INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1998
(unaudited)
(expressed in U.S. dollars)
Shares Value
- ------- -----------
COMMON STOCKS & WARRANTS (91.4%)
AUSTRALIA (0.5%)
ENERGY
38,350 Woodside Petroleum, Ltd.*.............................. $ 250,888
-----------
SERVICES
83,571 Pasminco Ltd........................................... 88,305
-----------
TOTAL AUSTRALIA ....................................... 339,193
-----------
FINLAND (2.9%)
MULTI-INDUSTRY
32,280 Nokia AB............................................... 2,163,221
-----------
TOTAL FINLAND ......................................... 2,163,221
-----------
FRANCE (14.2%)
BANKING
18,680 Banque Nationale de Paris C.I. ........................ 1,575,571
10,090 Compagnie Financiere de Paribas........................ 1,074,297
6,330 Societe Generale SA*................................... 1,318,443
-----------
3,968,311
-----------
CAPITAL EQUIPMENT
10,885 Alcatel Alsthom SA..................................... 2,019,094
-----------
ENERGY
14,000 Elf Aquitaine SA....................................... 1,837,632
14,000 Total SA............................................... 1,665,280
-----------
3,502,912
-----------
MEDIA
2,190 Canal Plus............................................. 380,727
-----------
SERVICES
3,395 Accor SA............................................... 925,704
-----------
TOTAL FRANCE ........................................ 10,796,748
-----------
GERMANY (6.8%)
BANKING
36,790 Commerzbank AG......................................... 1,418,667
14,410 Deutsche Pfandbrief-und Hypothekenbank AG*............. 1,112,137
-----------
2,530,804
-----------
CAPITAL EQUIPMENT
12,320 Siemens AG............................................. 720,849
-----------
INSURANCE
152 Allianz AG (New)*...................................... 46,331
6,120 Allianz AG Registered................................. 1,882,500
-----------
1,928,831
-----------
TOTAL GERMANY ......................................... 5,180,484
-----------
INDIA (0.4%)
FINANCE
10,850 Industrial Credit & Investment Corp.
of India, Ltd........................................ 28,221
-----------
MATERIALS
40,861 Indo Gulf Fertilisers and
Chemicals Corp., Ltd. GDR............................ 46,990
44,600 Reliance Industries, Ltd............................... 214,830
-----------
261,820
-----------
TOTAL INDIA ........................................... 290,041
-----------
IRELAND (2.6%)
BANKING
50,000 Allied Irish Banks, Plc................................ 687,862
-----------
CONSUMER NON-DURABLES
400,000 Waterford Wedgewood, Plc............................... 668,209
-----------
PHARMACEUTICALS
10,000 Elan Corp., Plc. ADR*.................................. 621,250
-----------
TOTAL IRELAND ......................................... 1,977,321
-----------
ITALY (6.0%)
ENERGY
206,600 Ente Nazionale Idrocarbun SpA (ENI)*................... 1,384,448
-----------
TELECOMMUNICATIONS
114,100 Telecom Italia SpA..................................... 859,607
404,100 Telecom Italia Mobile SpA.............................. 2,315,074
-----------
3,174,681
-----------
TOTAL ITALY ................. ......................... 4,559,129
-----------
JAPAN (10.2%)
BANKING
115,000 Long-Term Credit Bank of Japan, Ltd.................... 188,567
14,000 Sumitomo Trust & Banking Co., Ltd. .................... 73,205
-----------
261,772
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1998 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
- ------- -----------
CAPITAL EQUIPMENT
280 Fujikura, Ltd. (Warrants)*............................ $ 7,837
-----------
COMPUTER SOFTWARE
13,000 Meitec Corp............................................ 427,308
-----------
CONSUMER ELECTRONICS
8,000 Canon, Inc............................................. 189,211
5,000 Sony Corp.............................................. 415,974
-----------
605,185
-----------
CONSUMER GOODS
45,000 Kirin Brewery Co., Ltd................................. 392,738
30,000 Suzuki Motor Corp...................................... 257,972
-----------
650,710
-----------
CONSUMER NON-DURABLES
6,000 Fuji Photo Film Co..................................... 213,541
4,500 Nintendo Co., Ltd...................................... 406,680
-----------
620,221
-----------
ELECTRIC COMPONENTS
3,400 Kyocera Corp........................................... 178,298
9,000 Matsushita Communications Industrial Co., Ltd.......... 265,907
30,000 Minebea Co., Ltd....................................... 335,499
4,000 Rohm Co., Ltd.......................................... 449,751
4,000 TDK Corp............................................... 316,155
-----------
1,545,610
-----------
FINANCE
5,600 Orix Corp.............................................. 387,185
-----------
MATERIALS
17,000 Bridgestone Corp....................................... 387,940
25,000 Kurita Water Industries, Ltd........................... 275,238
-----------
663,178
-----------
MULTI-INDUSTRY
153,274 Prospect Japan Fund ................................... 498,141
-----------
PHARMACEUTICALS
20,000 Eisai Co., Ltd......................................... 287,139
26,000 Santen Pharmaceutical Co., Ltd........ ................ 258,350
12,000 Yamanouchi Pharmaceutical Co., Ltd................... . 283,814
-----------
829,303
-----------
PRECISION INSTRUMENTS
11,000 Hoya Corp.............................................. 364,062
-----------
RETAIL
4,000 Ito-Yokato Co., Ltd.................................... 207,042
-----------
SERVICES
9,900 Benesse Corp........................................... 320,175
3,000 Credit Saison Co., Ltd................................. 65,060
30 Credit Saison Co., Ltd. (Warrants)*.................... 46,500
3,300 Nichiei Co., Ltd....................................... 256,838
-----------
688,573
-----------
TOTAL JAPAN ........................................... 7,756,127
-----------
NETHERLANDS (5.8%)
CONSUMER GOODS
5,500 Heineken NV............................................ 1,275,829
-----------
ENERGY
28,000 Royal Dutch Petroleum Co............................... 1,583,750
-----------
FINANCE
10,500 Fortis Amev NV......................................... 614,376
-----------
MATERIALS
4,695 Akzo Nobel NV.......................................... 955,223
-----------
TOTAL NETHERLANDS...................................... 4,429,178
-----------
SPAIN (8.9%)
ENERGY
28,500 Repsol S.A............................................. 1,562,541
-----------
FINANCE
34,040 Banco Bilbao Vizcaya, S.A. ............................ 1,799,225
34,250 Banco Santander S.A.................................... 1,763,099
-----------
3,562,324
-----------
UTILITIES
37,720 Telefonica de Espana S.A. ............................. 1,575,175
31,230 Telefonica de Espana S.A. (Rights)*.................... 24,607
-----------
1,599,782
-----------
TOTAL SPAIN ........................................... 6,724,647
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1998 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
- ------- -----------
SWEDEN (5.0%)
CAPITAL EQUIPMENT
32,300 Ericsson (LM) Telephone Co., Class 'B'................. $ 1,702,196
-----------
CONSUMER DURABLES
13,920 Electrolux AB (B free)................................. 1,294,549
-----------
FINANCE
11,400 Skandia Foersaekrings AB............................... 793,671
-----------
TOTAL SWEDEN .......................................... 3,790,416
-----------
SWITZERLAND (8.7%)
BANKING
2,334 Credit Suisse Group AG Registered...................... 513,309
1,110 Union Bank of Switzerland.............................. 1,787,244
-----------
2,300,553
-----------
CONSUMER GOODS
102 Roche Holding AG DRC................................... 1,033,595
-----------
CONSUMER NON-DURABLES
1,020 Nestle AG Registered................................... 1,978,141
-----------
PHARMACEUTICALS
802 Norvartis AG Bearer.................................... 1,329,807
-----------
TOTAL SWITZERLAND ..................................... 6,642,096
-----------
UNITED KINGDOM (19.3%)
BANKING
37,000 Barclays, Plc.......................................... 1,067,600
54,000 Land Securities, Plc................................... 964,679
74,500 Lloyds TSB Group, Plc.................................. 1,115,937
-----------
3,148,216
-----------
CONSUMER GOODS
60,000 Smithkline Beecham, Plc................................ 715,581
100,000 Unilever, Plc.......................................... 1,065,510
-----------
1,781,091
-----------
ENERGY
90,000 Britsh Petroleum Co., Plc.............................. 1,422,631
71,000 PowerGen, Plc.......................................... 959,594
175,000 Shell Transport & Trading Co., Plc..................... 1,302,616
-----------
3,684,841
-----------
FOOD & BEVERAGES
83,0000 Diageo, Plc............................................ 988,499
-----------
PHARMACEUTICALS
40,000 Glaxo Wellcome, Plc.................................... 1,130,745
-----------
REAL ESTATE
76,000 British Land Co., Plc. (The)........................... 949,625
-----------
SERVICES
100,000 BAA, Plc............................................... 1,017,838
55,000 Granada Group, Plc..................................... 947,584
58,000 Railtrack Group, Plc................................... 1,059,906
-----------
3,025,328
-----------
TOTAL UNITED KINGDOM .................................. 14,708,345
-----------
TOTAL INVESTMENTS (identified cost $55,689,724) (a) .. 91.3% $69,356,946
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ....... 8.7 6,597,290
----- -----------
NET ASSETS ........................................... 100.0% $75,954,236
===== ===========
- ----------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $55,689,724, the
aggregate gross unrealized appreciation is $14,506,429, and the aggregate
gross unrealized depreciation is $839,207, resulting in net unrealized
appreciation of $13,667,222.
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(unaudited)
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified
cost $55,689,724) (Note 1) ............................. $69,356,946
Cash (including $166,791 in foreign currency) ............. 8,557,745
Receivables:
For investments sold ................................... 1,091,157
For forward foreign exchange contracts
sold (Note 4) ........................................ 177,940
For capital stock sold ................................. 50,000
Dividends and other receivables ........................... 257,057
Deferred organizational expense (Note 1) ................. 1,706
-----------
Total Assets ...................................... 79,492,551
-----------
LIABILITIES:
Payables for:
Investments purchased .................................. 3,465,505
Investment advisory fee (Note 2) ....................... 40,405
Administrative fee (Note 2) ............................ 2,175
Foreign withholding taxes .............................. 30,230
-----------
Total Liabilities ................................. 3,538,315
-----------
NET ASSETS ................................................... $75,954,236
===========
Net Assets Consist of:
Paid-in capital ......................................... $62,108,307
Net unrealized appreciation ............................. 13,845,929
-----------
Net Assets ................................................... $75,954,236
===========
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998
(unaudited)
(expressed in U.S. dollars)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes
of $78,282) .......................................... $ 331,196
------------
Expenses:
Investment advisory fee (Note 2) ........................ 196,655
Expense reimbursement fee (Note 2) ...................... 22,690
Administrative fee (Note 2) ............................. 10,588
Amortization of organization expenses (Note 1) .......... 366
------------
Total Expenses .......................................... 230,299
------------
Net Investment Income ............................... 100,897
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized loss on investments and
foreign exchange transactions ............................ (2,358,363)
Net change in unrealized appreciation on
investments and foreign currency translations ............ 13,437,502
------------
Net Realized and Unrealized Gain ...................... 11,079,139
------------
Net Increase in Net Assets Resulting from Operations ....... $ 11,180,036
============
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
For the six months
ended April 30, 1998 For the year ended
(unaudited) October 31, 1997
--------------- -----------------
INCREASE IN NET ASSETS:
Operations:
Net investment income ............ $ 100,897 $ 287,078
Net realized (loss) gain on
investments and foreign
exchange transactions ......... (2,358,363) 1,141,921
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currency translations ......... 13,437,502 (619,599)
------------ ------------
Net increase in net assets
resulting from operations ... 11,180,036 809,400
------------ ------------
Capital transactions:
Proceeds from contributions ...... 20,547,284 10,305,094
Value of withdrawals ............. (1,810,891) (4,561,135)
------------ ------------
Net increase in net assets
resulting from capital
transactions .................. 18,736,393 5,743,959
------------ ------------
Total increase in net assets . 29,916,429 6,553,359
NET ASSETS:
Beginning of period .................. 46,037,807 39,484,448
------------ ------------
End of period ........................ $ 75,954,236 $ 46,037,807
============ ============
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a
share outstanding throughout each period
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the period
For the six For the years April 1, 1995
months ended ended October 31, (commencement of
April 30, 1998 --------------------- operations) to
(unaudited) 1997 1996 October 31, 1995
--------------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of period (000's omitted).......... $75,954 $46,038 $39,484 $28,191
Expenses as a percentage of average
net assets..................................... 0.76%* 0.90% 0.90% 0.90%*
Ratio of net investment income to average
net assets..................................... 0.33%* 0.63% 0.68% 1.25%*
Portfolio turnover rate............................ 42% 85% 56% 23%
Average commission rate paid per share............. $1.2532 $0.0223 $0.0191 $0.0200
</TABLE>
- ----------
* Annualized
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(expressed in U.S. dollars)
1. Organization and Significant Accounting Policies. International Equity
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company which was
organized as a trust under the laws of the State of New York on August 15, 1994.
The Portfolio commenced operations on April 1, 1995. The Declaration of Trust
permits the Trustees to create an unlimited number of beneficial interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of the
financial statements and are based, in part, on the following accounting
policies. Actual results could differ from those estimates.
A. Valuation of Investments. (1) The value of investments listed on
either a domestic or foreign securities exchange is based on the last sale
price on that exchange prior to the time when assets are valued, or in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchange; (2) unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter
market; (3) securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Portfolio's Trustees. Such procedures include the use of independent
pricing services, which use prices based upon yields or prices of
securities of comparable quality, coupon, maturity and type; indications
as to the value from dealers; and general market conditions; (4) all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the prevailing rates of exchange available
at the time of valuation; and (5) trading in securities on most foreign
exchanges and over-the-counter markets is normally completed before the
close of the New York Stock Exchange and may also take place on days on
which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the Portfolio's Trustees.
B. Foreign Currency Translations. The accounting records of the
Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such
currency against the U.S. dollar to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Upon the purchase or sale of a
security denominated in foreign currency, the Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale, for
a fixed amount of U.S. dollars of the amount of foreign currency involved
in the underlying security transaction. The Portfolio does not isolate
that portion of realized gain or loss on investments resulting from
changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of such investments. Such
fluctuations are included with the net realized and unrealized gain or
loss from investments. Reported net realized and unrealized gains and
losses arise from the sales of portfolio securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between
the amounts of dividends, interest and foreign withholding taxes recorded
on the Portfolio's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized appreciation or depreciation on
foreign currency translations arise from changes in the value of the
assets and liabilities, excluding investments in securities, at fiscal
year end, arising from changes in the exchange rate.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
(expressed in U.S. dollars)
C. Forward Foreign Currency Exchange Contracts. The Portfolio may
enter into forward foreign currency exchange contracts ("contracts") in
connection with planned purchases or sales of securities, to hedge the
U.S. dollar value of portfolio securities denominated in a particular
currency, or to increase or shift its exposure to a currency other than
U.S. dollars. The Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The
Portfolio could be exposed to risks if the counterparties to the contracts
are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably. The U.S. dollar values of foreign
currency underlying all contractual commitments held by the Portfolio are
determined using forward currency exchange rates supplied by a quotation
service.
D. Accounting for Investments. Security transactions are
accounted for on the trade date. Realized gains and losses on security
transactions are determined on the identified cost method. Dividend income
and other distributions from portfolio securities are recorded on the
ex-dividend date. Dividend income is recorded net of foreign taxes
withheld where recovery of such taxes is not assured. Interest income is
accrued daily.
E. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains.
F. Deferred Organization Expenses. Expenses incurred by the
Portfolio in connection with its organization are being amortized on a
straight-line basis over a five-year period.
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which it pays
the Adviser a fee calculated daily and paid monthly at an annual rate equivalent
to 0.65% of the Portfolio's average daily net assets. For the six months ended
April 30, 1998, the Portfolio incurred $196,655 for advisory services.
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company (Cayman) Limited (the "Administrator") for
which it pays the Administrator a fee calculated daily and paid monthly at an
annual rate equivalent to 0.035% of the Portfolio's average daily net assets.
The Administrator has a subadministration agreement with Signature Financial
Group (Cayman) Ltd. for which Signature Financial Group (Cayman) Ltd. receives
such compensation as is from time to time agreed upon. For the six months ended
April 30, 1998, the Portfolio incurred $10,588 for administrative services.
Expense Reimbursement Fee. Brown Brothers Harriman Trust Company (Cayman)
Limited pays certain expenses of the Portfolio and receives a fee from the
Portfolio, computed and paid monthly, such that after such fee the aggregate
expenses will not exceed 0.76% of the Portfolio's average daily net assets. For
the six months ended April 30, 1998, Brown Brothers Harriman Trust Company
(Cayman) Limited incurred $77,533 in expenses on behalf of the Portfolio. The
expense reimbursement agreement will terminate when the aggregate amount of fees
received by Brown Brothers Harriman Trust Co. (Cayman) Limited thereunder equals
the aggregate amount of expenses paid by Brown Brother Harriman Trust Company
(Cayman) Limited thereunder.
3. Investment Transactions. For the six months ended April 30, 1998, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $36,531,394 and $21,438,555, respectively. There
were no purchases or sales of U.S. government obligations during the period.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
(expressed in U.S. dollars)
4. Financial Instruments with Off-Balance Sheet Risk. At April 30, 1998
the Portfolio had outstanding forward foreign currency exchange contracts as a
hedge to protect against possible changes in foreign currency exchange rates
that would adversely affect a portfolio position or an anticipated portfolio
position. Forward contracts involve elements of market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The Portfolio bears
the risk of an unfavorable change in the foreign exchange rate underlying the
forward contracts.
Forward foreign currency exchange contracts open at April 30, 1998:
Contracts In Exchage Deliver Unrealized
to deliver For Date Appreciation
----------- ----------- ------- ------------
JPY 948,000,000 $ 7,419,756 7/16/98 $ 177,940
