As filed with the Securities and Exchange Commission on April 30, 1998.
- -------------------------File No. 811-07363----------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3
GROWTH PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
50 California Street, 27th Floor
San Francisco, California 94111
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 415-392-6181
Michael A. Silver, Esq.
Assistant General Counsel
Chancellor LGT Asset Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment to the Registration Statement of Growth Portfolio has been filed
by the Registrant pursuant to Section 8(b) of the Investment Company Act of
1940, as amended (the "1940 Act"). However, beneficial interests in the
Registrant have not been registered under the Securities Act of 1933, as amended
(the "1933 Act") since such interests are offered solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in the Registrant may only be made by
investment companies, insurance company separate accounts, common or commingled
trust funds or similar organizations or entities which are "accredited
investors" as defined in Regulation D under the 1933 Act. This Amendment to the
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interests in the Registrant.
<PAGE>
GROWTH PORTFOLIO
CONTENTS OF REGISTRATION STATEMENT
This registration statement of Growth Portfolio contains the following
documents:
Facing Sheet
Contents of Registration Statement
Part A
Part B
Part C
Signature Page
Exhibits
<PAGE>
A-5
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Responses to certain Items required to be included in Part A of this
Registration Statement are incorporated herein by reference from Post-Effective
Amendment No. 41 to the Registration Statement of G.T. Global Growth Series
("Growth Series") (1940 Act File No. 811-2699), as filed with the Securities and
Exchange Commission ("SEC") on March 10, 1998 ("Feeder Registration Statement").
Part A of the Feeder Registration Statement includes the joint prospectus of the
GT Global Equity Funds ("Feeder's Part A").
Item 4. GENERAL DESCRIPTION OF REGISTRANT.
- ------------------------------------------
Growth Portfolio is a diversified, open-end management investment company
which was organized as a New York common law trust pursuant to a Declaration of
Trust dated as of May 4, 1995, and amended and restated as of September 25,
1995.
Beneficial interests in the Growth Portfolio are divided currently into two
separate subtrusts or "series" -- Small Cap Portfolio and Value Portfolio
(individually, a "Portfolio" and collectively, the "Portfolios") -- each having
a distinct investment objective and distinct investment policies. Each Portfolio
is described herein. Additional subtrusts of Growth Portfolio may be organized
at a later date. The assets of each Portfolio belong only to that Portfolio, and
the liabilities of each Portfolio are borne solely by that Portfolio, and no
other.
Beneficial interests in the Portfolios are offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolios may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. The
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
Each Portfolio's investment manager and administrator is Chancellor LGT
Asset Management, Inc. ("Chancellor LGT"). Chancellor LGT and its worldwide
affiliates are part of Liechtenstein Global Trust, formerly BIL GT Group
Limited, a provider of global asset management and private banking products and
services to individual and institutional investors.
On January 30, 1998, Liechtenstein Global Trust, AG ("LGT"), the indirect
parent organization of Chancellor LGT entered into an agreement with AMVESCAP
PLC ("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's Asset Management
Division, which includes Chancellor LGT (the "Purchase"). AMVESCAP is a holding
company formed in 1997 by the merger of INVESCO PLC and AIM Management Group
Inc. Consummation of the purchase is subject to a number of contingencies,
A-1
<PAGE>
including regulatory approvals. The transaction would constitute an assignment
of, and thereby result in the termination of, Growth Portfolio's investment
management agreement with Chancellor LGT. Accordingly, Growth Portfolio's Board
of Trustees has approved, subject to shareholder approval, a new investment
management and administration agreement between AIM Advisors, Inc. ("AIM"), a
wholly-owned subsidiary of AMVESCAP, and the Growth Portfolio and a sub-advisory
and sub-administration agreement between AIM and Chancellor LGT, which will
become a separate, indirect wholly owned subsidiary of AMVESCAP. Under the new
agreements, AIM would serve as investment manager and administrator and
Chancellor LGT would serve as investment sub-adviser and sub-administrator of
the Growth Portfolio. In addition to shareholder approval, implementation of the
new investment advisory arrangements is contingent upon the consummation of the
Purchase. The Board of Trustees has also approved the reorganization of the
Growth Portfolio from a New York common law trust into a Delaware business
trust. If the matters are approved by shareholders and the Purchase consummated,
it is anticipated that the changes described above will become effective on or
about June 1, 1998.
Information on the Portfolios' investment objectives, the kinds of securities in
which the Portfolios principally invest, other investment practices of the
Portfolios and the risk factors associated with investments in the Portfolios
are incorporated herein by reference from the sections entitled "Investment
Objectives and Policies" and "Risk Factors" in the Feeder's Part A. Additional
investment techniques, features and limitations concerning the Portfolios'
investment program are described in Part B of this Registration Statement.
Item 5. MANAGEMENT OF THE PORTFOLIOS.
- ------------------------------------
A description of how the business of the Portfolios is managed is
incorporated herein by reference from the section entitled "Management" in the
Feeder's Part A. The following list identifies the specific sections of the
Feeder's Part A under which the information required by Item 5 of Form N-1A may
be found; each listed section is incorporated herein by reference.
- --------------------------------------------------------
Item 5 (a) Management
- --------------------------------------------------------
Item 5 (b) Management--Investment Management
and
Administration
- --------------------------------------------------------
Item 5 (c) Management
- --------------------------------------------------------
Item 5 (d) Management
- --------------------------------------------------------
Item 5 (e) Other Information--Transfer Agent
- --------------------------------------------------------
Item 5 (f) Management; Prospectus Summary
- --------------------------------------------------------
Item 5 (g) Management
- --------------------------------------------------------
Item 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE.
- -----------------------------------------------------
Not Applicable.
A-2
<PAGE>
Item 6. CAPITAL STOCK AND OTHER SECURITIES.
- -------------------------------------------
Growth Portfolio is organized as a New York common law trust. Under the
Declaration of Trust, the Trustees are authorized to issue beneficial interests
in separate subtrusts or "series" of Growth Portfolio. Growth Portfolio
currently has two series (i.e., the Portfolios). Growth Portfolio reserves the
right to create and issue additional series. Each investor in a Portfolio is
entitled to participate equally in the Portfolio's earnings and assets and to a
vote in proportion to the amount of its interest in the Portfolio. Investments
in a Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value ("NAV"). Each investor
in a Portfolio will be liable for all obligations of that Portfolio but not of
the other Portfolios. However, because a Portfolio will indemnify each investor
therein with respect to any liability to which the investor may become subject
by reason of being such an investor, the risk of an investor in a Portfolio
incurring financial loss on account of such liability would be limited to
circumstances in which that Portfolio had inadequate insurance and was unable to
meet its obligations (including indemnification obligations) out of its assets.
As of the date of this Registration Statement, Growth Series owns a majority
interest in the Growth Portfolio and each Portfolio. However, Growth Series has
undertaken that, with respect to most matters on which the Growth Portfolio
seeks a vote of its interestholders, Growth Series will seek a vote of its
shareholders and will vote its interest in the Growth Portfolio in accordance
with their instructions.
Investments in a Portfolio have no pre-emptive or conversion rights. Growth
Portfolio is not required to hold annual meetings of investors, but it will hold
special meetings of investors when in the judgment of the Trustees it is
necessary or desirable to submit matters for an investor vote. Investors have
the right to communicate with other investors to the extent provided in Section
16(c) of the 1940 Act in connection with requesting a meeting of investors for
the purpose of removing one or more Trustees, which removal requires a
two-thirds vote of Growth Portfolio's beneficial interests. Investors also have
under certain circumstances the right to remove one or more Trustees without a
meeting. Upon liquidation of a Portfolio, investors would be entitled to share
pro rata in that Portfolio's net assets available for distribution to investors.
Each Portfolio annually declares as a dividend all of its net investment
income, if any, which includes dividends, accrued interest and earned discount
(including both original issue and market discounts) less applicable expenses.
Each Portfolio also annually distributes substantially all of its realized net
short-term capital gain (the excess of short-term capital gains over short-term
capital losses), net capital gain (the excess of net long-term capital gain over
net short-term capital loss) and net gains from foreign currency transactions,
if any. Each Portfolio may make an additional dividend or other distribution if
necessary to avoid a 4% excise tax on certain undistributed income and gain.
Under the current method of the Portfolios' operation, they are not subject
to any income tax. However, each investor in a Portfolio is taxable on its share
(as determined in accordance with the governing instruments of the Growth
A-3
<PAGE>
Portfolio and the Internal Revenue Code of 1986, as amended ("Code") and the
regulations promulgated thereunder) of that Portfolio's income, gains, losses,
deductions, and credits in determining its income tax liability. The
determination of such share will be made in accordance with the Code and the
regulations promulgated thereunder. It is intended that each Portfolio's assets,
income and distributions will be managed in such a way that an investor in a
Portfolio will be able to satisfy the requirements of Subchapter M of the Code,
assuming that the investor invested all of its assets in the Portfolio. See Part
B for a discussion of the foregoing tax matters and certain other matters.
Investor inquiries may be directed to Chancellor LGT at the following
address: 50 California Street, 27th Floor, San Francisco, CA 94111.
Item 7. PURCHASE OF SECURITIES.
- -------------------------------
Beneficial interests in each Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of Registrant"
above.
An investment in a Portfolio may be made without a sales load at the NAV
next determined after an order is received in "good order" by a Portfolio. There
is no minimum initial or subsequent investment in a Portfolio. However,
investments must be made in federal funds (i.e., monies credited to the account
of a Portfolio's custodian bank by a Federal Reserve Bank). Each investor in a
Portfolio may add to or reduce its investment in the Portfolio on each day the
New York Stock Exchange ("NYSE") is open for trading.
Information on the time and method of valuation of the Portfolios' assets is
incorporated by reference from the section entitled "Calculation of Net Asset
Value" in the Feeder's Part A.
Each Portfolio reserves the right to cease accepting investments at any time
or to reject any investment order.
Item 8. REDEMPTION OR REPURCHASE.
- ---------------------------------
An investor in a Portfolio may redeem any portion or all of its investment
at any time at the NAV next determined after a request in "good order" is
furnished by the investor to that Portfolio. The proceeds of a redemption will
be paid by a Portfolio in federal funds normally on the next business day after
the redemption is effected, but in any event within seven days. Investments in a
Portfolio may not be transferred.
The right of any investor to receive payment with respect to any redemption
may be suspended or the payment of the proceeds therefrom postponed during any
period (1) when the NYSE is closed (other than customary weekend or holiday
A-4
<PAGE>
closings) or trading on the NYSE is restricted as determined by the SEC, (2)
when an emergency exists, as defined by the SEC, which would prohibit a
Portfolio in disposing of its portfolio securities or in fairly determining the
value of its assets, or (3) as the SEC may otherwise permit.
Item 9. PENDING LEGAL PROCEEDINGS.
- ----------------------------------
Not applicable.
A-5
<PAGE>
PART B
Part B of this Registration Statement should be read only in conjunction
with Part A. Capitalized terms used in Part B and not otherwise defined have the
meanings given them in Part A of this Registration Statement.
Responses to certain Items required to be included in Part B of this
Registration Statement are incorporated herein by reference from the Feeder
Registration Statement. Part B of the Feeder Registration Statement includes the
joint statement of additional information of GT Global America Small Cap Growth
Fund ("Small Cap Fund") and GT Global America Value Fund ("Value Fund")
(collectively, "Feeder's Part B").
Item 10. COVER PAGE.
- --------------------
Not applicable.
Item 11. TABLE OF CONTENTS.
- ---------------------------
Page
General Information and History........................B-1
Investment Objectives and Policies.....................B-1
Management of the Growth Portfolio.....................B-1
Control Persons and Principal Holders of Interests.....B-2
Investment Advisory and Other Services.................B-2
Brokerage Allocation and Other Practices...............B-3
Capital Stock and Other Securities.....................B-3
Purchase, Redemption and Pricing of Interests..........B-4
Tax Status.............................................B-4
Underwriters...........................................B-4
Calculation of Performance Data........................B-4
Financial Statements...................................B-4
Item 12. GENERAL INFORMATION AND HISTORY.
-----------------------------------------
Not applicable.
B-1
<PAGE>
Item 13. INVESTMENT OBJECTIVES AND POLICIES.
--------------------------------------------
Part A contains basic information about the investment objectives, policies
and limitations of the Portfolios. This Part B supplements the discussion in
Part A of the investment objectives, policies and limitations of the Portfolios.
Information on the fundamental investment limitations and the
non-fundamental investment policies and limitations of the Portfolios, the types
of securities bought and investment techniques used by the Portfolios, and
certain risks attendant thereto, as well as other information on the Portfolios'
investment programs, is incorporated by reference from the sections entitled
"Investment Objectives and Policies," "Options and Futures," "Risk Factors,"
"Investment Limitations" and "Execution of Portfolio Transactions" in the
Feeder's Part B.
Item 14. MANAGEMENT OF THE GROWTH PORTFOLIO.
- --------------------------------------------
Information about the Trustees and Officers of the Growth Portfolio, and
their roles in management of the Portfolios and other GT Global Funds, is
incorporated herein by reference from the section entitled "Trustees and
Executive Officers" in the Feeder's Part B.
The Board of Trustees has a Nominating and Audit Committee, comprised of Ms.
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of Growth Portfolio
and its Portfolios recommending firms to serve as independent auditors for
Growth Portfolio. Each of the Trustees and officers of the Growth Portfolio is
also a Director and officer of G.T. Investment Portfolios, Inc., G.T. Investment
Funds, Inc. and GT Global Floating Rate Fund, Inc., and a Trustee and officer of
G.T. Global Growth Series, G.T. Global Eastern Europe Fund, G.T. Global Variable
Investment Trust, GT Global Variable Investment Series, GT Global Series Trust,
Global Investment Portfolio, Global High Income Portfolio and Floating Rate
Portfolio, which also are registered investment companies managed and
administered by Chancellor LGT. Each Trustee and Officer serves in total as a
Director, Trustee and/or Officer, respectively, of 12 registered investment
companies with 47 series managed or administered by Chancellor LGT.
Each Trustee who is not a director, officer or employee of Chancellor LGT or
any affiliated company and other Trustees and officers receive no compensation
or expense reimbursement from the Portfolio. For the fiscal year ended December
31, 1997, the Small Cap Portfolio and Value Portfolio paid Mr. Anderson, Mr.
Bayley, Mr. Patterson and Ms. Quigley Trustees' fees and expense reimbursements
of $0, $0, $0 and $0 each. For the fiscal year ended December 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley, who are not directors,
officers or employees of Chancellor LGT or any affiliated company, each received
total compensation of $103,654, $106,556, $89,700 and $98,038, respectively,
from the investment companies managed or administered by Chancellor LGT for
which he or she served as a Director or Trustee. Fees and expenses disbursed to
the Trustees contained no accrued or payable pension, or retirement benefits.
B-2
<PAGE>
As of the date of this filing, the officers and Trustees and their families
as a group owned in the aggregate beneficially or of record less than 1% of the
outstanding interests of each Portfolio.
Item 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF BENEFICIAL INTERESTS.
- -----------------------------------------------------------------------
As of the date of this filing, Small Cap Fund and Value Fund (each a "Fund,"
and collectively, the "Funds") owned 99.9% and 99.9% of the value of the
outstanding beneficial interests in Small Cap Portfolio and Value Portfolio,
respectively (a "corresponding Portfolio"). Because each Fund currently controls
its corresponding Portfolio, each Fund may take actions affecting its
corresponding Portfolio without the approval of any other investor.
Each Fund has informed its corresponding Portfolio that whenever a Fund is
requested to vote on any proposal of its corresponding Portfolio, it will hold a
meeting of shareholders and will cast its vote as instructed by its
shareholders. It is anticipated that other investors in each Portfolio will
follow the same or a similar practice.
Item 16. INVESTMENT ADVISORY AND OTHER SERVICES.
- ---------------------------------------------------
Information on the investment management and other services provided for or
on behalf of the Portfolios is incorporated herein by reference from the
sections entitled "Management," "Trustees and Executive Officers" and
"Additional Information" in the Feeder's Part B. The following list identifies
the specific sections in the Feeder's Part B under which the information
required by Items 16 of Form N-1A may be found; each section is incorporated
herein by reference.
- --------------------------------------------------------
Item 16 (a) Management; Additional
Information
- --------------------------------------------------------
Item 16 (b) Management
- --------------------------------------------------------
Item 16 (c) Not applicable
- --------------------------------------------------------
Item 16 (d) Management
- --------------------------------------------------------
Item 16 (e) Not applicable
- --------------------------------------------------------
Item 16 (f) Not applicable
- --------------------------------------------------------
Item 16 (g) Not applicable
- --------------------------------------------------------
Item 16 (h) Additional Information
- --------------------------------------------------------
Item 16 (i) Not applicable
- --------------------------------------------------------
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, the Small Cap Portfolio and the Value Portfolio paid investment
management and administration fees of $1,293 and $622, respectively, to
Chancellor LGT. For the same period, the Small Cap Fund and Value Fund paid
B-3
<PAGE>
administration fees of $755 and $349, respectively, to Chancellor LGT. For the
fiscal period October 18, 1995 (commencement of operations) to December 31,
1995, Chancellor LGT reimbursed the Small Cap Portfolio and Value Portfolio for
their respective investment management and administration fees in the amounts of
$1,293 and $622, respectively; for the same period, the Small Cap Fund and Value
Fund reimbursed administration fees in the amounts of $755 and $349,
respectively. Accordingly, Chancellor LGT reimbursed each Fund and its
respective Portfolio investment management and administration fees in the
aggregate amounts of $2,048 and $971, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, the Small
Cap Portfolio and the Value Portfolio paid investment management and
administration fees of $120,544 and $73,312; and $74,372 and $27,487,
respectively, to Chancellor LGT. For the same periods, the Small Cap Fund and
Value Fund paid administration fees of $63,460 and $39,004; and $39,171 and
$14,722, respectively, to Chancellor LGT. For the fiscal years ended December
31, 1997 and December 31, 1996, Chancellor LGT reimbursed the Small Cap
Portfolio and Value Portfolio for their respective investment management and
administration fees in the amounts of $67,837 and $73,312; and $74,372 and
$27,487, respectively; for the same periods, Chancellor LGT reimbursed the Small
Cap Fund and Value Fund for their respective administration fees in the amounts
of $63,460 and $39,004; and $39,171 and $14,722, respectively. Accordingly,
Chancellor LGT reimbursed each Fund and its corresponding Portfolio investment
management and administration fees in the aggregate amounts of $131,297 and
$112,316; and $113,543 and $42,209, respectively.
For the fiscal period October 18, 1995 (commencement of operations) to December
31, 1995, Chancellor LGT, pursuant to a voluntary expense undertaking to limit
expenses to the maximum annual level of 1.65% of average daily net assets of
Advisor Class shares of the Funds, reimbursed the Small Cap Fund and Value Fund
for expenses in the additional amounts of $65,079 and $66,907, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, the Manager,
pursuant to its voluntary expense undertaking, reimbursed the Small Cap Fund and
Value Fund for expenses in the additional amounts of $0 and $58,269; and $38,419
and $164,683, respectively.
Item 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
- --------------------------------------------------
A description of the Portfolios' brokerage allocation and other practices is
incorporated herein by reference from the section entitled "Execution of
Portfolio Transactions" in the Feeder's Part B.
B-4
<PAGE>
Item 18. CAPITAL STOCK AND OTHER SECURITIES.
- --------------------------------------------
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in each Portfolio. An investor in a Portfolio is entitled
to participate pro rata in distributions of the Portfolio's income and gains and
to be allocated a pro rata share of the Portfolio's income, gains, losses,
deductions, and credits. Upon liquidation or dissolution of a Portfolio,
investors are entitled to share pro rata in that Portfolio's net assets
available for distribution to its investors. Investments in a Portfolio have no
preference, preemptive, conversion or similar rights. Investments in each
Portfolio may not be transferred.
Each investor in a Portfolio is entitled to a vote in proportion to the
amount of its investment in that Portfolio. Investors in the Portfolios will all
vote together in certain circumstances (e.g., election of the Trustees and
auditors, and as required by the 1940 Act and the rules thereunder). Investors
in a Portfolio do not have cumulative voting rights, and investors holding more
than 50% of the aggregate beneficial interest in Growth Portfolio or in a
Portfolio, as the case may be, may control the outcome of these votes. Growth
Portfolio is not required to hold annual meetings of investors but Growth
Portfolio will hold special meetings of investors when (1) a majority of the
Trustees determines to do so; or (2) investors holding at least 10% of the
interests in Growth Portfolio (or a Portfolio) request in writing a meeting of
investors in Growth Portfolio (or a Portfolio). No amendment required to be
approved by investors by law may be made to Growth Portfolio's Declaration of
Trust without the affirmative majority vote of investors (with the vote of each
being in proportion to the amount of its investment).
Growth Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its (or a Portfolio's) assets, upon such terms and
conditions and for such consideration when and as authorized by the Trustees.
Any such merger shall be deemed for all such purposes to have been accomplished
under and pursuant to the law of the State of New York. A Portfolio may also be
dissolved (i) upon liquidation and distribution of its assets, if approved by
the vote of two-thirds of the beneficial interests in such Portfolio (with the
vote of each being in proportion to the amount of their investment), (ii) by the
Trustees by written notice to its investors, or (iii) 120 days after a holder of
beneficial interests in a Portfolio either (a) makes an assignment for the
benefit of creditors, or (b) files a voluntary petition in bankruptcy, or (c) is
adjudged a bankrupt or insolvent or has entered against it an order for relief
in any bankruptcy or insolvency proceeding, or (d) files a petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any bankruptcy statute or
regulation, or (e) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding referred to in clauses (c) or (d) above, or (f) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of such
holder of beneficial interest or of all or any substantial part of its
properties, or (g) is expelled from the Portfolio, whichever occurs first.
However, within such 120 days, holders of beneficial interests of the Portfolio
(excluding the holder with respect to which an event described in (a) - (g) has
occurred) owning a majority of the beneficial interests in a Portfolio may vote
to continue its business, even if such a dissolution has occurred.
Growth Portfolio is organized as a New York common law trust. Investors in
each Portfolio will be held personally liable for its obligations and
liabilities, subject, however, to indemnification by that Portfolio in the event
B-5
<PAGE>
that there is imposed upon an investor a greater portion of the liabilities and
obligations of that Portfolio than its proportionate beneficial interest in such
Portfolio. The Declaration of Trust also provides that each Portfolio may
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) covering certain kinds of potential liabilities. Thus, the
risk of an investor incurring financial loss on account of investor liability is
limited to circumstances in which both inadequate insurance existed and the
investor's Portfolio itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of each Portfolio
are not binding upon the Trustees individually but only upon the property of
that Portfolio and that the Trustees will not be liable for any action or
failure to act, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. The Declaration of Trust
provides that the Trustees and officers will be indemnified by Growth Portfolio
against liabilities and expenses incurred in connection with litigation in which
they may be involved because of their offices with Growth Portfolio, unless, as
to liability to Growth Portfolio or its investors, it is finally adjudicated
that they engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in their offices, or unless with
respect to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Growth Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a court or
other body approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of a
majority of disinterested Trustees or in a written opinion of independent
counsel, that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
Item 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
- --------------------------------------------------------
Beneficial interests in each Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act, as amended. See Items 4 and 7 in Part
A.
Information on the method followed by the Portfolios in determining their
net asset value and the timing of such determination is incorporated by
reference from the section entitled "Valuation of Fund Shares" in the Feeder's
Part B. See also Items 7 & 8 in Part A.
Each Portfolio reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
that Portfolio and valued as they are for purposes of computing the Portfolio's
NAV (a redemption in kind). If payment is made in securities, an investor may
incur transaction expenses in selling any such securities so received and would
B-6
<PAGE>
be subject to any increase or decrease in the value of the securities until they
were sold.
Each investor in a Portfolio may add to or reduce its investment in that
Portfolio on each day that the NYSE is open for trading. At the close of
trading, on each such day, the value of each investor's interest in a Portfolio
will be determined by multiplying the NAV of such Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in that
Portfolio. Any additions or reductions which are to be effected on that day will
then be effected. The investor's percentage of the aggregate beneficial
interests in a Portfolio will then be recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of the close of trading on such day plus or minus, as the
case may be, the amount of net additions to or reductions in the investor's
investment in that Portfolio effected on such day, and (ii) the denominator of
which is the aggregate NAV of the Portfolio as of the close of trading on such
day plus or minus, as the case may be, the amount of the net additions to or
reductions in the aggregate investments in that Portfolio by all investors in
that Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in that Portfolio as of the close of
trading on the following day the NYSE is open for trading.
Item 20. TAX STATUS.
- --------------------
Information on the taxation of the Portfolios is incorporated by reference
from the section entitled "Taxes" in the Feeder's Part B.
Item 21. UNDERWRITERS.
- ----------------------
Not applicable.
Item 22. CALCULATION OF PERFORMANCE DATA.
- -----------------------------------------
Not applicable.
Item 23. FINANCIAL STATEMENTS.
- ------------------------------
The financial statements of each Portfolio for the fiscal year ended
December 31, 1997, are included herein, in reliance on the report of Coopers &
Lybrand L.L.P., independent auditors, given on the authority of said firm as
experts in auditing and accounting.
B-7
<PAGE>
SMALL CAP PORTFOLIO
VALUE PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of Growth Portfolio:
We have audited the accompanying statements of assets and liabilities of Small
Cap Growth Portfolio and Value Portfolio, including the portfolios of
investments, as of December 31, 1997, the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years then ended and the supplementary data for each of the periods indicated
herein. These financial statements and the supplementary data are the
responsibility of the Portfolios' management. Our responsibility is to express
an opinion on these financial statements and the supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Small
Cap Growth Portfolio and Value Portfolio as of December 31, 1997, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years then ended and the supplementary data for each of the
periods indicated herein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accomodations, Inc.-/- ....................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.0%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.0
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 0.9
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.2
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (12.8%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.3
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.2
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.0
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 0.9
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.2%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.7
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.1
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.3%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.6
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
TRANSPORTATION - ROAD & RAIL
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 95.8
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 98.4
Other Assets and Liabilities ................................ 554,948 1.6
------------ -----
NET ASSETS .................................................. $ 34,134,451 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (129,067) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,903,599 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
SMALL CAP PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304) (Note 1)................................... $33,579,503
U.S. currency..................................................................................... 927
Receivable for securities sold.................................................................... 887,683
Unamortized organizational costs (Note 1)......................................................... 13,972
Dividends receivable.............................................................................. 10,766
Interest receivable............................................................................... 142
----------
Total assets.................................................................................... 34,492,993
----------
Liabilities:
Payable for securities purchased.................................................................. 348,610
Payable for professional fees..................................................................... 5,453
Payable for custodian fees........................................................................ 2,924
Payable for Trustees' fees and expenses (Note 2).................................................. 653
Other accrued expenses............................................................................ 902
----------
Total liabilities............................................................................... 358,542
----------
Net assets.......................................................................................... $34,134,451
----------
----------
Net assets consist of:
Paid in capital................................................................................... $29,310,377
Accumulated net investment income................................................................. 138,935
Accumulated net realized gain on investments and foreign currency transactions.................... 3,788,940
Net unrealized appreciation of investments........................................................ 896,199
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding............ $34,134,451
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
SMALL CAP PORTFOLIO
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................. $ 95,213
Dividend income............................................................................. 35,957
---------
Total investment income................................................................... 131,170
---------
Expenses:
Investment management and administration fees (Note 2)...................................... 120,544
Custodian fees.............................................................................. 21,876
Legal fees.................................................................................. 11,855
Amortization of organization costs (Note 1)................................................. 5,000
Audit fees.................................................................................. 3,000
Other expenses (Note 1)..................................................................... 122
---------
Total expenses before reductions.......................................................... 162,397
---------
Expense reductions...................................................................... (20,049)
---------
Total net expenses........................................................................ 142,348
---------
Net investment loss........................................................................... (11,178)
---------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments................................................. $2,524,251
Net change in unrealized appreciation of investments............................. 1,674,235
---------
Net realized and unrealized gain on investments............................................... 4,198,486
---------
Net increase in net assets resulting from operations.......................................... $4,187,308
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Increase in net assets
Operations:
Net investment income (loss)............................................. $ (11,178) $ 145,368
Net realized gain on investments and foreign currency transactions....... 2,524,251 1,264,689
Net change in unrealized appreciation (depreciation) of investments...... 1,674,235 (782,829)
------------- -------------
Net increase in net assets resulting from operations................... 4,187,308 627,228
------------- -------------
Beneficial interest transactions:
Contributions............................................................ 34,998,418 31,029,243
Withdrawals.............................................................. (24,498,523) (15,955,572)
------------- -------------
Net increase from beneficial interest transactions..................... 10,499,895 15,073,671
------------- -------------
Total increase in net assets............................................... 14,687,203 15,700,899
Net assets:
Beginning of year........................................................ 19,447,248 3,746,349
------------- -------------
End of year.............................................................. $34,134,451 $19,447,248
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
SMALL CAP PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
OCTOBER 18, 1995
(COMMENCEMENT
YEAR ENDED YEAR ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
------------ ------------ ----------------
<S> <C> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 34,134 $ 19,447 $ 3,746
Ratio of net investment income to
average net assets..................... (0.04)% 0.94% 1.74% (a)
Ratio of expenses to average net assets:
With expense reductions............... 0.56% 0.70% 2.33% (a)
Without expense reductions............ 0.64% 0.70% 2.33% (a)
Portfolio turnover rate+................ 233% 150% N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- --------------
(a) Annualized
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
VALUE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $23,031,922) (Note 1)................................... $25,032,666
U.S. currency..................................................................................... 988
Receivable for securities sold.................................................................... 90,237
Dividends receivable.............................................................................. 42,920
Unamortized organizational costs (Note 1)......................................................... 13,971
Interest receivable............................................................................... 178
----------
Total assets.................................................................................... 25,180,960
----------
Liabilities:
Payable for securities purchased.................................................................. 263,514
Payable for professional fees..................................................................... 4,364
Payable for Trustees' fees and expenses (Note 2).................................................. 3,783
Payable for custodian fees........................................................................ 2,892
Other accrued expenses............................................................................ 2,808
----------
Total liabilities............................................................................... 277,361
----------
Net assets.......................................................................................... $24,903,599
----------
----------
Net assets consist of:
Paid in capital................................................................................... $20,468,434
Accumulated net investment income................................................................. 347,658
Accumulated net realized gain on investments and foreign currency transactions.................... 2,086,763
Net unrealized appreciation of investments........................................................ 2,000,744
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding............ $24,903,599
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
VALUE PORTFOLIO
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income............................................................................. $ 357,943
Interest income............................................................................. 46,139
---------
Total investment income................................................................... 404,082
---------
Expenses:
Investment management and administration fees (Note 2)...................................... 74,372
Custodian fees.............................................................................. 9,431
Legal fees.................................................................................. 8,817
Amortization of organization costs (Note 1)................................................. 5,000
Audit fees.................................................................................. 4,949
Trustees' fees and expenses (Note 2)........................................................ 130
Other expenses (Note 1)..................................................................... 4,351
---------
Total expenses before reductions.......................................................... 107,050
---------
Expense reductions...................................................................... (1,332)
---------
Total net expenses........................................................................ 105,718
---------
Net investment income......................................................................... 298,364
---------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments................................................. $1,352,859
Net change in unrealized appreciation of investments............................. 2,016,032
---------
Net realized and unrealized gain on investments............................................... 3,368,891
---------
Net increase in net assets resulting from operations.......................................... $3,667,255
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income.................................................... $ 298,364 $ 50,661
Net realized gain on investments and foreign currency transactions....... 1,352,859 733,904
Net change in unrealized appreciation (depreciation) of investments...... 2,016,032 (69,965)
------------- -------------
Net increase in net assets resulting from operations................... 3,667,255 714,600
------------- -------------
Beneficial interest transactions:
Contributions............................................................ 24,444,169 10,565,026
Withdrawals.............................................................. (11,524,091) (4,841,948)
------------- -------------
Net increase from beneficial interest transactions..................... 12,920,078 5,723,078
------------- -------------
Total increase in net assets............................................... 16,587,333 6,437,678
Net assets:
Beginning of year........................................................ 8,316,266 1,878,588
------------- -------------
End of year.............................................................. $24,903,599 $ 8,316,266
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
VALUE PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
OCTOBER 18, 1995
(COMMENCEMENT
YEAR ENDED YEAR ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
------------ ------------ ----------------
<S> <C> <C> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 24,904 $ 8,316 $ 1,879
Ratio of net investment income to
average net assets..................... 1.90% 0.88% (1.04)% (a)
Ratio of expenses to average net assets:
With expense reductions............... 0.67% 1.06% 4.33% (a)
Without expense reductions............ 0.68% 1.06% 4.33% (a)
Portfolio turnover rate+................ 93% 256% N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- --------------
(a) Annualized
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
SMALL CAP PORTFOLIO
VALUE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Small Cap Portfolio and Value Portfolio ("Portfolios") are organized as New York
Trusts and are registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified open-end management investment companies. The
following is a summary of significant accounting policies consistently followed
by the Portfolios in the preparation of the financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
(A) PORTFOLIO VALUATION
The Portfolios calculate the net asset value of and complete orders to purchase,
exchange or repurchase Portfolio shares of beneficial interest on each business
day, with the exception of those days on which the New York Stock Exchange is
closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Portfolio (the phrase
"Portfolio" hereinafter includes each of the two Portfolios), it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers, unless a quotation
from only one broker is available, in which case only that broker's price will
be used. If an option expires on its stipulated expiration date or if the
F-20
<PAGE>
Portfolio enters into a closing purchase transaction, a gain or loss is realized
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a written call option
is exercised, a gain or loss is realized from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the cost of the underlying
security purchased would be decreased by the premium originally received. The
Portfolio can write options only on a covered basis, which, for a call, requires
that the Portfolio hold the underlying security, and, for a put, requires the
Portfolio to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Portfolio
may use options to manage its exposure to the stock market and to fluctuations
in interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, a Portfolio agrees to receive from
or pay to the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as "variation margin" and
are recorded by the Portfolio as unrealized gains or losses. When the contract
F21
<PAGE>
SMALL CAP PORTFOLIO
VALUE PORTFOLIO
is closed, the Portfolio 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 potential risk to the Portfolio is that the change in
value of the underlying securities may not correlate to the change in value of
the contracts. The Portfolio may use futures contracts to manage its exposure to
the stock market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED At December 31, 1997 Small Cap Portfolio and
Value Portfolio had stocks with an aggregate value of $1,812,494 and $794,531
respectively, which were on loan to brokers. The loans were secured by cash
collateral of $1,869,550, received by Small Cap Portfolio and $810,000, received
by Value Portfolio. Cash collateral is received by the Portfolio against loaned
securities in the amount at least equal to 102% of the market value of the
loaned securities at the inception of each loan. The collateral cash is invested
in a securities lending trust which consists of a portfolio of high quality
short duration securities whose average effective duration is restricted to 120
days or less. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan. Small Cap
Portfolio and Value Portfolio received securities lending fees of $17,489 and
$896 respectively.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolios in connection with their organization, their
initial registration with the Securities and Exchange Commission and with
various states and the initial public offering of their shares aggregated
$25,000 for each Portfolio. These expenses are being amortized on a straightline
basis over a five-year period.
(H) TAXES
It is the policy of the Portfolios to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) RESTRICTED SECURITIES
A Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(J) INDEXED SECURITIES
A Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
F-22
<PAGE>
(K) LINE OF CREDIT
Each of the GT Global America Small Cap Growth Fund and the GT Global America
Value Fund (and their respective Portfolios), along with certain other funds
advised and/or administered by the Manager, has a line of credit with BankBoston
and State Street Bank & Trust Company. The arrangements with the banks allow all
specific funds to borrow an aggregate maximum amount of $250,000,000. Each of
these two funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for Small
Cap Portfolio and Value Portfolio was $101,429 and $284,000 with a weighted
average interest rate of 6.34% and 6.31%, respectively. Interest expense for
Small Cap Portfolio and Value Portfolio for the year ended December 31, 1997 was
$125 and $50, respectively, included in "Other Expenses" on the Statement of
Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Portfolio's investment manager and
administrator. Each portfolio pays investment management and administration fees
to the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. These fees are
computed daily and paid monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Global Investor Services, Inc. $500 per
year plus $150 for each meeting of the board or any committee thereof attended
by the Trustees.
At December 31, 1997, all of the shares of beneficial interest of each Portfolio
were owned either by GT Global America Small Cap Growth Fund and GT Global
America Value Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases of investment securities by the
Small Cap Portfolio and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,037,388,895 and $25,951,699,
respectively. Sales of investment securities by the Small Cap Portfolio and
Value Portfolio, other than U.S. government obligations and short-term
investments, aggregated $1,221,752,474 and $13,967,002, respectively. There were
no purchases or sales of U.S. government obligations by the Portfolios during
the year.
F23
<PAGE>
PART C
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
- -------------------------------------------
(a) Financial Statements
The following financial statements as of December 31, 1997, and for
the fiscal year then ended for Small Cap Portfolio and Value Portfolio are
included herewith.
--Report of Independent Accountants
--Portfolios of Investments
--Statements of Assets and Liabilities
--Statements of Operations
--Statements of Changes in Net Assets
--Supplementary Data
--Notes to Financial Statements
(b) Exhibits
1. Amended and Restated Declaration of Trust of the
Registrant. (1)
2. Form of By-Laws of the Registrant. (1)
5. Investment Management and Administration Contract between the
Registrant and Chancellor LGT Asset Management, Inc. (1)
8. Custodian Agreement between the Registrant and State Street
Bank and Trust Company. (1)
9. Transfer Agency Agreement between the Registrant and GT Global
Investor Services, Inc. (1)
11. Consent of Coopers & Lybrand L.L.P., Independent Accountants -
Filed herewith.
13. Investment representation letters of initial investors. (2)
27. Financial Data Schedules - Filed herewith.
- -------------------------------
(1) Incorporated by reference to the identically enumerated Exhibit or the
Registration Statement on Form N-1A, filed on October 17, 1995.
(2) Incorporated by reference to the identically enumerated Exhibit Of
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A,
filed on April 29, 1996.
C-1
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
- -----------------------------------------------------------------------
Not applicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
- -----------------------------------------
(1) (2)
Title of Class Number of Record Holders
Series of Beneficial (as of April 15, 1998)
Interests
Small Cap Portfolio 2
Value Portfolio 2
Item 27. INDEMNIFICATION.
- -------------------------
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as Exhibit 1 to the Registration Statement on Form N-1A, filed on
October 17, 1995.
The Registrant's Trustees and officers are insured under a directors and
officers/errors and omissions liability insurance policy and the Registrant is
insured under a fidelity bond required by Rule 17g-1 under the 1940 Act.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
- --------------------------------------------------------------
Information as to any other business, profession, vocation or employment of
a substantial nature in which each director or officer of Chancellor LGT Asset
Management, Inc. is, or at any time during the past two years has been, engaged
for his or her own account or in the capacity of director, officer, employee,
partner or trustee is incorporated herein by reference from the section entitled
"Management" in the Feeder's Part A and the sections entitled "Trustees and
Executive Officers" and "Management" in the Feeder's Part B.
Information as to the directors and officers of Chancellor LGT Asset
Management, Inc., the Registrant's investment manager, is included in such
manager's Form ADV (File No. 801-10254), filed with the SEC, which is
incorporated herein by reference thereto.
C-2
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS.
- --------------------------------
Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
- ------------------------------------------
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the 1940 Act, are maintained and held in the offices of the Registrant and its
investment manager, Chancellor LGT Asset Management, Inc., 50 California Street,
27th Floor, San Francisco, California 94111.
Records covering shareholder accounts and portfolio transactions are also
maintained and kept by the Registrant's Custodian, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
Item 31. MANAGEMENT SERVICES.
- -----------------------------
Other than as set forth in Parts A and B of this Registration Statement,
the Registrant is not a party to any management-related service contract.
Item 32. UNDERTAKINGS.
- ----------------------
None.
C-3
<PAGE>
Coopers COOPERS & LYBRAND L.L.P
& Lybrand a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Growth Portfolio:
Re: Small Cap Growth Portfolio
Value Portfolio
We hereby consent to the inclusion in Post Effective Amendment No. 4 to the
Registration Statement of The Growth Portfolio, on Form N1-A No. 811-07363 of
our report dated February 17, 1998 on our audit of the financial statements and
supplementary data of the above referenced Portfolios which report is included
in the Annual Report to Shareholders for the year ended December 31, 1997 which
is included in the Post Effective Amendment to the Registration Statement.
We also consent to the reference to our Firm under the caption, "Financial
Statements."
/s/ Coopers & Lybrand L.L.P.
-------------------------------------
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 30, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Francisco and State of California on the 28th day of April, 1998.
GROWTH PORTFOLIO
By /s/ Michael A. Silver
--------------------------
Michael A. Silver
Assistant Secretary