International Equity Portfolio
Portfolio of Investments
October 31, 1999
Shares Value
------- -----------
COMMON STOCKS AND WARRANTS (99.3%)
AUSTRALIA (2.6%)
CONSUMER GOODS
173,300 Coca-Cola Amatil, Ltd....... $ 534,885
---------
SERVICES
31,800 Lend Lease Corp.............. 365,891
500,000 Pasminco, Ltd.*.............. 478,275
---------
844,166
---------
TELECOMMUNICATIONS
210,000 Cable and Wireless Optus*.... 480,762
---------
TOTAL AUSTRALIA ............. 1,859,813
---------
FINLAND (2.7%)
MULTI-INDUSTRY
16,600 Nokia AB..................... 1,899,900
---------
TOTAL FINLAND ............... 1,899,900
---------
FRANCE (12.1%)
BANKING
13,500 Banque National de Paris CI.. 1,185,698
---------
CAPITAL EQUIPMENT
8,385 Alcatel Alsthom SA........... 1,309,735
---------
ENERGY
13,135 Total Fina SA................ 1,775,362
---------
MEDIA
14,360 Canal Plus................... 996,901
---------
PHARMACEUTICALS
22,000 Rhone Poulenc SA............. 1,231,085
---------
SERVICES
4,300 Accor SA..................... 967,912
7,200 Suez Lyonn Aise Des Eaux..... 1,162,505
---------
2,130,417
---------
TOTAL FRANCE ................ 8,629,198
---------
GERMANY (5.0%)
BANKING
9,210 Deutsche Pfandbrief-und
Hypothekenbank AG.......... 798,737
---------
CAPITAL EQUIPMENT
44,900 SAP AG ADR................... 1,641,656
---------
INSURANCE
3,832 Allianz AG Registered........ 1,166,884
---------
TOTAL GERMANY ............... $ 3,607,277
---------
HONG KONG (0.9%)
TELECOMMUNICATIONS
214,000 China Telecom................ 663,886
---------
TOTAL HONG KONG ............. 663,886
---------
INDIA (0.0%)
FINANCE
550 Industrial Credit & Investment
Corp....................... 1,001
---------
TOTAL INDIA ................. 1,001
---------
IRELAND (2.7%)
BANKING
46,200 Allied Irish Banks, Plc...... 578,286
---------
CONSUMER NON-DURABLES
547,000 Waterford Wedgewood, Plc..... 581,116
---------
PHARMACEUTICALS
30,000 Elan Corp., Plc. ADR*........ 772,500
---------
TOTAL IRELAND ............... 1,931,902
---------
ITALY (5.0%)
INSURANCE
43,500 Assicurazioni Generali....... 1,402,405
---------
TELECOMMUNICATIONS
190,100 Telecom Italia Mobile SpA.... 1,190,742
110,700 Telecom Italia SpA........... 960,745
---------
2,151,487
---------
TOTAL ITALY ................. 3,553,892
---------
JAPAN (27.5%)
BANKING
63,000 Asahi Bank, Ltd.............. 559,490
43,000 Dai Ichi Kangyo Bank......... 589,719
---------
1,149,209
---------
CAPITAL GOODS/DURABLES
150,000 Fuji Electric Co., Ltd....... 647,358
24,000 Matsushita Electric Industrial
Co., Ltd................... 505,227
160 Matsushita Electric Industrial
Co., Ltd. (Warrants)*...... 106,000
19,000 Matsushita Electric Works.... 184,041
290 Matsushita Electric Works
(Warrants)*................ 36,250
27,000 Toyoda Auto Loom............. 525,655
---------
2,004,531
---------
CHEMICALS
14,000 Shin-Etsu Chemical Co........ $ 577,347
---------
COMPUTER SOFTWARE
11,200 Meitec Corp.................. 419,987
---------
CONSUMER ELECTRONICS
3,000 Sony Corp.................... 467,824
300 Sony Corp. (Warrants)*....... 176,250
---------
644,074
---------
CONSUMER GOODS
33,000 Kirin Brewery Co., Ltd....... 377,884
38,000 Suzuki Motor Corp............ 577,271
---------
955,155
---------
CONSUMER NON-DURABLES
4,000 Nintendo Co., Ltd............ 634,890
---------
ELECTRIC COMPONENTS
3,000 Rohm Co., Ltd................ 673,252
110 Rohm Co., Ltd. (Warrants)*... 177,375
---------
850,627
---------
FINANCE
4,000 Jafco........................ 448,835
7,000 Orix Corp.................... 939,868
---------
1,388,703
---------
INSURANCE
88,000 Mitsui Marine & Fire......... 583,178
---------
MACHINERY/EQUIPMENT
110,000 Mitsubishi Heavy Industries.. 431,476
---------
MATERIALS
14,000 Bridgestone Corp............. 385,346
160,000 Mitsubishi Materials......... 421,981
130,000 Sumitomo Metal & Mining...... 392,730
61,400 Tokyo Steel Manufacturing
Co., Ltd................... 236,131
---------
1,436,188
---------
MULTI-INDUSTRY
130,374 Prospect Japan Fund*......... 1,212,478
850 Shohkoh Fund & Co............ 487,309
1,500 Softbank Corp................ 622,902
---------
2,322,689
---------
PHARMACEUTICALS
18,000 Kissei Pharmaceutical Co., Ltd. 345,257
14,000 Sankyo Co., Ltd.............. 398,772
225,000 Sankyo Co., Ltd. (Warrants)*. 118,087
16,000 Santen Pharmaceutical Co., Ltd. 361,370
6,000 Yamanouchi Pharmaceutical
Co., Ltd................... 272,178
100 Yamanouchi Pharmaceutical
Co., Ltd. (Warrants)*...... 136,250
---------
1,631,914
---------
PRECISION INSTRUMENTS
8,000 Hoya Corp.................... 575,429
---------
REAL ESTATE
10,000 Oriental Land Co., Ltd....... 947,540
---------
RETAIL
7,000 Ito-Yokado Co., Ltd.......... 559,893
---------
SERVICES
2,600 Benesse Corp................. 556,056
16,700 Credit Saison Co., Ltd....... 410,813
51,000 Daikin Industries, Ltd....... 562,482
275,000 Kawasaki Kisen Kaisha, Ltd... 551,213
1,200 Trans Cosmos, Inc............ 152,489
---------
2,233,053
---------
UTILITIES
19,000 Chubu Electric Power Co., Inc. 324,168
---------
TOTAL JAPAN ................. 19,670,051
---------
NETHERLANDS (3.9%)
CONSUMER GOODS
19,637 Heineken NV.................. 1,001,570
---------
FINANCE
32,400 Fortis Amev NV............... 1,115,436
---------
SERVICES
21,500 Ahold (Kon) NV............... 660,351
---------
TOTAL NETHERLANDS ........... 2,777,357
---------
SINGAPORE (2.0%)
BANKING
63,499 DBS Group Holdings, Ltd...... 716,628
---------
CONSUMER GOODS
39,000 Fraser & Neave............... 166,476
---------
SERVICES
49,000 Singapore Airlines*.......... 518,487
---------
TOTAL SINGAPORE ............. 1,401,591
---------
SOUTH KOREA (2.4%)
ELECTRIC COMPONENTS
14,600 Samsung Electronics, Ltd.,
GDR........................ $ 1,237,350
---------
MATERIALS
15,000 Pohang Iron & Steel Ltd., ADR 500,625
---------
TOTAL SOUTH KOREA ........... 1,737,975
---------
SPAIN (5.0%)
BANKING
117,922 Banco Santander SA........... 1,224,238
---------
FINANCE
74,250 Banco Bilbao Vizcaya SA...... 998,116
---------
TELECOMMUNICATIONS
83,533 Telefonica SA................ 1,374,196
---------
TOTAL SPAIN ................. 3,596,550
---------
SWEDEN (4.5%)
CAPITAL EQUIPMENT
26,720 Atlas Copco.................. 705,039
36,000 Ericsson (LM) Telephone Co.
Class `B'.................. 1,497,082
---------
2,202,121
---------
CONSUMER DURABLES
49,100 Electrolux AB................ 979,134
---------
TOTAL SWEDEN ................ 3,181,255
---------
SWITZERLAND (4.0%)
BANKING
4,450 Union Bank of Switzerland AG. 1,294,742
---------
PHARMACEUTICALS
1,047 Novartis AG Registered....... 1,566,070
---------
TOTAL SWITZERLAND ........... 2,860,812
---------
UNITED KINGDOM (17.7%)
ENERGY
195,400 BP Amoco..................... $ 1,895,984
204,000 Shell Transport & Trading
Co., Plc. ................. 1,563,767
---------
3,459,751
---------
FOOD & BEVERAGES
113,000 Diageo, Plc.................. 1,141,941
---------
INSURANCE
63,500 Prudential Corp.............. 995,955
---------
MEDIA
46,000 Pearson, Plc................. 1,033,276
---------
PHARMACEUTICALS
51,300 Glaxo Wellcome, Plc.......... 1,513,958
---------
REAL ESTATE
93,700 British Land Co., Plc. (The). 673,609
200 Land Securities, Plc......... 2,498
---------
676,107
---------
SERVICES
105,000 BAA, Plc..................... 770,373
83,180 Granada Group................ 657,437
52,000 Railtrack Group, Plc......... 1,052,699
---------
2,480,509
---------
TELECOMMUNICATIONS
72,600 British Telecom, Plc......... 1,316,434
---------
TOTAL UNITED KINGDOM ........ 12,617,931
---------
TOTAL COMMON STOCKS
AND WARRANTS
(identifed cost $58,782,267) 69,990,391
---------
TIME DEPOSIT (1.3%)
957,000 State Street Bank (Cayman)
4.50%, 11/01/99 (identified
cost $957,000)............. 957,000
---------
TOTAL INVESTMENTS (identified cost
$59,739,267) (a) .................................... 99.3% $70,947,391
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ...... 0.7 503,297
---- --------
NET ASSETS ......................................... 100.0% $71,450,688
==== ========
- ----------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $60,347,054, the
aggregate gross unrealized appreciation is $12,329,489, and the aggregate
gross unrealized depreciation is $1,729,152, resulting in net unrealized
appreciation of $10,600,387.
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
ASSETS:
Investments in securities, at value
(identified cost $59,739,267) (Note 1) ... $70,947,391
Cash (including $62,621 in foreign currency) 62,087
Receivables for:
Investments sold ........................ 835,178
Contributions ........................... 1,630,910
Dividends and other receivables ............ 106,988
Deferred organizational expense (Note 1) ... 372
-----------
Total Assets .......................... 73,582,926
-----------
LIABILITIES:
Payables for:
Investments purchased ................... 2,065,410
Administration fee (Note 2) ............. 2,021
Expense reimbursement fee (Note 2) ...... 48,795
Foreign withholding taxes ............... 16,012
-----------
Total Liabilities ..................... 2,132,238
-----------
Net Assets .................................... $71,450,688
===========
Net Assets Consist of:
Paid-in capital .......................... $60,243,640
Net unrealized appreciation .............. 11,207,048
-----------
Net Assets .................................... $71,450,688
===========
See Notes to Financial Statements
<PAGE>
See Notes to Financial Statements.
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $152,955) $ 719,348
Interest ............................................. 48,545
-----------
Total Income ...................................... 767,893
-----------
Expenses:
Expense reimbursement fee (Note 2) ................... 553,400
Administrative fee (Note 2) .......................... 23,114
Amortization of organization expenses (Note 1) ....... 887
-----------
Total Expenses ................................... 577,401
-----------
Net Investment Income ............................ 190,492
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments and foreign exchange
transactions ......................................... 10,563,181
Net change in unrealized appreciation on investments
and foreign currency transactions .................... 6,673,316
-----------
Net Realized and Unrealized Gain ..................... 17,236,497
-----------
Net Increase in Net Assets Resulting from Operations .... $17,426,989
===========
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
---------------------------------
1999 1998
------------ --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income .......................... $ 190,492 $ 384,603
Net realized gain on investments and foreign
exchange transactions ....................... 10,563,181 933,148
Net change in unrealized appreciation on
investments and foreign currency translations 6,673,316 4,125,305
------------ ------------
Net increase in net assets resulting from
operations ................................. 17,426,989 5,443,056
------------ ------------
Capital transactions:
Proceeds from contributions .................... 31,843,108 35,422,813
Value of withdrawals ........................... (44,451,990) (20,271,095)
------------ ------------
Net increase (decrease) in net assets
resulting from
capital transactions ...................... (12,608,882) 15,151,718
------------ ------------
Total increase in net assets ............... 4,818,107 20,594,774
NET ASSETS:
Beginning of year .................................. 66,632,581 46,037,807
------------ ------------
End of year ........................................ $ 71,450,688 $ 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
<TABLE>
<CAPTION>
For the period
April 1, 1995
For the year ended October 31, (commencement of
------------------------------------------------ operations) to
1999 1998 1997 1996 October 31, 1995
--------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted).............. $71,451 $66,633 $46,038 $39,484 $28,191
Expenses as a
percentage of
average net assets........... 0.87% 0.76% 0.90% 0.90% 0.90%1
Ratio of net investment
income to average
net assets................... 0.29% 0.56% 0.63% 0.68% 1.25%1
Portfolio turnover rate........ 86% 89% 85% 56% 23%
- ----------
1 Annualized.
</TABLE>
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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
generally accepted accounting principles, 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.
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
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
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 year ended
October 31, 1999, the Portfolio incurred $23,114 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 year ended October 31, 1999, Brown Brothers Harriman Trust Company (Cayman)
Limited incurred $562,608, including $429,256 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.
3. Investment Transactions. For the year ended October 31, 1999, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $54,084,764 and $66,705,612, respectively. There
were no purchases or sales of U.S. government obligations during the period.
<PAGE>
Independent Auditors' Report
Trustees and Investors
International Equity Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of International Equity Portfolio as of
October 31, 1999, the related statement of operations, the statement of changes
in net assets for the years ended October 31, 1999, and 1998, and the financial
highlights for each of the years in the five-year period ended October 31, 1999
(all expressed in U.S. dollars). These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1999, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of International Equity
Portfolio at October 31, 1999, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 17, 1999
