Brandes International Fund
Brandes Small Cap International Fund
Annual
Report
For the
Period Ended
October 31, 1996
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
Annual Report
For the Period Ended October 31, 1996
December 16, 1996
Dear Shareholder:
The six-month period ended October 31, 1996 showed mixed returns in foreign
stock markets, while the U.S. market continued to outshine them. As value
investors, the Brandes Funds welcome downward price volatility in international
markets, as it gives us the chance to purchase good businesses at bargain
prices.
Over the past six months, both the Brandes International Fund and the Brandes
Small Cap International Fund became more heavily weighted in Europe. This
reflects no economic, political or other bias in favor of that region of the
world. It simply shows that more bargains have been available to us in this
area. We believe there are some slow, revolutionary changes taking place in
continental Europe that ultimately could be very positive for investors.
The Brandes International Fund continues to find bargains in infrastructure
companies. These include companies which provide or manufacture basic products
such as telephones, telephone equipment, gas and electric services, and power
generating equipment. Much of this service and equipment is provided to growing
and emerging markets around the world. You will also see several financial
service companies in this Fund. These are very reasonably priced banks and
insurance companies we have found throughout Europe. As a measure of the values
we have been able to find, the Price/Earnings Ratio of this Fund at fiscal
year-end was just 15.5, compared to 26.0 for the benchmark, the Morgan Stanley
Capital International Europe, Australasia and Far East Index of stocks (EAFE).
The Brandes Small Cap International Fund contains a strong representation of
companies in the construction and housing, electrical and electronics, and
machinery sectors, as well as in banking. At the end of the fiscal year, this
Fund's portfolio showed an average Price/Earnings Ratio of just 10.8, compared
to a 27.7 Price/Earnings ratio for the benchmark, the Financial Times/S&P
Actuaries World Indices Medium/Small Cap Index.
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
As you know by now, the Board of Trustees of the Brandes Investment Trust has
approved in principal a proposed tax-free reorganization of the Brandes
International Fund into the Northstar International Value Fund, and the
termination of the Small Cap International Fund by January 17, 1997. These
transactions have already been discussed in some detail in the prospectus
supplement dated December 16, 1997.
We will notify you of further events affecting the Funds as they develop. We
will try to keep these notifications to a minimum. We appreciate the opportunity
to serve you and are grateful for your cooperation and goodwill during this
transition process.
Sincerely yours,
/s/
Barry P. O'Neil
President, Brandes Investment Trust
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
Comparison of change in value of $10,000 investment in the BRANDES
INTERNATIONAL FUND, Class A and Class C, and the Morgan Stanley Capital
International EAFE (Europe, Australasia,and Far East) Index.
Annualized Total Return
since March 6, 1996 (inception) to October 31, 1996
Class A: 7.84% Class C: 10.39%
Year-ended October 31, 1996
Class A: 6.91% Class C: 10.62%
<TABLE>
Date Class A Class C MSCI EAFE
<C> <C> <C> <C>
3/6/95 10,000 10,000 10,000
3/31/95 9,688 10,168 10,307
6/30/95 10,092 10,584 10,382
9/30/95 10,351 10,840 10,815
12/31/95 10,685 11,171 11,253
3/31/96 10,776 11,251 11,578
6/30/96 11,266 11,741 11,761
9/30/96 11,358 11,813 11,746
10/31/96 11,335 11,681 11,626
</TABLE>
Past Performance is not predictive of future performance
Comparison of change in value of $10,000 investment in the BRANDES SMALL
CAP INTERNATIONAL FUND, Class A and Class C, and the Morgan Stanley Capital
International EAFE (Europe, Australasia,and Far East) Index.
Annualized Total Return
since aPRIL 29, 1996 (inception) to October 31, 1996
Class A: (11.81)% Class C: (5.53)%
<TABLE>
Date Class A Class C MSCI EAFE
<C> <C> <C> <C>
4/29/96 10,000 10,000 10,000
6/30/96 9,512 9,976 9,852
9/30/96 9,223 9,656 9,840
10/31/96 9,383 9,716 9,739
</TABLE>
Past Performance is not predictive of future performance
<PAGE>
<TABLE>
<CAPTION>
Brandes International Fund
PORTFOLIO OF INVESTMENTS as of October 31, 1996
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS: 95.9%
- --------------------------------------------------------------------------------
Argentina: 2.3%
Yacimientos Petroliferos
<S> <C> <C>
S.A., ADR............... 33,240 $ 733,460
---------
Australia: 1.0%
Pacific Dunlop, Ltd.,
ORD..................... 134,800 299,094
-------
Austria: 2.5%
EVN Energie-
Versorgung Nie., ORD.... 2,760 373,654
VA Technologie
AG, ORD.................. 3,000 418,794
-------
792,448
-------
Brazil: 2.8%
Telecommunicacoes
Brasileiras, ADR........ 11,900 886,550
-------
Canada: 1.0%
Molson Co. Ltd.,
Class A, ORD............ 21,140 323,567
-------
Denmark: 5.8%
Den Danske Bank
Group................... 12,080 863,966
Tele Danmark AS-B,
ORD..................... 18,520 930,684
-------
1,794,650
---------
France: 14.5%
AGF Assurances Gen.
de France, ORD.......... 3,300 97,128
Alcatel Alsthom, ORD..... 16,750 1,425,378
Compagnie UAP, ORD....... 23,700 491,249
Elf Aquitaine, ORD....... 10,005 798,283
Groupe Danone, ORD....... 6,720 918,113
France, continued
SGS-Thomson
Microelec-NY Shs........ 15,700 $ 822,288
---------
4,552,439
---------
Germany: 8.9%
Berliner Kraft und
Licht, ORD.............. 1,380 408,249
Daimler-Benz AG, ORD..... 23,600 1,385,445
Siemens AG, ORD.......... 19,000 980,326
-------
2,774,020
---------
Israel: 0.1%
Scitex Corporation, Ltd.. 2,400 23,700
------
Italy: 10.6%
Istituto Mobiliare
Italiano, ORD........... 127,100 1,004,408
Italgas-Sta It per il
Gas pA, ORD............. 204,000 752,005
Stet Societa Finanzioria
Telefonica, ORD......... 452,800 1,561,843
---------
3,318,256
---------
Japan: 7.8%
Fuji Photo Film
Co. Ltd., ORD........... 41,400 1,187,994
Hitachi, Ltd., ORD....... 141,000 1,249,697
---------
2,437,691
---------
Mexico: 2.8%
Telefonos de
Mexico, ADR............. 28,530 870,165
-------
Netherlands: 5.4%
Konin Boskalis
Westminstr N.V., ORD.... 22,840 824,684
Unilever N.V. Ctfs.,
ORD..................... 5,810 881,493
-------
1,706,177
---------
<PAGE>
Brandes International Fund
PORTFOLIO OF INVESTMENTS as of October 31, 1996
Shares Value
Singapore: 2.1%
Jardine Matheson
Hldgs., ORD............. 117,200 $ 662,180
---------
South Africa: 1.5%
Iscor, Ltd., ORD......... 662,950 471,424
-------
South Korea: 0.5%
Pohang Iron & Steel
Co., Inc., ADR.......... 7,490 155,418
-------
Spain: 9.8%
Argentaria, ORD.......... 8,510 332,746
Banco Bilbao Vizcaya,
ORD..................... 14,700 712,727
Banco de Valencia-Reg.,
ORD..................... 5,580 95,127
Repsol S.A., ORD......... 23,290 758,574
Telefonica de Espana
S.A., ORD............... 58,090 1,162,933
---------
3,062,107
---------
Sweden: 1.5%
Munksjo AB-Free,
ORD..................... 9,800 96,727
SSAB Svenskt Stal AB-
Shs, ORD................ 26,000 379,012
-------
475,739
-------
Switzerland: 8.3%
ABB AG-Bearer, ORD....... 380 467,997
Baloise Holdings -
Reg, ORD................ 263 547,441
Nestle S.A., ORD......... 1,282 1,387,831
Schindler Holding AG
Partn Ctf, ORD.......... 180 182,796
-------
2,586,065
---------
United Kingdom: 6.7%
British Gas PLC, ORD..... 185,000 $ 576,645
Grand Metropolitan
PLC, ORD................ 115,200 866,304
Guinness PLC, ORD........ 63,400 454,064
Invesco PLC, ORD......... 28,300 107,327
Medeva PLC, ORD.......... 18,900 81,214
------
2,085,554
---------
Total Common Stocks
(cost $29,411,672)................ 30,010,704
----------
Principal
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 2.9%
- --------------------------------------------------------------------------------
United States: 2.9%
Prudential-Bache Repurchase Agree-
ment, dated 10/31/96, due 11/1/96,
collateralized by mortgage-backed
securities (proceeds $922,596)
(cost $922,470)............ $922,470 922,470
Total Investments in Securities
(cost $30,334,142+): 98.8%........ 30,933,174
----------
Other Assets less
Liabilities: 1.2%................. 373,722
-------
Total Net Assets: 100.0% ........... $31,306,896
===========
<FN>
+ Cost for federal income tax purposes is the same.
Net unrealized depreciation consists of:
Gross unrealized appreication..... $ 1,623,455
Gross unrealized deprecaition..... (1,024,423)
----------
Net unrealized appreciation...... $ 599,032
=========
</FN>
</TABLE>
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS by Industry as of October 31, 1996
<S> <C>
Automobiles............................. 4.6%
Banking................................. 10.0%
Beverages and Tobacco .................. 2.6%
Data Processing & Reproductions......... 0.1%
Electrical & Electronics................ 13.7%
Electronic Components &
Instruments........................... 2.7%
Energy Sources.......................... 7.6%
Financial Services...................... 0.4%
Food & Household Products............... 13.5%
Forest Products & Papers................ 0.3%
Health and Personal Care................ 0.3%
Insurance............................... 3.8%
Machinery & Engineering................. 2.0%
Metals - Steel.......................... 3.4%
Multi - Industry........................ 3.2%
Recreation, Other Consumer Goods....... 4.0%
Telecommunications...................... 20.8%
Utilities - Electrical & Gas............ 7.0%
---
100.0%
=====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES as of October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $30,334,142) ..................... $30,933,174
Foreign cash........................................................................... 452,227
Receivables:
Fund shares sold.................................................................... 233,476
Dividends and interest ............................................................. 143,827
Prepaid expenses....................................................................... 17,494
Deferred organization costs............................................................ 70,104
------
Total assets .................................................................... 31,850,302
----------
LIABILITIES
Securities purchased................................................................... 398,090
Fund shares redeemed................................................................... 64,522
Accrued expenses ...................................................................... 73,197
Accrued administration fees............................................................ 5,000
Due to Advisor ........................................................................ 2,597
-----
Total liabilities................................................................ 543,406
-------
Net assets ...................................................................... $31,306,896
===========
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $29,342,717
Undistributed net investment income.................................................... 286,879
Net unrealized appreciation on investments and foreign currency........................ 599,032
Net realized gain on investments and foreign currency.................................. 1,078,268
---------
Net assets ...................................................................... $31,306,896
===========
Net assets:
Class A Shares ........................................................................ $16,776,556
Class C Shares ........................................................................ 14,530,340
----------
$31,306,896
===========
Class A Shares
Net asset value and redemption price per share, based on 1,132,809 shares
outstanding (unlimited number of shares authorized without par value) .............. $14.81
======
Computation of Offering Price per share
(net asset value $14.81/.9525)...................................................... $15.55
======
Class C Shares
Net asset value and redemption price per share, based on 989,620 shares
outstanding (unlimited number of shares authorized without par value) .............. $14.68
======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - Year ended October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
<S> <C>
Dividends (net of withholding tax of $109,816)...................................... $ 673,738
Interest............................................................................ 171,227
-------
Total income..................................................................... 844,965
-------
Expenses:
Advisory fees....................................................................... 259,033
Custodian and accounting fees....................................................... 117,967
Transfer agent fees................................................................. 95,677
Administrative fee ................................................................. 60,000
Blue sky fees....................................................................... 38,047
Auditing fees....................................................................... 24,055
Amortization of deferred organization costs......................................... 20,989
Legal fees.......................................................................... 14,289
Reports to shareholders............................................................. 6,006
Trustees fees....................................................................... 11,121
Miscellaneous....................................................................... 18,947
Expense reimbursements ............................................................. (277,625)
--------
388,506
Distribution and Shareholder Service fees
Class A Shares...................................................................... 51,858
Class C Shares...................................................................... 110,222
-------
Total expenses...................................................................... 550,586
-------
Net investment income ........................................................ 294,379
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net unrealized appreciation on investments and foreign currency..................... 756,605
Net realized gain on investments and foreign currency............................... 1,078,369
---------
Net realized and unrealized gain on investments and foreign currency............. 1,834,974
---------
Net increase in net assets resulting from operations ......................... $ 2,129,353
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
<S> <C> <C>
Net investment income................................................... $ 294,379 $ 46,449
Net unrealized appreciation (depreciation) on investments and
foreign currency..................................................... 756,605 (157,573)
Net realized gain (loss) on investments and foreign currency............ 1,078,369 (101)
--------- ----
Net increase (decrease) in net assets resulting from operations .. 2,129,353 (111,225)
--------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends paid from net investment income............................... (53,949) -0-
------- -
CAPITAL SHARE TRANSACTIONS: (a)
Increase in net assets derived from net change in outstanding:
Class A Shares....................................................... 10,422,834 5,238,627
Class C Shares....................................................... 7,871,677 5,810,199
Class I Shares....................................................... (620) -0-
---- -
Increase in net assets resulting from capital share transactions.. 18,293,891 11,048,826
---------- ----------
Total increase in net assets...................................... 20,369,295 10,937,601
NET ASSETS:
Beginning of period..................................................... 10,937,601 -0-
---------- -
End of period (including undistributed net investment income
of $286,879 and $46,449, respectively)............................... $31,306,896 $10,937,601
=========== ===========
<FN>
(a) Note 6 contains a summary of capital shares transactions.
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class C Class I
Nov. 1, 1995 March 6, 1995* Nov. 1, 1995 March 6, 1995*June 14, 1996*
through through through through through
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.26 $12.50 $13.22 $12.50 $12.50
------ ------ ------ ------ ------
Income from investment operations:
Net investment income** ........ .23 .15 .09 .10 .08
Net unrealized appreciation
(depreciation) on investments** .39 (.45) .49 (.39) .27
Net realized and unrealized
gain (loss) on investments***. .99 1.06 .92 1.01 (.04)
--- ---- --- ---- ----
Total from investment operations ... 1.61 .76 1.50 .72 .31
---- --- ---- --- ---
Distributions paid from net
investment income ............... (.06) -0- (.04) -0- -0-
---- - ---- - -
Net Asset Value, End of Period...... $14.81 $13.26 $14.68 $13.22 $12.81
====== ====== ====== ====== ======
Total return (sales load not included) 6.09% 9.39%+ 5.46% 8.89%+ 6.64%+
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period (thousands)$16,777 $5,188 $14,530 $5,749 -0-
Ratio of expenses to average net assets:
Before expense reimbursement..... 2.82% 7.93%+ 3.71% 8.58%+ 123.03%+
After expense reimbursement...... 1.85% 1.85%+ 2.50% 2.50%+ 1.20%+
Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement..... 0.56% (4.41)%+ (0.60)% (4.95)%+ (120.02)%+
After expense reimbursement..... 1.52% 1.67%+ 0.62% 1.13%+ 1.80%+
Portfolio turnover rate............. 74.00% 0.00% 74.00% 0.00% 74.00%
Average commission rate paid per share $0.0314 - $0.0314 - $0.0314
<FN>
*Commencement of operations.
**Calculated based on average shares outstanding.
***The amount shown in this caption for a share outstanding throughout the
period does not correspond with the change in realized
gains and losses in the portfolio securities for the period because of the
timing of sales and repurchases of portfolio shares in relation to fluctuating
market values for the portfolio.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS as of October 31, 1996
Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 79.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Austria: 4.6%
Bau Holding AG,
<S> <C> <C>
ORD..................... 1,170 $ 73,443
Boehler Uddeholm AG,
ORD..................... 600 44,802
------
118,245
-------
Canada: 2.6%
Fairfax Financial Hldgs,
Ltd., ORD............... 300 58,013
Molson Co. Ltd.,
Class A, ORD............ 700 10,714
------
68,727
------
China: 1.8%
Shandong Huaneng
Power, ADR.............. 5,000 45,669
------
France: 2.2%
De Dietrich et
Compagnie SA,
ORD..................... 1,398 58,119
------
Germany: 6.6%
Dyckerhoff AG,
Preferred, ORD.......... 287 63,536
Felten & Guilleaume
Energie., ORD........... 410 45,923
KSB AG, Preference
Shares, ORD............. 480 62,144
------
171,603
-------
Hong Kong: 14.4%
Cafe de Coral Hldgs.,
Ltd., ORD............... 216,000 63,547
China Strategic Hldgs.,
ORD..................... 185,000 60,995
Harbour Ring Intl.
Hldg., Ltd., ORD........ 714,000 59,976
Hong Kong, continued
Kwong On Bank
Limited................. 34,000 $ 39,794
Liu Chong Hing Bank,
Ltd., ORD............... 29,000 42,192
Peregrine Investment
Hldgs., Ltd, ADR........ 15,160 48,862
Sing Tao Hldgs, ORD...... 120,000 57,804
-----
373,170
-------
Hungary: 1.3%
Mol Magyar Olaj Rt.,
Reg. S, GDR............. 3,240 34,129
------
Israel: 0.3%
Scitex Corporation, Ltd.. 830 8,196
-----
Italy: 10.4%
Ansaldo Trasporti
S.P.A., ORD............. 46,310 45,115
Danieli & Co., ORD....... 8,720 55,966
Magneti Marelli S.P.A.,
ORD..................... 42,600 41,220
Sasib S.P.A., ORD........ 15,300 49,300
Tecnost S.P.A., ORD...... 34,800 77,197
------
268,798
-------
Netherlands: 11.3%
GTI Hldg., ORD........... 565 75,422
Hollandsche Beton
Groep N.V., ORD......... 397 73,517
Internatio-Muller N.V.,
ORD..................... 1,260 30,305
Konin Boskalis
Westminstr N.V., ORD.... 3,635 73,747
Nedschroef Hldgs.
N.V., ORD............... 265 18,467
Telegraaf Holdingmij
N.V., ORD............... 932 20,005
------
291,463
-------
<PAGE>
Brandes Small Cap International Fund
PORTFOLIO OF INVESTMENTS as of October 31, 1996
Shares Value
Norway: 1.9%
Hunsfos Fabrikker
A/S, ORD................ 8,860 $ 49,902
--------
Philippines: 1.4%
RFM Corporation,
ORD..................... 215,000 35,583
------
Portugal: 2.9%
Espirito Santo Finl
Hldgs. SA, ADR.......... 6,170 74,918
------
Singapore: 1.9%
Singapore Bus Svc.
Foreign, ORD............ 9,000 48,243
------
Spain: 8.1%
Banco de Valencia Reg.,
ORD..................... 980 16,707
Construcciones Aux
Ferrocar., ORD.......... 1,480 57,869
ENHER-Emp Nac
Hidro Rib. S, ORD....... 800 15,703
Energia E Ind
Aragonesas, ORD......... 11,420 58,405
Uralita, SA ORD.......... 7,790 60,919
------
209,603
-------
Sweden: 0.5%
Munksjo AB-Free,
ORD..................... 1,400 13,818
------
Switzerland: 4.1%
Daetwyler Hldg., AG-
Bearer, ORD............. 34 56,832
Magazine Zum Globus
PC, ORD................. 100 50,146
------
106,978
-------
United Kingdom: 2.9%
Invesco PLC ADR.......... 370 $ 13,829
London Pacific Group,
Ltd., ADR............... 4,100 61,612
------
75,441
------
Total Common Stocks
(cost $2,089,376)................. 2,052,605
---------
Principal
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 20.47%
- ------------------------------------------------------------------------------------------------------------------------------------
United States: 20.4%
Prudential-Bache Repurchase Agree-
ment, dated 10/31/96, due 11/1/96,
collateralized by mortgage-backed
securities (proceeds $ 526,879)
(cost $526,806)............ $526,806 526,806
Total Investments in Securities
(cost $2,616,182+): 99.6%......... 2,579,411
---------
Other Assets less
Liabilities: 0.4%................. 10,795
------
Total Net Assets: 100.0% ........... $ 2,590,206
===========
<FN>
+ Cost for federal income tax purposes is the same.
Net unrealized depreciation consists of:
Gross unrealized appreication..... $ 94,784
Gross unrealized deprecaition..... (131,555)
--------
Net unrealized depreciation...... $ (36,771)
=========
</FN>
</TABLE>
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS by Industry as of October 31, 1996
<S> <C>
Banking................................. 8.5%
Beverages and Tobacco .................. 0.5%
Broadcasting & Publishing............... 3.8%
Building Materials & Components......... 6.1%
Chemicals............................... 2.8%
Construction & Housing.................. 14.4%
Data Processing & Reproductions......... 0.4%
Electrical & Electronics................ 11.2%
Energy Sources.......................... 1.7%
Financial Services...................... 6.1%
Food & Household Products............... 1.7%
Forest Products & Papers................ 3.1%
Industrial Components................... 5.1%
Insurance............................... 2.8%
Machinery & Engineering................. 10.8%
Merchandising........................... 2.4%
Multi - Industry........................ 7.2%
Recreation, Other Consumer Goods....... 6.0%
Transportation - Road & Rail............ 2.4%
Utilities - Electrical & Gas............ 3.0%
---
100.0%
=====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES as of October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments in securities, at value (identified cost $2,089,376) ...................... $ 2,052,605
Short-term investments (cost $526,806)................................................. 526,806
Foreign cash........................................................................... 33,942
Receivables:
Fund shares sold.................................................................... 19,526
Due from Advisor.................................................................... 19,636
Dividends and interest ............................................................. 2,641
Prepaid expenses....................................................................... 21,809
Deferred organization costs............................................................ 35,068
------
Total assets .................................................................... 2,712,033
---------
LIABILITIES
Securities purchased................................................................... 75,581
Accrued expenses ...................................................................... 40,804
Accrued administration fees............................................................ 5,442
-----
Total liabilities................................................................ 121,827
-------
Net assets ...................................................................... $ 2,590,206
===========
COMPONENTS OF NET ASSETS
Paid-in capital ....................................................................... $ 2,611,748
Undistributed net investment income.................................................... 12,461
Net unrealized depreciation on investments and foreign currency........................ (36,771)
Net realized gain on investments and foreign currency.................................. 2,768
-----
Net assets ...................................................................... $ 2,590,206
===========
Net assets:
Class A Shares ........................................................................ $ 1,120,861
Class C Shares ........................................................................ 1,469,345
---------
$ 2,590,206
===========
Class A Shares
Net asset value and redemption price per share, based on 91,059 shares outstanding
(unlimited number of shares authorized without par value) .......................... $12.31
======
Computation of Offering Price per share
(net asset value $12.31/.9525)...................................................... $12.92
======
Class C Shares
Net asset value and redemption price per share, based on 119,720 shares outstanding
(unlimited number of shares authorized without par value) .......................... $12.27
======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - April 29, 1996* to October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
<S> <C>
Dividends (net of withholding tax of $1,995)........................................ $ 19,632
Interest............................................................................ 11,851
------
Total income..................................................................... 31,483
------
Expenses:
Custodian and accounting fees....................................................... 40,209
Administrative fee ................................................................. 30,442
Transfer agent fees................................................................. 26,742
Auditing fees....................................................................... 18,820
Blue sky fees....................................................................... 20,070
Advisory fees....................................................................... 8,421
Legal fees.......................................................................... 3,580
Reports to shareholders............................................................. 4,754
Trustees fees....................................................................... 4,232
Amortization of deferred organization costs......................................... 3,919
Miscellaneous....................................................................... 1,775
Expense reimbursements ............................................................. (150,134)
--------
12,830
Distribution and Shareholder Service fees
Class A Shares...................................................................... 1,200
Class C Shares...................................................................... 4,992
-----
Net expenses........................................................................ 19,022
------
Net investment income ........................................................ 12,461
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net unrealized depreciation on investments and foreign currency..................... (36,771)
Net realized gain on investments and foreign currency............................... 2,768
-----
Net realized and unrealized loss on investments and foreign currency............. (34,003)
-------
Net decrease in net assets resulting from operations ................... $ (21,542)
=========
<FN>
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS - April 29, 1996* to October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
OPERATIONS:
<S> <C>
Net investment income..................................................................... $ 12,461
Net unrealized depreciation on investments and foreign currency........................... (36,771)
Net realized gain on investments and foreign currency..................................... 2,768
-----
Net decrease in net assets resulting from operations ............................... (21,542)
-------
CAPITAL SHARE TRANSACTIONS: (a)
Increase in net assets derived from net change in outstanding:
Class A Shares...................................................................... 1,126,872
Class C Shares...................................................................... 1,484,876
---------
Increase in net assets resulting from capital share transactions.................... 2,611,748
---------
Total increase in net assets........................................................ 2,590,206
NET ASSETS:
Beginning of period....................................................................... -0-
-
End of period (including undistributed net investment income of $12,461).................. $2,590,206
==========
<FN>
(a) A summary of capital shares transactions is as follows:
Class A:
Shares Value
Shares sold........................................................... 92,669 $1,146,484
Shares redeemed....................................................... (1,610) (19,612)
------ -------
Net increase.......................................................... 91,059 $1,126,872
====== ==========
Class C:
Shares Value
Shares sold........................................................... 120,106 $1,489,610
Shares redeemed....................................................... (386) (4,734)
---- ------
Net increase.......................................................... 119,720 $1,484,876
======= ==========
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes Small Cap International Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period) For the period April 29, 1996*
to October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class C
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.............................. $12.50 $12.50
------ ------
Income (loss) from investment operations:
Net investment income**..................................... .12 .08
Net unrealized depreciation on investments**................ (.25) (.30)
Net realized gain (loss) on investments***.................. (.06) (.01)
---- ----
Total from investment operations ................................. (.19) (.23)
---- ----
Net Asset Value, End of Period.................................... $12.31 $12.27
====== ======
Total return (Sales load not included)+........................... (2.98)% (3.60)%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period ........................................ $1,120,861 $1,469,345
Ratio of expenses to average net assets:+
Before expense reimbursement................................ 20.65% 19.35%
After expense reimbursement................................. 1.85% 2.50%
Ratio of net investment income (loss) to average net assets:+
Before expense reimbursement................................ (16.99)% (15.62)%
After expense reimbursement................................ 1.81% 1.23%
Portfolio turnover rate........................................... 1.05% 1.05%
Average commission rate paid per share............................ $0.0041 $0.0041
<FN>
*Commencement of operations.
**Calculated based on average shares outstanding.
***The amount shown in this caption for a share outstanding throughout the perod
may not accord with the change in realized gains and
losses in the portfolio secruities for the period because of the timing of sales
and repurchases of portfolio shares in relation to fluctuating market values for
the portfolio.
+Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
NOTES TO FINANCIAL STATEMENTS as of October 31, 1996
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Brandes Investment Trust (The "Trust") is a Delaware business trust
organized on July 6, 1994 and registered under the Investment Company Act of
1940 (the "1940 Act") as a diversified, open-end management investment company.
The Trust consists of two separate Funds, the Brandes International Fund (the
"International Fund") and the Brandes Small Cap International Fund (the "Small
Cap Fund") (collectively, the "Funds"). The International Fund and Small Cap
Fund began operations on March 6, 1995 and April 29, 1996, respectively.
Shares of beneficial interest of each of the Funds are currently divided
into two Classes, designated Class A Shares and Class C Shares. Each Class
represents interests in the same assets of each respective Fund.
The International Fund invests its assets primarily in equity securities
of foreign issuers with market capitalizations greater than $1 billion. The
Small Cap Fund normally invests in equity securities of foreign issuers with
market capitalizations of $1 billion or less.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities traded on a primary
exchange are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on an exchange
for which there has been no sale are valued at the last reported bid price.
Securities for which quotations are not readily available are valued at their
respective fair values as determined in good faith by the Advisor pursuant to
guidelines of the Board of Trustees. Short-term investments are stated at cost,
which when combined with accrued interest, approximates market value.
U.S. Government securities with less than 60 days remaining to maturity
when acquired by the Funds are valued on an amortized cost basis. U.S.
Government securities with more than 60 days remaining to maturity are valued at
the current market value (using the mean between the bid and asked price) until
the 60th day prior to maturity, and are then valued at amortized cost based upon
the value on such date unless the Board determines during such 60 day period
that this amortized cost basis does not represent fair value.
Foreign securities are recorded in the financial statements after
translation to U.S. dollars, based on the applicable exchange rate at the end of
the period. The Funds do not isolate that portion of the results of operations
arising as a result of changes in the currency exchange rate from the
fluctuations arising as a result of changes in the market prices of investments
during the period.
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
NOTES TO FINANCIAL STATEMENTS as of October 31, 1996
Interest income is translated at the exchange rates which existed at the
dates the income was accrued. Exchange gains and losses related to interest
income are included in interest income on the accompanying Statement of
Operations.
B. Repurchase Agreements. The Funds may enter into repurchase agreements
with government securities dealers recognized by the Federal Reserve Board, with
member banks of the Federal Reserve System or with such other brokers or dealers
that meet the credit guidelines established by the Board of Trustees. The Funds
will always receive and maintain, as collateral, securities whose market value,
including accrued interest, will be at least equal to 100% of the dollar amount
invested by each respective Fund in each agreement, and the Funds will make
payment for such securities only upon physical delivery or upon evidence of book
entry transfer to the account of the custodian. To the extent that the term of
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to ensure the adequacy of the collateral.
If the seller defaults and the value of the collateral declines, or if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
C. Forward Foreign Currency Exchange Contracts. The Funds may utilize
forward foreign currency exchange contracts ("forward contracts") under which
they are obligated to exchange currencies at specific future dates.
D. Security Transactions, Dividends and Distributions. As is common in the
industry, security transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
E. Federal Income Taxes. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of their taxable income to the shareholders. Therefore, no
federal income tax provision is required.
For the year ended October 31, 1996, the International Fund and the Small
Cap Fund accrued foreign taxes amounting to $109,816 and $1,995, respectively,
which are expected to be passed through to shareholders as foreign tax credits
on Form 1099-DIV for the year ending December 31, 1996.
F. Deferred Organization Costs. The International Fund and Small Cap Fund
have incurred expenses of $104,821 and $38,987, respectively, in connection with
their respective organization. These costs have been deferred and are being
amortized on a straight line basis over a period of sixty months from the date
that the respective Fund commenced investment operations. In the event that any
of the initial shares of the Funds are redeemed by the holder during the period
of amortization of that Fund's
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
NOTES TO FINANCIAL STATEMENTS as of
October 31, 1996
organization costs, the redemption proceeds will be reduced by any such
unamortized organization costs in the same proportion as the number of initial
shares being redeemed bears to the number of those shares outstanding at the
time of redemption.
G. Concentration of Risk. As of October 31, 1996, the Funds held a
significant portion of their assets in foreign securities. Certain price and
foreign exchange fluctuations as well as economic and political situations in
the foreign jurisdictions could have an impact on the Funds' net assets. It is
the Trust's policy to continuously monitor these off-balance sheet risks.
H. Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements. Actual results could differ
from these estimates.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the year ended October 31, 1996, Brandes Investment Partners, L.P.
(the "Advisor") provided the Trust with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space and certain administrative services, and provided certain personnel
needed by the Trust. As compensation for its services, the Advisor was entitled
to a monthly fee at the annual rate of 1.00% based upon the average daily net
assets of each Fund. The Funds are responsible for their own operating expenses.
In order to maintain the Funds' operating expenses at 1.85% and 2.50% of average
daily net assets of Class A Shares and Class C Shares, respectively, the Advisor
has waived fees and reimbursed expenses totalling $277,625 and $150,134 for the
International Fund and the Small Cap Fund, respectively, for the fiscal year
ended October 31, 1996. The Funds may reimburse the Advisor in the later years
in which the operating expenses for the Funds are less than the applicable
percentage limitation, set forth previously for any set year. As of October 31,
1996, the Advisor had accumulated $484,819 and $150,134 in expense
reimbursements to the International Fund and the Small Cap Fund, respectively.
Investment Company Administration Corporation (the "Administrator") acts
as the Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings; prepares reports and
materials to be supplied to the Directors; monitors the activities of the Funds'
custodian, transfer agent and accountants; coordinates the preparation and
payment of Fund expenses and reviews the Funds' expense accruals. For its
services, the Administrator receives an annual fee at the rate of 0.10 of 1% of
the first $100 million, 0.05 of 1% of the next $100 million and 0.03 of 1% of
assets in excess of $200 million of the Funds' average daily net assets, subject
to a minimum of $60,000 per Fund per annum.
Worldwide Value Distributors, L.L.C. (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Advisor.
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
NOTES TO FINANCIAL STATEMENTS as of October 31, 1996
The Trust has adopted a Shareholder Service Plan for Class A and Class C
shares, under which the Class A shares and Class C shares of the Funds reimburse
the Distributor and Services Organizations for shareholder servicing expenses
incurred. Under the Shareholder Service Plan, payments by the Funds for
shareholder servicing expenses may not exceed an annual rate of 0.10% of the
Funds' average daily net assets for Class A shares and 0.25% of the Funds'
average daily net assets for Class C shares. The Trust has also adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act, under which the
Class A shares and Class C shares of each Fund compensate the Distributor for
services rendered and costs incurred in connection with distribution of the
Class A shares and Class C shares. Under the Distribution Plan, payments by the
Class A shares of the Funds for distribution expenses are incurred at the annual
rate of 0.25% of the Funds' average daily net assets, and payments by the Class
C shares of the Funds are incurred at an annual rate of 0.75% of the Fund's
average daily net assets. The Distributor also receives an initial sales charge
paid upon the purchase of front-load Class A shares up to a maximum of 4.75% of
share offering price, of which up to 4.25% is reallowed to other broker/dealers,
and a contingent deferred sales charge paid upon certain redemptions of Class C
shares up to a maximum of 1% of redemption proceeds. For the fiscal year ended
October 31, 1996, the Distributor received $289,147 from commissions earned on
sales of Class A shares of the Funds, $257,159 of which was reallowed to other
broker/dealers.
Certain officers of the Trust are also officers and/or Directors of the
Advisor, Administrator and Distributor.
As of October 31, 1996, shares of each Fund owned by the Funds' Advisor
and its affiliates totalled 79,172 shares, out of 2,122,429 shares outstanding
for the International Fund, and 46,031 shares, out of 210,779 shares outstanding
for the Small Cap Fund. Class I shares of the Brandes International Fund were
held by an affiliate of the Administrator.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the fiscal year ended October 31, 1996, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$38,331,381 and $17,095,182, respectively for the International Fund, and
$2,095,206 and $14,922, respectively, for the Small Cap Fund.
NOTE 5 - SUBSEQUENT EVENTS
Subsequent to October 31, 1996, management of the Trust commenced
discussions with an unrelated management investment company, with the intent to
merge the Brandes International Fund into a new series of the other company.
Details of the proposed transaction are being negotiated, and an agreement will
be subject to approval by the shareholders of the Fund.
<PAGE>
Brandes International Fund
Brandes Small Cap International Fund
NOTES TO FINANCIAL STATEMENTS as of October 31, 1996
OTE 6 - CAPITAL SHARES TRANSACTIONS
A summary of capital shares transactions for the Brandes International
Fund is as follows:
<TABLE>
<CAPTION>
November 1, 1995 March 6, 1995*
through through
October 31, 1996 October 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Class A: Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................. 2,086,245 $ 30,122,061 392,800 $ 5,260,956
Shares issued from dividend distributions.... 2,255 31,554 -0- -0-
Shares redeemed.............................. (1,346,844) (19,730,781) (1,647) (22,329)
---------- ----------- ------ -------
Net increase................................. 741,656 $ 10,422,834 391,153 $ 5,238,627
======= ============ ======= ===========
Class C:
Shares sold.................................. 657,295 $ 9,347,820 438,014 $ 5,852,336
Shares issued from dividend distributions.... 1,608 22,395 -0- -0-
Shares redeemed.............................. (104,158) (1,498,538) (3,139) (42,137)
-------- ---------- ------ -------
Net increase................................. 554,745 $ 7,871,677 434,875 $ 5,810,199
======= =========== ======= ===========
June 14, 1996*
through
October 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Class I: Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold.................................. 2,000 $ 25,005
Shares redeemed.............................. (2,000) (25,625)
------ -------
Net change................................... -0- $ (620)
= ======
<FN>
*Commencement of operations
</FN>
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES OF BRANDES INVESTMENT TRUST,
AND SHAREHOLDERS OF
BRANDES INTERNATIONAL FUND AND
BRANDES SMALL CAP INTERNATIONAL FUND
We have audited the accompanying statements of assets and liabilities of
Brandes International Fund and Brandes Small Cap International Fund
(collectively, the "Funds"), series of Brandes Investment Trust, including the
portfolios of investments as of October 31, 1996, and the related statements of
operations for the year then ended, the statements of changes in net assets, and
the financial highlights for the year then ended and for the period from March
6, 1995 (commencement of operations) to October 31, 1995 for Brandes
International Fund, and for the period from April 29, 1996 (commencement of
operations) to October 31, 1996, for Brandes Small Cap International Fund. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial positions of
Brandes International Fund and Brandes Small Cap International Fund as of
October 31, 1996, the results of their operations for the year then ended, the
net changes in their net assets, and the financial highlights for the year then
ended and for the period from March 6, 1995 (commencement of operations) to
October 31, 1995 for Brandes International Fund, and for the period from April
29, 1996 (commencement of operations) to October 31, 1996 for Brandes Small Cap
International Fund, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
December 4, 1996
<PAGE>
Advisor
Brandes Investment Partners, L.P.
12750 High Bluff Drive
San Diego, California 92130
1-800-331-2979
Distributor
Worldwide Value Distributors, L.L.C.
4455 East Camelback Road
Suite 261E
Phoenix, Arizona 85018
Transfer Agent
Rodney Square Management Corp.
1105 North Market Street
Wilmington, Delaware 19890
Independent Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, California 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
This report is intended for shareholders of Brandes International Fund
and Brandes Small Cap International Fund and may not be used as sales
literature unless preceded or accompanied by a current prospectus.
