-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WuvF1tUOjgx01fZ8G0Z3lhVkc9rhZZv5FG9GHTr6E4nH19wTQgF6XgZh7Ff/oLx5 xZ5YG95mgIUF7E68A0200g== 0000950115-96-000940.txt : 19960629 0000950115-96-000940.hdr.sgml : 19960629 ACCESSION NUMBER: 0000950115-96-000940 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960627 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: 1838 INVESTMENT ADVISORS FUNDS CENTRAL INDEX KEY: 0000933996 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 232794406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08902 FILM NUMBER: 96586934 BUSINESS ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER SUITE 320 STREET 2: 100 MATSONFORD ROAD CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 6102934300 MAIL ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER SUITE 320 STREET 2: 100 MATSONFORD ROAD CITY: RADNOR STATE: PA ZIP: 19087 N-30D 1 SEMI-ANNUAL REPORT May 22, 1996 DEAR SHAREHOLDER: The net asset value per share of your Fund as of April 30, 1996 was $10.77. This represents a total return of 8.2% since the Fund's inception on August 3, 1995. For the six months ended April 30, 1996, the Fund's total return was 12.6% and the number of Fund shares outstanding rose by 67% to 2,923,779. The EAFE index for international markets had a total return of 13.4% during the same six-month period, performing in line with the U.S. stock market averages. High returns were experienced in Continental Europe and the Far East. Local six month returns, of approximately 20% in Japan, Spain, Italy, and the Netherlands, were somewhat reduced by the strength of the dollar. Market leadership alternated between economically sensitive and defensive stocks, brought about by conflicting data about strength in many economies. We increased the Fund's holdings in equities of companies domiciled in emerging markets, which recovered during the period amid high volatility. These markets now represent 8% of the Fund's net assets, with holdings in the Republic of Korea, Taiwan, Thailand, the Philippines, Indonesia, Mexico, Brazil and Chile. Rising liquidity and expectations that reform in the European corporate culture will increase shareholder value boosted valuations there. We expanded our holdings across Europe, particularly in Spain and Sweden, with an emphasis on capital spending-related companies. Currently, 35% of the Fund's net assets are invested in Japan, in line with the size of the world's second largest economy. Evidence is growing that Japan is emerging from a long recessionary period with the accompanying recovery of corporate earnings. Average worldwide economic growth in GNP in 1996 is expected to be roughly the same as it was in 1995 in the OECD countries. In Europe, the focus is on reducing budget deficits and national debt for countries that seek entry into the European Monetary Union. Growth is picking up in Japan. In both areas, monetary policy has been relaxed to stimulate the economic recovery. China appears to have succeeded in reducing growth and inflation to sustainable levels. The rest of the Far Eastern region continues to grow at a high pace. We believe this macro-economic environment presents a number of attractive investment opportunities for your Fund. Sincerely, [SIGNATURE] Hans van den Berg Vice President & Portfolio Manager - ---------------------------------- Shares of the 1838 International Equity Fund are distributed by Rodney Square Distributors, Inc. 6/26/96 Past performance is not predictive of future results. Investment returns and principal values will fluctuate, so that, when redeemed, shares may be worth less than their original cost. 1 SCHEDULE OF NET ASSETS (UNAUDITED) APRIL 30, 1996
PRINCIPAL AMOUNT (000'S) OR NUMBER VALUE SECTOR OF SHARES (NOTE 2) ------ --------- -------- COMMON STOCK (93.3%) AUSTRALIA (1.9%) Broken Hill Propriety Co. Metals -- Diversified.......................... 20,116 $309,562 News Corp. Ltd. Publishing..................................... 50,000 293,009 ------------ 602,571 ------------ BRAZIL (0.7%) Telecomunicacoes Brasileiras Sponsor ADR Telecommunications............................. 4,400 238,150 ------------ CHILE (0.6%) Compania Telecomunicacion Chile ADR Telecommunications............................. 2,000 182,500 ------------ FRANCE (5.8%) Accor Lodging........................................ 2,300 320,119 Alcatel Alsthom Telecomm., Energy & Electricity................ 1,700 160,157 Axa Inc. Insurance...................................... 2,700 161,151 Carrefour Supermarche Retail -- Grocery.............................. 400 313,102 Cetelem Financial Services............................. 900 193,479 LVMH (Moet-Hennessy) Wines & Spirits................................ 1,350 345,959 Rhone Poulenc Chemicals...................................... 14,000 336,519 ------------ 1,830,486 ------------ GERMANY (5.0%) Allianz AG Holding Insurance...................................... 120 205,449 Bayer AG Chemicals...................................... 1,200 387,163 Deutsche Bank AG Banking........................................ 3,400 163,230 Mannesmann AG Machinery Manufacturer......................... 650 222,996 Siemens AG Electrical Equipment........................... 600 328,727 Veba AG Electric Utility............................... 5,300 262,605 ------------ 1,570,170 ------------ HONG KONG (3.8%) Cheung Kong Holdings, Ltd. Real Estate.................................... 38,000 271,478 HSBC Holdings Financial Services............................. 16,000 238,957 Hutchinson Whampoa Real Estate, Transportation & Telecomm......... 40,000 248,267 Sun Hung Kai Properties Real Estate.................................... 25,000 238,408 Swire Pacific, Ltd. (A Shares) General Trading & Air Transportation........... 25,000 213,355 ------------ 1,210,465 ------------ INDONESIA (0.8%) PT Bank Internasional Indonesia Banking........................................ 50,000 246,245 ------------ ITALY (2.0%) Assicurazioni Generali SPA Insurance...................................... 11,000 273,867 Telecom Italia Mobile SPA Telecommunications............................. 160,000 352,841 ------------ 626,708 ------------
See accompanying notes to financial statements. 2 SCHEDULE OF NET ASSETS (UNAUDITED) -- continued APRIL 30, 1996
PRINCIPAL AMOUNT (000'S) OR NUMBER VALUE SECTOR OF SHARES (NOTE 2) ------ --------- -------- JAPAN (36.3%) All Nippon Airways Air Transportation............................. 32,000 $364,720 Asahi Bank, Ltd. Banking........................................ 25,000 323,248 Asahi Glass Co., Ltd. Glass Manufacturer............................. 26,000 316,257 Dai-Ichi Kangyo Bank Banking........................................ 19,000 387,611 Daiwa House Industries House Manufacturer............................. 12,000 191,938 Fuji Bank, Ltd. Banking........................................ 13,000 285,129 Hitachi, Ltd. Electronics.................................... 49,000 530,319 Hoya Corp. Glass Manufacturer............................. 12,000 425,251 Industrial Bank of Japan Banking........................................ 10,000 268,176 Japan Tobacco, Inc. Tobacco........................................ 23 213,239 Konica Corp. Photography Equipment.......................... 32,000 251,320 Kyocera Corp. Bioceramics Manufacturer....................... 5,000 377,362 Marubeni Corp. Miscellaneous Distributor...................... 71,000 426,372 Mitsubishi Estate Co. Ltd. Real Estate.................................... 20,000 281,585 Mitsubishi Materials Corp. Metals -- Diversified.......................... 49,000 295,664 Mitsubishi Oil Co. Oil Distributor................................ 37,000 333,822 Mitsubishi Trust & Banking Banking........................................ 19,000 329,378 Mitsui Toatsu Chemicals Chemicals...................................... 61,000 271,088 Nippon Steel Corp. Steel Manufacturer............................. 94,000 340,316 Nippon Television Network Broadcasting................................... 800 252,086 Nippondenso Co. Ltd. Electronics.................................... 15,000 327,558 Nitto Boeski Co. Textiles Manufacturer.......................... 84,000 303,307 Nomura Securities, Co., Ltd. Securities Dealer.............................. 16,000 349,395 Obayashi Corp. Construction................................... 36,000 335,489 Ricoh Company, Ltd. Office Equipment............................... 27,000 318,076 Seven-Eleven Retail -- Grocery.............................. 3,300 234,204 Sharp Corp. Electronics.................................... 29,000 505,512 Sumitomo Bank Banking........................................ 19,000 407,628 Sumitomo Trust & Banking Banking........................................ 27,000 395,656 Sumitomo Warehouse Storage/Warehousing............................ 54,000 399,794 Takeda Chemicals Industries Pharmaceuticals................................ 17,000 294,707 Tokio Marine & Fire Insurance...................................... 21,000 289,630 Tokyo Electric Power Electric Utility............................... 12,800 349,396 Toyota Motor Corp. Automobile Manufacturer........................ 11,000 251,798 Wacoal Corp. Textile Manufacturer........................... 15,000 204,006 ------------ 11,431,037 ------------ MALAYSIA (1.3%) Genting Berhad Resorts -- Plantation.......................... 11,000 98,809 Maylayan Banking Banking........................................ 23,000 224,125 United Engineers, Ltd. Engineering & Construction..................... 15,000 102,859 ------------ 425,793 ------------ MEXICO (1.0%) CIFRA SA ADR Retail......................................... 225,000 302,344 ------------
See accompanying notes to financial statements. 3 SCHEDULE OF NET ASSETS (UNAUDITED) -- continued APRIL 30, 1996
PRINCIPAL AMOUNT (000'S) OR NUMBER VALUE SECTOR OF SHARES (NOTE 2) ------ --------- -------- NETHERLANDS (4.5%) Aegon N.V. Insurance...................................... 4,250 $203,045 Akzo N.V. Chemicals...................................... 1,250 145,638 Heineken N.V. Beverage Manufacturer.......................... 1,200 251,944 International Nederlanden Groep Financial Services............................. 2,961 229,356 Philips Electronics N.V. Electronics.................................... 6,000 212,529 Stork N.V. Miscellaneous Manufacturing.................... 7,600 214,473 Unilever N.V. Food, Detergents............................... 1,300 177,951 ------------ 1,434,936 ------------ PHILIPPINES (0.8%) Pilipino Telephone Corp. Telecommunications............................. 175,000 257,421 ------------ REPUBLIC OF KOREA (0.9%) Pohang Iron & Steel Company, Ltd. ADR Iron & Steel Manufacturer...................... 5,500 151,250 Samsung Electronics -- GDR* Electronics.................................... 3,352 142,461 ------------ 293,711 ------------ SINGAPORE (1.9%) DBS Land Real Estate.................................... 35,000 142,003 IPC Corp. Computer Manufacturer.......................... 160,000 81,429 Keppel Corp. Ltd. Shipbuilding, Real Estate...................... 12,000 108,477 Singapore Press Holdings Publishing..................................... 8,000 151,470 United O/S Bank Banking........................................ 11,000 107,268 ------------ 590,647 ------------ SPAIN (2.4%) Banco Santander SA Banking........................................ 3,750 174,639 Empresa Nacional DE Electricidad SA Utility........................................ 5,000 314,804 Repsol SA Oil & Gas Exploration.......................... 7,000 257,320 ------------ 746,763 ------------ SWEDEN (3.8%) Astra AB (A Shares) Pharmaceuticals................................ 6,800 302,519 Atlas Copco AB (A Shares) Machinery Manufacturer......................... 14,000 263,387 Svenska Handelsbanken (A Shares) Financial -- Banks............................. 17,000 348,674 Telefonaktiebolaget Lm Ericsson ADR Telecommunications............................. 13,500 275,062 ------------ 1,189,642 ------------ SWITZERLAND (3.5%) ABB AG Electrical Machinery........................... 240 290,156 Ciba-Geigy AG Pharmaceuticals................................ 200 231,615 Nestle SA Sponsor ADR Food Processing................................ 4,000 224,000 Roche Holding AG -- Genussshein Pharmaceuticals................................ 45 355,120 ------------ 1,100,891 ------------ TAIWAN (0.6%) China Steel Corp.* Steel Manufacturer............................. 8,000 180,000 ------------
See accompanying notes to financial statements. 4 SCHEDULE OF NET ASSETS (UNAUDITED) -- continued APRIL 30, 1996
PRINCIPAL AMOUNT (000'S) OR NUMBER VALUE SECTOR OF SHARES (NOTE 2) ------ --------- -------- THAILAND (1.2%) Land & House Co. Ltd. Real Estate.................................... 6,000 $92,673 Telecomasia Corp.* Telephone Utility.............................. 30,000 78,415 Thai Farmers Bank Co. Banking........................................ 11,000 126,336 The Siam Cement Co., Ltd. Building Materials............................. 1,500 77,226 ------------ 374,650 ------------ UNITED KINGDOM (14.5%) British Petroleum Co. plc Oil & Gas Exploration and Distribution......... 42,217 381,475 BTR plc Miscellaneous Manufacturing.................... 70,000 338,965 Cable & Wireless plc Telecommunications............................. 169 1,331 Carlton Communications, plc Sponsor ADR Broadcasting................................... 10,000 353,750 Glaxo Holdings plc Pharmaceuticals................................ 21,000 255,174 Lloyds Tsb Group, plc Banking........................................ 60,796 292,103 Powergen plc Electric Utility............................... 20,244 170,405 Prudential Corp. plc Insurance...................................... 55,000 379,997 Reed International plc Publishing..................................... 23,000 395,188 Reuters Holdings plc Sponsor ADR Publishing..................................... 3,000 202,875 Shell Transport and Trading Co. plc Oil & Gas Exploration and Distribution......... 28,000 370,011 Siebe plc Machinery Manufacturer......................... 28,000 362,830 Smithkline Beecham plc Pharmaceuticals................................ 34,646 368,464 Tesco plc Retail -- Grocery.............................. 70,000 295,671 TI Group Miscellaneous Manufacturing.................... 49,000 402,850 ------------ 4,571,089 ------------ TOTAL COMMON STOCK (COST $27,170,625)........................................................... 29,406,219 ------------ COMMERCIAL PAPER (5.5%) Ford Motor Credit Corp., 5.29%, 05/01/96 Finance........................................ $1,724,029 $1,724,029 (COST $1,724,029) ------------ CORPORATE BONDS (0.4%) United Micro Electron, Convertible, Electronics.................................... 100 125,500 1.25%, 06/08/04 (COST $150,000) ------------ TOTAL INVESTMENTS (COST $29,044,654)+ (99.2%).............................................. $31,255,748 OTHER ASSETS AND LIABILITIES, NET (0.8%)................................................... 240,108 ------------ NET ASSETS (100.0%)........................................................................ $31,495,856 ====== ============
- ---------------------------------- * Non-income producing security. +The cost for Federal income tax purposes was $29,045,141. The aggregate gross unrealized appreciation in which there was an excess of market value over tax cost was $2,786,618, and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over market value was $576,011. ADR -- American Depository Receipt GDR -- Global Depository Receipt See accompanying notes to financial statements. 5 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED)
ASSETS: Investments, at market (identified cost $29,044,654) (Note 2)................. $ 31,255,748 Foreign currency held at market (identified cost $5,071)...................... 5,006 Receivables: Dividends and interest...................................................... 131,510 Foreign taxes recoverable................................................... 14,270 Forward foreign currency exchange contracts sold (Note 6)................... 5,142 Deferred organizational costs (Note 2)........................................ 110,004 Other assets.................................................................. 559 ------------- Total Assets............................................................. 31,522,239 LIABILITIES: Payables: Due to Advisor.............................................................. $8,365 Accrued expenses (Note 4)................................................... 12,865 Foreign currencies to deliver (Note 6)...................................... 5,153 -------------- Total Liabilities........................................................ 26,383 ------------- NET ASSETS.................................................................... $ 31,495,856 ============= NET ASSETS CONSIST OF: Common stock.................................................................. $2,924 Additional capital paid in.................................................... 29,401,090 Undistributed net investment income........................................... 66,309 Accumulated net realized gain (loss) on: Investments................................................................. (190,616) Foreign currency transactions............................................... 5,379 Net unrealized appreciation (depreciation) on: Investments................................................................. 2,211,094 Translation of assets and liabilities in foreign currencies................. (324) ------------- NET ASSETS, for 2,923,779 shares outstanding.................................. $31,495,856 ============= NET ASSET VALUE offering price and redemption price per share ($31,495,856 divided by 2,923,779 outstanding shares of common stock, $0.001 par value)...................................................................... $10.77 =============
See accompanying notes to financial statements. 6 STATEMENT OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME: Dividends................................................................. $237,705 Interest.................................................................. 35,963 ------------ 273,668 Less foreign taxes withheld............................................... (27,634) ------------ 246,034 EXPENSES: Investment advisory fee (Note 4).......................................... $84,783 Administration fee (Note 4)............................................... 24,863 Accounting fee (Note 4)................................................... 29,835 Custodian fees............................................................ 14,006 Amortization of organizational expenses (Note 2).......................... 12,891 Reports to shareholders................................................... 5,833 Legal..................................................................... 9,301 Audit..................................................................... 11,236 Registration fees......................................................... 8,318 Trustees' fees and expenses (Note 4)...................................... 12,308 Transfer agency fees...................................................... 6,562 Other..................................................................... 7,945 -------------- Total expenses before fee waivers....................................... 227,881 Advisory fee waived (Note 4)............................................ (63,415) Administration fee waived (Note 4)...................................... (9,358) Accounting fee waived (Note 4).......................................... (11,229) Transfer agency fee waived (Note 4)..................................... (2,573) -------------- Total Expenses, net................................................ 141,306 ------------ Net Investment Income..................................................... 104,728 ------------ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY: Net realized from: Investments............................................................... (167,077) Foreign currency transactions............................................. (31,611) Net unrealized appreciation (depreciation) during the period on: Investments............................................................... 2,890,619 Translation of assets and liabilities in foreign currencies............... (280) ------------ Net realized and unrealized gain from investments and foreign currency.......................................................... 2,691,651 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 2,796,379 ============
See accompanying notes to financial statements. 7 STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH FOR THE PERIOD PERIOD ENDED AUGUST 3, 1996+ APRIL 30, 1996 TO OCTOBER 31, (UNAUDITED) 1995 ----------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income............................................ $104,728 $40,266 Net realized gain (loss) on: Investments................................................... (167,077) (23,539) Foreign currency transactions................................. (31,611) 36,990 Net unrealized appreciation (depreciation) during the period on: Investments................................................... 2,890,619 (679,525) Translation of assets and liabilities in foreign currencies... (280) (44) ----------------- ------------------ Net increase in net assets resulting from operations............. 2,796,379 (625,852) ----------------- ------------------ Distributions to shareholders from: Net investment income ($0.043 and $0, respectively).............. (78,685) 0 ----------------- ------------------ Increase in net assets from Fund share transactions (Note 5)....... 12,014,420 17,289,594 ----------------- ------------------ Increase in net assets........................................... 14,732,114 16,663,742 NET ASSETS: Beginning of period.............................................. 16,763,742 100,000 ----------------- ------------------ End of period (including undistributed net investment income of $66,309 and $40,266, respectively)............................ $ 31,495,856 $ 16,763,742 ================ ================
- ---------------------------------- + Commencement of Operations. See accompanying notes to financial statements. 8 FINANCIAL HIGHLIGHTS The following table includes selected data for a share outstanding throughout each period and other performance information derived from the financial statements. It should be read in conjuction with the financial statements and notes thereto.
FOR THE SIX-MONTH FOR THE PERIOD PERIOD ENDED AUGUST 3, 1995+ APRIL 30, 1996 TO OCTOBER 31, (UNAUDITED) 1995 ----------------- ------------------ NET ASSET VALUE -- BEGINNING OF PERIOD.................... $9.61 $10.00 ----------------- ---------- INVESTMENT OPERATIONS: Net investment income................................ 0.05 0.02 Net realized and unrealized gain (loss) on investment and foreign currency transactions.................. 1.15 (0.41) ----------------- ---------- Total from investment operations................ 1.20 (0.39) ----------------- ---------- DISTRIBUTIONS: From net investment income........................... (0.04) -- ----------------- ---------- NET ASSET VALUE -- END OF PERIOD.......................... $10.77 $9.61 ----------------- ---------- ----------------- ---------- TOTAL RETURN(1)........................................... 12.56% (3.90)% Ratios (to average net assets)/Supplemental Data: Expenses(2).......................................... 1.25%* 1.25%* Net investment income................................ 0.93%* 1.02%* Portfolio turnover rate................................... 24.78%* 42.21%* Average commission rate paid.............................. $0.0364 -- Net assets at end of period ($000's omitted).............. 31,496 16,764
- ---------------------------------- + Commencement of Operations. (1) The total return for each period has not been annualized. (2) Without fee waivers or expense reimbursements, the annualized ratio of expenses to average daily net assets would have been 2.02% for the six-month period ended April 30, 1996 and 2.60% for the period ended October 31, 1995. * Annualized. See accompanying notes to financial statements. 9 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. DESCRIPTION OF THE FUND -- The 1838 Investment Advisors Funds (the 'Trust'), a diversified, open-end management investment company, was established as a series Delaware business trust on December 9, 1994, and is registered under the Investment Company Act of 1940, as amended (the '1940 Act'). The Trust's Agreement and Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest. The Trust has established two series: the 1838 International Equity Fund and the 1838 Small Cap Equity Fund. The 1838 International Equity Fund (the 'Fund'), the only series offered by the Trust as of April 30, 1996, commenced operations on August 3, 1995. The Fund's investment objective is capital appreciation, with a secondary objective of income. The Fund seeks to achieve its objective by investing in a diversified portfolio of equity securities of issuers located in countries other than the United States. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES. SECURITY VALUATION -- The Fund's securities, except investments with remaining maturities of 60 days or less, are valued at the last quoted sales price on the security's principal exchange on that day. If there are no sales of the relevant security on such day, the security will be valued at the mean between the closing bid and asked price on that day, if any. Debt securities having a maturity of 60 days or less are valued at amortized cost. Securities for which market quotations are not readily available and all other assets will be valued at their respective fair market value as determined in good faith by, or under procedures established by, the Board of Trustees. FEDERAL INCOME TAXES -- The Fund intends to qualify annually and elect to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986 and to distribute all of its taxable income to its shareholders. Therefore, no federal income or excise tax provision is required. At October 31, 1995, the Fund had a net tax basis capital loss carryforward available to offset future capital gains of approximately $24,000, which will expire on October 31, 2003. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Distributions of net investment income and net realized gains are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for foreign currency transactions. These distributions will be made annually in December. Additional distributions may be made to the extent necessary to avoid the payment of a 4% excise tax. DEFERRED ORGANIZATIONAL COSTS -- Costs incurred by the Fund in connection with the initial registration and public offering of shares have been deferred and are being amortized on a straight-line basis over a five-year period beginning on the date that the Fund commenced operations. FOREIGN CURRENCY TRANSLATIONS -- The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. 10 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- continued The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at the end of the fiscal period, resulting from changes in exchange rates. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- In connection with portfolio purchases and sales of securities denominated in a foreign currency, the Fund may enter into forward foreign currency exchange contracts. Additionally, the Fund may enter into these contracts to hedge certain foreign currency assets. Foreign currency exchange contracts are recorded at market value. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts. Realized gains or losses arising from such transactions are included in net realized gain (loss) from foreign currency transactions. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. OTHER -- Investment security transactions are accounted for on a trade date basis. The Fund uses the specific identification method for determining realized gain or loss on investments for both financial and federal income tax reporting purposes. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded on an accrual basis. NOTE 3. PURCHASES AND SALES OF INVESTMENT SECURITIES -- Purchases and sales of investment securities (excluding short-term investments) for the six-month period ended April 30, 1996 were $13,871,824 and $2,730,841, respectively. NOTE 4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES -- The Trust, on behalf of the Fund, employs 1838 Investment Advisors, L.P. (the 'Investment Advisor'), a Delaware limited partnership and registered investment adviser, to furnish investment advisory services to the Fund pursuant to an Investment Advisory Agreement with the Trust. The Investment Advisor supervises the investment of the assets of the Fund in accordance with its objective, policies and restrictions. The Fund's assets are managed by MeesPierson 1838 Investment Advisors (the 'Sub-Advisor') pursuant to a Sub-Investment Advisory Agreement between the Investment Advisor and the Sub-Advisor. The Sub-Advisor is compensated by the Investment Advisor for the services it provides. 11 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED NOTE 4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES -- continued The Fund pays the Investment Advisor a monthly fee at the annual rate of 0.75% of the average daily net assets of the Fund. The Investment Advisor has voluntarily agreed to waive its advisory fee or reimburse the Fund monthly to the extent that the Fund's total operating expenses exceed 1.25% of the average daily net assets of the Fund. This undertaking may be rescinded at any time in the future. The advisory fee for the six-month period ended April 30, 1996 amounted to $84,783, of which $63,415 was waived. Rodney Square Management Corporation ('RSMC'), a wholly-owned subsidiary of Wilmington Trust Company ('WTC'), serves as Administrator to the Fund pursuant to an Administration Agreement with the Trust. As Administrator, RSMC is responsible for services such as financial reporting, compliance monitoring and corporate management. For the services provided, RSMC receives a monthly administration fee from the Trust at the annual rate of 0.15% of the average daily net assets of the Trust on the first $50 million; 0.10% of such assets in excess of $50 million to $100 million; 0.07% of such assets in excess of $100 million to $200 million; and 0.05% of such assets in excess of $200 million. Each series pays its pro-rata portion based upon total Trust assets. Such fees are subject to a minimum fee of $50,000 per year for one series and $15,000 minimum per year for each additional series. RSMC has agreed to waive a portion of its fees. For the six-month period ended April 30, 1996, RSMC's administration fees amounted to $24,863, of which $9,358 was waived. At April 30, 1996 Administration fees payable to RSMC amounted to $3,074. Rodney Square Distributors, Inc. ('RSD'), a wholly-owned subsidiary of WTC, has been engaged pursuant to a Distribution Agreement with the Trust to assist in securing purchasers for shares of the Fund. RSD also directly, or through its affiliates, provides investor support services. RSD receives no compensation for distribution of shares of the Fund, except for reimbursement of out-of-pocket expenses. RSMC serves as Accounting Agent to the Fund. As Accounting Agent, RSMC determines the Fund's net asset value per share and provides accounting services to the Fund pursuant to an Accounting Services Agreement with the Trust. At April 30, 1996, Accounting fees payable to RSMC amounted to $3,689. RSMC also serves as the Fund's transfer agent pursuant to a Transfer Agency Agreement with the Trust. For these services, RSMC receives a monthly fee computed on the basis of the number of shareholder accounts that the Transfer Agent maintains for the Fund during the month, and is reimbursed for out-of-pocket expenses. At April 30, 1996, Transfer Agent fees payable to RSMC amounted to $1,248. The Trustees of the Trust who are 'interested persons' of the Trust, the Investment Advisor or its affiliates and all personnel of the Trust or the Investment Advisor performing services related to research, statistical and investment activities are paid by the Investment Advisor or its affiliates. The fees and expenses payable to the 'non-interested' Trustees amounted to $4,808 on April 30, 1996. 12 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED NOTE 5. FUND SHARE TRANSACTIONS -- At April 30, 1996, there were an unlimited number of shares of beneficial interest with a $0.001 par value, authorized. Transactions in shares of the Fund were as follows:
FOR THE SIX-MONTH PERIOD FOR THE PERIOD ENDED APRIL 30, 1996 AUGUST 3, 1995+ (UNAUDITED) TO OCTOBER 31, 1995 ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------- ---------- ------------- Shares sold....................................... 1,172,520 $ 11,955,215 1,742,436 $ 17,357,801 Shares issued to shareholders in reinvestment of distributions from net investment income and net realized gains.................................. 7,882 78,427 0 0 Shares redeemed................................... (1,887) (19,222) (7,172) (68,207) ---------- ------------- ---------- ------------- Net increase...................................... 1,178,515 $ 12,014,420 1,735,264 $ 17,289,594 ============= ============= Shares outstanding: Beginning of period............................. 1,745,264 10,000 ---------- ---------- End of period................................... 2,923,779 1,745,264 ========== ==========
NOTE 6. COMMITMENTS -- As of April 30, 1996, the Fund had entered into a forward foreign currency exchange contract which contractually obligates the Fund to deliver currencies at specified future dates. The open contract is as follows: NET UNREALIZED DEPRECIATION CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE U.S. $ - ----------------------- --------------- --------------- ----------------- British Pound 3,416 U.S. $ 5,142 5/01/96 (11) - ------------------ +Commencement of Operations. 13 [BACK COVER] TRUSTEES -------- W. THACHER BROWN CHARLES D. DICKEY, JR. FRANK B. FOSTER, III GEORGE W. GEPHART, JR. ROBERT P. HAUPTFUHRER OFFICERS -------- W. THACHER BROWN President GEORGE W. GEPHART, JR. Vice President JOHANNES B. van den BERG Vice President ANNA M. BENCROWSKY Vice President, Treasurer and Secretary JOHN J. KELLEY Assistant Treasurer LAURIE V. BROOKS Assistant Secretary INVESTMENT ADVISOR 1838 ------------------ INTERNATIONAL EQUITY FUND ------------------------- 1838 INVESTMENT ADVISORS, L.P. FIVE RADNOR CORPORATE CENTER FIVE RADNOR CORPORATE CENTER SUITE 320 SUITE 320 100 MATSONFORD ROAD 100 MATSONFORD ROAD RADNOR, PA 19087 RADNOR, PA 19087 SUB-ADVISOR SEMI-ANNUAL REPORT ----------- MEESPIERSON 1838 INVESTMENT ADVISORS APRIL 30, 1996 FIVE RADNOR CORPORATE CENTER SUITE 320 100 MATSONFORD ROAD RADNOR, PA 19087 CUSTODIAN --------- BANKERS TRUST COMPANY 280 PARK AVENUE NEW YORK, NY 10017 COUNSEL ------- STRADLEY, RONON, STEVENS & YOUNG, LLP 2600 ONE COMMERCE SQUARE PHILADELPHIA, PA 19103 AUDITORS -------- COOPERS & LYBRAND, L.L.P. 2400 ELEVEN PENN CENTER PHILADELPHIA, PA 19103 ET06 -----END PRIVACY-ENHANCED MESSAGE-----