INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments
April 30, 1999 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
------ -----------
COMMON STOCKS AND WARRANTS (97.3%)
AUSTRALIA (2.8%)
CONSUMER GOODS
173,300 Coca-Cola Amatil, Ltd.* .... $ 822,494
-----------
SERVICES
700,000 Pasminco Ltd. .............. 782,850
-----------
TOTAL AUSTRALIA ............. 1,605,344
-----------
FINLAND (2.2%)
MULTI-INDUSTRY
16,960 Nokia AB ................... 1,307,012
-----------
TOTAL FINLAND ............... 1,307,012
-----------
FRANCE (11.2%)
BANKING
9,580 Banque National de Paris CI* 793,939
-----------
CAPITAL EQUIPMENT
7,085 Alcatel Alsthom SA* ........ 869,710
-----------
ENERGY
10,650 Elf Aquitaine SA* .......... 1,653,847
11,300 Total SA* .................. 1,547,077
-----------
3,200,924
-----------
MEDIA
2,890 Canal Plus* ................ 803,549
-----------
SERVICES
3,295 Accor SA* .................. 868,469
-----------
TOTAL FRANCE ................ 6,536,591
-----------
GERMANY (5.3%)
BANKING
9,210 Deutsche Pfandbrief-und
Hypothekenbank AG* ....... 768,626
-----------
CAPITAL EQUIPMENT
34,900 SAP AG ADR* ................ 1,094,988
-----------
INSURANCE
3,832 Allianz AG Registered* ..... 1,220,510
-----------
TOTAL GERMANY ............... 3,084,124
-----------
INDIA (0.0%)
FINANCE
550 Industrial Credit &
Investment Corp.* ........ 614
-----------
TOTAL INDIA ................. 614
-----------
IRELAND (3.4%)
BANKING
46,200 Allied Irish Banks, Plc. ... 746,727
-----------
CONSUMER NON-DURABLES
637,000 Waterford Wedgewood, Plc. .. 619,093
-----------
PHARMACEUTICALS
11,500 Elan Corp., Plc. ADR* ...... 592,250
-----------
TOTAL IRELAND ............... 1,958,070
-----------
ITALY (6.4%)
INSURANCE
34,900 Assicurazioni Generali* .... 1,357,86
-----------
TELECOMMUNICATIONS
190,100 Telecom Italia Mobile SpA* . 1,144,282
118,100 Telecom Italia SpA* ........ 1,249,480
-----------
2,393,762
-----------
TOTAL ITALY ................. 3,751,624
-----------
JAPAN (23.8%)
CAPITAL GOODS
35,000 Matsushita Electric Works .. 370,164
80 Matsushita Electric Works
(Warrants)* .............. 25,000
-----------
395,164
-----------
CHEMICALS
14,000 Shin-Etsu Chemical Co.* .... 445,487
-----------
COMPUTER SOFTWARE
11,200 Meitec Corp. ............... 363,892
-----------
CONSUMER DURABLES
10,000 Makita Corp. ............... 107,352
-----------
CONSUMER ELECTRONICS
14,000 Canon, Inc. ................ 342,321
3,000 Sony Corp. ................. 280,104
30 Sony Corp. (Warrants)* ..... 72,000
-----------
694,425
-----------
CONSUMER GOODS
11,000 Honda Motor Co., Ltd. ...... 484,508
33,000 Kirin Brewery Co., Ltd. .... 373,053
14,000 Shimano, Inc. .............. 356,389
38,000 Suzuki Motor Corp. ......... 540,948
-----------
1,754,898
-----------
CONSUMER NON-DURABLES
6,000 Nintendo Co., Ltd. ......... 559,203
55,000 Nintendo Co., Ltd. (Warrants)* 108,508
13,000 Sega Enterprises ........... 231,326
15,000 Shiseido Co. ............... 236,141
-----------
1,135,178
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments
April 30, 1999 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
------ -----------
ELECTRIC COMPONENTS
35,000 Minebea Co., Ltd. .......... $ 338,511
4,000 Rohm Co., Ltd. ............. 482,331
4,000 TDK Corp. .................. 302,462
-----------
1,123,304
-----------
ELECTRONIC TECHNOLOGY
6,000 Tokyo Electron, Ltd. ....... 341,651
-----------
FINANCE
9,000 Jafco Co., Ltd. ............. 450,678
7,000 Orix Corp. ................. 563,306
-----------
1,013,984
-----------
MATERIALS
15,000 Bridgestone Corp............. 401,94
16,000 Kurita Water Industries, Ltd. 257,24
120,000 Mitsubishi Materials*........ 288,39
68,000 Sumitomo Metal & Mining...... 308,62
61,400 Tokyo Steel Manufacturing
Co., Ltd................... 328,02
-----------
1,584,234
-----------
MULTI-INDUSTRY
200,374 Prospect Japan Fund* ....... 1,222,281
4,300 Softbank Corp. ............. 572,157
-----------
1,794,438
-----------
PHARMACEUTICALS
18,000 Kissei Pharmaceutical Co., Ltd. 383,604
14,000 Sankyo Co., Ltd. ........... 293,669
16,000 Santen Pharmaceutical Co., Ltd. 290,739
7,000 Yamanouchi
Pharmaceutical Co., Ltd. . 221,571
53 Yamanouchi Pharmaceutical
Co., Ltd. (Warrants)* .... 118,587
-----------
1,308,170
-----------
REAL ESTATE
7,000 Oriental Land Co., Ltd. .... 413,834
-----------
RETAIL
7,000 Ito-Yokato Co., Ltd. ....... 429,660
-----------
SERVICES
5,200 Benesse Corp. .............. 433,696
51,000 Daikin Industries, Ltd. .... 532,122
-----------
965,818
-----------
TOTAL JAPAN ................. 13,871,489
-----------
NETHERLANDS (5.0%)
CONSUMER GOODS
19,637 Heineken NV ................ 985,365
-----------
FINANCE
32,400 Fortis Amev NV*. ........... 1,153,462
-----------
SERVICES
21,500 Ahold (Kon)NV* ............. 798,348
-----------
TOTAL NETHERLANDS ......... 2,937,175
-----------
SINGAPORE (0.3%)
CONSUMER GOODS
39,000 Fraser & Neave ............. 172,434
-----------
TOTAL SINGAPORE ............. 172,434
-----------
SPAIN (5.9%)
FINANCE
54,250 Banco Bilbao Vizcaya SA .... 811,505
58,961 Banco Santander SA ......... 1,280,609
-----------
2,092,114
-----------
UTILITIES
27,756 Telefonica de Espana SA
(Rights)* ............... 25,803
27,756 Telefonica de Espana SA* ... 1,300,406
-----------
1,326,209
-----------
TOTAL SPAIN ................. 3,418,323
-----------
SWEDEN (5.6%)
CAPITAL EQUIPMENT
34,020 Atlas Copco ................ 915,318
56,600 Ericsson (LM) Telephone Co.
Class 'B' ................ 1,485,943
-----------
2,401,261
-----------
CONSUMER DURABLES
42,900 Electrolux AB .............. 869,492
-----------
TOTAL SWEDEN ................ 3,270,753
-----------
SWITZERLAND (4.5%)
BANKING
4,450 Union Bank of Switzerland AG 1,510,847
-----------
PHARMACEUTICALS
777 Novartis AG Bearer ......... 1,136,191
-----------
TOTAL SWITZERLAND ........... 2,647,038
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments
April 30, 1999 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
------ -----------
UNITED KINGDOM (20.9%)
BANKING
43,500 Barclays, Plc.* ............ $ 1,384,174
-----------
ENERGY
73,200 BP Amoco, Plc.* ............ 1,389,531
73,000 PowerGen, Plc. ............. 800,320
-----------
2,189,851
-----------
FOOD & BEVERAGES
113,000 Diageo, Plc.* .............. 1,299,749
-----------
INSURANCE
63,500 Prudential Corp.* .......... 903,028
-----------
PHARMACEUTICALS
39,300 Glaxo Wellcome, Plc.* ...... 1,162,651
-----------
REAL ESTATE
93,700 British Land Co., Plc. (The)* 859,190
62,800 Land Securities, Plc. ...... 823,870
-----------
1,683,060
-----------
SERVICES
72,500 BAA, Plc.* ................. 758,100
41,590 Granada Group, Plc.* ....... 887,171
32,200 Railtrack Group, Plc.* ..... 670,812
-----------
2,316,083
-----------
TELECOMMUNICATIONS
72,600 British Telecom, Plc.* ..... 1,212,297
-----------
TOTAL UNITED KINGDOM ........ 12,150,893
-----------
TOTAL COMMON STOCKS
AND WARRANTS
(identified cost $47,161,635) 56,711,484
-----------
Principal
Amount Value
- ---------- -----------
TIME DEPOSIT (2.8%)
$1,607,000 State Street Bank
(Cayman) 4.50%, 05/03/99
(identified cost $1,607,000) 1,607,000
-----------
TOTAL INVESTMENTS (identified cost $48,768,635) (a) .....100.1% $58,318,484
CASH AND OTHER ASSETS LESS LIABILITIES .................. (0.1) (67,737)
----- -----------
NET ASSETS ..............................................100.0% $58,250,747
===== ===========
- ----------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $48,768,635, the
aggregate gross unrealized appreciation is $10,232,821, and the aggregate
gross unrealized depreciation is $682,972, resulting in net unrealized
appreciation of $9,549,849.
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(expressed in U.S. dollars)
(unaudited)
ASSETS:
Investments in securities, at value
(identified cost $48,768,635) (Note 1) ................... $58,318,484
Cash (including $59,488 in foreign currency) ............... 68,964
Receivables for:
Forward foreign exchange contracts sold (Note 4) ........ 352,462
Investments sold ........................................ 96,501
Contributions ........................................... 75,000
Dividends and other receivables ............................ 150,633
Deferred organizational expense (Note 1) ................... 819
-----------
Total Assets ....................................... 59,062,863
-----------
LIABILITIES:
Payables for:
Investments purchased ................................... 720,479
Withdrawals ............................................. 30,835
Administrative fee (Note 2) ............................. 1,640
Expense reimbursement fee (Note 2) ...................... 40,524
Foreign withholding taxes ............................... 18,638
-----------
Total Liabilities .................................. 812,116
-----------
NET ASSETS .................................................... $58,250,747
===========
Net Assets Consist of:
Paid-in capital........................................... $48,352,346
Net unrealized appreciation............................... 9,898,401
-----------
Net Assets .................................................... $58,250,747
===========
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(expressed in U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes of $65,478) ....... $ 323,335
Interest ...................................................... 44,494
-----------
Total Income .............................................. 367,829
-----------
Expenses:
Expense reimbursement fee (Note 2) ............................ 277,042
Administrative fee (Note 2) ................................... 11,898
Amortization of organization expenses (Note 1) ................ 440
-----------
Total Expenses ............................................ 289,380
-----------
Net Investment Income ..................................... 78,449
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments and foreign exchange transactions 5,975,369
Net change in unrealized appreciation on investments and foreign
currency translations ......................................... 5,364,669
-----------
Net Realized and Unrealized Gain ............................ 11,340,038
-----------
Net Increase in Net Assets Resulting from Operations ............. $11,418,487
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the six months
ended April 30, 1999 For the year ended
(unaudited) October 31, 1998
-------------------- ------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income ........................................... $ 78,449 $ 384,603
Net realized gain on investments and foreign
exchange transactions......................................... 5,975,369 933,148
Net change in unrealized appreciation on
investments and foreign currency translations................. 5,364,669 4,125,305
----------- -----------
Net increase in net assets resulting from operations .......... 11,418,487 5,443,056
----------- -----------
Capital transactions:
Proceeds from contributions...................................... 19,930,674 35,422,813
Value of withdrawals............................................. (39,730,995) (20,271,095)
----------- -----------
Net increase (decrease) in net assets resulting from
capital transactions.......................................... (19,800,321) 15,151,718
----------- -----------
Total increase (decrease) in net assets...................... (8,381,834) 20,594,774
NET ASSETS:
Beginning of period.................................................. 66,632,581 46,037,807
----------- -----------
End of period ....................................................... $58,250,747 $66,632,581
=========== ===========
</TABLE>
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 April 1, 1995
six months ended For the years ended October 31, (commencement of
April 30, 1999 ------------------------------------- operations) to
(unaudited) 1998 1997 1996 October 31, 1995
---------------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of
period (000's omitted)... $58,251 $66,633 $46,038 $39,484 $28,191
Expenses as a percentage
of average net assets.... 0.85%(1) 0.76% 0.90% 0.90% 0.90%(1)
Ratio of net investment
income to average
net assets............... 0.23%(1) 0.56% 0.63% 0.68% 1.25%(1)
Portfolio turnover rate... 45% 89% 85% 56% 23%
</TABLE>
- ----------
1 Annualized.
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
(unaudited)
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 isolates 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. 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)
(expressed in U.S. dollars)
(unaudited)
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. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision
for federal income taxes is necessary.
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.
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, 1999, the Portfolio incurred $11,898 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 0.90% of the Portfolio's average daily net assets. For
the six months ended April 30, 1999, Brown Brothers Harriman Trust Company
(Cayman) Limited incurred $278,151, including $220,968 in investment advisory
fees, 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 Brothers Harriman Trust Company (Cayman)
Limited thereunder.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
(unaudited)
3. Investment Transactions. For the six months ended April 30, 1999, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $30,815,682 and $50,569,712, respectively. There
were no purchases or sales of U.S. government obligations during the period.
4. Financial Instruments with Off-Balance Sheet Risk. At April 30, 1999
the International Equity Fund 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 Funds bear the risk of an unfavorable change in the foreign
exchange rate underlying the forward contracts.
Forward foreign currency exchange contracts open at April 30, 1999:
Contracts In Exchage Deliver Unrealized
to deliver For Date Appreciation
------------- ---------- -------- ------------
JPY* 1,005,000,000 $8,822,024 06/17/99 $352,462
------------- ---------- --------
* Japanese Yen
