<PAGE>
Brandes Institutional International Equity Fund
================================================================================
Semi-Annual Report
For the Period Ended April 30, 1999
June 15, 1999
Dear Shareholder:
Your Fund returned 26.45% for the six-month period ended April 30, 1999. This
compared to a return of 15.28% for the benchmark Morgan Stanley Capital
International EAFE (Europe, Australasia, Far East) Index, for the same period.
This semi-annual period was characterized early on by upheaval in Latin American
financial markets, followed by a dramatic recovery in emerging markets and
non-emerging Asia. Returns in your Fund were driven by strong performance in its
holdings in Latin America and Asia, particularly those securities the Fund owned
in Venezuela, Argentina, South Africa and Singapore. Industries showing the
greatest strength for the period were the telecommunications, broadcasting, and
metals industries.
Much of the movement in emerging markets this period was affected in some way by
events in Brazil. In late 1998, disruption in Latin American markets was calmed
by the news of the Brazilian government's approval of an IMF loan package and
related austerity measures. Then, in January of 1999, Brazil abruptly devalued
its currency, the real. This brought turmoil not only to its domestic markets,
but to emerging markets the world over. Beginning in March, however, emerging
markets staged a rally. For the 6-month period ended April 30, 1999, the Morgan
Stanley Emerging Markets Free Index ended up 34.87%.
In developed markets, Japan showed considerable strength, amid indications that
the Tokyo government was taking steps to address problems in that country's
banking system. The MSCI Japan Index rose 26.93% for the semi-annual period.
European stocks, on the other hand, were generally mixed, with the MSCI Europe
Index up about 10.81% for the six months.
In analyzing a possible recovery in emerging markets, we have two observations
to make. First, we believe that caution is appropriate. The timing and strength
of any recovery is likely to vary from country to country and from region to
region. Significant political, economic, and financial problems are yet to be
overcome. Accordingly, we expect that emerging markets could remain volatile for
the foreseeable future.
Secondly, while we welcome a recovery in the emerging economies of Asia and
Latin America, we also recognize that the upheaval in these regions created
opportunities for us to accumulate good businesses at historically undervalued
prices. Clearly, these opportunities will not last
<PAGE>
Brandes Institutional International Equity Fund
forever. To the extent that economic storm clouds slowly dissipate from the
affected regions, we believe that the companies we purchase for the Fund during
difficult periods will prove to be sound long-term investments.
Value Investing
We urge investors to focus on the long term, and view large and sudden market
moves with skepticism. As we have said in previous letters, we don't believe
such moves accurately reflect actual changes in underlying values of companies
in these markets. Rather, these moves are likely due to shifts in sentiment.
This is an important distinction. As value investors, we expect markets to
overreact and misprice securities on a regular basis. These mispricings allow us
to buy quality businesses at levels which offer the opportunity for profit with
a reasonable margin of safety against price declines. We believe that over
longer periods, sentiment becomes neutralized, and investors are able to focus
on fundamentals. Recent events in emerging markets may be a first step in the
process of returning calm to equity markets.
We thank you for your confidence in Brandes' long-term value investment approach
and look forward to continuing to serve you.
Sincerely yours,
/s/ Betsy M. Blodgett
Betsy M. Blodgett
President
2
<PAGE>
Brandes Institutional International Equity Fund
Comparison of the change in value of a $1,000,000 investment in
the Brandes Institutional International Equity Fund and the Morgan
Stanley Capital International EAFE (Europe, Australasia and Far
East) Index with Dividends Reinvested
Average Annual Total Returns For Periods Ending April 30, 1999
1 Year.................................................. 18.01%
Since Inception (January 2, 1997)....................... 24.56%
[LINE GRAPH APPEARS HERE]
Brandes Institutional MSCI EAFE with
International Equity Fund Dividends Reinvested
------------------------- --------------------
1/2/97 1,000,000.00 1,000,000.00
4/30/97 1,062,400.00 999,507.78
7/31/97 1,227,200.00 1,141,432.04
10/31/97 1,165,600.00 1,029,617.75
1/31/98 1,239,292.96 1,075,028.83
4/30/98 1,411,462.11 1,188,568.24
7/31/98 1,402,528.80 1,203,831.84
10/31/98 1,317,256.35 1,128,929.58
1/31/99 1,420,630.51 1,229,938.40
4/30/99 1,665,720.46 1,301,423.23
Past performance is not indicative of future performance.
The MSCI EAFE Index is an unmanaged index that is a generally accepted benchmark
for major overseas markets. The MSCI EAFE Index consists of securities listed on
exchanges in European, Australasian and Far Eastern markets and includes
dividends and distributions, but does not reflect fees, brokerage commissions,
or other expenses of investing. The Index weightings represent the relative
capitalizations of the major overseas markets included in the index on a U.S.
dollar adjusted basis.
3
<PAGE>
Brandes Institutional International Equity Fund
PORTFOLIO OF INVESTMENTS at April 30, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
EQUITY SECURITIES: 95.8% Shares Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina: 3.4%
YPF Sociedad Anonima, Class D, ADR .................................... 172,960 $ 7,264,320
-----------
Austria: 0.6%
EVN AG ................................................................ 7,805 1,164,994
-----------
Brazil: 5.8%
Banco Bradesco S.A., preferred, ADR ................................... 242,000 1,283,689
Centrais Eletricas Brasileiras S.A. (Eletrobras), ADR ................. 391,130 3,890,139
Centrais Geradoras do Sul do Brasil S.A., ADR ......................... 20,613 87,597
Companhia Cervejaria Brahma, preferred, ADR ........................... 231,240 2,254,590
Embratel Participacoes S.A., preferred, ADR ........................... 13,090 212,712
Petroleo Brasileiro S.A., preferred, ADR .............................. 227,690 3,678,240
Tele Celular Sul Participacoes S.A., preferred, ADR ................... 1,309 25,934
Tele Centro Oeste Celular Participacoes S.A., preferred, ADR .......... 4,363 15,815
Tele Centro Sul Participacoes S.A., preferred, ADR .................... 2,618 139,081
Tele Leste Celular Participacoes S.A., preferred, ADR ................. 261 9,363
Tele Nordeste Celular Participacoes S.A., preferred, ADR .............. 654 14,388
Tele Norte Celular Participacoes S.A., preferred, ADR ................. 261 7,993
Tele Norte Leste Participacoes S.A., preferred, ADR ................... 13,090 221,711
Telemig Celular Participacoes S.A., preferred, ADR .................... 654 17,535
Telesp Celular Participacoes S.A., preferred, ADR ..................... 5,236 130,900
Telesp Participacoes S.A., preferred, ADR ............................. 13,090 327,250
-----------
12,316,937
-----------
Denmark: 1.8%
Den Danske Bank Group ................................................. 32,820 3,778,740
-----------
France: 6.8%
Alcatel Alsthom Group ................................................. 19,000 2,332,544
Elf Aquitaine S.A ..................................................... 40,255 6,251,834
Michelin Group, class B ............................................... 47,100 2,137,242
PSA Peugeot Citroen ................................................... 22,495 3,731,263
-----------
14,452,883
-----------
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at April 30, 1999 (Unaudited)
===========================================================================================================
EQUITY SECURITIES: 95.8% Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Germany: 5.3%
BASF AG .................................................................... 43,000 $ 1,876,240
Deutsche Telekom AG ........................................................ 236,900 9,423,242
-----------
11,299,482
-----------
Hong Kong/China: 8.0%
CITIC Pacific Limited ...................................................... 900,000 2,438,460
Hutchison Whampoa Limited .................................................. 983,900 8,822,532
Swire Pacific Limited, class A ............................................. 998,000 5,601,175
-----------
16,862,167
-----------
Italy: 4.7%
ENI S.p.A .................................................................. 288,000 1,895,616
Telecom Italia S.p.A ....................................................... 758,900 8,073,937
-----------
9,969,553
-----------
Japan: 18.4%
Canon Inc. ................................................................. 80,000 1,956,944
Hitachi, Ltd. .............................................................. 1,272,800 9,297,804
Japan Tobacco, Inc. ........................................................ 77 774,063
Komatsu Ltd. ............................................................... 481,000 2,864,980
Kyocera Corporation ........................................................ 94,400 5,606,906
Matsushita Electric Works, Ltd. ............................................ 204,000 3,879,366
Mitsubishi Heavy Industries, Ltd. .......................................... 1,291,000 5,656,259
Nippon Oil Company, Limited ................................................ 287,000 1,281,484
Ono Pharmaceutical Co., Ltd. ............................................... 49,000 1,896,457
The Tokio Marine & Fire Insurance Co., Ltd. ................................ 493,400 5,749,492
-----------
38,963,755
-----------
Mexico: 3.6%
Telefonos de Mexico S.A. de C.V., Class L, ADR ............................. 99,720 7,553,791
-----------
Netherlands: 3.9%
ING Groep N.V .............................................................. 101,050 6,224,074
Koninklijke (Royal) Philips Electronics N.V ................................ 49,213 2,053,748
-----------
8,277,822
-----------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
Brandes Institutional International Equity Fund
PORTFOLIO OF INVESTMENTS at April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY SECURITIES: 95.8% Shares Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Singapore: 4.9%
The Development Bank of Singapore Ltd. ................................... 690,140 $ 7,323,282
Jardine Matheson Holdings Limited ........................................ 705,997 3,007,547
-----------
10,330,829
-----------
South Africa: 4.0%
DeBeers/Centenary linked unit ............................................ 277,710 6,937,057
Iscor Limited ............................................................ 1,179,110 368,119
South African Breweries Plc .............................................. 126,000 1,052,756
-----------
8,357,932
-----------
South Korea: 1.6%
Korea Electric Power Corporation, ADR .................................... 146,150 2,411,476
Pohang Iron & Steel Co., Ltd., ADR ....................................... 41,190 1,060,643
-----------
3,472,119
-----------
Spain: 2.6%
Argentaria S.A ........................................................... 172,380 4,053,982
Union Electrica Fenosa S.A ............................................... 105,400 1,401,968
-----------
5,455,950
-----------
Switzerland: 2.2%
Allied Zurich Plc ........................................................ 198,720 2,713,443
Swisscom AG .............................................................. 5,100 1,871,867
-----------
4,585,310
-----------
United Kingdom: 16.3%
The BOC Group Plc ........................................................ 79,200 1,255,954
British American Tobacco Plc ............................................. 273,720 2,295,772
British Steel Plc ........................................................ 1,418,000 3,369,594
Diageo Plc ............................................................... 550,683 6,354,662
HSBC Holdings Plc ........................................................ 245,800 9,133,363
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS at April 30, 1999 (Unaudited)
=============================================================================================================
EQUITY SECURITIES: 95.8% Shares Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom-Continued
Imperial Chemical Industries Plc ........................................... 179,940 $ 1,947,653
Invensys Plc ............................................................... 1,217,359 6,211,453
Marks & Spencer Plc ........................................................ 108,000 737,349
Reckitt and Colman Plc ..................................................... 170,000 2,020,519
Royal & Sun Alliance Insurance Group Plc ................................... 135,000 1,163,781
-----------
34,490,100
-----------
Venezuela: 1.9%
Compania Anonima Nacional
Telefonos de Venezuela, ADR ................................................ 147,690 4,061,475
-----------
Total Equity Securities (Cost $169,562,303) ............................................... 202,658,159
-----------
<CAPTION>
=============================================================================================================
SHORT-TERM INVESTMENTS: 3.8% Principal Amount Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investors Bank & Trust Co., Repurchase Agreement, 4.25%,
dated 04/30/1999, due 05/01/1999, collateralized by
$8,543,907 Citicorp Mortgage Securities, Inc., Series
1998-8 A1, 6.750%, due 9/25/2028, (cost $8,137,054) $8,137,054 $8,137,054
------------
Total Investments in Securities (cost $177,699,357**) 99.6% 210,795,213
Other Assets less Liabilities: 0.4% 770,553
------------
Total Net Assets: 100.0% $211,565,766
============
<CAPTION>
- -----------------------------------
* Non-income producing security.
** At April 30, 1999 the cost basis of securities for federal tax purposes was
the same as for financial reporting. Net unrealized appreciation consists
of:
<S> <C>
Gross unrealized appreciation $ 40,656,427
Gross unrealized depreciation (7,560,571)
------------
Net unrealized appreciation $ 33,095,856
============
</TABLE>
See accompanying Notes to Financial Statements. 7
<PAGE>
Brandes Institutional International Equity Fund
SCHEDULE OF INVESTMENTS By Industry at April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Automobile ............................................................... 2.8%
Banking................................................................... 12.1
Beverages and Tobacco..................................................... 6.0
Chemicals................................................................. 2.4
Drugs..................................................................... 0.9
Electrical & Electronics.................................................. 8.3
Energy Sources............................................................ 9.6
Food and Household Products............................................... 2.0
Insurance................................................................. 7.5
Machinery & Engineering................................................... 7.9
Metals-Steel.............................................................. 3.1
Merchandising............................................................. 0.4
Misc. Materials and Commodities........................................... 3.3
Multi-Industry............................................................ 9.4
Industrial Components..................................................... 2.7
Telecommunications........................................................ 16.1
Utilities-Electrical & Gas................................................ 1.3
------
Total Equity Securities................................................... 95.8
Short-Term Investments.................................................... 3.8
------
Total Investments......................................................... 99.6
Other Assets less
Liabilities............................................................... 0.4
------
Net Assets................................................................100.0%
======
See accompanying Notes to Financial Statements.
8
<PAGE>
Brandes Institutional International Equity Fund
STATEMENTS OF ASSETS AND LIABILITIES at April 30, 1999 - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $177,699,357)...................... $210,795,213
Foreign Cash................................................................. 1
Receivable for dividends and interest........................................ 907,240
Prepaid expenses............................................................. 29,049
Deferred organization costs.................................................. 9,223
------------
Total assets................................................................. 211,740,726
------------
LIABILITIES
Due to investment advisor.................................................... 149,332
Accrued expenses............................................................. 25,628
------------
Total liabilities............................................................ 174,960
------------
Net Assets...................................................................... $211,565,766
============
SOURCE OF NET ASSETS
Paid-in capital.............................................................. $172,934,039
Undistributed net investment income.......................................... 798,628
Net realized gain on investment and foreign currency......................... 4,740,802
Net unrealized appreciation (depreciation) on:
Investments................................................................ 33,095,856
Foreign currency........................................................... (3,559)
------------
Net assets .............................................................. $211,565,766
============
Net asset value, offering price and redemption price per share
(11,318,044 shares outstanding; unlimited number of shares authorized
without par value)........................................................... $18.69
============
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - Six Months ended April 30, 1999 (Unaudited)
- ---------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (net of withholding tax of $105,309).............................. $1,657,111
Interest.................................................................... 143,833
-----------
Total income.............................................................. 1,800,944
-----------
Expenses:
Advisory fees............................................................... 887,368
Custody fees................................................................ 83,381
Administration fees......................................................... 69,260
Accounting fees............................................................. 34,805
Registration fees........................................................... 22,778
Printing.................................................................... 17,764
Auditing fees............................................................... 14,264
Transfer agent fees......................................................... 13,067
Legal fees.................................................................. 10,067
Trustees' fees.............................................................. 8,149
Amortization of deferred organization costs................................. 1,444
Insurance................................................................... 1,244
Miscellaneous............................................................... 3,076
-----------
Total expense............................................................... 1,166,667
Expense reimbursements...................................................... (101,824)
-----------
Net expenses................................................................ 1,064,843
-----------
Net investment income ...................................................... 736,101
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency....................... 4,794,372
Net change in unrealized appreciation on investments and foreign currency... 38,112,144
-----------
Net realized and unrealized gain on investments and foreign currency....... 42,906,516
-----------
Net increase in net assets resulting from operations...................... $43,642,617
===========
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
Brandes Institutional International Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months For the Year
ended ended
April 30, 1999 # October 31, 1998
------------------ ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income................................................ $736,101 $2,325,435
Net realized gain on investments and foreign currency................ 4,794,372 12,473,013
Net unrealized appreciation (depreciation) on investments
and foreign currency................................................ 38,112,144 (7,148,668)
------------- -------------
Net increase in net assets resulting from operations................ 43,642,617 7,649,780
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........................................... (2,286,065) (349,689)
From realized gains.................................................. (12,503,131) (724,896)
------------- -------------
Total distributions to shareholders ................................. (14,789,196) (1,074,585)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............................................ 41,693,886 160,815,973
Net asset value of shares issued on reinvestment of distributions... 13,228,096 917,917
Cost of shares redeemed.............................................. (32,224,807) (59,423,431)
------------- -------------
Net increase in net assets resulting from capital share
transactions....................................................... 22,697,175 102,310,459
------------- -------------
Net increase in net assets ......................................... 51,550,596 108,885,654
------------- -------------
NET ASSETS:
Beginning of period.................................................. 160,015,170 51,129,516
End of period (including undistributed net investment income of
$798,629 and $2,348,592 respectively)............................... $211,565,766 $160,015,170
============= =============
CHANGES IN SHARES:
Shares sold.......................................................... 2,533,789 10,048,815
Shares issued on reinvestment from distributions..................... 867,985 61,154
Shares redeemed...................................................... (1,950,952) (3,752,756)
------------- -------------
Net increase......................................................... 1,450,822 6,357,213
============= =============
</TABLE>
# Unaudited
See accompanying Notes to Financial Statements.
11
<PAGE>
Brandes Institutional International Equity Fund
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout the period
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
For the six months Year January 2, 1997*
ended ended through
April 30, 1999# October 31, 1998 October 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ...................... $ 16.22 $ 14.57 $ 12.50
--------- --------- --------
Income from investment operations:
Net investment income ................................... 0.03 0.21 0.17
Net realized and unrealized gain
on investments and foreign currency .................... 3.74 1.66 1.90
--------- --------- --------
Total from investment operations ........................ 3.77 1.87 2.07
--------- --------- --------
Less distributions:
From net investment income ............................. (0.20) (0.07) 0.00
From net capital gains ................................. (1.10) (0.15) 0.00
--------- --------- --------
Total distributions ..................................... (1.30) (0.22) 0.00
--------- --------- --------
Net asset value, end of period .......................... $ 18.69 $ 16.22 $ 14.57
========= ========= ========
Total return ............................................ 26.45%*** 13.01% 16.56%***
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) ................... $ 211,566 $ 160,015 $ 51,130
Ratio of expenses to average net assets:
Before expense reimbursement ......................... 1.31%** 1.37% 1.76%**
After expense reimbursement .......................... 1.20%** 1.20% 1.19%**
Ratio of net investment income to average
net assets:
Before expense reimbursement ......................... 0.72%** 1.75% 0.84%**
After expense reimbursement .......................... 0.83%** 1.92% 1.40%**
Portfolio turnover rate ................................. 10.85% 50.08% 27.40%
</TABLE>
# Unaudited.
*Commencement of operations.
**Annualized.
***Not annualized.
See accompanying Notes to Financial Statements.
12
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS at April 30, 1999 - Unaudited
================================================================================
NOTE 1 - ORGANIZATION
The Brandes Institutional International Equity Fund (the "Fund") is a
series of shares of beneficial interest of Brandes Investment Trust (the
"Trust"). The Trust is registered under the Investment Company Act of 1940 (the
"1940 Act") as a diversified, open-end management investment company. The Fund
began operations on January 2, 1997. The Fund invests its assets primarily in
equity securities of foreign issuers with market capitalizations greater than $1
billion. The Fund seeks to achieve long-term capital appreciation.
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.
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 have been no sales are valued at the mean between the bid and
asked price. Securities for which quotations are not readily available are
valued at their respective fair values as determined in good faith by 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 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 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 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
13
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS at April 30, 1999 - Unaudited
================================================================================
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 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. The cost of
securities owned on realized transactions are relieved on the specific
identification basis. 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 $14,570
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.
G. Concentration of Risk. As of April 30, 1999 the Fund held a significant
portion of its 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 Fund's 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 amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Brandes Investment Partners, L.P. (The "Advisor") provides the Fund with
investment management services under an Investment Advisory Agreement. The
Advisor furnishes all investment advice, office space and certain administrative
services, and provides certain personnel needed by the Fund. As compensation for
its services, the Advisor is 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 1.20% of average daily net assets, the Advisor has waived
fees totaling $101,824 during the six months ended April 30, 1999. Any such
14
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS at April 30, 1999 - Unaudited
================================================================================
reductions made by the Advisor in its fees or reimbursement of expenses are
subject to reimbursement by the Fund. At April 30, 1999, the cumulative fee
waiver from the Advisor to the Fund was $453,502.
Investment Company Administration, L.L.C. (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 Trustees; monitors the activities of the Fund's
custodian, transfer agent and accountants; coordinates the preparation and
payment of Fund 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% in
excess of $200 million of the Fund's average daily net assets, subject to a
minimum of $40,000 per annum. For the six months ended April 30, 1999 the Fund
paid $69,260 in such fees.
First Fund 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 Administrator.
Certain officers of the Fund are also officers and/or Trustees of the
Adviser, Administrator and Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, the cost of purchases and the
proceeds from sales of securities, excluding short-term securities, were
$18,868,742 and $21,019,085, respectively.
NOTE 5 - YEAR 2000 ISSUE
Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems it uses and those used by the Fund's brokers and other major
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. This is commonly known as the "Year
2000 issue."
The Fund has assessed its computer systems and the systems compliance
issues of its brokers and major 2000 issue with respect to the computer systems
it uses and has obtained satisfactory assurances that comparable steps are being
taken by its brokers and other major service providers. At this time, however,
there can be no assurance that these steps will be sufficient to address all
Year 2000 issues. The inability of the Fund or its third party providers to
timely complete all necessary procedures to address the Year 2000 issue could
have a materially adverse effect on the Fund's operations. Management will
continue to monitor the status of and its exposure to this issue. For the six
months ended April 30, 1999, the Fund incurred no significant Year 2000 related
expenses and does not expect to incur significant Year 2000 expenses in the
future.
The Fund is in the process of establishing a contingency plan to address
recovery from unavoidable Year 2000 problems, if any.
15
<PAGE>
BRANDES
Investment Trust
ADVISOR BRANDES
Brandes Investment Partners, L.P. INVESTMENT TRUST
12750 High Bluff Drive
San Diego California 92130
800.331.2979
DISTRIBUTOR
First Fund Distributors, Inc.
4155 East Camelback Road
Suite 261E
Phoenix Arizona 85018
Transfer Agent SEMI-ANNUAL
Investors Bank & Trust Co. REPORT
200 Clarendon Street 16th Floor
Boston Massachusetts 02116 For the period ending April 30, 1999
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 WORLDWIDE VALUE SPECIALISTS
of the Brandes Institutional International
Equity Fund and may not be used as sales
brochure unless accompanied by a current
prospectus
