<PAGE>
Brandes Institutional International Equity Fund
================================================================================
Annual Report
For the Fiscal Year Ended October 31, 2000
December 4, 2000
Dear Shareholder:
During the 12-month period ending October 31, 2000, your fund extended its solid
recent performance with continued gains. Stock selection across a variety of
countries and industries resulted in significant outperformance. Your fund
advanced 22.84% during the period while the MSCI EAFE (Europe, Australasia, Far
East) Index declined 3.9%.
The negative return for the Index reflects the difficult overseas environment
during the period. A variety of factors contributed to investor wariness and
slumping returns among non-U.S. markets including:
. rising interest rates
. declining corporate profits
. weaker currencies
. surging oil prices
. conflicting economic reports
. slumping technology stocks
During the period, returns among emerging markets were also generally weak. The
MSCI EMF (Emerging Markets Free) Index fell 11.4%. Higher oil prices were the
greatest detriment to returns in emerging markets, especially in Asia where most
nations are net importers of oil. Higher fuel costs, when passed along in the
economy, are expected to blunt economic growth. Also, expectations for a similar
dampening effect on developed market economies raised concerns that exports will
slow. Because the economies of many emerging nations are largely dependent on
exports, the prospect of weaker global demand weighed on investor confidence.
Amid this difficult environment, value stocks showcased their mettle. For much
of the period, as tensions and market volatility escalated, investors
re-evaluated opportunities among previously overlooked value stocks. Morgan
Stanley Capital International (MSCI), hoping to illustrate potential differences
in returns between growth and value stocks in international markets, segregated
the growth and value stock constituents in its EAFE Index. Reflecting value
stocks' resilience during the period, the MSCI EAFE Value Index fell 0.4% while
the MSCI EAFE Growth Index declined 8.0%.
<PAGE>
Brandes Institutional International Equity Fund
For your fund, gains among holdings in Japan and company-specific advances in
the industrial components and telecommunications industries were the greatest
contributors to returns. A significant allocation to generally solid performers
in Japan also boosted results.
Among the best-performing holdings during the period were Kyocera (Japan-
industrial components), Alcatel Alsthom (France-electrical & electronics), and
Deutsche Telekom (Germany-telecommunications). In January, as the share price
for Kyocera climbed above the level we had established as its intrinsic value,
we eliminated the position.
While many holdings advanced, there were positions that declined and detracted
from overall returns during the period. Among the weakest-performing holdings
were issues in the United Kingdom such as Invensys (machinery & engineering),
Marks & Spencer (merchandising), and British Energy (utilities).
The continued application of our company-by-company search for what we believe
to be the most promising investment candidates for your fund resulted in some
minor changes to the composition of holdings during the period. The purchase of
stocks in the food & household products industry lifted the fund's exposure to
this industry. Appreciation and select purchases also raised your fund's
weighting in the beverages & tobacco industry. We trimmed exposure to the
telecommunications, machinery & engineering, and electrical & electronics
industries on a stock-by-stock basis.
With respect to countries, your fund's allocation remained largely unchanged. As
a result of individual purchases and sales, we reduced the weighting in France,
Germany, and Hong Kong while raising exposure in the United Kingdom. Your fund
retains its greatest exposure to the United Kingdom.
What is Value?
What is value? And when it comes to investing in businesses, how is value
recognized?
We believe calculating the true value of a business integrates a variety of
factors: a thorough review of fiscal strength; an evaluation of intangibles,
such as management expertise or brand recognition; and an estimation of future
profitability.
Combining these elements in our research, we derive an estimate of intrinsic
value for a business and compare it to the price of the company's stock. The
crux of our value investment philosophy is identifying a stock with a
substantial "margin of safety," a stock selling at a price well below our
estimation of the company's true, or intrinsic, value. We allow our company-by-
company search for extraordinary bargains to take us wherever they happen to be.
2
<PAGE>
Brandes Institutional International Equity Fund
When reviewing a company's fiscal strength, we study objective data, such as
current assets, current liabilities, and other balance sheet elements. To
evaluate a company's intangibles, we often meet face-to-face with senior
management members. We may also tour the company's facilities and talk with
suppliers, customers, and competitors.
With respect to estimating future profitability, we believe in using
conservative assumptions regarding long-term growth in profits. We consider
whether the competitive position of a company's products or services is
strengthening or weakening and we review the company's past treatment of
shareholders. In essence, we ask ourselves, "What are we paying today?" and
"What may we gain or lose in the future?"
Forecasting a company's long-term cash flows is rather like predicting the
weather-there are no certainties. We look at a variety of fundamental traits and
analyze the operating history to formulate a reasonable prediction. But just as
it's difficult to make an accurate, long-range weather forecast, we believe it's
very difficult to precisely predict a company's future cash flows-especially
more than a few years out. Even though we apply conservative estimates to future
cash flows, we still demand a low current price to help offset the risk that a
company may not live up to expectations.
In the short term, we believe any company's stock price may be inconsistent with
the underlying value of the business. By remaining mindful of financial strength
and what we are paying today for what may we gain in the future, we believe we
can recognize value in the marketplace and generally deliver strong returns with
limited risk over the long term. We appreciate your continued confidence and
remain committed to pursuing your investment goals.
Sincerely yours,
/s/ Debra McGinty-Poteet
Debra McGinty-Poteet
President
Brandes Investment Trust
3
<PAGE>
Brandes Institutional International Equity Fund
Value of $1,000,000 vs Morgan Stanley Capital
International EAFE (Europe, Australasia and Far East) Index
MSCI EAFE Index Brandes Institutional International Equity Fund
Jan-97 $ 1,000,000 $ 1,000,000
Apr-97 $ 999,508 $ 1,062,390
Jul-97 $ 1,141,429 $ 1,227,313
Oct-97 $ 1,029,617 $ 1,165,658
Jan-98 $ 1,075,025 $ 1,239,346
Apr-98 $ 1,188,564 $ 1,411,524
Jul-98 $ 1,203,832 $ 1,402,611
Oct-98 $ 1,128,926 $ 1,317,408
Jan-99 $ 1,229,938 $ 1,420,794
Apr-99 $ 1,301,420 $ 1,666,099
Jul-99 $ 1,320,645 $ 1,731,215
Oct-99 $ 1,388,955 $ 1,768,213
Jan-00 $ 1,466,692 $ 1,968,796
Apr-00 $ 1,482,228 $ 2,052,275
Jul-00 $ 1,439,583 $ 2,226,413
Oct-00 $ 1,348,744 $ 2,171,925
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
4
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at October 31, 2000
============================================================================================
Shares Value
--------------------------------------------------------------------------------------------
<S> <C> <C>
COMMONSTOCKS: 98.6%
Brazil: 7.5%
Banco Bradesco S.A. Sponsored ADR........................... 474,600 $ 3,021,588
Brasil Telecom Participacoes S.A. ADR....................... 2,618 141,863
Centrais Eletricas Brasileiras S.A. Sponsored ADR........... 538,130 4,779,509
Centrais Geradoras do Sul do Brasil S.A. ADR................ 20,613 159,316
Companhia Cervejaria Brahma Sponsored ADR................... 293,040 6,611,715
Petroleo Brasileiro S.A. ADR................................ 179,990 4,773,245
Telecelular Sul Participacoes ADR........................... 1,309 32,970
Telecentro Oeste Celular ADR................................ 4,363 44,175
Telecomunicacoes Brasileiras S.A. Sponsored ADR............. 57,600 4,219,200
Teleleste Celular Participacoes ADR......................... 261 10,065
Telemig Celular Participacoes ADR........................... 654 34,335
Telenordeste Celular Participacoes ADR...................... 654 26,977
Telenorte Celular Participacoes ADR......................... 261 9,037
Telenorte Leste Participacoes ADR........................... 14,622 323,512
Telesp Celular Partcipacoes ADR............................. 5,236 165,588
-----------
24,353,095
-----------
China: 1.4%
PetroChina Co., Ltd......................................... 22,128,000 4,653,518
----------
Denmark: 1.3%
Den Danske Bank Group....................................... 29,620 4,293,170
----------
France: 6.6%
Alcatel Alsthom Group....................................... 105,000 6,413,316
Compagnie Generale des Establissements Michelin............. 227,100 6,578,633
Eridania Beghin-Say S.A..................................... 32,500 2,502,740
Total Fina S.A.............................................. 42,239 6,049,727
----------
21,544,416
----------
Germany: 5.5%
BASF AG..................................................... 116,000 4,532,944
Bayerische Motoren Werke AG................................. 145,300 4,863,249
Deutsche Telekom AG......................................... 169,600 6,108,806
E.On AG..................................................... 51,000 2,595,145
----------
18,100,144
==========
</TABLE>
5
<PAGE>
Brandes Institutional International Equity Fund
SCHEDULE OF INVESTMENTS at October 31, 2000 (Continued)
================================================================================
Shares Value
--------------------------------------------------------------------------------
Hong Kong/China: 0.9%
Swire Pacific Ltd..................................... 482,500 $ 2,975,819
-----------
Ireland: 2.9%
Allied Irish Banks Plc................................ 370,600 3,777,896
Bank of Ireland....................................... 742,500 5,616,864
-----------
9,394,760
-----------
Italy: 2.7%
ENI S.p.A............................................. 939,000 5,089,192
Telecom Italia S.p.A.................................. 323,200 3,747,730
-----------
8,836,922
-----------
Japan: 18.3%
Bank of Tokyo-Mitsubishi (The)........................ 138,000 1,655,213
Daiichi Pharmaceutical Co., Ltd....................... 155,000 4,402,806
Daiwa House Industry Co., Ltd......................... 471,000 2,956,279
Hitachi, Ltd.......................................... 403,800 4,329,019
Japan Tobacco Inc..................................... 670 4,604,389
Komatsu Ltd........................................... 703,000 3,117,735
Matsushita Electric Works, Ltd........................ 204,000 5,925,506
Mitsubishi Heavy Industries, Ltd...................... 2,202,000 8,554,990
Nippon Mitsubishi Oil Corp............................ 1,637,000 8,804,932
Nippon Telegraph and Telephone Corp................... 496 4,513,016
Tokio Marine & Fire Insurance Co., Ltd. (The)......... 986,400 10,900,213
-----------
59,764,098
-----------
Mexico: 3.3%
Telefonos de Mexico S.A. Class L Sponsored ADR........ 198,840 10,724,933
-----------
Netherlands: 4.4%
Akzo Nobel N.V........................................ 59,000 2,688,972
ING Groep N.V......................................... 171,758 11,806,937
-----------
14,495,909
-----------
New Zealand: 0.8%
Telecom New Zealand................................... 1,227,661 2,718,218
-----------
6
<PAGE>
Brandes Institutional International Equity Fund
SCHEDULE OF INVESTMENTS at October 31, 2000 (Continued)
===============================================================================
Shares Value
-------------------------------------------------------------------------------
Portugal: 1.7%
Portugal Telecom .................................... 628,645 $ 5,607,388
===========
Singapore: 4.2%
Development Bank of Singapore Ltd. (The) ............ 557,069 6,568,679
Jardine Matheson Holdings Ltd. ...................... 1,263,263 7,011,110
-----------
13,579,789
===========
South Africa: 3.2%
De Beer Centenary Linked Unit ....................... 283,710 7,813,515
Iscor Ltd. .......................................... 117,911 187,349
South African Breweries Plc ......................... 386,000 2,322,485
-----------
10,323,349
===========
South Korea: 0.8%
Korea Electric Power Corp. .......................... 211,000 2,571,563
===========
Spain: 1.3%
Banco Bilbao Vizcaya Argenta ........................ 243,300 3,244,941
Telefonica, S.A. Sponsored ADR* ..................... 5,660 327,926
Union Electrica Fenosa S.A........................... 39,400 729,322
-----------
4,302,189
===========
Switzerland: 4.8%
Nestle S.A. ......................................... 3,800 7,880,964
Swisscom AG ......................................... 9,200 2,338,289
Zurich Financial Services ........................... 11,326 5,486,317
-----------
15,705,570
===========
United Kingdom: 26.0%
Allied Domecq Plc ................................... 125,000 645,638
BOC Group Plc ....................................... 249,200 3,468,490
British Aerospace Plc ............................... 997,000 5,659,072
British American Tobacco Plc ........................ 1,287,620 9,016,817
British Energy Plc .................................. 536,192 1,399,300
British Telecommunications Plc ...................... 301,300 3,529,639
Cadbury Schweppes Plc ............................... 608,487 3,758,198
7
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS at October 31, 2000 (Continued)
===========================================================================================
Shares Value
-------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom- (Continued)
Corus Group Plc............................................. 1,418,000 $ 1,274,640
Diageo Plc.................................................. 1,180,983 11,138,087
HSBC Holdings Plc........................................... 234,200 3,258,237
Imperial Chemical Industries Plc............................ 179,940 1,100,927
Innogy Holdings Plc*........................................ 1,231,000 3,569,531
International Power Plc..................................... 1,231,000 4,961,669
Invensys Plc................................................ 1,217,359 2,903,401
Marks & Spencer Plc......................................... 1,628,000 4,531,864
Reckitt Benckiser Plc....................................... 353,200 4,639,494
Royal & Sun Alliance Insurance Group Plc.................... 602,090 4,281,763
Safeway Plc................................................. 1,176,000 4,884,869
Unilever Plc................................................ 1,605,000 10,849,640
-----------
84,871,276
-----------
Venezuela: 1.0%
Compania Anonima Nacional Telefonos de Venezuela, ADR....... 167,690 3,186,110
-----------
TOTAL COMMON STOCKS (cost $304,099,951)..................... 322,002,236
===========
Principal Amount
--------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 2.3%
Investors Bank & Trust Co., Repurchase Agreement, 5.690%, dated 10/31/2000, due
11/01/2000, [collateralized by $7,225,000 Federal Home Loan Mortgage Corporation
ARM #846814, 7.911%, due 11/01/2022 and by $5,171,000 Federal National Mortgage
Association ARM #313143, 7.867%, due 06/01/2024, (Combined market value
$8,014,868)]
(proceeds $7,634,293) (cost $7,633,086).................... $ 7,633,086 7,633,086
TOTAL INVESTMENTS IN SECURITIES (cost$311,733,037**) 100.9% 329,635,322
Liabilities in excess of Other Assets: (0.9%) (3,110,429)
------------
NET ASSETS: 100.0% $326,524,893
============
</TABLE>
_____________
* Non-income producing security.
** At October 31, 2000, the basis of investments for federal income tax purposes
was the same as for financial reporting purposes.
<TABLE>
<CAPTION>
Unrealized appreciation and depreciation were as follows:
<S> <C>
Gross unrealized appreciation $ 53,709,343
Gross unrealized depreciation (35,807,058)
------------
Net unrealized appreciation $ 17,902,285
============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS By Industry at October 31, 2000
===========================================================================================================
Percent of
Industry Net Assets
-------- ----------
<S> <C>
Aircraft ....................................................................................... 1.7%
Automobile ..................................................................................... 1.5
Banking ........................................................................................ 15.4
Beverages & Tobacco ............................................................................ 10.5
Business Services .............................................................................. 2.6
Chemicals ...................................................................................... 3.6
Communications Equipments & Services ........................................................... 8.1
Electrical & Electronics ....................................................................... 3.1
Food & Household Products ...................................................................... 10.6
Insurance ...................................................................................... 4.6
Machinery & Engineering ........................................................................ 7.0
Metals-Steel ................................................................................... 0.5
Minerals ....................................................................................... 2.4
Oil & Gas ...................................................................................... 5.7
Pharmaceutical ................................................................................. 1.3
Retail Stores .................................................................................. 1.4
Telecommunications ............................................................................. 7.7
Tires & Inner Tubes ............................................................................ 2.0
Utilities-Electrical & Gas .................................................................... 8.9
------
TOTAL COMMON STOCKS ........................................................................... 98.6
SHORT-TERM INVESTMENTS ........................................................................ 2.3
------
TOTAL INVESTMENTS IN SECURITIES ............................................................... 100.9
Liabilities in excess of Other Assets ......................................................... (0.9)
------
NET ASSETS 100.0%
======
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
Brandes Institutional International Equity Fund
STATEMENT OF ASSETS AND LIABILITIES at October 31, 2000
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $311,733,037)............................... $329,635,322
Cash.................................................................................. 54,759
Receivables:
Fund Shares sold................................................................... 728,381
Dividends and interest ............................................................ 677,911
Securities lending income.......................................................... 2,476
Tax reclaim........................................................................ 153,083
Prepaid expenses...................................................................... 15,972
Deferred organization costs........................................................... 4,849
------------
Total assets................................................................... 331,272,753
------------
LIABILITIES
Payables:
Fund shares redeemed............................................................... 281,214
Securities purchased............................................................... 4,313,043
Due to advisor..................................................................... 35,676
Unrealized loss on forward currency contracts...................................... 52,142
Accrued expenses...................................................................... 65,785
------------
Total liabilities.............................................................. 4,747,860
------------
NET ASSETS............................................................................ $326,524,893
============
Net asset value, offering and redemption price per share
($326,524,893/14,613,008 shares outstanding; unlimited
number of shares authorized without par value)................................. $ 22.34
============
COMPONENTS OF NET ASSETS
Paid-in capital....................................................................... $240,678,753
Accumulated net investment income..................................................... 5,087,003
Accumulated net realized gain on investments and foreign currency .................... 62,899,192
Net unrealized appreciation (depreciation) on:
Investments........................................................................ 17,902,285
Foreign currency................................................................... (42,340)
------------
Net assets..................................................................... $326,524,893
============
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
=========================================================================================================
<S> <C>
INVESTMENT INCOME
Income
Dividends (net of foreign tax withheld of $755,929)................................ $ 8,254,210
Interest........................................................................... 454,886
------------
Total income................................................................... 8,709,096
------------
Expenses
Advisory fees...................................................................... 3,089,527
Administration fees................................................................ 148,669
Custody fees....................................................................... 144,875
Transfer agent fees................................................................ 49,862
Accounting fees.................................................................... 45,283
Auditing fees...................................................................... 41,095
Printing........................................................................... 32,414
Registration expense............................................................... 18,895
Legal fees......................................................................... 17,718
Trustee fees....................................................................... 13,702
Amortization of deferred organization costs........................................ 2,921
Insurance expense.................................................................. 919
Miscellaneous...................................................................... 21,292
------------
Total expenses................................................................. 3,627,172
Add: expenses recouped by advisor.............................................. 20,659
------------
Net expenses before interest .................................................. 3,647,831
Add: Interest expense.......................................................... 1,200
------------
Net expenses................................................................... 3,649,031
------------
Net investment income..................................................... 5,060,065
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments and foreign currency.............................. 62,973,116
Net unrealized depreciation on investments and foreign currency.................... (12,236,683)
------------
Net realized and unrealized gain on investments and foreign currency........... 50,736,433
------------
Net increase in net assets resulting from operations...................... $ 55,796,498
============
</TABLE>
See accompanying Notes to Financial Statements.
11
<PAGE>
Brandes Institutional International Equity Fund
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
October 31, 2000 October 31, 1999
--------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income.................................................................... $ 5,060,065 $ 2,400,994
Net realized gain on investments and foreign currency.................................... 62,973,116 19,599,093
Net unrealized appreciation (depreciation) on investments and foreign currency........... (12,236,683) 35,116,475
---------- ----------
Net increase in net assets resulting from operations.................................. 55,796,498 57,116,562
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................................................... (2,436,583) (2,286,065)
From net realized gain................................................................... (19,619,447) (12,503,131)
---------- ----------
Total distributions to shareholders................................................... (22,056,030) (14,789,196)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a)............. 57,661,459 32,780,430
---------- ----------
Total increase in net assets.......................................................... 91,401,927 75,107,796
NET ASSETS
Beginning of year........................................................................ 235,122,966 160,015,170
----------- -----------
End of year (including accumulated net investment income of $5,087,003 and $2,463,521,
respectively)......................................................................... $326,524,893 $235,122,966
============ ============
</TABLE>
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 2000 October 31, 1999
----------------------------- ----------------------------
Shares Value Shares Value
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 7,605,833 $ 166,267,606 6,037,117 $108,174,956
Shares issued on reinvestment of distributions.................. 1,038,338 20,860,212 867,985 13,228,096
Shares redeemed................................................. (5,879,759) (129,466,359) (4,923,728) (88,622,622)
--------- ------------- --------- ------------
Net increase.................................................... 2,764,412 $ 57,661,459 1,981,374 $ 32,780,430
========= ============= ========= ============
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
================================================================================
<TABLE>
<CAPTION>
January 2, 1997*
Year Ended October 31, through
----------------------------------------
2000 1999 1998 October 31, 1997
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 19.84 $ 16.22 $ 14.57 $ 12.50
----------- ----------- ----------- ----------
Income from investment operations:
Net investment income.................... 0.34 0.20 0.21 0.17
Net realized and unrealized gain on
investments and foreign currency...... 3.99 4.91 1.66 1.90
----------- ----------- ----------- ----------
Total from investment operations............ 4.33 5.11 1.87 2.07
----------- ----------- ----------- ----------
Less distributions:
From net investment income............... (0.20) (0.23) (0.07) 0.00
From net realized gain................... (1.63) (1.26) (0.15) 0.00
----------- ----------- ----------- ----------
Total distributions......................... (1.83) (1.49) (0.22) 0.00
----------- ----------- ----------- ----------
Net asset value, end of period.............. $ 22.34 $ 19.84 $ 16.22 $ 14.57
=========== =========== =========== ==========
Total return................................ 22.84% 34.23% 13.01% 16.56%***
Ratios/supplemental data:
Net assets, end of period (millions)........ $ 326.5 $ 235.1 $ 160.0 $ 51.1
Ratio of expenses to average net assets
including interest expense:
Before fees waived and expenses recouped 1.18% 1.30% 1.37% 1.76%**
After fees waived and expenses recouped 1.19% 1.20% 1.20% 1.19%**
Ratio of net investment income to average
net assets:
Before fees waived and expenses recouped 1.65% 1.09% 1.75% 0.84%**
After fees waived and expenses recouped 1.64% 1.19% 1.92% 1.40%**
Portfolio turnover rate..................... 42.03% 32.31% 50.08% 27.40%***
</TABLE>
* Commencement of operations.
** Annualized.
*** Not annualized.
See accompanying Notes to Financial Statements.
13
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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. Securities traded on a national securities exchange
are valued at the last reported sale price at the close of regular
trading on each day the exchanges are open for trading. 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 stated at their respective
fair values as determined in good faith by the Board of Trustees.
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. Short-term investments are stated at
cost, which when combined with accrued interest, approximates market
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
Statement 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,
14
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
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 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. 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 October 31, 2000, 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 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. Actual results
could differ from those estimates.
I. Securities Lending. The Trust may temporarily loan securities to
brokers, dealers or other financial institutions in exchange for a
negotiated lender's fees. At all times the borrower fully
collateralizes the loans with cash, letters of credit or U.S.
Government securities. The market value of securities on loan and
related collateral at October 31, 2000 were $22,755,987 and
$23,811,809, respectively.
15
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
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. For the year ended
October 31, 2000, the Fund incurred $3,089,527 in advisory fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to limit the Fund's total operating expenses by reducing all or a portion
of its fees and reimbursing the Fund for expenses, excluding interest, so that
its ratio of expenses to average net assets will not exceed 1.20%. Any fee
waived and/or any Fund expense absorbed by the Advisor pursuant to an agreed
upon expense cap shall be reimbursed by the Fund to the Advisor, if so requested
by the Advisor, provided the aggregate amount of the Fund's current operating
expenses for such fiscal year does not exceed the applicable limitation on Fund
expenses. For the year ended October 31, 2000, the Advisor recouped fees
previously waived fees of $20,659. At October 31, 2000, the amount available for
reimbursement that has been paid and/or waived by the Advisor on behalf of the
Fund is $530,603. The Advisor may recapture $331,019 of the above amount no
later than October 31, 2003 and $199,584 no later than October 31, 2004. The
Fund must pay its current ordinary operating expenses before the Advisor is
entitled to any reimbursement. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated.
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 0.05% of
average daily net assets for the first $250 million in net assets, 0.04% of
average daily net assets for the next $250 million in net assets and 0.03% in
excess of $500 million of the Fund's average daily net assets, subject to a
minimum of $40,000 per annum. For the year ended October 31, 2000, the Fund
incurred $148,669 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
Advisor, Administrator and Distributor.
16
<PAGE>
Brandes Institutional International Equity Fund
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 2000, the cost of purchases and the
proceeds from sales of securities, excluding short-term investments, were
$166,572,033 and $125,817,593, respectively.
NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS
At October 31, 2000, the Fund had entered into forward foreign currency
contracts which obligated the Fund to exchange currencies at specified future
dates. Forward foreign currency contracts are valued at the forward rate, and
are marked to market at the end of each period. At the maturity of a forward
contract, the Fund may either make delivery of the foreign currency from
currency held, if any, or from the proceeds of the portfolio securities sold, or
it may terminate its obligation to deliver the foreign currency at any time by
purchasing an offsetting contract. The Fund could be exposed to the risk that
the counterparties to the contracts are unable to meet the terms of their
contracts. Open forward foreign currency exchange contracts at October 31, 2000
were as follows:
Foreign Currency
Delivery Currency Currency to Value in Unrealized
Date Deliverable be Received U.S.$ Loss
------------------------------------------------------------------------------
11/10/00 Japanese Yen 470,704,000 $ 4,321,008 $ (52,142)
------------ -----------
$ 4,321,008 $ (52,142)
============ ===========
17
<PAGE>
Report of Independent Auditors
To the Shareholders of Brandes Institutional
International Equity Fund and the
Board of Trustees of Brandes Investment Trust
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Brandes Institutional International Equity Fund
(the "Fund"), (one of the portfolios constituting Brandes Investment Trust), as
of October 31, 2000, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended and for the period from January 2, 1997 (commencement of
operations) to October 31, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 2000, by correspondence with the custodian and brokers.
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 position of
Brandes Institutional International Equity Fund as of October 31, 2000, the
results of its operations for the year then ended, and the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended and for the
period from January 2, 1997 (commencement of operations) to October 31, 1997, in
conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Los Angeles, California
December 15, 2000
18
<PAGE>
BRANDES
INVESTMENT TRUST
ADVISOR
Brandes Investment Partners, L.P.
11988 El Camino Real, Suite 500
San Diego, California 92191
800-331-2979
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road
Suite 261E
Phoenix, Arizona 85018
TRANSFER AGENT
Investors Bank & Trust Co.
200 Clarendon Street, 16th Floor
Boston, Massachusetts 02116
AUDITORS
Ernst & Young LLP
725 South Figueroa Street
Los Angeles, California 90017
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street, 23rd Floor
Los Angeles, California 90071
This report is intended for shareholders of the Brandes Institutional
International Equity Fund and may not be used as sales literature unless
preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered are
presentation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
BRANDES
INVESTMENT TRUST
ANNUAL
REPORT
Year ended October 31, 2000
WORLDWIDE VALUE SPECIALISTS
