Brandes International Fund
Semi-Annual Report
For the
Period Ended
April 30, 1996
<PAGE>
Brandes International Fund
Semi-Annual Report
For the six-month period ended April 30, 1996
June 1, 1996
Dear Shareholder:
Your Fund has completed its first full year of operation. During this time,
we have constructed what we consider to be a very strong investment portfolio.
As you are well aware, the last year saw exceptional performance in U.S. stocks.
Foreign stocks, on the other hand, underperformed the U.S. markets. This
relative underperformance of non-U.S. markets was somewhat unusual, since over
the past two decades, the U.S. never had a year when it was the top-performing
market in the world. However, as investment markets run through their cycles, it
could be expected that the U.S. would periodically have its time in the sun.
The flip side of a lackluster year in international markets is that the Brandes
International Fund was able to find attractive bargains abroad. As you will see
in the following pages, your Fund is currently overweighted in Europe. We have
been finding more, and better quality bargains in Europe than in many other
parts of the world. We also have found some very good values in Asia and Latin
America. During times of market underperformance, we are able to find increased
opportunities. As value investors, our interest quickens when industries or
countries are perceived to be experiencing difficult times.
We continue to stress the importance of time as an element of value investing.
It is often difficult to be patient. Much of the analysis we are bombarded with
by the media focuses
<PAGE>
on short-term performance. What happened last quarter? What will happen
next quarter? This type of analysis is exciting and hard to resist. But it is
not an investment strategy. In our opinion, the way to long-term outperformance
is through the discipline to stay invested - especially during times when your
investment is declared "unexciting" by the pundits.
Your Fund's portfolio has been crafted company by company, through rigorous
bottom-up research. The stocks you own have been purchased at what we consider
to be very attractive prices. We believe this will provide not only a margin of
safety against price declines, but also considerable potential for growth. We
continue to scour the world for value, and look forward to working with you.
Sincerely yours,
/s/
Barry P. O'Neil
President
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS as of April 30, 1996 (Unaudited)
Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 91.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina: 2.2%
Yacimientos Petroliferos
<S> <C> <C>
S.A., ADS............... 27,900 $ 610,313
------ ---------
Australia: 0.2%
Westpac Banking, Ltd.,
ORD..................... 13,600 66,091
------ ------
Austria: 2.8%
EVN Energie-Versorg.
Nie., ORD............... 2,550 372,340
VA Technologie
AG, ORD................. 3,000 397,998
----- -------
770,338
-------
Brazil: 2.6%
Telecommunicacoes
Brasileiras, ADR........ 13,060 706,873
------ -------
Canada: 1.4%
Molson Co. Ltd.,
Class A, ORD............ 21,530 389,530
------ -------
Denmark: 4.9%
Den Danske Bank
Group, ORD.............. 10,110 658,548
Tele Danmark AS-B,
ORD..................... 13,670 686,911
------ -------
1,345,459
---------
France: 12.4%
Alcatel Alsthom, ORD 13,740 1,290,864
Compagnie UAP, ORD 22,400 484,547
Ste. Natl.Elf Aquitaine,
ORD..................... 9,015 669,720
Groupe Danone, ORD 4,660 703,549
SGS-Thomson
Microelec-NY shares 5,100 239,700
----- -------
3,388,380
---------
Germany: 8.7%
Berliner Kraft und
Licht, ORD.............. 1,610 $ 439,974
Daimler-Benz AG,
ORD..................... 1,930 1,055,474
Siemens AG, ORD.......... 1,620 885,730
----- -------
2,381,178
---------
Israel: 0.2%
Scitex Corporation, Ltd.. 2,300 48,300
----- ------
Italy: 10.9%
Istituto Mobiliare
Italiano, ORD........... 114,600 908,509
Italgas-Sta It per il
Gas pA, ORD............. 197,700 680,559
Stet Societa Finanziaria
Telefonica, ORD......... 413,200 1,394,881
------- ---------
2,983,949
---------
Japan: 8.6%
Fuji Photo Film
Co. Ltd., ORD........... 38,000 1,179,191
Hitachi, Ltd., ORD....... 109,000 1,172,433
------- ---------
2,351,624
---------
Mexico: 2.9%
Telefonos de
Mexico, ADS............. 23,550 800,700
------ -------
Netherlands: 5.1%
KPN - Konin. PTT
Nederland, ORD.......... 17,530 656,864
Unilever NV, ORD......... 5,500 749,359
----- -------
1,406,223
---------
<PAGE>
Brandes International Fund
PORTFOLIO OF INVESTMENTS as of April 30, 1996 (Unaudited)
Shares Value
Singapore: 1.7%
Jardine Matheson
Holdings, ORD........... 58,800 $ 470,400
------ ---------
South Africa: 1.1%
Iscor, Ltd., ORD......... 315,300 287,629
------- -------
South Korea: 0.5%
Pohang Iron and Steel
Co., Inc., ADR.......... 4,700 129,250
----- -------
Spain: 10.4%
Argentaria, ORD.......... 5,600 226,356
Banco Bilbao Vizcaya
(REGD), ORD............. 15,620 592,753
Banco de Valencia
Reg., ORD............... 5,880 89,301
Empresa Nacional de
Electric, ORD........... 2,370 148,625
Repsol S.A., ORD......... 20,000 732,282
Telefonica de Espana
S.A., ORD............... 59,550 1,058,636
------ ---------
2,847,953
---------
Sweden: 1.5%
Munksjo AB-Free,
ORD..................... 9,300 73,228
SSAB Svenskt Stal
AB-A shares, ORD........ 26,800 329,352
------ -------
402,580
-------
Switzerland: 8.9%
BBC Brown Boveri,
Ltd., ORD............... 490 588,551
Baloise Holdings - Reg,
ORD..................... 240 513,529
Nestle S.A.,
Registered, ORD......... 1,002 1,111,009
Schindler Holdings AG,
Partn Ctf, ORD.......... 210 229,306
--- -------
2,442,395
---------
United Kingdom: 4.7%
Grand Metropolitan
PLC, ORD................ 118,900 $ 781,104
Guinness PLC, ORD........ 41,800 300,994
Invesco PLC, ORD......... 30,800 117,143
Medeva PLC, ORD.......... 21,900 84,446
------ ------
1,283,687
---------
Total Common Stocks
(cost $23,547,797)....... 25,112,852
----------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
WARRANTS: 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland: 0.0%
Schindler Holdings AG-
PC, expires 12/16/96..... 160 334
-- -- --- --- ---
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 7.5%
- ------------------------------------------------------------------------------------------------------------------------------------
United States: 7.5%
Prudential-Bache
Repurchase Agree-
ment, 4.77%, due
5/1/96, collateralized
by mortgage-backed
securities............ $2,042,562 2,042,562
---------- ---------
Total Investments in Securities
(cost $25,592,359): 99.2%........ 27,155,748
Assets less Other
Liabilities: 0.8%................. 225,600
--- -------
Total Net Assets: 100.0% ........... $27,381,348
</TABLE>
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS by Industry
- --------------------------------------------------------------------------------
<S> <C>
Automobiles............................. 4.2%
Banking................................. 10.1%
Beverages and Tobacco .................. 2.7%
Data Processing & Reproductions......... 0.2%
Electrical & Electronics................ 15.7%
Electronic Components &
Instruments........................... 1.0%
Energy Sources.......................... 8.0%
Financial Services...................... 0.5%
Food and Household Products............. 13.3%
Forest Products & Papers................ 0.3%
Health & Personal Care.................. 0.3%
Insurance............................... 4.0%
Machinery & Engineering................. 2.5%
Metals-Steel............................ 3.0%
Multi - Industry........................ 1.9%
Recreation, Other Consumer Goods....... 4.7%
Telecommunications...................... 21.1%
Utilities - Electrical & Gas............ 6.5%
---
100.0%
=====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES at April 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at value (identified cost $25,592,359) (Note 2-A) .......... $27,155,748
Foreign cash........................................................................... 2,807
Receivables:
Expense reimbursement............................................................... 15,667
Dividends and interest ............................................................. 61,021
Capital stock sold.................................................................. 173,978
Prepaid expenses....................................................................... 36,779
Deferred organization costs............................................................ 80,643
------
Total assets .................................................................... 27,526,643
----------
LIABILITIES
Payable for capital stock repurchased.................................................. 31,673
Accrued expenses ...................................................................... 113,622
-------
Total liabilities................................................................... 145,295
-------
Net assets .............................................................................. $27,381,348
===========
SOURCE OF NET ASSETS
Paid-in capital ....................................................................... $25,838,017
Undistributed net investment income.................................................... 37,551
Net unrealized appreciation on investments and foreign currency........................ 1,563,389
Net realized loss on investments and foreign currency.................................. (57,609)
-------
Net assets ......................................................................... $27,381,348
===========
Net assets:
Class A Shares ........................................................................ $15,184,619
Class C Shares ........................................................................ 12,196,729
----------
$27,381,348
===========
Class A Shares
Net asset value and redemption price per share, based on 1,036,615 shares
outstanding (unlimited number of shares authorized without par value) .............. $14.65
======
Computation of Offering Price per share
(net asset value $14.65/.9525)...................................................... $15.38
------ ----- ------
Class C Shares
Net asset value and redemption price per share, based on 837,112 shares
outstanding (unlimited number of shares authorized without par value) .............. $14.57
======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - November 1, 1995 to April 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
<S> <C>
Interest............................................................................ $ 98,461
Dividends (net of withholding tax of $14,202)....................................... 151,641
------- -------
Total income..................................................................... 250,102
-------
Expenses:
Advisory fees (Note 3).............................................................. 94,808
Transfer agent fees................................................................. 47,407
Accounting fees..................................................................... 31,406
Administrative fee (Note 3)......................................................... 30,000
Custodian fees...................................................................... 17,042
Blue sky fees....................................................................... 16,875
Auditing fees....................................................................... 12,339
Legal fees.......................................................................... 10,452
Amortization of deferred organization costs......................................... 10,449
Trustees fees....................................................................... 6,827
Miscellaneous....................................................................... 11,744
Expense reimbursements (Note 3)..................................................... (146,165)
- --------
143,184
Distribution and Shareholder Service fees
Class A Shares...................................................................... 17,737
Class C Shares...................................................................... 44,131
------
Net expenses........................................................................ 205,052
-------
Net investment income ........................................................ 45,050
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net unrealized appreciation on investments and foreign currency..................... 1,720,962
Net realized loss on investments and foreign currency............................... (57,508)
-------
Net realized and unrealized gain on investments and foreign currency............. 1,663,454
---------
Net increase in net assets resulting from operations ......................... $ 1,708,504
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Brandes International Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS:
<S> <C> <C>
Net investment income.................................................. $ 45,050 $ 46,449
Net unrealized appreciation (depreciation) on investments and
foreign currency..................................................... 1,720,962 (157,573)
Net realized loss on investments and foreign currency.................. (57,508) (101)
------- ----
Net increase (decrease) in net assets resulting from operations . 1,708,504 (111,225)
--------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends paid from net investment income.............................. (53,948) -0-
------- -
CAPITAL SHARE TRANSACTIONS: (a)
Increase in net assets derived from net change in outstanding
Class A Shares....................................................... 9,119,620 5,238,627
Increase in net assets derived from net change in outstanding
Class C Shares....................................................... 5,669,571 5,810,199
--------- ---------
Increase in net assets resulting from capital share transactions. 14,789,191 11,048,826
---------- ----------
Total increase in net assets .................................... 16,443,747 10,937,601
NET ASSETS:
Beginning of period.................................................... 10,937,601 -0-
---------- -
End of period (including undistributed net investment income
of $37,551 and $46,449).............................................. $27,381,348 $10,937,601
======= ======= =========== ===========
<FN>
(a) A summary of capital shares transactions is as follows:
November 1, 1995 March 6, 1995*
through through
April 30, 1996 October 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Class A: Shares Value Shares Value
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold.................................... 673,094 $9,512,514 392,800 $5,260,956
Shares issued from dividend distributions...... 2,255 31,553 -0- -0-
Shares redeemed................................ (29,887) (424,447) (1,647) (22,329)
------- -------- ------ -------
Net increase................................... 645,462 $9,119,620 391,153 $5,238,627
======= ========== ======= ==========
Class C:
Shares sold.................................... 413,347 $5,822,988 438,014 $5,852,336
Shares issued from dividend distributions...... 1,608 22,395 -0- -0-
Shares redeemed................................ (12,718) (175,812) (3,139) (42,137)
------- -------- ------ -------
Net increase................................... 402,237 $5,669,571 434,875 $5,810,199
======= ========== ======= ==========
*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 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class C
November 1, 1995 March 6, 1995* November 1, 1995 March 6, 1995*
through through through through
April 30, 1996 October 31, 1995 April 30, 1996 October 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..... $13.26 $12.50 $13.22 $12.50
------ ------ ------ ------
Income from investment operations:
====================================================================================================================================
Net investment income.............. .06 .15** .01 .10**
=== === === ===
Net unrealized appreciation
====================================================================================================================================
(depreciation) on investments.... 1.06 (.45)** 1.02 (.39)**
==== ==== ==== ====
Net realized and unrealized gain
====================================================================================================================================
(loss) on investments............ .33 1.06*** .36 1.01***
--- ---- --- ----
Total from investment operations ........ 1.45 .76 1.39 .72
---- --- ---- ---
Distributions paid from net
====================================================================================================================================
investment income ..................... (.06) -0- (.04) -0-
---- - ---- -
Net Asset Value, End of Period........... $14.65 $13.26 $14.57 $13.22
====== ====== ====== ======
Total return (sales load not included)+.. 22.46% 9.39% 21.51% 8.89%
===== ==== ===== ====
RATIOS / SUPPLEMENTAL DATA:
====================================================================================================================================
Net assets, end of period (thousands) ... $15,185 $5,188 $12,197 $5,749
======= ====== ======= ======
Ratio of expenses to average
====================================================================================================================================
net assets:+
====================================================================================================================================
Before expense reimbursement....... 3.27% 7.93% 4.15% 8.58%
==== ==== ==== ====
After expense reimbursement........ 1.85% 1.85% 2.50% 2.50%
==== ==== ==== ====
Ratio of net investment income
====================================================================================================================================
(loss) to average net assets:+
====================================================================================================================================
Before expense reimbursement....... (0.65)% (4.41)% (0.76)% (4.95)%
===== ===== ===== =====
After expense reimbursement....... 0.77% 1.67% 0.13% 1.13%
==== ==== ==== ====
Portfolio turnover rate.................. 10.92% 0.00% 10.92% 0.00%
===== ==== ===== ====
<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 International Fund
NOTES TO FINANCIAL STATEMENTS - April 30, 1996
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Brandes International Fund (the "Fund") is a series of shares of
beneficial interest of Brandes Investment Trust (the "Trust") and registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified,
open-end management investment company. The Fund began operations on March 6,
1995.
Shares of beneficial interest of the Fund are currently divided into three
Classes, designated Class A Shares, Class C Shares, and Institutional Shares.
Each Class represents interests in the same assets of the Fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles (GAAP).
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.
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 Fund 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 Fund does 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.
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 Statements of
Operations.
B. Repurchase Agreements. The Fund 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 Fund
will always receive and maintain, as collateral, securities whose market value,
including
<PAGE>
Brandes International Fund
NOTES TO FINANCIAL STATEMENTS - April 30, 1996
accrued interest, will be at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund 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 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 Fund may be delayed or limited.
C. Forward Foreign Currency Exchange Contracts. The Fund may utilize
forward foreign currency exchange contracts ("forward contracts") under which it
is 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 Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
F. Deferred Organization Costs. The Fund has incurred expenses of $104,821
in connection with its organization. These costs have been deferred and are
being amortized on a straight line basis over a period of sixty months from the
date the Fund commenced investment operations. In the event that any of the
initial shares of the Fund are redeemed by the holder during the period of
amortization of the Fund's 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.
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the period November 1, 1995 through April 30, 1996, Brandes Investment
Partners, L.P. (the "Advisor") provided the Fund with investment management
services under an Investment Advisory Agreement. The Advisor furnished all
investment advice, office space and certain administrative services, and
provides certain personnel needed by the Fund. 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 the Fund. The Fund is responsible for its own
operating expenses. In order to maintain the Fund's 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
$146,165 during the period November 1, 1995 through April 30, 1996.
<PAGE>
Brandes International Fund
NOTES TO FINANCIAL STATEMENTS - April 30, 1996
Investment Company Administration Corporation (the "Administrator") acts
as the Fund's 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 Fund's
custodian, transfer agent and accountants; coordinates the preparation and
payment of the Fund's expenses and reviews the Fund's 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 Fund's average daily net assets, or a
minimum of $60,000.
Worldwide Value Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Advisor.
Certain officers of the Trust are also officers and/or Directors of the
Advisor, Administrator and Distributor.
As of April 30, 1996 shares of the Fund owned by the Advisor and its
affiliates totalled 72,605 shares, out of 1,873,727 shares outstanding.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the period November 1, 1995 through April 30, 1996, the cost of
purchases and the proceeds from sales of securities, excluding short-term
securities, were $18,208,110 and $1,701,649, respectively.
<PAGE>
Advisor
Brandes Investment Partners, L.P.
12750 High Bluff Drive
San Diego, California 92130
1-800-331-2979
Distributor
Worldwide Value Distributors, Inc.
4455 East Camelback Road
Suite 261E
Phoenix, Arizona 85018
Transfer Agent
Rodney Square Management Corp.
1105 North Market Street
Wilmington, Delaware 19890
Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, California 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker
555 South Flower Street
Los Angeles, California 90071
This report is intended for shareholders of the Brandes International Fund
and may not be used as sales literature unless preceded or accompanied by a
current prospectus.
