As filed with the Securities and Exchange Commission on May 1, 2000
FILE NO. 811-09569
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
Butterfield House, Fort Street, P.O. Box 2330, George Town, Grand
Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (345) 949-4719
Philip W. Coolidge, 21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to: John E. Baumgardner, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
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EXPLANATORY NOTE
This Amendment to the Registration Statement on Form N-1A
(the"Registration Statement") has been filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended. However,
beneficial interests in the Registrant are not being registered under the
Securities Act of 1933 (the "1933 Act") because such interests will be issued
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 other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interests in the
Registrant.
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PART A
Responses to Items 1 through 3, 5 and 9 have been omitted pursuant to
Item 2(b)of Instruction B of the General Instructions to Form N-1A.
ITEM 4. Investment Objectives, Principal Investment Strategies and Related
Risks.
The investment objective of the Dow Jones Islamic Market Index
Portfolio (the "Portfolio") is described below, together with the policies
employed to attempt to achieve this objective.
The investment objective of the Portfolio is to seek long-term capital
gains by matching the performance of the Dow Jones Islamic Market Index (SM)
(the "Index") - a globally diversified compilation of equity securities
considered by Dow Jones' Shari'ah Supervisory Board to be in compliance with
Shari'ah principles.
Under normal circumstances the assets of the Portfolio are fully
invested in securities which are included in the Index. Any uninvested cash will
be held in non-interest bearing deposits or invested in a manner compliant with
the Shari'ah principles.
SHARI'AH PROCESS
Primary Selection Criteria
Dow Jones selection process begins by excluding those firms who do not
meet specific business line and financial requirements. The selection criteria
and key features established by Dow Jones for inclusion of a company in its
Index and, in turn, the Portfolio are as follows:
Specifically, Dow Jones excludes firms whose products include:
Alcohol
Pork related products
Conventional financial services (banking, insurance, etc.)
Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.)
Tobacco
Defense
These incompatible lines of business, represented by 18 of the 122
industry groups within the Dow Jones Global Indexes are removed from the
"universe" of stocks considered for the Index. Other companies classified in
other industry groups may also be excluded if they are deemed to have a material
ownership in or revenues from prohibited business activities. After removing
companies with unacceptable primary business activities, the remaining universe
is tested by three financial-ratio "filters". The purpose is to remove companies
with unacceptable financial ratios.
The filters exclude companies if:
Total debt divided by total assets is equal to or greater than 33%.
(Note: total debt = short term debt + current portion of long-term debt +
long-term debt).
Accounts receivables divided by total assets is equal to or greater
than 47%.
(Note: accounts receivables = current receivables + long-term
receivables).
Non-operating interest income divided by operating income is equal to
or greater than 9%.
Companies that pass these screens are included in the Index investable
universe, from which Index components are selected.
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Shari'ah Supervisory Board
Dow Jones' Shari'ah Supervisory Board has approved of the above
criteria and any changes in the Shari'ah Supervisory Board or the selection
criteria are at the sole discretion of Dow Jones. Changes by Dow Jones in the
selection criteria or the composition of the Index will be reflected in the
composition of the Portfolio in a reasonable period of time.
BENCHMARK
The Portfolio will use as its benchmark the Dow Jones Islamic Market
Index (SM) which it intends to track. There is no guarantee that the Portfolio
will achieve the same return as the Index. Due to the large number of stocks in
the Index, the Trustees of the Portfolio may, in the initial stages of the
Portfolio, purchase a sub-group of equities from those contained in the Index
that Brown Brothers Harriman & Co. (the "Investment Manager") believes will best
track the Index. As the assets of the Portfolio grow, it is anticipated the
holdings of the Portfolio will be increased to include more of the components of
the Index.
The approximate geographic distribution of the market capitalization of
the Index is: Americas (70%), Europe (20%), and Asia (10%).
The 600 companies whose issues compromise the Index have an average
market capitalization of US$11.7 billion and a median market capitalization of
US$2.6 billion.
The following sectors are represented in the Index: Consumer,
Non-Cyclical (28%); Technology (25%); Utilities (12%); Energy (11%) Consumer
Cyclical (9%); Industrial (8%); Basic materials (4%); Others (3%). The above
composition is estimated and will change over time.
"Dow Jones" and "Dow Jones Islamic Market IndexSM" are service marks of
Dow Jones & Company, Inc. Dow Jones has no relationship to the Portfolio's
Investment Adviser or Investment Manager, other than the licensing of the Dow
Jones Islamic Market Index and its service marks for use in connection with the
Portfolio.
Dow Jones does not:
Sponsor, endorse, sell or promote the Portfolio.
Recommend that any person invest in the Portfolio or any other
securities.
Have any responsibility or liability for or make any decisions about
the timing, amount or pricing of Portfolio.
Have any responsibility or liability for the administration,
management or marketing of the Portfolio.
Consider the needs of the Portfolio or the owners of the
Portfolio in determining, composing or calculating the Dow Jones
Islamic Market IndexSM or have any obligation to do so.
Dow Jones will not have any liability in connection with the Trust.
Specifically, Dow Jones does not make any warranty, express or implied, and Dow
Jones disclaims any warranty about:
The results to be obtained by the Portfolio, the owner of the Portfolio or any
other person in connection with the use of the Dow Jones Islamic Market IndexSM
and the data included in the Dow Jones Islamic Market IndexSM;
The accuracy or completeness of the Dow Jones Islamic Market IndexSM
and its data;
The merchantability and the fitness for a particular purpose or use of the Dow
Jones Islamic Market IndexSM and its data;
Although Dow Jones uses reasonable efforts to comply with its guidelines
regarding the selection of components in the Dow Jones Islamic Market Index,
Dow Jones disclaims any warranty of compliance with Shariah law or other
Islamic principles;
Dow Jones will have no liability for any errors, omissions or interruptions
in the Dow Jones Islamic Market IndexSM or its data;
Under no circumstances will Dow Jones be liable for any lost profits or
indirect, punitive, special or consequential damages or losses, even
if Dow Jones knows that they might occur.
The licensing agreement between the Portfolio's Investment Adviser, Investment
Manager and Dow Jones is solely for their benefit and not for the benefit of the
owners of the Trust or any other third parties.
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PRINCIPAL RISK FACTORS
The principal risks of investing in the Portfolio and the circumstances
reasonably likely to adversely affect an investment are described below. An
investor may lose money by investing in the Portfolio.
The principal risks of investing in the Portfolio are:
Market Risk.
This is the risk that the price of a security falls due to changing
economic, political or market conditions, or due to a company's individual
situation.
Index Investing Risk.
Unlike other non-index investment portfolios, the Portfolio will not be
engaged in buying and selling of securities based upon economic, financial and
market analysis and investment judgement. Instead, the Portfolio will be
invested under an indexed investment approach, which attempts to approximate the
investment performance of the Index. Therefore, an investor should not expect to
achieve the potentially greater results that could be obtained by investment
portfolios that aggressively seek growth or investment portfolios that attempt
to limit losses in a falling market.
The strategy of investing in a representative sample of Index
components may result in some deviation between Portfolio performance and that
of the Index. The Portfolio's return is also likely to be lower than that of the
Index because the Portfolio incurs brokerage commissions, transaction fees and
other expenses. However, transaction costs will likely be lower than typical
stock funds because of lower portfolio turnover. In addition, the Portfolio's
ability to replicate the Index return will depend to a certain extent on cash
flow into and out of the Portfolio. Even if the Portfolio's investments were
fairly representative of the Index its return could differ because of
differences in how the Portfolio and the Index are valued. The Index is valued
by Dow Jones, which may use different closing prices, currency exchange rates or
dividend reinvestment assumptions than the Portfolio does.
Foreign Investment Risk.
Changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on the removal
of funds or assets, or imposition of (or change in) exchange control or tax
regulations may adversely affect the value of such investments. Changes in
government administrations or economic or monetary policies in the United States
or other countries could result in appreciation or depreciation of portfolio
securities and could favorably or unfavorably affect the operations of the
Portfolio. The economies of individual foreign nations differ from the U.S.
economy, whether favorably or unfavorably, in areas such as growth of gross
domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. It may be more difficult to
obtain and enforce a judgment against a foreign company. Dividends paid by
foreign issuers may be subject to withholding and other foreign taxes which may
decrease the net return on foreign investments as compared to dividends paid by
domestic companies.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, foreign investments are
less liquid and their prices are more volatile than comparable investments in
securities of U.S. companies. Moreover, the settlement periods for foreign
securities, which are often longer than those for securities of U.S. companies,
may affect portfolio liquidity. In buying and selling securities on foreign
exchanges, fixed commissions are normally paid that are generally higher than
the negotiated commissions charged in the United States. In addition, there is
generally less government supervision and regulation of securities exchanges,
brokers and companies in foreign countries than in the United States.
The foreign investments made by the Portfolio are made in compliance
with the currency regulations and tax laws of the United States and foreign
governments. There may also be foreign government regulations and laws that
restrict the amounts and types of foreign investments.
Because securities in the Portfolio are denominated and pay dividends
in various currencies, and the Portfolio holds various foreign currencies from
time to time, the value of the net assets of the Portfolio as measured in U.S.
dollars is affected favorably or unfavorably by changes in exchange rates. The
Portfolio also incurs costs in connection with conversion between various
currencies.
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Developing Countries Investment Risk
The Portfolio may invest its assets in securities of issuers
based in developing countries. Investments in securities of issuers in
developing countries may involve a high degree of risk and many may be
considered speculative. These investments carry all of the risks of investing in
securities of foreign issuers outlined in this section to a heightened degree.
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) the small current size of the markets for securities of issuers in
developing countries and the currently low or non-existent volume of trading
resulting in lack of liquidity and in price volatility; (iii) certain national
policies which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests; and (iv) the absence of developed legal structures governing
private or foreign investment and private property.
Non-Diversification Risk.
The Portfolio is classified as "non-diversified" for purposes of the
1940 Act which means that it is not limited by that Act with respect to the
portion of its assets that may be invested in the securities of a single issuer
The Portfolio is however limited with respect to such assets by certain
requirements of federal tax law. The possible assumption of large positions in
the securities of a small number of issuers may cause performance to fluctuate
to a greater extent than that of a diversified investment company as a result of
changes in the financial condition or in the market's assessment of an issuer.
Islamic Shari'ah Investment Risk.
It is possible that the restrictions placed on investments, in
particular the prohibition on interest bearing investments and the cost of
donations by the Portfolio of parts of dividends which are attributable to
interest related activities, may result in the Portfolio performing less well
than portfolios with similar investment objectives which are not subject to
Islamic Shari'ah restrictions.
Investments in the Portfolio are neither insured nor guaranteed by the
U.S. Government. Shares of beneficial interest of the Portfolio are not deposits
of or obligations of, or guaranteed by, Brown Brothers Harriman & Co. or any
other bank, and the shares of beneficial interest are not insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other federal,
state or other governmental agency.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
Investment Manager and Investment Adviser
The Investment Manager is Brown Brothers Harriman & Co., Private
Bankers, 59 Wall Street, New York, NY 10005, a New York limited partnership
established in 1818. The firm is subject to examination and regulation by the
Superintendent of Banks of the State of New York and by the Department of
Banking of the Commonwealth of Pennsylvania. The firm is also subject to
supervision and examination by the Commissioner of Banks of the Commonwealth of
Massachusetts.
Brown Brothers Harriman & Co. provides portfolio management services to
the Portfolio. Subject to the general supervision of the Portfolio's Trustees
and based upon advice given by Wafra Investment Advisory Group, Inc. (the
"Investment Adviser"), Brown Brothers Harriman & Co. makes the day-to-day
investment decisions for the Portfolio, places the purchase and sale orders for
portfolio transactions, and generally manages the Portfolio's investments. Brown
Brothers Harriman & Co. provides a broad range of investment management services
for customers in the United States and abroad. At December 31, 1999, it managed
total assets of approximately $35 billion.
The Portfolio is managed on a day to day basis by a team of individuals
including Mr. John A. Nielsen, Mr. Jeffrey A. Schoenfeld, Mr. Young Chin, Mr.
Vasken H. Setrakian and Mr. Gerald Lavish. Mr. Nielsen holds a B.A. from
Bucknell University, a M.B.A. from Columbia University and is a Chartered
Financial Analyst. He joined Brown Brothers Harriman & Co. in 1968. Mr.
Schoenfeld holds a B.A. from University of California, Berkeley and a M.B.A.
from the Wharton School of the University of Pennsylvania. He joined Brown
Brothers Harriman & Co. in 1984. Mr. Chin holds a B.A. and a M.B.A from
University of Chicago. He joined Brown Brothers Harriman & Co. in 1999. Mr.
Setrakian holds a B.E. from American University of Beirut and a M.B.A. from
Harvard University. He joined Brown Brothers Harriman & Co. in 1980. Mr. Lavish
holds a B.S. from Columbia University and a M.B.A. from New York University. He
joined Brown Brothers Harriman & Co. in 1998.
<PAGE>
The Investment Adviser of the Portfolio is Wafra Investment Advisory
Group, Inc., 345 Park Avenue, New York, NY 10154, a U.S. registered investment
adviser. Founded in 1985, the Investment Adviser, with its principal place of
business in New York, together with its affiliate companies, manages in excess
of $3 billion, specialising in global fund management, securities portfolio
management, direct equity investment, real estate investment and private asset
management to major financial institutions from the Gulf as well as other
companies and high net worth individuals. The Investment Adviser acts as U.S.
investment adviser for numerous investment funds and managed accounts, including
other Islamic funds and products.
The Investment Adviser will provide investment advisory services to the
Portfolio and the Investment Manager. For performing such investment advisory
services, the Investment Adviser receives such compensation from the Investment
Manager as is from time to time agreed upon.
For the services provided and the expenses borne pursuant to the
Investment Management Agreement and the Investment Advisory Agreement, the
Investment Manager and the Investment Adviser jointly will receive from the
Portfolio as full compensation therefor an aggregate fee at an annual rate equal
to 0.40% of the Portfolio's average daily net assets. This fee will be computed
based on net assets at 4:00 P.M. New York time on each day the New York Stock
Exchange is open for trading, will be paid monthly during the succeeding
calendar month and will be shared between the Investment Manager and the
Investment Adviser as from time to time may be agreed upon by the Investment
Manager and the Investment Adviser.
ITEM 7. INVESTOR INFORMATION
The net asset value of the Portfolio is determined each day the New
York Stock Exchange is open for regular trading. This determination is made once
each business day as of 4:00 p.m. New York time.
The Portfolio determines the value of each security held by the
Portfolio with advice from the Investment Manager and Investment Adviser as to
the broadest and most representative market for such securities. Any security
for which the primary market is on a securities exchange is valued at the last
sale price on such exchange on the valuation day or, if no sale occurred on that
day, at the most recent quoted bid price on that day. Such securities as well as
other securities for which the primary market is believed to be over-the-counter
are valued at the most recent quoted bid price provided by one or more principal
market makers. Securities or other assets for which market prices are not
readily available will be valued at their fair value as determined in good faith
in accordance with the procedures adopted by the Trustees with the advice of the
Investment Manager and Investment Adviser.
Beneficial interests in the Portfolio are issued solely in private
placement transactions. Investments in the Portfolio may only be made by other
investment companies, insurance company separate accounts, common or commingled
trust funds, or similar organizations or entities which are "accredited
investors." This Registration Statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
Securities Act of 1933 (the "1933 Act").
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio.
<PAGE>
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the
custodian of the Portfolio's account by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds within five Portfolio
business days after the reduction is effected.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted
or, if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 8. DISTRIBUTION ARRANGEMENTS.
Not applicable.
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PART B
ITEM 10. COVER PAGE.
Not applicable.
TABLE OF CONTENTS. PAGE
Portfolio History . . . . . . . . . . . . . . . . . . B-1
Description of Portfolio and Its Investments and Risks B-1
Management of the Portfolio . . . . . . . . . . . . . B-4
Control Persons and Principal Holders . . . . . . . . B-5
Investment Advisory and Other Services . . . . . . . B-5
Expense Payment Agreement B-7
Brokerage Allocation and Other Practices . . . . . . B-8
Capital Stock and Other Securities . . . . . . . . . B-9
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . B-10
Tax Status . . . . . . . . . . . . . . . . . . . . . B-11
Underwriters . . . . . . . . . . . . . . . . . . . . B-12
Calculations of Performance Data . . . . . . . . . . B-12
Financial Statements . . . . . . . . . . . . . . . . B-12
ITEM 11. PORTFOLIO HISTORY.
The Portfolio is a trust organized under the laws of the State of
New York on March 5, 1999.
ITEM 12. DESCRIPTION OF PORTFOLIO AND ITS INVESTMENTS AND RISKS.
The investment objective of the Dow Jones Islamic Market Index
Portfolio (the "Portfolio") is to to seek long-term capital gains by matching
the performance of the Dow Jones Islamic Market Index (SM) (the "Index") - a
globally diversified compilation of equity securities considered by Dow Jones'
Shari'ah Supervisory Board to be in compliance with Shari'ah principles.
At the Portfolio's inception, the Shari'ah Supervisory Board consists
of:
Shaykh Abdul Sattar Abu Ghuddah, Senior advisor to Albaraka Investment Co. of
Syria Saudi Arabia and Syria
Shaykh Justice Muhammed Shaykh Usmani has been a member of the
Usmani, Pakistan Supreme Court of Pakistan since 1982.
He is Deputy Chairman of the Islamic Fiqh
Academy, Jeddah, and chairman or
members of more than a dozen Shari'ah
supervisory boards.
Shaykh Yaquby, Bahrain Shaykh Mizam Yaquby is a renowned Shari'ah
scholar and advisor to numerous Islamic
banks and companies, including Abu Dhabi
Islamic Bank, Islamic Investment Company of
the Gulf, Bahrain and the Arab Islamic Bank,
Bahrain. He Pursued traditional Islamic
studies in Mecca, India and Morocco under
the guidance of eminent Islamic scholars,
including Shaykh Abdullah Al-Farisi and
Shaykh Muhammad Salah Al-Abbasi. He holds a
B.A.in Economics and Comparative Religion
from McGill University, Toronto. He is a
Ph.D.candidate in Islamic Law at the
University of Wales. Shaykh Yaquby has
published several
books on Islam law and is a frequent speaker
at Islamic conferences.
Shaykh Dr. Mohamed Ali Eligari, Dr. Mohamed Ali Elgari is the director of
Saudi Arabia the Center for Research in Islamic Economics
at King Abdulaziz University in Jeddah. He
is also a member of the OIC Fiqh Council.Dr.
Elgari serves as a consultant to Islamic
banks and has served on the consulting
committee that counseled the Government of
Pakistan on the Islamization of its banking
system. Dr. Elgari holds a Ph.D.in Economics
from the University of California.
<PAGE>
Shaykh Yusuf Tala DeLorenzo, Shaykh Yusuf Talal DeLorenzo is currently
United States a Shari'ah consultant/advisor and
translator/researcher for the
institution of Islamic Banking,
London, and PCS Inc., Reston, VA. He
holds an M.A. in Islamic Studies from
Jami'ah al Ulum al Islamiyah (Karachi)
and is a doctoral candidate at the
Hartford Seminary. Shaykh DeLorenzo
produced the first systematic academic
translation in English of legal
rulings issued by Shari'ah advisory
boards on the operations of Islamic ba
Rulings on the Operations of Islamic
Banks." He has also authored original
research in Islamic studies, including
Islamic banking and law, in English,
Arabic and Urdu.
Periodic Review
The Index is reviewed quarterly and annually by the Shari'ah Supervisory
Board and by Dow Jones for consideration of exclusion or inclusion of
components. In addition, the Index is reviewed on an on-going basis to
contemplate changes as a result of extraordinary events (e.g. delisting,
bankruptcy, merger, takeover, etc.).
The following discussion supplements the information regarding the
investment objective of the Portfolio and the policies to be employed to achieve
this objective as set forth above and in Part A.
EQUITY INVESTMENTS
Equity investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock,
usually of the same company, at specified prices within a certain period of time
and to receive interest or dividends until the holder elects to convert. The
provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holder's claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.
FOREIGN EXCHANGE CONTRACTS
Foreign exchange contracts are made with currency dealers, usually large
commercial banks and financial institutions. Although foreign exchange rates are
volatile, foreign exchange markets are generally liquid with the equivalent of
approximately $500 billion traded worldwide on a typical day.
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OTHER INVESTMENT TECHNIQUES
Cash is held for the Portfolio in demand deposit accounts with Brown
Brothers Harriman & Co. as the Portfolio's custodian bank (the "Custodian").
RESTRICTED SECURITIES. Securities that have legal or contractual
restrictions on their resale may be acquired for the Portfolio. The price paid
for these securities, or received upon resale, may be lower than the price paid
or received for similar securities with a more liquid market. Accordingly, the
valuation of these securities reflects any limitation on their liquidity. (See
"Investment Restrictions".)
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Securities may be purchased
for the Portfolio on a when-issued or delayed delivery basis. For example,
delivery and payment may take place a month or more after the date of the
transaction. The purchase price and the interest rate payable on the securities,
if any, are fixed on the transaction date. The securities so purchased are
subject to market fluctuation and no income accrues to the Portfolio until
delivery and payment take place. At the time the commitment to purchase
securities on a when-issued or delayed delivery basis is made, the transaction
is recorded and thereafter the value of such securities is reflected each day in
determining the Portfolio's net asset value. The Portfolio maintains with the
Custodian a separate account with a segregated portfolio of securities in an
amount at least equal to these commitments. At the time of its acquisition, a
when-issued or delayed delivery security may be valued at less than the purchase
price. Commitments for such when-issued or delayed delivery securities are made
only when there is an intention of actually acquiring the securities. On
delivery dates for such transactions, such obligations are met from maturities
or sales of securities and/or from cash flow. If the right to acquire a when-
issued or delayed delivery security is disposed of prior to its acquisition, the
Portfolio could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. When-issued or delayed delivery
commitments for the Portfolio may not be entered into if such commitments exceed
in the aggregate 15% of the market value of its total assets, less liabilities
other than the obligations created by when-issued or delayed delivery
commitments.
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INVESTMENT COMPANY SECURITIES. Subject to applicable statutory and
regulatory limitations, the assets of the Portfolio may be invested in shares of
other investment companies. Under the 1940 Act, assets of the Portfolio may be
invested in shares of other investment companies in connection with a merger,
consolidation, acquisition or reorganization or if immediately after such
investment (i) 10% or less of the market value of the Portfolio's total assets
could be so invested, (ii) 5% or less of the market value of the Portfolio's
total assets would be invested in the shares of any one such company, and (iii)
3% or less of the total outstanding voting stock of any other investment company
would be owned by the Portfolio. As a shareholder of another investment company,
the Portfolio would bear, along with other shareholders, its pro rata portion of
the other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Portfolio bears
directly in connection with its own operations.
ADDITIONAL INVESTMENT INFORMATION
In response to adverse market, economic, political or other conditions, the
Portfolio may make temporary investments that are not consistent with its
investment objective and principal investment strategies. Such investments may
prevent the Portfolio from achieving its investment objective.
INVESTMENT RESTRICTIONS
The Portfolio is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Portfolio.
As used in this Part B, the term "majority of the outstanding voting securities"
as defined in the 1940 Act currently means the vote of (i) 67% or more of the
voting securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
The Portfolio may not:
(1) borrow money or mortgage or hypothecate its assets except that in an
amount not to exceed 1/3 of the current value of its net assets and in a manner
not to contravene Islamic Shari'ah principles, it may borrow money as a
temporary measure for extraordinary or emergency purposes, and except that it
may pledge, mortgage or hypothecate not more than 1/3 of such assets to secure
such borrowings (it is intended that money will be borrowed only from banks and
only either to accommodate requests for the withdrawal of part or all of an
interest in the Portfolio, as the case may be, while effecting an orderly
liquidation of portfolio securities or to maintain liquidity in the event
of an unanticipated failure to complete a portfolio security transaction
or other similar situations), and except that assets may be pledged to
secure letters of credit solely for the purpose of participating in a
captive insurance company sponsored by the Investment Company Institute
(2) earn interest on its capital;
(3) purchase any security which is not included in the Dow Jones
Islamic Market Index (SM);
(4) hold uninvested cash in interest bearing deposits or invest such
uninvested cash in a manner that would not be in compliance with Shari'ah
principles;
(5) acquire the securities of one issuer if upon such purchase the value of
the Portfolio's holdings of such securities would exceed 10% of its net assets;
(6) invest in fixed income investments;
(7) underwrite securities issued by other persons except insofar as it may
technically be deemed an underwriter under the Securities Act of 1933, as
amended (the "1933 Act") in selling a portfolio security;
(8) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts in the
ordinary course of business (the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities is reserved);
(9) concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of its investment objective, up to 25% of
its assets, at market value at the time of each investment, may be invested in
any one industry;
(10) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder.
<PAGE>
NON-FUNDAMENTAL RESTRICTIONS. The Portfolio may not as a matter of
operating policy: (i) purchase securities of any investment company if such
purchase at the time thereof would cause more than 10% of its total assets
(taken at the greater of cost or market value) to be invested in the securities
of such issuers or would cause more than 3% of the outstanding voting securities
of any such issuer to be held for it; (iii) knowingly invest in securities which
are subject to legal or contractual restrictions on resale if, as a result
thereof, more than 10% of its net assets (taken at market value) would be so
invested; (iv) enter into forward contracts and write, purchase or sell any put
or call option or any combination thereof, provided that this shall not prevent
the purchase, ownership, holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities; purchase any security or
evidence of interest therein on margin; or (v) make short sales of securities or
maintain a short position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short, and unless
not more than 10% of its net assets (taken at market value) is represented by
such securities, or securities convertible into or exchangeable for such
securities, at any one time (it is the present intention of management to make
such sales only for the purpose of deferring realization of gain or loss for
federal income tax purposes; such sales would not be made of securities subject
to outstanding options).
These policies are not fundamental and may be changed without investor
approval.
PERCENTAGE RESTRICTIONS. If a percentage restriction on investment or
utilization of assets set forth above or referred to in Part A is adhered to at
the time an investment is made or assets are so utilized, a later change in
percentage resulting from changes in the value of the portfolio securities of a
portfolio security is not considered a violation of policy. If investment
restrictions relating to any particular investment practice or policy are
inconsistent between the Portfolio and an investor, the Portfolio will adhere to
the more restrictive limitation.
ITEM 13. MANAGEMENT OF THE PORTFOLIO.
The Portfolio's Trustees, in addition to supervising the actions of the
Investment Adviser, Investment Manager and the Portfolio's administrator (the
"Administrator"), as set forth below, decide upon matters of general policy with
respect to the Portfolio. The Portfolio's Trustees receive no compensation for
their services.
Because of the services rendered to the Portfolio by the Investment
Adviser, Investment Manager and the Administrator, the Portfolio requires no
employees, and its officers receive no compensation from the Portfolio.
The Trustees and executive officers of the Portfolio, their business
addresses, and principal occupation during the past five years (although their
titles may have varied during the period) are:
TRUSTEES OF THE PORTFOLIO
RICHARD L. CARPENTER** -- Trustee; Trustee of the Portfolios(1);
Trustee of The 59 Wall Street Trust (since October 1999); Director of The 59
Wall Street Fund, Inc. (since October 1999); Retired; Director of Internal
Investments, Public School Employees' Retirement System; Managing Director of
Chase Investors Management Corp. (since December 1995). His business address is
12664 Lazy Acres Court, Nevada City, CA 95959.
CLIFFORD A. CLARK** -- Trustee; Trustee of the Portfolios; Trustee of
The 59 Wall Street Trust (since October 1999); Director of The 59 Wall Street
Fund, Inc. (since October 1999); Retired; Director of Schmid, Inc. (prior to
July 1993); Managing Director of the Smith-Denison Foundation. His business
address is 42 Clowes Drive, Falmouth, MA 02540.
J. ANGUS IVORY - Trustee; Trustee of the Portfolios (since October
1999); Trustee of The 59 Wall Street Trust (since October 1999); Director of The
59 Wall Street Fund, Inc. (since October 1999); Director of Brown Brothers
Harriman Ltd., subsidiary of Brown Brothers Harriman & Co.; Director of Old
Daily Saddlery; Advisor, RAF Central Fund; Committee Member, St. Thomas Hospital
Pain Clinic (since 1999).
<PAGE>
OFFICERS OF THE PORTFOLIO
PHILIP W. COOLIDGE -- President; Chief Executive Officer and President
of Signature Financial Group, Inc. ("SFG"), 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors") and 59 Wall Street Administrators, Inc. ("59
Wall Street Administrators").
LINWOOD C. DOWNS - Assistant Treasurer; Senior Vice President of SFG;
Senior Vice President and Treasurer of SFG; Treasurer of 59 Wall Street
Distributors and 59 Wall Street Administrators.
SUSAN JAKUBOSKI -- Assistant Treasurer and Assistant Secretary of the
Portfolio; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Cayman) Limited.
MOLLY S. MUGLER -- Assistant Secretary; Vice President and Secretary of
SFG; Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.
CHRISTINE D. DORSEY -- Assistant Secretary; Vice President of SFG
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996); Graduate Student, Bentley College (prior
to December 1994).
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(1) The Portfolios consist of the following active investment companies:
U.S. Money Market Portfolio, International Equity Portfolio, U.S.
Equity Portfolio, European Equity Portfolio and Pacific Basin Equity
Portfolio and the following inactive investment company:
Inflation-Indexed Securities Portfolio.
The address of each officer of the Portfolio is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge and Downs, and Mss. Jakuboski, Mugler and
Dorsey also hold similar positions with other investment companies for which
affiliates of 59 Wall Street Distributors serves as the principal underwriter.
No Trustee of the Portfolio is an "interested person" of the Portfolio as
that term is defined in the 1940 Act.
By virtue of the responsibilities assumed by the Investment Adviser,
Investment Manager and the Administrator, the Portfolio requires no employees
other than its officers, and none of its officers devote full time to the
affairs of the Portfolio or receive any compensation from the Portfolio.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 31, 2000, Wafra/BBH & Co.-Dow Jones Islamic Market Index
Fund (Cayman) owned 99.9% of the outstanding beneficial interests in the
Portfolio.
Wafra/BBH & Co.-Dow Jones Islamic Market Index Fund (Cayman) has informed
the Portfolio that whenever it is requested to vote on matters pertaining to the
Portfolio (other than a vote by the Portfolio to continue the operation of the
Portfolio upon the withdrawal of another investor in the Portfolio), it will
hold a meeting of its shareholders and will cast its vote as instructed by those
shareholders.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
Under the Investment Management Agreement with the Portfolio, subject to
the general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Brown Brothers Harriman & Co. (the "Investment
Manager") provides investment management services to the Portfolio. The
Investment Manager will make all investment decisions for the Portfolio based
upon the advice given by Wafra Investment Advisory Group, Inc. (the "Investment
Adviser") but subject to the overall direction and control of the Trustees of
the Portfolio.
The investment management services of Brown Brothers Harriman & Co. to the
Portfolio are not exclusive under the terms of the Investment Management
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
management services to others, including other registered investment companies.
The Investment Management Agreement between Brown Brothers Harriman &
Co. and the Portfolio is dated March 5, 1999 and remains in effect for two years
from such date and thereafter, but only as long as the agreement is specifically
approved at least (see "Investment Manager") annually (i) by a vote of the
holders of a "majority of the outstanding voting securities as defined in the
1940 Act" of the Portfolio, or by the Portfolio's Trustees, and (ii) by a vote
of a majority of the Trustees of the Portfolio who are not parties to the
Investment Management Agreement or "interested persons" (as defined in the 1940
Act) of the Portfolio ("Independent Trustees"), cast in person at a meeting
called for the purpose of voting on such approval. The Investment Management
Agreement was most recently approved by the Independent Trustees on August 10,
1999. The Investment Management Agreement terminates automatically if assigned
and is terminable at any time without penalty by a vote of a majority of the
Trustees of the Portfolio or by a vote of the holders of a "majority of the
outstanding voting securities as defined in the 1940 Act" of the Portfolio on
three months' written notice to Brown Brothers Harriman & Co. and by Brown
Brothers Harriman & Co. on three months' written notice to the Portfolio.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting, selling or distributing securities and
from sponsoring, organizing or controlling a registered open-end investment
company continuously engaged in the issuance of its shares. There is presently
no controlling precedent prohibiting financial institutions such as Brown
Brothers Harriman & Co. from performing investment management or administrative
functions. If Brown Brothers Harriman & Co. were to terminate its Investment
Management Agreement with the Portfolio, or were prohibited from acting in such
capacity, it is expected that the Trustees of the Portfolio would recommend to
the investors that they approve a new investment manager agreement for the
Portfolio with another qualified manager.
Under its Investment Advisory Agreement with the Portfolio, subject to the
general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Wafra Investment Advisory Group, Inc. (the
"Investment Adviser") provides investment advisory services to the Portfolio.
The investment advisory services of the Investment Adviser to the Portfolio
are not exclusive under the terms of the Investment Advisory Agreement. The
Investment Adviser is free to and does render investment advisory services to
others, including other registered investment companies.
The Investment Advisory Agreement between Wafra Investment Advisory Group,
Inc. and the Portfolio is dated March 5, 1999 and remains in effect for two
years from such date and thereafter, but only as long as the agreement is
specifically approved at least annually in the same manner as the Investment
Management Agreement. The Investment Advisory Agreement was most recently
approved by the Independent Trustees on August 10, 1999. The Investment Advisory
Agreement terminates automatically if assigned and is terminable at any time
without penalty by a vote of a majority of the Trustees of the Portfolio or by a
vote of the holders of a "majority of the outstanding voting securities as
defined in the 1940 Act" of the Portfolio on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Portfolio.
The Investment Adviser and the Investment Manager jointly receive from the
Portfolio a fee calculated daily and paid monthly at an annual rate
equivalent to 0.40% of the Portfolio's average daily net assets. For the
period July 1, 1999 (commencement of operations) to December 31, 1999, the
Portfolio incurred $30,655 in investment management/advisory fees.
<PAGE>
ADMINISTRATOR. Brown Brothers Harriman Trust Company acts as the
Administrator of the Portfolio (the "Administrator"). Brown Brothers Harriman
Trust Company is a wholly-owned subsidiary of Brown Brothers Harriman & Co.
Brown Brothers Harriman Trust Company, in its capacity as Administrator,
administers all aspects of the Portfolio's operations subject to the supervision
of the Trustees except as set forth above under "Investment Adviser" and
"Investment Manager". In connection with its responsibilities as Administrator
and at its own expense, Brown Brothers Harriman Trust Company (i) provides the
Portfolio with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of the Portfolio, including the maintenance of certain
books and records, receiving and processing requests for increases and decreases
in the beneficial interests in the Portfolio, notification to the Investment
Adviser of available funds for investment, reconciliation of account information
and balances between the Custodian and the Investment Adviser, and processing,
investigating and responding to investor inquiries; (ii) oversees the
performance of administrative and professional services to the Portfolio by
others, including the Custodian; (iii) provides the Portfolio with adequate
office space and communications and other facilities; and (iv) prepares and/or
arranges for the preparation, but does not pay for, the periodic updating of the
Portfolio's registration statement for filing with the Securities and Exchange
Commission (the "SEC"), and the preparation of tax returns for the Portfolio and
reports to investors and the SEC.
For the services rendered to the Portfolio and related expenses borne by
Brown Brothers Harriman Trust Company as Administrator of the Portfolio, Brown
Brothers Harriman Trust Company receives from the Portfolio a fee, computed
daily and paid monthly, at an annual rate equal to 0.05% of the average daily
net assets of the Portfolio that are not in excess of $50 million and at an
annual rate equal to 0.01% of the average daily net assets of the Portfolio in
excess of $50 million. The Administrator shall receive a minimum annual fee from
the Portfolio equal to $20,000. For the period July 1, 1999 (commencement of
operations) to December 31, 1999, the Portfolio incurred $10,000 in
administration fees.
The Administration Agreement between the Portfolio and Brown Brothers
Harriman Trust Company (dated March 5, 1999) will remain in effect for
successive annual periods, but only so long as the agreement is specifically
approved at least annually in the same manner as the Investment Management
Agreement. The agreement will terminate automatically if assigned by either
party thereto and is terminable by the Portfolio at any time without penalty by
a vote of a majority of the Trustees of the Portfolio, or by a vote of the
holders of a "majority of the outstanding voting securities as defined in the
1940 Act" of the Portfolio. The Portfolio's Administration Agreement is
terminable by the Trustees of the Portfolio or by investors in the Portfolio on
60 days' written notice to Brown Brothers Harriman Trust Company. The agreement
is terminable by the Administrator on 90 days' written notice to the Portfolio.
PLACEMENT AGENT
The Portfolio has not retained the services of a principal underwriter or
distributor, since interests in the Portfolio are offered solely in private
placement transactions. 59 Wall Street Distributors, Inc. ("59 Wall Street
Distributors"), acting as agent for the Portfolio, serves as the placement agent
of interests in the Portfolio. 59 Wall Street Distributors receives no
compensation for serving as placement agent.
EXPENSE PAYMENT AGREEMENT
Under an agreement dated August 10, 1999, Brown Brothers Harriman Trust
Company pays the expenses of the Portfolio, other than fees paid to Brown
Brothers Harriman Trust Company under the Portfolio's Administration Agreement
and other than expense relating to the organization of the Portfolio. In return,
Brown Brothers Harriman Trust Company receives a fee from the Portfolio such
that after such payment the aggregate expenses of the Portfolio do not exceed an
agreed upon annual rate, currently 0.57% of the average daily net assets of the
Portfolio. Such fees are computed daily and paid monthly. For the period July 1,
1999 (commencement of operations) to December 31, 1999, Brown Brothers Harriman
Trust Company incurred $127,202 in expenses on behalf of the Portfolio,
including $30,655 in investment management/advisory fees, $10,000 in
administration fees and $44,667 in custody fees.
CUSTODIAN
Brown Brothers Harriman & Co., 59 Wall Street, New York, NY 10005, is the
Custodian for the Portfolio.
As Custodian, Brown Brothers Harriman & Co. is responsible for maintaining
books and records of portfolio transactions and holding the Portfolio's
securities and cash pursuant to a custodian agreement with the Portfolio. Cash
is held for the Portfolio in demand deposit accounts at the Custodian. Subject
to the supervision of the Administrator, the Custodian maintains the accounting
and portfolio transaction records for the Portfolio and each day computes the
net asset value and net income of the Portfolio.
INDEPENDENT AUDITORS
Deloitte & Touche LLP are the independent auditors of the Portfolio.
<PAGE>
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Portfolio is managed actively in pursuit of its investment
objective. Securities are not traded for short-term profits but, when
circumstances warrant, securities are sold without regard to the length of time
held. A 100% annual turnover rate would occur, for example, if all portfolio For
the period July 1, 1999 (commencement of operations) to December 31, 1999, the
portfolio turnover rate was 7.0%. Securities (excluding short-term obligations)
were replaced once in a period of one year. The amount of brokerage commissions
and taxes on realized capital gains to be borne by the investors tend to
increase as the level of portfolio activity increases.
In effecting securities transactions the Investment Manager seeks to
obtain the best price and execution of orders. In selecting a broker, the
Investment Manager considers a number of factors, including: the broker's
ability to execute orders without disturbing the market price; the broker's
reliability for prompt, accurate confirmations and on-time delivery of
securities; the broker's financial condition and responsibility; the research
and other information provided by the broker; and the commissions charged.
Accordingly, the commissions charged by any such broker may be greater than the
amount another firm might charge if the Investment Manager determines in good
faith that the amount of such commissions is reasonable in relation to the value
of the brokerage services and research information provided by such broker.
For the period July 1, 1999 (commencement of operations) to December
31, 1999 the aggregate commissions paid by the Portfolio were $49,786.
Portfolio securities are not purchased from or sold to the
Administrator, Distributor, Investment Adviser or Investment Manager or any
"affliated person" (as defined in the 1940 Act)of the Administrator, Distributor
Investment Adviser or Investment Manager when such entities are acting as
principals, except to the extent permitted by law. The Portfolio uses Brown
Brothers Harriman & Co., an "affiliated person" of the Portfolio, as one of the
Portfolio's principal brokers in the purchase and sale of securities when, in
the judgment of the Investment Manager, that firm will be able to obtain a price
and execution at least as favorable as other qualified brokers. As one of the
Portfolio's principal brokers, Brown Brothers Harriman & Co. receives brokerage
commissions from the Portfolio.
The use of Brown Brothers Harriman & Co. as a broker for the Portfolio
is subject to the provisions of Rule 11a2-2(T) under the Securities Exchange
Act of 1934 which permits the Portfolio to use Brown Brothers Harriman & Co.
as a broker provided that certain conditions are met.
In addition, under the 1940 Act, commissions paid by the Portfolio to
Brown Brothers Harriman & Co. in connection with a purchase or sale of
securities offered on a securities exchange may not exceed the usual and
customary broker's commission.
The Investment Manager may direct a portion of the Portfolio's
securities transactions to certain unaffiliated brokers which in turn use a
portion of the commissions they receive from the Portfolio to pay other
unaffiliated service providers on behalf of the Portfolio for services provided
for which the Portfolio would otherwise be obligated to pay. Such commissions
paid by the Portfolio are at the same rate paid to other brokers for effecting
similar transactions in listed equity securities.
Research services provided by brokers to which Brown Brothers Harriman
& Co. has allocated brokerage business in the past include economic statistics
and forecasting services, industry and company analyses, portfolio strategy
services, quantitative data, and consulting services from economists and
political analysts. Research services furnished by brokers are used for the
benefit of all the Investment Manager's clients and not solely or necessarily
for the benefit of the Portfolio. The Investment Manager believes that the value
of research services received is not determinable and such research does not
significantly reduce its expenses. The Portfolio does not reduce the fee paid to
the Investment Manager and Investment Adviser by any amount that might be
attributable to the value of such services.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Portfolio. In some instances, this procedure might
adversely affect the Portfolio.
A committee of independent Trustees from time to time reviews, among
other things, information relating to the commissions charge by Brown
Brothers Harriman & Co. to the Portfolio and to its other customers and
information concerning the prevailing level of commissions charge by other
qualified brokers. In addition, the procedures pursuant to which Brown
Brothers Harriman & Co. effects brokerage transactions for the Portfolio are
reviewed and approved no less often than annually by a majority of the
independent Trustees.
For the period July 1, 1999 (commencement of operations) to December
31, 1999, total transactions with a principal value of $28,204,010 were
effected for the Portfolio of which transactions with a principal value of
$9,964,170 were effected by Brown Brothers Harriman & Co. which involved
payments of commissions to Brown Brothers Harriman & Co. of $3,076.
For the period July 1, 1999 (commencement of operations) to December
31, 1999, 6.2% of the Portfolio's aggregate commissions were paid to Brown
Brothers Harriman & Co. For the same period, transactions effected for the
Portfolio by Brown Brothers Harriman & Co. which involved payments of
commissions to Brown Brothers Harriman & Co. represented 35.3% of total
transactions effected for the Portfolio.
A committee, comprised of officers and partners of Brown Brothers
Harriman & Co. who are portfolio managers of some of Brown Brothers Harriman &
Co.'s managed accounts (the "Managed Accounts"), evaluates semi-annually the
nature and quality of the brokerage and research services provided by brokers,
and, based on this evaluation, establishes a list and projected ranking of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to such brokers. However, in any semi-annual period, brokers not on
the list may be used, and the relative amounts of brokerage commissions paid to
the brokers on the list may vary substantially from the projected rankings.
The Trustees of the Portfolio review regularly the reasonableness of
commissions and other transaction costs incurred for the Portfolio in light of
facts and circumstances deemed relevant from time to time and, in that
connection, receive reports from the Investment Manager and published data
concerning transaction costs incurred by institutional investors generally.
Over-the-counter purchases and sales are transacted directly with
principal market makers, except in those circumstances in which, in the judgment
of the Investment Manager, better prices and execution of orders can otherwise
be obtained. If the Portfolio effects a closing transaction with respect to a
futures or option contract, such transaction normally would be executed by the
same broker-dealer who executed the opening transaction. The writing of options
by the Portfolio may be subject to limitations established by each of the
exchanges governing the maximum number of options in each class which may be
written by a single investor or group of investors acting in concert, regardless
of whether the options are written on the same or different exchanges or are
held or written in one or more accounts or through one or more brokers. The
number of options which the Portfolio may write may be affected by options
written by the Investment Manager for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio is organized as a trust under the laws of the State of
New York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees if they choose to do so
and in such event the other investors in the Portfolio would not be able to
elect any Trustee. The Portfolio is not required and has no current intention to
hold annual meetings of investors but the Portfolio will hold special meetings
of investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. No material amendment may
be made to the 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). Investors have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified percentage of the outstanding interests in the Portfolio) the right to
communicate with other investors in connection with requesting a meeting of
investors for the purpose of removing one or more Trustees. Investors also have
the right to remove one or more Trustees without a meeting by a declaration in
writing by a specified percentage of the outstanding interests in the Portfolio.
Upon liquidation of the Portfolio, investors would be entitled to share pro rata
in the net assets of the Portfolio available for distribution to investors.
The end of the Portfolio's fiscal year is December 31.
Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the 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.
Investor inquiries may be directed to 59 Wall Street Distributors, Inc,
21 Milk Street, Boston, MA 02109, 1-800-625-5759.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to its percentage of the
beneficial interests in the Portfolio), except that if the Trustees recommend
such sale of assets, the approval by vote of a majority of the investors (with
the vote of each being in proportion to its percentage of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets if approved by
the vote of two thirds of its investors (with the vote of each being in
proportion to the amount of its investment) or (ii) by the Trustees by written
notice to its investors.
Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other 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 Portfolio itself was unable to meet its
obligations.
<PAGE>
The Portfolio's Declaration of Trust further provides that obligations
of the Portfolio are not binding upon the Trustees individually but only upon
the property of the 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 wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in the 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. Investments in the Portfolio may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
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.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of the Portfolio is determined
once on each business day.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the account
of the Custodian by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each day the New York Stock Exchange is open for regular
trading. At 4:00 P.M., New York time on each such business day, the value of
each investor's beneficial interest in the Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals, which are to be
effected on that day, are then effected. The investor's percentage of the
aggregate beneficial interests in the Portfolio is then 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 4:00 P.M New York time on such day
plus or minus, as the case may be, the amount of any additions to or withdrawals
from the investor's investment in the Portfolio effected on such day, and (ii)
the denominator of which is the aggregate net asset value of the Portfolio as of
4:00 P.M. New York time, on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of 4:00 P.M., New York time on the following business day of the Portfolio.
The net income and capital gains and losses, if any, of the Portfolio
are determined at 4:00 p.m., New York time on each business day. Net income for
days other than business days is determined as of 4:00 p.m., New York time on
the immediately preceding business day. All the net income, as defined below,
and capital gains and losses, if any, so determined are allocated pro rata among
the investors in the Portfolio at the time of such determination.
For this purpose the "net income" of the Portfolio (from the time of
the immediately preceding determination thereof) consists of (i) accrued
interest, accretion of discount and amortization of premium less (ii) all actual
and accrued expenses of the Portfolio (including the fees payable to the
Investment Adviser, Investment Manager and Administrator of the Portfolio).
The value of investments listed on a domestic securities exchange is
based on the last sale prices as of the regular close of the New York Stock
Exchange (which is currently 4:00 P.M New York time) or, in the absence of
recorded sales, at the average of readily available closing bid and asked prices
on such Exchange.
<PAGE>
Unlisted securities are valued at the average of the quoted bid and
asked prices in the over-the-counter market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.
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 values from dealers; and general
market conditions. Short-term investments which mature in 60 days or less are
valued at amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their original
maturity when acquired was more than 60 days, unless this is determined not to
represent fair value by the Trustees of the Portfolio.
If the Portfolio determines that it would be detrimental to the best
interest of the remaining investors in the Portfolio to make payment wholly or
partly in cash, payment of the redemption price may be made in whole or in part
by a distribution in kind of securities from the Portfolio, in lieu of cash, in
conformity with the applicable rules of the Securities and Exchange Commission
(the "SEC"). If interests are redeemed in kind, the redeeming investor might
incur transaction costs in converting the assets into cash. The method of
valuing portfolio securities is described above and such valuation will be made
as of the same time the redemption price is determined.
An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
Portfolio Business Day after the reduction is effected, but in any event within
seven days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted
or, to the extent otherwise permitted by the 1940 Act if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 19. TAX STATUS.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. However each investor in the Portfolio will be
taxable on its share (as determined in accordance with the governing instruments
of the Portfolio) of the Portfolio's ordinary income and capital gain in
determining its income tax liability. The determination of such share will be
made in accordance with the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder.
Although, as described above, the Portfolio will not be subject to
federal income tax, it will file appropriate income tax returns.
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 satisfy the requirements
of Subchapter M of the Code.
Gains or losses on sales of securities by the Portfolio will be treated
as long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where, if applicable, the Portfolio
acquires a put or writes a call thereon. Other gains or losses on the sale of
securities will be short-term capital gains or losses.
<PAGE>
FOREIGN TAXES. The Portfolio may be subject to foreign withholding
taxes with respect to income received from sources within foreign countries.
OTHER TAXATION. The investment by an investor in the Portfolio does not
cause the investor to be liable for any income or franchise tax in the State of
New York. Investors are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in the Portfolio.
ITEM 20. UNDERWRITERS.
The placement agent for the Portfolio is 59 Wall Street Distributors,
Inc., which receives no compensation for serving in this capacity. Other
investment companies, insurance company separate accounts, common and commingled
trust funds and similar organizations and entities may continuously invest in
the Portfolio acted as placement agent for the Portfolio under the same terms
and conditions as set forth herein.
ITEM 21. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The Portfolio's current annual report to shareholders as filed with
the SEC pursuant to Section 30(b) of the 1940 Act and Rule 30b2-1
thereunder is incorporated herein by reference.
<PAGE>
PART C
ITEM 23. EXHIBITS.
(a) Declaration of Trust of the Registrant (1)
(b) By-Laws of the Registrant(1)
(d) Form of Investment Advisory Agreement between the Registrant and Wafra
Investment Advisory Group, Inc.(1)
(d) Form of Investment Management Agreement between the Registrant and Brown
Brothers Harriman & Co.(1)
(g) Custodian Contract between the Registrant and Brown Brothers Harriman (1)
(g)(i)Form of Amendment to Custodian Contract between the Registrant and
Brown Brothers Harriman & Co.(1)
(h) Form of Administration Agreement between the Registrant and
Brown Brothers Harriman Trust Company(1)
(h)(i) Form of Expense Payment Agreement between the Registrant and
Brown Brothers Harriman Trust Company (1)
(l) Form of Investment representation letters of initial investors(1)
(p) Code of Ethics (2)
17 Financial Data Schedule (2)
- ----------------
(1) Incorporated herein by reference from the Registration Statement as
initially filed with the Securities and Exchange Commission on
September 1, 1999.
(2) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
<PAGE>
ITEM 25. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as an Exhibit herewith.
The Trustees and officers of the Registrant are insured under an errors and
omissions liability insurance policy. The Registrant and its officers are also
insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940, as amended.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Registrant's investment adviser, Wafra Investment Advisory Group, Inc.,
a U.S. registered investment adviser, acts as investment adviser for numerous
investment funds and managed accounts, including other Islamic funds and
products.
To the knowledge of the Registrant, none of the principals or officers of
Wafra Investment Advisory Group, Inc. is engaged in any other business,
profession, vocation or employment of a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder are maintained at the offices of:
Dow Jones Islamic Market Index Portfolio
Butterfield House
Fort Street/P.O. Box 2330
George Town, Grand Cayman
Cayman Islands, B.W.I.
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment manager)
Brown Brothers Harriman Trust Company
63 Wall Street
New York, NY 10005
(administrator)
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, MA 02109
(placement agent)
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(custodian)
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, Dow
Jones Islamic Market Index Portfolio has duly caused this registration statement
on Form N-1A to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, Massachusetts on the 28th day of April, 2000.
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
By: /s/Philip W. Coolidge
Philip W. Coolidge
President
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
EX-99.(p) Code of Ethics.
EX-99.27 Financial Data Schedule.
CODE OF ETHICS FOR
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
August 10, 1999
Dow Jones Islamic Market Index Portfolio (each a "Portfolio" and
collectively the "Portfolios") have each determined to adopt this Code of Ethics
(the "Code") as of August 10, 1999, to specify and prohibit certain types of
personal securities transactions deemed to create a conflict of interest and to
establish reporting requirements and preventive procedures pursuant to the
provisions of Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the
"1940 Act").
I. DEFINITIONS
A. An "Access Person" means (i) any Trustee, Director, officer or
Advisory Person (as defined below) of the Portfolio or any
investment adviser thereof, or (ii) any director or officer of a
principal underwriter or placement agent of the Portfolio who, in
the ordinary course of his or her business, makes, participates
in or obtains information regarding the purchase or sale of
securities for the Portfolio for which the principal underwriter
or placement agent so acts or whose functions or duties as part
of the ordinary course of his or her business relate to the
making of any recommendation to the Portfolio regarding the
purchase or sale of securities or (iii) notwithstanding the
provisions of clause (i) above, where the investment adviser is
primarily engaged in a business or businesses other than advising
registered investment companies or other advisory clients, any
trustee, director, officer or Advisory Person of the investment
adviser who, with respect to the Portfolio, makes any
recommendation or participates in the determination of which
recommendations shall be made, or whose principal function or
duties relate to the determination of which recommendations shall
be made to the Portfolio or who in connection with his or her
duties, obtains any information concerning securities
recommendations being made by such investment adviser to the
Portfolio.
B. An "Advisory Person" means any employee of the Portfolio or any
investment adviser thereof (or of any company in a control
relationship to the Portfolio or such investment adviser), who,
in connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or
sale of securities by the Portfolio or whose functions relate to
any recommendations with respect to such purchases or sales and
any natural person in a control relationship with the Portfolio
or adviser who obtains information regarding the purchase or sale
of securities.
C. A "Portfolio Manager" means any person or persons with the direct
responsibility and authority to make investment decisions
affecting the Portfolio.
D. "Access Persons," "Advisory Persons" and "Portfolio Managers"
shall not, unless otherwise provided in the code of ethics of the
Portfolio's investment adviser, any subadviser, administrator,
principal underwriter or placement agent, include any individual
who is required to file quarterly reports with the Portfolio's
investment adviser, any subadviser, administrator, principal
underwriter or placement agent pursuant to a code of ethics
substantially in conformity with Rule 17j-1 of the 1940 Act or
Rule 204-2 of the Investment Advisers Act of 1940 which has been
approved by the Portfolio's Board of Trustees.
E. "Beneficial Ownership" shall be interpreted subject to the
provisions of Rule 16a-1(a) (exclusive of Section (a)(1) of such
Rule) of the Securities Exchange Act of 1934.
F. "Control" shall have the same meaning as set forth in Section
2(a)(9) of the 1940 Act.
G. "Disinterested Trustee" means a Trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the 1940 Act.
An "interested person" includes any person who is a trustee,
director, officer, employee or owner of 5% or more of the
outstanding stock of the Adviser. Affiliates of brokers or
dealers are also "interested persons," except as provided in Rule
2(a)(19)(1) under the 1940 Act.
H. The "Review Officer" is the person designated by the Portfolio's
Board of Trustees to monitor the overall compliance with this
Code. In the absence of any such designation the Review Officer
shall be the Treasurer or any Assistant Treasurer of the
Portfolio.
I. The "Preclearance Officer" is the person designated by the
Portfolio's Board of Trustees to provide preclearance of any
personal security transaction as required by this Code.
J. "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security or the
purchase or sale of a future or index on a security or option
thereon.
K. "Security" shall have the meaning as set forth in Section
2(a)(36) of the 1940 Act (in effect, all securities), except that
it shall not include securities issued by the U.S. Government (or
any other "government security" as that term is defined in the
1940 Act), bankers' acceptances, bank certificates of deposit,
commercial paper and such other money market instruments as may
be designated by the Trustees of the Portfolio and shares of
registered open-end investment companies.
L. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such
a recommendation.
II. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the
personal investment activities of all Access Persons.
Each Access Person shall:
A. At all times, place the interests of the Portfolio before his or
her personal interests;
B. Conduct all personal securities transactions in a manner
consistent with this Code, so as to avoid any actual or potential
conflicts of interest, or an abuse of position of trust and
responsibility; and
C. Not take any inappropriate advantage of his or her position with
or on behalf of the Portfolio.
III. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. Blackout Periods
1. No Access Person (other than a Disinterested Trustee) shall
purchase or sell, directly or indirectly, any security in
which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership on a
day during which he or she knows or should have known the
Portfolio has a pending "buy" and "sell" order in that same
security until that order is executed or withdrawn.
2. No Advisory Person or Portfolio Manager shall purchase or
sell, directly or indirectly, any security in which he or
she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership within at least
seven calendar days before and after the Portfolio trades
(or has traded) in that security.
B. Initial Public Offerings
No Advisory Person shall acquire any security in an initial
public offering for his or her personal account.
C. Private Placements
With regard to private placements, each Advisory Person
shall:
1. Obtain express prior written approval from the Review
Officer for any acquisition of securities in a private
placement (the Review Officer, in making such
determination, shall consider, among other factors, whether
the investment opportunity should be reserved for the
Portfolio, and whether such opportunity is being offered to
such Advisory Person by virtue of his or her position with
the Portfolio); and
2. After authorization to acquire securities in a private
placement has been obtained, disclose such personal
investment with respect to any subsequent consideration by
the Portfolio (or any other investment company for which he
or she acts in a capacity as an Advisory Person) for
investment in that issuer.
If the Portfolio decides to purchase securities of an
issuer the shares of which have been previously obtained
for personal investment by an Advisory Person, that
decision shall be subject to an independent review by
Advisory Persons with no personal interest in the issuer.
D. Short-Term Trading Profits
No Advisory Person shall profit from the purchase and sale,
or sale and purchase, of the same (or equivalent)
securities of which such Advisory Person has beneficial
ownership within 60 calendar days. Any profit so realized
shall, unless the Portfolio's Board of Trustees approves
otherwise, be disgorged as directed by the Portfolio's
Board of Trustees.
E. Gifts
No Advisory Person shall receive any gift or other things
of more than de minimis value from any person or entity
that does business with or on behalf of the Portfolio.
F. Service as a Director or Trustee
1. No Advisory Person shall serve on a board of directors or
trustees of a publicly traded company without prior
authorization from the Board of Trustees of the Portfolio,
based upon a determination that such board service would be
consistent with the interests of the Portfolio and its
investors.
2. If board service by an Advisory Person is authorized by the
Board of Trustees of the Portfolio, such Advisory Person
shall be isolated from the investment making decisions of
the Portfolio with respect to the companies of which he or
she is a director or trustee.
G. Exempted Transactions
The prohibitions of Section III. shall not apply to:
1. Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or
control;
2. Purchases or sales that are non-volitional on the part of
the Access Person or the Portfolio, including mergers,
recapitalizations or similar transactions;
3. Purchases which are part of an automatic dividend
reinvestment plan;
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired; and
5. Purchases and sales that receive prior approval in writing
by the Preclearance Officer as (a) only remotely
potentially harmful to the Portfolio because they would be
very unlikely to affect a highly institutional market, (b)
clearly not economically related to the securities to be
purchased or sold or held by the Portfolio or client and
(c) not representing any danger of the abuses proscribed by
Rule 17j-1, but only if in each case the prospective
purchaser has identified to the Review Officer all factors
of which he or she is aware which are potentially relevant
to a conflict of interest analysis, including the existence
of any substantial economic relationship between his or her
transaction and securities held or to be held by the
Portfolio.
IV. COMPLIANCE PROCEDURES
A. Preclearance
1. An Access Person (other than a Disinterested Trustee) may
not, directly or indirectly, acquire or dispose of
beneficial ownership of a security except as provided below
unless:
a. Such purchase or sale has been approved by the
Preclearance Officer;
b. The approved transaction is completed on the same day
approval is received; and
c. The Preclearance Officer has not rescinded such
approval prior to execution of the transaction.
2. Each Access Person may effect total purchases and sales of
up to $25,000 of securities listed on a national securities
exchange within any six month period without preclearance
from the Board of Trustees or the Preclearance Officer
provided that:
a. The six month period is a "rolling" period, i.e., the
limit is applicable between any two dates which are
six months apart;
b. Transactions in options and futures, other than
options or futures on commodities, will be included
for purposes of calculating whether the $25,000 limit
has been exceeded. Such transactions will be measured
by the value of the securities underlying the options
and futures; and
c. Although preclearance is not required for personal
transactions in securities which fall into this "de
minimis" exception, these trades must still be
reported on a quarterly basis pursuant to Section
IV.B.2. hereunder, if such transactions are
reportable.
B. Reporting
1. Coverage: Each Access Person (other than Disinterested
Trustees) shall file with the Review Officer confidential
quarterly reports containing the information required in
Section IV.B.2. hereunder with respect to all transactions
during the preceding quarter in any
securities in which such person has, or by reason of
such transaction acquires, any direct or indirect
beneficial ownership, provided that no Access Person shall
be required to report
transactions effected for any account over which such
Access Person has no direct or indirect influence or
control (except that such an Access Person must file a
written certification stating that he or she has no direct
or indirect influence or control over the account in
question). All such Access Persons shall file reports, even
when no transactions have been effected, representing that
no transactions subject to reporting requirements were
effected.
2. Filings: Every report shall be made no later than ten days
after the end of the calendar quarter in which the
transaction to which the report relates was effected, and
shall contain the following information:
a. The date of the transaction, the title and the number
of shares and the principal amount of each security
involved;
b. The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
c. The price at which the transaction was effected; and
d. The name of the broker, dealer or bank with or
through whom the transaction was effected.
3. Any report may contain a statement that it shall not be
construed as an admission by the person making the report
that he or she has any direct or indirect beneficial
ownership in the security to which the report relates.
4. Confirmations: All Access Persons (other than Disinterested
Trustees) shall direct their brokers to supply the
Portfolio's Review Officer, on a timely basis, duplicate
copies of confirmations of all personal securities
transactions.
C. Review
In reviewing transactions, the Review Officer shall take into
account the exemptions allowed under Section III.G. hereunder.
Before making a determination that a violation has been committed
by an Access Person, the Review Officer shall give such person an
opportunity to supply additional information regarding the
transaction in question.
D. Disclosure of Personal Holdings
All Advisory Persons shall disclose all personal securities
holdings upon commencement of employment and thereafter on an
annual basis.
E. Certification of Compliance
Each Access Person is required to certify annually that he or she
has read and understood this Code and recognizes that he or she
is subject to the Code. Further, each Access Person is required
to certify annually that he or she has complied with all the
requirements of this Code and that he or she has disclosed or
reported all personal securities transactions pursuant to the
requirements of the Code.
V. REQUIREMENTS FOR DISINTERESTED TRUSTEES
A. Every Disinterested Trustee shall file with the Review Officer a
quarterly report indicating that he or she had no reportable
transactions or a report containing the information required in
Section IV.B.2. above with respect to transactions (other than
exempted transactions listed under Section III.G.) in any
securities in which such person has, or by reason of such
transactions acquires, any direct or indirect beneficial
ownership, if such Trustee, at the time of that transaction, knew
or should have known, in the ordinary course of pursuing his or
her official duties as Trustee, that during the fifteen day
period immediately preceding or after the transaction by the
Trustee:
1. Such security was being purchased or sold by the
Portfolio; or
2. Such security was being considered for purchase or sale
by the Portfolio.
All Disinterested Trustees shall file reports, even when no
transactions have been effected, representing that no
transactions subject to reporting requirements were effected.
B. Notwithstanding the preceding section, any Disinterested Trustee
may, at his or her option, report the information described in
section IV.B.2. above with respect to any one or more
transactions and may include a statement that the report shall
not be construed as an admission that the person knew or should
have known of portfolio transactions by the Portfolio in such
securities.
VI. REVIEW BY THE BOARD OF TRUSTEES
At least annually, the Review Officer shall report to the Board of
Trustees regarding:
A. All existing procedures concerning Access Persons' personal
trading activities and any procedural changes made during the
past year;
B. Any recommended changes to the Portfolios' Code or procedures;
and
C. A summary of any violations which occurred during the past year
with respect to which significant remedial action was taken.
VII. SANCTIONS
A. Sanctions for Violations by Access Persons (except Disinterested
Trustees)
If the Review Officer determines that a violation of this Code
has occurred, he or she shall so advise the Board of Trustees and
the Board may impose such sanctions as it deems appropriate,
including, inter alia, disgorgement of profits, censure,
suspension or termination of the employment of the violator. All
material violations of the Code and any sanctions imposed as a
result thereto shall be reported periodically to the Board of
Trustees.
B. Sanctions for Violations by Disinterested Trustees
If the Review Officer determines that any Disinterested Trustee
has violated this Code, he or she shall so advise the President
of the Portfolio and also a committee consisting of the
Disinterested Trustees (other than the person whose transaction
is at issue) and shall provide the committee with a report,
including the record of pertinent actual or contemplated
portfolio transactions of the Portfolio and any additional
information supplied by the person whose transaction is at issue.
The committee, at its option, shall either impose such sanctions
as it deems appropriate or refer the matter to the full Board of
Trustees of the Portfolio, which shall impose such sanctions as
it deems appropriate.
VIII. MISCELLANEOUS
A. Access Persons
The Review Officer of the Portfolio will identify all Access
Persons who are under a duty to make reports to the Portfolio and
will inform such persons of such duty. Any failure by the Review
Officer to notify any person of his or her duties under this Code
shall not relieve such person of his or her obligations
hereunder.
B. Records
Brown Brothers Harriman Trust Company (Cayman) Limited shall
maintain records in the manner and to the extent set forth below,
which records may be maintained on microfilm under the conditions
described in Rule 31a-2(f) under the 1940 Act, and shall be
available for examination by representatives of the Securities
and Exchange Commission ("SEC"):
1. A copy of this Code and any other code which is, or at any
time within the past five years has been, in effect shall
be preserved in an easily accessible place;
2. A record of any violation of this Code and of any action
taken as a result of such violation shall be preserved in
an easily accessible place for a period of not less than
five years following the end of the fiscal year in which
the violation occurs;
3. A copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two
years in an easily accessible place; and
4. A list of all persons who are required, or within the past
five years have been required, to make reports pursuant to
this Code shall be maintained in an easily accessible
place.
C. Confidentiality
All reports of securities transactions and any other information
filed pursuant to this Code shall be treated as confidential,
except to the extent required by law.
D. Interpretation of Provisions
The Board of Trustees of the Portfolio may from time to time
adopt such interpretations of this Code as it deems appropriate.
<PAGE>
TRANSACTION REPORT
To: , Review Officer
From:
(Your Name)
This Transaction Report is submitted pursuant to Section IV. of the
Code of Ethics, of Dow Jones Islamic Market Index Portfolio and supplies
information with respect to transactions in any security in which I may be
deemed to have, or by reason of such transaction acquire, any direct or indirect
beneficial ownership interest (whether or not such security is a security held
or to be acquired by a Portfolio) for the calendar quarter ended
.
Unless the context otherwise requires, all terms used in this Report
shall have the same meaning as set forth in said Code of Ethics.
For purposes of this Report, beneficial ownership shall be interpreted
subject to the provisions of the Code and Rule 16a-1(a) (exclusive of Section
(a)(1) of such Rule) of the Securities Exchange Act of 1934.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nature of
Transaction
(Whether Name of the
Purchase, Principal Broker, Dealer
Sale, or Amount of Price at Or Bank with
Other Type of Securities Which the Whom the Nature of
Name of Title of Date of Disposition Acquired or Transaction Transaction Ownership
Fund Securities Transaction or Acquisition Disposed of Was Effected Was
Effected of Securities*
<FN>
* If appropriate, you may disclaim beneficial ownership of any security
listed in this Report.
</FN>
</TABLE>
<PAGE>
I HEREBY CERTIFY THAT I (1) HAVE READ AND UNDERSTAND THE CODE, (2)
RECOGNIZE THAT I AM SUBJECT TO THE CODE, (3) HAVE COMPLIED WITH THE REQUIREMENTS
OF THE CODE OVER THE PAST YEAR, (4) HAVE DISCLOSED ALL PERSONAL SECURITIES
TRANSACTIONS OVER THE PAST YEAR REQUIRED TO BE DISCLOSED BY THE CODE, (5) HAVE
SOUGHT AND OBTAINED PRECLEARANCE WHENEVER REQUIRED BY THE CODE AND (6) CERTIFY
THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS
TRUE AND CORRECT.
Dated:
Signature
<PAGE>
5In the case of a personal securities transaction by an Access Person
of a Portfolio (other than a Disinterested Trustee), the Code of the Portfolio
requires that the Portfolio's Preclearance Officer determine that the proposed
personal securities transaction (i) is not potentially harmful to the Portfolio,
(ii) would be unlikely to affect the market in which the Portfolio's portfolio
securities are traded, or (iii) is not related economically to securities to be
purchased, sold, or held by the Portfolio. In addition, the Code requires that
the Portfolio's Preclearance Officer determine that the decision to purchase or
sell the security at issue is not the result of information obtained in the
course of the Access Person's relationship with the Portfolio.
PERSONAL TRADING REQUEST AND AUTHORIZATION
This Personal Trading Request and Authorization is submitted pursuant
to the Code of Ethics, amended and restated as of June 20, 1995, of U.S. Money
Market Portfolio, Inflation-Indexed Securities Portfolio, U.S. Equity Portfolio,
U.S. Small Company Portfolio, European Equity Portfolio, Pacific Basin Equity
Portfolio, Emerging Markets Portfolio, International Equity Portfolio and U.S.
Mid-Cap Portfolio. Unless the context otherwise requires, all terms used herein
shall have the same meaning as set forth in said Code of Ethics.
Personal Trading Request (to be completed by Access Person prior to any personal
trade):
Name of Access Person:
Date of proposed transaction:
Name of the issuer and dollar amount or number of securities of the issuer to be
purchased or sold:
Nature of the transaction (i.e., purchase, sale):1
Are you or is a member of your immediate family an officer, trustee or
director of the issuer of the securities or any affiliate2 of the issuer?
Yes No
If yes, please describe:
Describe the nature of any direct or indirect professional or business
relationship that you may have with the issuer of the securities.3
Do you have any material nonpublic information concerning the issuer?
Yes No
Do you beneficially own more than 1/2 of 1% of the outstanding equity securities
of the issuer?
Yes No
If yes, please report the name of the issuer and the total number of
shares "beneficially owned":
Are you aware of any facts regarding the proposed transaction, including the
existence of any substantial economic relationship, between the proposed
transaction and any securities held or to be acquired by a Portfolio that may be
relevant to a determination as to the existence of a potential conflict of
interest?4
Yes No
If yes, please describe:
To the best of my knowledge and belief, the answers that I have
provided above are true and correct.
Dated:
Signature of Access Person
Approval or Disapproval of Personal Trading Request (to be completed by
Preclearance Officer prior to personal trade):
I confirm that the above-described proposed transaction appears to be
consistent with the policies described in the Code and that the
conditions necessary5 for approval of the proposed transaction have
been satisfied.
I do not believe the above-described proposed transaction is consistent
with the policies described in the Code or that the conditions
necessary for approval of the proposed transaction have been satisfied.
Dated:
Signature of Preclearance Officer
1If other than market order, please describe any proposed limits.
2For purposes of this question, "affiliate" includes (i) any entity that
directly or indirectly owns, controls or holds with power to vote 5% or more of
the outstanding voting securities of the issuer and (ii) any entity under common
control with the issuer.
3A "professional relationship" includes, for example, the provision of legal
counsel or accounting services. A "business relationship" includes, for example,
the provision of consulting services or insurance coverage.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information from the Dow Jones Islamic Market
Index Portfolio Annual Report, dated December 31, 1999, and is qualified in its
entirety by reference to such report.
</LEGEND>
<CIK> 0001088654
<NAME> Dow Jones Islamic Market Index Portfolio
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 14,904,463
<INVESTMENTS-AT-VALUE> 16,745,622
<RECEIVABLES> 16,201
<ASSETS-OTHER> 99,948
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,861,771
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,823
<TOTAL-LIABILITIES> 46,823
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,973,734
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,841,214
<NET-ASSETS> 16,814,948
<DIVIDEND-INCOME> 71,791
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 43,410
<NET-INVESTMENT-INCOME> 28,381
<REALIZED-GAINS-CURRENT> (54,847)
<APPREC-INCREASE-CURRENT> 1,841,214
<NET-CHANGE-FROM-OPS> 1,814,748
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,000,200
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,814,948
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 43,410
<AVERAGE-NET-ASSETS> 15,202,633
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.57
</TABLE>
