000 Anglogold Ltd. 1,167,353
60,000 Comparex Holdings Ltd. 486,906
128,000 Gold Fields Ltd. 706,252
255,000 Harmony Gold Mining Company, Ltd.+ 1,177,539
16,000 Impala Platinum Holdings Ltd. 217,308
42,000 Nedcor Ltd. 713,043
217,000 Sanlam Ltd. 215,517
210,000 Sappi Ltd. 811,086
71,000 South African Breweries 1,195,739
------------
8,006,001
------------
SOUTH KOREA - 17.4%
270,000 Housing & Commercial Bank 3,344,140
108,000 LG Chemical Ltd. 1,176,060
26,239 LG Information & Communication+ 704,505
127,500 Korea Electric Power Corporation 3,158,354
51,000 Oriental Chemical Industries Company, Ltd. 716,459
23,492 Samsung Display Devices Company 1,158,001
22,446 Samsung Electronics Company 1,505,729
71,830 Samsung Electro-Mechanics Company 1,552,436
3,506 Samsung Fire & Marine Insurance Company 1,311,471
26,800 Samsung Securities Company, Ltd. 735,162
48,800 Shinsegae Department Store 1,070,923
------------
16,433,240
------------
SRI LANKA - 0.5%
130,356 John Keells Holdings Ltd. 424,805
------------
TAIWAN - 10.3%
268,180 Accton Technology Corporation, GDR+ 811,245
75,750 Acer Inc.+ 102,505
126,718 Asia Cement Corporation, GDR+@ 1,156,302
504,400 Cathay Life Insurance Corporation 1,628,107
64,000 China Steel Corporation, Sponsored GDS 780,800
140,000 Compal Electronics, Inc. 456,238
1,019,240 Everest Textile Company, Ltd. 911,053
770,000 Fubon Insurance Company 831,657
168,000 Hon Hai Precision Industry Company, Ltd. 928,119
394,000 Phoenixtec Power Company, Ltd. 776,505
655,000 United Microelectronics Corporation, Ltd. 819,258
1,152,480 Walsin Lihwa Corporation 511,498
------------
9,713,287
------------
THAILAND - 5.9%
412,900 Bangkok Bank Public Company, Ltd. (F) 851,926
1,050,000 Bank of Asia Public Company, Ltd. (F) 866,575
112,600 BEC World Plc Ltd. (F) 619,532
83,800 Delta Electronics Thai (F)@ 442,630
337,700 Electricity Generation Power Company (F) 915,088
62,500 Siam Cement Company, Ltd. (F) 1,416,781
240,000 Thai Farmers Bank Public Company, Ltd. 422,558
------------
5,535,090
------------
TURKEY - 0.2%
12,381,750 Aksa Akrilik Kimya Sanayii AS@ 149,149
------------
VENEZUELA - 0.8%
157,555 Ceramica Carabobo, Class A@ 13,955
16,132 Ceramica Carabobo, Class A, Sponsored ADR@ 12,099
10,820 Cia Anonima Nacional Telefonos de Venezuela, ADR 192,731
954,720 La Electronicidad de Caracas 412,162
11,161,173 Sudamtex de Venezuela, Class A@ 67,224
1,600,007 Venezolana de Pulpa Y Papel, Class A@ 24,801
------------
722,972
------------
TOTAL COMMON STOCKS (COST $91,058,382) 87,106,843
------------
PREFERRED STOCKS - 3.0%
BRAZIL - 2.9%
827 Banco Bradesco 5
1,630,000 Banco Itau SA 795,931
17,312,000 Centrais Electricas Brasileiras SA 332,413
75,000 Cia Vale Do Rio Doc, Class A 962,135
65,000,000 Lojas Americanas SA 314,711
26,064,000 Tele Leste Participacoes 325,733
59,900 Vale do Rio Doce 496
------------
2,731,424
------------
PHILIPPINES - 0.1%
646,333 Cosmos Bottling Company@ 111,322
------------
TOTAL PREFERRED STOCKS (COST $3,292,252) 2,842,746
------------
RIGHTS -- 0.2%
BRAZIL - 0.0%#
34 Banco Bradesco SA, Expire 02/15/99+ 0
8,255,000 Lojas Americanas SA, Expire 01/21/99+## 28
------------
28
------------
SOUTH KOREA - 0.2%
1,070 Samsung Fire & Marine Insurance Company,
Expire 01/14/99+## 205,643
------------
TAIWAN - 0.0%#
280 Compal Electronics, Inc., Expire 01/22/99+## 2
------------
TOTAL RIGHTS (COST $0) 205,673
------------
TOTAL INVESTMENTS (COST $94,350,634*) 95.5% 90,155,262
OTHER ASSETS AND LIABILITIES (NET) 4.5 4,206,614
- -------------------------------------------------------------------------------
NET ASSETS 100.0% $94,361,876
- -------------------------------------------------------------------------------
* Aggregate cost for Federal tax purposes was $95,132,495.
+ Non-income producing security.
# Amount represents less than 0.1%.
## The valuations of these securities have been determined by procedures
established by the Pricing Committee of the Board of Trustees. The cost of
the denoted securities at December 31, 1998 was $3,124,986, with a value of
$1,686,566, representing 1.8% of total net assets.
@ Illiquid Security (unaudited). These are securities that the Adviser believes
cannot be sold or disposed of in the ordinary course of business within seven
days at approximately the value at which the Fund has valued the investment.
The value of the denoted securities at December 31, 1998 was $9,522,884,
representing 10.1% of total net assets.
Abbreviations:
ADR American Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Shares
(F) Foreign Shares
<PAGE>
AT DECEMBER 31, 1998, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
% OF NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS:
Banking 11.8% $ 11,103,323
Telecommunications 6.5 6,118,453
Electrical and Electronics 6.4 6,081,539
Chemicals 6.1 5,768,851
Beverage and Tobacco 5.8 5,497,774
Utilities -- Electric and Gas 4.8 4,572,562
Insurance 4.5 4,238,221
Multi-Industry 4.4 4,185,629
Financial Services 3.4 3,215,814
Electronic Components and Instruments 3.4 3,210,002
Construction and Housing 3.3 3,134,588
Broadcasting and Publishing 3.1 2,926,424
Building Materials and Components 2.8 2,609,318
Appliances and Household Durables 2.6 2,444,420
Merchandising 2.5 2,376,314
Metals - Non Ferrous 2.4 2,236,317
Data Processing and Reproduction 2.1 1,967,590
Gold Mines 2.0 1,883,791
Energy Sources 1.9 1,769,828
Real Estate 1.6 1,511,002
Forest Products and Paper 1.6 1,469,929
Metals - Steel 1.5 1,445,300
Food and Household 1.4 1,325,875
Miscellaneous Materials and Commodities 1.4 1,303,719
Textiles and Apparel 1.0 911,053
Transportation 0.8 792,951
Automobiles 0.8 739,073
Business and Public Services 0.7 699,669
Industrial Components 0.5 511,498
Recreation, Other Consumer Goods 0.5 453,119
Wholesale & International Trade 0.4 414,644
Energy Equipment and Services 0.1 125,811
Health and Personal Care 0.1 61,709
Machinery and Engineering 0.0# 733
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 92.3 87,106,843
PREFERRED STOCKS 3.0 2,842,746
RIGHTS 0.2 205,673
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 95.5% 90,155,262
OTHER ASSETS AND LIABILITIES (NET) 4.5 4,206,614
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $ 94,361,876
- --------------------------------------------------------------------------------
# Amount represents less than 0.1%.
See Notes to Financial Statements.
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1998
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 94.7%
AUSTRALIA - 5.0%
42,800 Ci Technologies Group Ltd.+ $ 107,534
48,844 Computer Power Group Ltd.+ 179,590
------------
287,124
------------
AUSTRIA - 1.6%
1,300 Austria Haustechnik AG+ 42,193
450 Semperit Holdings AG 49,430
------------
91,623
------------
BELGIUM - 4.5%
150 Deceuninck Plastics Industries SA 48,489
600 Ontex 43,390
1,500 Real Software 93,289
3,000 Xeikon NV, ADR 70,500
------------
255,668
------------
DENMARK - 1.7%
200 Christian Hansen Holding, Class B 28,440
1,000 Neurosearch AS, New+ 66,308
------------
94,748
------------
FINLAND - 0.5%
500 Helsingin Puhelin Oyj-e, Series E 29,712
------------
FRANCE - 12.7%
1,900 Avenir Telecom 76,462
400 Cegid 72,903
700 Eurofins Scientific 50,081
1,500 Guy Degrenne SA 74,584
1,700 Infogrammes Entertainment SA+ 112,502
2,784 Marionnaud Parfumeries SA 129,465
450 UBI Soft Entertainment SA+ 75,255
598 Union Financiere de France Banque SA 74,870
1,000 Vranken Monopole 59,936
------------
726,058
------------
GERMANY - 9.0%
300 Aixtron AG 55,180
600 Deutsche Pfandbrief-und Hypothekenbank AG 52,570
50 EM.TV & Merchandising AG 28,685
600 Intershop Communication AG 88,577
1,500 Pfeiffer Vacuum Technology AG 58,061
900 Qiagen NV 58,061
1,000 SCM Microsystems, Inc. 73,814
200 Ser Systems AG 65,532
200 Teles AS 33,246
------------
513,726
------------
HONG KONG - 2.0%
276,000 Techtronic Industries Company+ 49,161
15,000 VTech Holdings Ltd.+ 65,440
------------
114,601
------------
IRELAND - 3.3%
11,000 First Active Plc 57,261
10,000 Green Property Plc 56,517
2,000 Iona Technologies Plc, ADR 76,000
------------
189,778
------------
ITALY - 7.3%
3,000 Banca Popolare Di Bergamo 72,757
12,500 Credito Fondiario E Industries 33,264
26,000 Gruppo Buffetti SpA 87,744
13,000 Gruppo Editoriale L' Espresso SpA 114,004
59,000 Seat-Pagine Gialle SpA 55,665
20,000 Trenno Societa SpA 50,742
------------
414,176
------------
JAPAN - 2.0%
2,000 Fuji Machine MFG Company, Ltd. 63,183
2,000 Meitec Corporation 49,909
------------
113,092
------------
NETHERLANDS - 5.7%
2,200 Beter Bed Holding NV 76,702
1,800 Endemol Entertainment Holding NV 66,684
3,000 Magnus Holding NV 28,903
1,600 Nutreco Holding NV+ 63,022
2,000 Ordina Beheer NV+ 53,335
1,500 Unique International NV 34,332
------------
322,978
------------
NORWAY - 1.9%
6,500 Ekornes ASA 51,326
2,300 Kverneland ASA 56,604
------------
107,930
------------
PORTUGAL - 1.7%
1,000 Jeronimo Martins SA 54,730
900 Sonae Investmentos 43,773
------------
98,503
------------
SINGAPORE - 1.1%
16,000 Venture Manufacturing Ltd. 61,054
------------
SPAIN - 4.9%
2,500 Abengoa SA 71,682
1,500 Azkoyen SA 53,828
4,400 Corp Fin Reunida 63,932
5,000 Funespana SA 88,833
------------
278,275
------------
SWEDEN - 4.9%
1,000 Assa Aboly AB, B Shares 38,155
7,000 Citymail Sweden AB, A Shares 54,279
4,333 IBS AB, B Shares 87,996
1,400 Scandic Hotels AB 51,349
2,500 Sendit AB 45,847
------------
277,626
------------
SWITZERLAND - 4.1%
10 Disetronic Holding AG 24,863
250 Fotolabo SA 76,447
250 Mikron Holdings AG, New Registered+ 49,964
300 Valora Holding AG 81,143
------------
232,417
------------
UNITED KINGDOM - 20.8%
4,000 Bespak Plc 61,818
65,000 Budgens Plc 68,896
10,000 DCS Group Plc 89,783
6,000 Eidos Plc+ 93,774
7,000 Filtronic Plc 70,122
15,000 First Technology Plc 86,416
17,000 Hogg Robinson Plc 58,367
10,000 MSB International Plc 56,531
9,000 Nestor Healthcare Group Plc 61,576
12,000 NXT Plc 77,812
30,000 Paragon Group Companies Plc 74,819
20,000 Pressac Holdings Plc 71,993
30,000 Rebus Group Plc 56,864
30,000 Rolfe & Nolan Plc 87,289
25,000 Saatchi & Saatchi Plc+ 57,154
20,000 Skillsgroup Plc+ 60,354
60,000 VideoLogic Group Plc+ 52,375
------------
1,185,943
------------
TOTAL COMMON STOCKS (COST $5,103,623) 5,395,032
------------
PREFERRED STOCK -- 1.2% (COST $65,421)
GERMANY - 1.2%
1,200 Sixt AG 68,269
------------
TOTAL INVESTMENTS (COST $5,169,044*) 95.9% 5,463,301
OTHER ASSETS AND LIABILITIES (NET) 4.1 236,110
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $ 5,699,411
- --------------------------------------------------------------------------------
* Aggregate cost for Federal tax purposes was $5,199,808.
+ Non-income producing security.
Abbreviation:
ADR American Depositary Receipt
<PAGE>
AT DECEMBER 31, 1998, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
% OF NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS:
Data Processing and Reproduction 13.5% $ 767,252
Electrical and Electronics 10.9 621,019
Business and Public Services 9.8 559,556
Machinery and Engineering 8.3 473,419
Recreation, Other Consumer Goods 6.3 357,307
Leisure and Tourism 5.2 299,645
Health and Personal Care 5.0 282,638
Merchandising 4.9 281,556
Telecommunications 4.9 281,332
Banking 3.8 215,852
Financial Services 2.6 149,689
Broadcasting and Publishing 2.5 142,689
Wholesale and International Trade 2.3 129,465
Appliances and Household Durables 2.2 128,028
Food and Household Products 2.1 117,752
Multi-Industry 2.1 120,512
Utilities - Electric and Gas 1.6 88,833
Industrial Components 1.5 87,585
Construction and Housing 1.3 71,682
Beverages and Tobacco 1.1 59,936
Real Estate 1.0 56,517
Building Materials and Components 0.9 48,489
Transportation - Shipping 0.9 54,279
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 94.7 5,395,032
PREFERRED STOCK 1.2 68,269
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 95.9% 5,463,301
OTHER ASSETS AND LIABILITIES (NET) 4.1 236,110
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $ 5,699,411
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1998
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS -- 89.8%
CROATIA - 5.1%
5,000 Pliva D.D. $ 83,000
------------
CZECH REPUBLIC - 15.8%
3,100 Ceske Energeticke Zavody AS+ 68,542
2,000 Ceske Radiokomunikace, GDR+ 64,500
6,700 Inzenyrske Prumyslove Stavby AS 20,550
4,950 SPT Telecom AS+ 75,526
16,500 Unipetrol AS 29,683
------------
258,801
------------
HUNGARY - 32.7%
1,600 Gedeon Richter RT, GDR 68,240
4,450 MATAV RT, Sponsored ADR, Series B+ 132,666
1,720 Mezogazdasagi Gepgyarto Reszvenytarsasag RT+ 23,972
5,300 Mol Magyar Olaj-es Gazipari RT, GDR 146,413
3,600 North American Bus Industries RT 44,403
1,500 OTP Bank RT, GDR 74,175
1,000 Pannonplast RT 28,315
2,000 Pick Szeged RT, GDR 17,200
------------
535,384
------------
POLAND - 26.8%
3,000 Bank Pekao SA 37,606
900 Bank Rozwoju Eksportu SA 20,769
400 Debica SA, Class A 5,926
6,900 Elektrim SA 74,701
4,400 Exbud SA+ 37,983
15,000 KGHM Polska Miedz SA 53,419
6,600 Kredyt Bank SA 21,436
2,500 Mostostal-Warszawa SA 12,607
7,500 Orbis SA+ 58,974
730 Softbank SA, GDR 19,345
11,500 Telekomunikacja Polska, GDR 58,650
3,850 Zaklady Metali Lekkich Kety+ 36,306
------------
437,722
------------
RUSSIA - 9.4%
22,000 AO Norilsk Nickel+ 11,715
2,000 Gazprom, ADR 16,950
3,000 LUKOil Holding 12,150
700 LUKOil Holdings, Sponsored ADR+ 11,200
19,890 Rostelecom+ 14,520
8,600 Surgutneftegaz, ADR 28,810
2,300 Unified Energy Systems, GDR 7,475
3,950 Vimpel Communications, ADR 51,103
------------
153,923
------------
TOTAL COMMON STOCKS (COST $1,846,273) 1,468,830
------------
TOTAL INVESTMENTS (COST $1,846,273*) 89.8% 1,468,830
OTHER ASSETS AND LIABILITIES (NET) 10.2 167,188
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $1,636,018
- --------------------------------------------------------------------------------
* Aggregate cost for Federal tax purposes was $1,858,682.
+ Non-income producing security.
Abbreviations:
ADR American Depositary Receipt
GDR Global Depositary Receipt
<PAGE>
AT DECEMBER 31, 1998, SECTOR DIVERSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
% OF NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS:
Telecommunications 24.3% $ 396,965
Energy Sources 12.1 198,573
Banking 9.4 153,986
Health and Personal Care 9.2 151,240
Metals - Non Ferrous 6.2 101,440
Utilities - Electrical and Gas 5.7 92,967
Wholesale and International Trade 4.6 74,701
Construction and Housing 4.4 71,140
Leisure and Tourism 3.6 58,974
Business and Public Service 2.7 44,403
Industrial Components 1.8 29,898
Chemicals 1.8 29,683
Building Materials and Components 1.7 28,315
Data Processing and Reproduction 1.2 19,345
Food & Household Products 1.1 17,200
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 89.8 1,468,830
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 89.8% 1,468,830
OTHER ASSETS AND LIABILITIES (NET) 10.2 167,188
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $ 1,636,018
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
<TABLE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN FUND
- ---------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1998
- ---------------------------------------------------------------------------------------------------
<CAPTION>
PICTET GLOBAL PICTET INTERNATIONAL PICTET
EMERGING MARKETS SMALL COMPANIES EASTERN EUROPEAN
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $94,350,634, $5,169,044
and $1,846,273, respectively) (Note 1)
See accompanying schedules $ 90,155,262 $5,463,301 $1,468,830
Cash 1,519,363 35,538 29,198
Foreign currency (Cost $2,608,062, $0 and
$7,873, respectively) 2,616,278 -- 7,568
Receivable for investment securities sold 1,290,232 195,362 137,472
Receivable from investment adviser (Note 2) -- 27,465 25,123
Dividends receivable 225,947 15,786 2,272
Unamortized organization costs (Note 1) 15,697 530 8,258
Other assets -- 12 699
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS 95,822,779 5,737,994 1,679,420
- ------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities purchased 1,163,459 -- 7,568
Investment advisory fee (Note 2) 132,865 -- --
Payable for Fund shares redeemed 32,625 -- --
Custodian fees payable (Note 2) 36,582 2,229 2,663
Administration fee payable (Note 2) 17,041 1,187 343
Trustees' fees and expenses payable (Note 2) 5,809 342 99
Transfer agent fees payable (Note 2) 1,966 116 33
Professional fees payable (Note 2) 51,297 28,238 25,809
Printing fees payable (Note 2) 12,869 4,025 5,664
Other accrued expenses and payables 6,390 2,446 1,223
- ------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,460,903 38,583 43,402
- ------------------------------------------------------------------------------------------------------
NET ASSETS $ 94,361,876 $5,699,411 $1,636,018
- ------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Accumulated distributions in excess of net
investment income (Note 1) $ (183,470) $ (15,538) $ (2,225)
Accumulated net realized loss on investments
sold (Note 1) (63,813,302) (389,194) (534,282)
Net unrealized appreciation/(depreciation)
of investments and foreign currency
related transactions (4,277,902) 292,583 (378,647)
Par value 138,571 8,708 2,501
Paid-in capital in excess of par value
(Notes 1 and 4) 162,497,979 5,802,852 2,548,671
- ------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 94,361,876 $5,699,411 $1,636,018
- ------------------------------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING
(Note 4) 13,857,133 870,757 250,135
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE:
Net asset value, offering and redemption
price per share (Note 4) $6.81 $6.55 $6.54
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN FUND
- ---------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
PICTET GLOBAL PICTET INTERNATIONAL PICTET
EMERGING MARKETS SMALL COMPANIES EASTERN EUROPEAN
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of
$148,510, $42,811, and $1,987, respectively) $ 2,473,832 $ 274,837 $ 17,464
Interest 168,077 21,076 9,325
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,641,909 295,913 26,789
- ------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2) 1,464,171 160,128 20,711
Custodian fees (Note 2) 370,263 40,824 12,783
Administration fee (Note 2) 209,718 32,127 8,319
Professional fees 60,996 30,825 25,957
Transfer agent fees (Note 2) 29,283 10,000 9,000
Registration and filing fees (Note 2) 19,352 15,896 12,103
Trustees' fees and expenses (Note 2) 25,527 2,988 359
Amortization of organization costs (Note 1) 8,969 236 --
Other 158,836 85,442 48,382
- ------------------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE EXPENSE REDUCTION 2,347,115 378,466 137,614
- ------------------------------------------------------------------------------------------------------
Fees waived and/or expenses reimbursed by
investment advisor (Note 2) (351,157) (187,047) (109,999)
- ------------------------------------------------------------------------------------------------------
NET EXPENSES 1,995,958 191,419 27,615
- ------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 645,951 104,494 (826)
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (Notes 1 and 3):
Net realized gain/(loss) on:
Security transactions (60,365,269) 2,561,761 (534,282)
Foreign currency contracts (109,140) (5,195) (1,220)
Foreign currency related transactions
including CPMF Tax (Note 1) (695,729) (188,502) (1,686)
- ------------------------------------------------------------------------------------------------------
Net realized gain/(loss) on investments
during the year (61,170,138) 2,368,064 (537,188)
- ------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/(depreciation) of:
Securities 30,939,235 1,305,068 (377,443)
Foreign currency related transactions 98,722 8,620 (1,204)
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation/(depreciation) of
investments during the year 31,037,957 1,313,688 (378,647)
- ------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (30,132,181) 3,681,752 (915,835)
- ------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(29,486,230) $3,786,246 $(916,661)
- ------------------------------------------------------------------------------------------------------
* Pictet Eastern European Fund commenced operations on April 7, 1998.
</TABLE>
See Notes to Financial Statements
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
INCREASE/(DECREASE) IN NET ASSETS FROM DECEMBER 31, DECEMBER 31,
OPERATIONS: 1998 1997
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 645,951 $ 664,177
Net realized loss on investments during
the year (61,170,138) (1,764,594)
Change in unrealized appreciation/
(depreciation) of investments during the
year 31,037,957 (34,065,813)
- --------------------------------------------------------------------------------
Net decrease in net assets resulting from
operations (29,486,230) (35,166,230)
Distributions to shareholders:
Distributions to shareholders from net
investment income -- (125,929)
Distributions to shareholders in excess
of net investment income -- (189,740)
Distributions to shareholders in excess
of net realized gains
on investments -- (2,187,788)
Net increase/(decrease) in net assets from
Fund share transactions (Note 4) (67,073,603) 106,544,495
- --------------------------------------------------------------------------------
Net increase/(decrease) in net assets (96,559,833) 68,874,808
NET ASSETS:
Beginning of year 190,921,709 122,046,901
- --------------------------------------------------------------------------------
End of year (including accumulated
distributions in excess of net
investment income of ($183,470) and
($95,221), respectively) $ 94,361,876 $190,921,709
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
DECREASE IN NET ASSETS FROM OPERATIONS: 1998 1997
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 104,494 $ 211,834
Net realized gain/(loss) on investments
during the year 2,368,064 (935,106)
Change in unrealized appreciation/
(depreciation) of investments
during the year 1,313,688 (1,246,920)
- --------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 3,786,246 (1,970,192)
Distributions to shareholders:
Distributions to shareholders from net
investment income -- (211,834)
Distributions in excess of net investment
income -- (106,650)
Distributions from net realized gains on
investments (1,857,131) --
Net increase/(decrease) in net assets from
Fund share transactions (Note 4) (20,002,739) 318,484
- --------------------------------------------------------------------------------
Net decrease in net assets (18,073,624) (1,970,192)
NET ASSETS:
Beginning of year 23,773,035 25,743,227
- --------------------------------------------------------------------------------
End of year (including accumulated
distributions in excess of net
investment income of ($15,538) and
($132,257), respectively) $ 5,699,411 $ 23,773,035
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED
INCREASE IN NET ASSETS FROM OPERATIONS: DECEMBER 31, 1998*
- --------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment loss $ (826)
Net realized loss on investments during the period (537,188)
Change in unrealized depreciation of investments during
the period (378,647)
- --------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (916,661)
Distributions to shareholders:
Distributions in excess of net investment income (16,740)
Net increase in net assets from Fund share transactions
(Note 4) 2,569,419
- --------------------------------------------------------------------------------
Net increase in net assets 1,636,018
NET ASSETS:
Beginning of period 0
- --------------------------------------------------------------------------------
End of period (including accumulated distributions in
excess of net investment income of ($2,225)) $1,636,018
- --------------------------------------------------------------------------------
* Pictet Eastern European Fund commenced operations on April 7, 1998.
See Notes to Financial Statements
<PAGE>
<TABLE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96(a) 12/31/95*(a)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $8.87 $10.13 $9.51 $10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.04 0.07 0.02
Net realized and unrealized gain/(loss) on
investments (2.10) (1.18) 0.71 (0.49)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.06) (1.14) 0.78 (0.47)
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Distributions from net investment income -- (0.02) (0.07) (0.02)
Distributions from net realized gains on
investments -- (0.10) (0.09) --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.12) (0.16) (0.02)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $6.81 $ 8.87 $10.13 $ 9.51
- -----------------------------------------------------------------------------------------------------------------------------
Total return++ (23.22)% (11.29)% 8.32% (4.72)%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $94,362 $190,922 $122,047 $9,623
Ratio of operating expenses 1.70% 1.70% 1.70% 1.95%+
Ratio of operating expenses without waivers
and/or reimbursements 2.00% 1.84% 2.20% 8.39%+
Ratio of net investment income 0.55% 0.32% 0.88% 0.68%+
Ratio of net investment income/(loss)
without waivers and/or reimbursements 0.25% 0.18% 0.38% (5.77)%+
Portfolio turnover rate 123% 77% 48% 5%
- ------------
* 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 $0.01 per share.
(a) Per share amounts have been restated to reflect the stock dividend of 9 additional shares for each share outstanding. On
December 2, 1996, the Board of Trustees declared a stock dividend of nine additional shares for each share outstanding
of the Pictet Global Emerging Markets Fund. The record date of the stock dividend was December 31, 1996, payable on
January 1, 1997.
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
PANORAMA TRUST
PICTET INTERNATIONAL SMALL COMPANIES FUND
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE YEAR.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96*(a)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year $ 9.24 $10.15 $10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07+++ 0.08 0.09
Net realized and unrealized gain/(loss) on investments 0.41 (0.86) 0.20
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.48 (0.78) 0.29
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Distributions from net investment income -- (0.13) (0.12)
Distributions from net realized gains on investments (3.17) -- (0.02)
Distributions from capital -- -- (0.00)#
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (3.17) (0.13) (0.14)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $6.55 $ 9.24 $10.15
- -----------------------------------------------------------------------------------------------------------------------------
Total return++ 5.35% (7.68)% 2.85%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $5,699 $23,773 $25,743
Ratio of operating expenses 1.20% 1.20% 1.20%+
Ratio of operating expenses without waivers and
reimbursements 2.36% 2.20% 2.46%+
Ratio of net investment income 0.65% 0.82% 1.04%+
Ratio of net investment loss without waivers and
reimbursements (0.52)% (0.18)% (0.22)%+
Portfolio turnover rate 132% 90% 53%
- ------------
* Pictet International Small Companies Fund commenced operations on February 7, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period.
+++ Per share numbers have been calculated using the average share method.
# Amount represents less than $0.01 per share.
(a) Per share amounts have been restated to reflect the stock dividend of 9 additional shares for each share outstanding. On
December 2, 1996, the Board of Trustees declared a stock dividend of nine additional shares for each share outstanding
of the Pictet International Small Companies Fund. The record date of the stock dividend was December 31, 1996, payable
on January 1, 1997.
</TABLE>
See Notes to Financial Statements
<PAGE>
PANORAMA TRUST
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PERIOD
ENDED
12/31/98*
- -------------------------------------------------------------------------------
Net asset value, beginning of period $10.00
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.00)#
Net realized and unrealized loss on investments (3.39)
- -------------------------------------------------------------------------------
Total from investment operations (3.39)
- -------------------------------------------------------------------------------
Distributions to shareholders:
Distributions from net investment income (0.07)
- -------------------------------------------------------------------------------
Total distributions (0.07)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 6.54
- -------------------------------------------------------------------------------
Total return++ (33.93)%
- -------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $1,636
Ratio of operating expenses 2.00%+
Ratio of operating expenses without waivers and reimbursements 9.97%+
Ratio of net investment loss (0.06)%+
Ratio of net investment loss without waivers and reimbursements (8.03)%+
Portfolio turnover rate 91%
- ------------
* Pictet Eastern European Fund commenced operations on April 7, 1998.
+ Annualized.
++ Total return represents aggregate total return for the period.
# Amount represents less than $0.01 per share.
See Notes to Financial Statements
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN 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 three series, Pictet Global Emerging Markets Fund, Pictet
International Small Companies Fund and Pictet Eastern European 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 bid and asked 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 securities 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.
Foreign Currency Contracts: Each Fund may enter into forward foreign
currency exchange 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 exchange 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 exchange 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, such Fund 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 exchange 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
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. The Funds' 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 due primarily to timing differences and differing
characterization of distributions made by a Fund. Dividends and other
distributions are reinvested automatically 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, 1998,
resulting from differences in book and tax accounting have been reclassified
at year end as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
DECREASE UNDISTRIBUTED ACCUMULATED
PAID-IN NET INVESTMENT NET REALIZED
CAPITAL INCOME GAIN/(LOSS)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pictet Global Emerging Markets Fund $(70,669) $(734,200) $804,869
Pictet International Small Companies Fund (1,728) 12,225 (10,497)
Pictet Eastern European Fund (18,247) 15,341 2,906
</TABLE>
Taxation: 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.
Pictet Global Emerging Markets Fund is also subject to a 0.20% Contribuicao
Provisoria sobre Movimentacos Financeiras (CPMF) tax which is applied to foreign
exchange transactions representing capital inflows or outflows to the Brazilian
market. This tax of $72,424 has been reported as part of the net realized loss
from foreign currency related transactions for the year ended December 31, 1998.
Organization Costs: Expenses incurred in connection with the organization
of certain Funds 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 among 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 an investment advisory
agreement (the "Advisory Agreement") with Pictet International Management
Limited ("Pictet International"), a wholly-owned subsidiary of Pictet (Canada)
& Company ("Pictet Canada"). Pictet Canada is a partnership, whose principal
activity is investment accounting, custody and securities brokerage. Pictet
Canada has two general partners, Pictet Advisory Services Overseas and
FINGEST, and six limited partners, each of whom is also a partner of Pictet &
Cie, a Swiss private bank founded in 1805. Under the terms of the Advisory
Agreement, Pictet Global Emerging Markets Fund, Pictet International Small
Companies Fund and Pictet Eastern European Fund pay Pictet International a
fee, computed daily and payable quarterly, at an annual rate of 1.25%, 1.00%
and 1.50%, 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 total ordinary operating expenses
of Pictet Global Emerging Markets Fund, Pictet International Small Companies
Fund and Pictet Eastern European Fund do not exceed 1.70%, 1.20% and 2.00%,
respectively, of each Fund's average daily net assets.
First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, serves as the Trust's
administrator, accounting agent and transfer agent. Investor Services Group,
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 administration services, Investor
Services Group is entitled to receive $220,000 per annum from the Trust. In
addition, for its services as transfer agent, Investor Services Group is paid
separate compensation.
For the period ended December 31, 1998, Pictet International and Investor
Services Group either waived fees or reimbursed expenses as follows:
<TABLE>
<CAPTION>
INVESTOR PICTET
SERVICES PICTET INTERNATIONAL
GROUP INTERNATIONAL EXPENSES
FEES WAIVED FEES WAIVED REIMBURSED TOTAL
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pictet Global Emerging Markets Fund $ 2,172 $348,985 $ -- $351,157
Pictet International Small Companies Fund 9,654 160,128 17,265 187,047
Pictet Eastern European Fund 10,161 20,711 79,127 109,999
</TABLE>
No officer, director or employee of Pictet International, First Data
Investor Services Group, Inc., 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. First Data
Distributors, Inc., a wholly-owned subsidiary of Investor Services Group,
serves as the Funds' principal underwriter and distributor.
<TABLE>
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, 1998 were as follows:
<CAPTION>
PURCHASES SALES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pictet Global Emerging Markets Fund $139,706,468 $202,977,313
Pictet International Small Companies Fund 19,698,550 41,242,795
Pictet Eastern European Fund 3,748,612 1,367,367
At December 31, 1998, aggregate gross unrealized appreciation and unrealized depreciation for tax purposes were as follows:
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pictet Global Emerging Markets Fund $12,151,760 $17,128,993
Pictet International Small Companies Fund 651,518 388,025
Pictet Eastern European Fund 57,784 447,636
4. SHARES OF BENEFICIAL INTEREST
Each Fund has one class of shares of beneficial interest, par value $0.01 per share, of which an unlimited number of shares is
authorized. Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pictet Global Emerging Markets Fund:
Sold 4,881,501 $ 34,840,805 9,649,457 $108,632,793
Issued as reinvestment of dividends -- -- 284,465 2,503,293
Redeemed (12,555,938) (101,914,408) (453,312) (4,591,591)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) (7,674,437) $(67,073,603) 9,480,610 $106,544,495
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pictet International Small Companies Fund:
Sold 922,708 $ 10,125,000 -- --
Issued as reinvestment of dividends 284,836 1,857,130 34,641 $ 318,484
Redeemed (2,908,938) (31,984,869) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) (1,701,394) $(20,002,739) 34,641 $ 318,484
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1998*
SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pictet Eastern European Fund:
Sold 291,402 $ 2,843,760
Issued as reinvestment of dividends 2,134 14,129
Redeemed (43,401) (288,470)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 250,135 $ 2,569,419
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Pictet Eastern European Fund commenced operations on April 7, 1998.
At December 31, 1998 Pictet Global Emerging Markets Fund had 4
institutional shareholders owning 36.88%, 27.33% 12.56% and 11.38%,
respectively, of the outstanding shares of beneficial interest of the Fund.
At December 31, 1998 Pictet International Small Companies Fund had 1
institutional shareholder owning 98.54% of the outstanding shares of
beneficial interest of the Fund.
At December 31, 1998 Pictet Eastern European Fund had 1 institutional
shareholder owning 15.02% of the outstanding shares of beneficial interest of
the Fund.
5. FOREIGN SECURITIES
Pictet Global Emerging Markets Fund invests primarily in foreign emerging
markets securities, Pictet International Small Companies Fund invests
primarily in foreign securities and Pictet Eastern European Fund invests
primarily in Eastern European equity 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 year ended December 31, 1998, the Funds
elected to defer capital losses and currency losses occurring between November
1, 1998 and December 31, 1998 as follows:
CAPITAL LOSSES CURRENCY LOSSES
- --------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund $2,450,647 $183,465
Pictet International Small Companies Fund 376,173 7,622
Pictet Eastern European Fund -- 2,225
Such losses will be treated as arising on the first day of the year ending
December 31, 1999.
7. CAPITAL LOSS CARRYFORWARDS
At December 31, 1998 the following Funds had available for Federal income
tax purposes unused capital losses as follows:
EXPIRING IN 2006
- ------------------------------------------------------------------------------
Pictet Global Emerging Markets Fund $60,580,799
Pictet Eastern European Fund 521,873
<PAGE>
PANORAMA TRUST
PICTET GLOBAL EMERGING MARKETS FUND
PICTET INTERNATIONAL SMALL COMPANIES FUND
PICTET EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and the Shareholders of Panorama Trust:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material aspects, the financial position of each of the series of
the Panorama Trust (in this report comprised of Pictet Global Emerging Markets
Fund, Pictet International Small Companies Fund and Pictet Eastern European
Fund) (the "Funds") at December 31, 1998, the results of their operations, the
changes in their net assets and the financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 12, 1999
