Registration Statement of an Open-End Management Investment Company — Form N-1A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-1A Initial Form N-1A for Djimip 29 163K
3: EX-99.B1 Declaration of Trust 24± 97K
11: EX-99.B13(A) Form of Investment Representation Letter 1 7K
12: EX-99.B13(A) Form of Investment Representation Letter 1 5K
13: EX-99.B13(B) Form of Investment Representation Letter 1 7K
4: EX-99.B2 Bylaws 6± 28K
5: EX-99.B5(A) Form of Investment Advisory Agreement 4± 18K
6: EX-99.B5(B) Form of Investment Management Agreement 4± 20K
7: EX-99.B8(A) Custodian Agreement 19± 77K
8: EX-99.B8(B) Foreign Custody Manager Delegation Agreement 6± 26K
9: EX-99.B9(A) Form of Administration Agreement 4± 19K
10: EX-99.B9(B) Form of Expense Payment Agreement 1 8K
2: EX-99.EXIND Index to Exhibits 1 7K
As filed with the Securities and Exchange Commission on September 1, 1999
FILE NO. 811-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
Butterfield House, Fort Street, P.O. Box 2330, George Town, Grand
Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (345) 949-4719
Philip W. Coolidge, 21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to: John E. Baumgardner, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
EXPLANATORY NOTE
This Registration Statement on Form N-1A (the"Registration Statement")
has been filed by the Registrant pursuant to Section 8(b) of the Investment
Company Act of 1940, as amended. However, beneficial interests in the Registrant
are not being registered under the Securities Act of 1933 (the "1933 Act")
because such interests will be issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in the Registrant may only be made by other investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
beneficial interests in the Registrant.
PART A
Responses to Items 1 through 3, 5 and 9 have been omitted pursuant to
Item 2(b)of Instruction B of the General Instructions to Form N-1A.
ITEM 4. Investment Objectives, Principal Investment Strategies and Related
Risks.
The investment objective of the Dow Jones Islamic Market Index
Portfolio (the "Portfolio") is described below, together with the policies
employed to attempt to achieve this objective.
The investment objective of the Portfolio is to seek long-term capital
gains by matching the performance of the Dow Jones Islamic Market Index (SM)
(the "Index") - a globally diversified compilation of equity securities
considered by Dow Jones' Shari'ah Supervisory Board to be in compliance with
Shari'ah principles.
Under normal circumstances the assets of the Portfolio are fully
invested in securities which are included in the Index. Any uninvested cash will
be held in non-interest bearing deposits or invested in a manner compliant with
the Shari'ah principles.
SHARI'AH PROCESS
Primary Selection Criteria
Dow Jones selection process begins by excluding those firms who do not
meet specific business line and financial requirements. The selection criteria
and key features established by Dow Jones for inclusion of a company in its
Index and, in turn, the Portfolio are as follows:
Specifically, Dow Jones excludes firms whose products include:
Alcohol
Pork related products
Conventional financial services (banking, insurance, etc.)
Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.)
Tobacco
Defense
These incompatible lines of business, represented by 18 of the 122
industry groups within the Dow Jones Global Indexes are removed from the
"universe" of stocks considered for the Index. Other companies classified in
other industry groups may also be excluded if they are deemed to have a material
ownership in or revenues from prohibited business activities. After removing
companies with unacceptable primary business activities, the remaining universe
is tested by three financial-ratio "filters". The purpose is to remove companies
with unacceptable financial ratios.
The filters exclude companies if:
Total debt divided by total assets is equal to or greater than 33%.
(Note: total debt = short term debt + current portion of long-term debt +
long-term debt).
Accounts receivables divided by total assets is equal to or greater
than 47%.
(Note: accounts receivables = current receivables + long-term
receivables).
Non-operating interest income divided by operating income is equal to
or greater than 9%.
Companies that pass these screens are included in the Index investable
universe, from which Index components are selected.
Shari'ah Supervisory Board
Dow Jones' Shari'ah Supervisory Board has approved of the above
criteria and any changes in the Shari'ah Supervisory Board or the selection
criteria are at the sole discretion of Dow Jones. Changes by Dow Jones in the
selection criteria or the composition of the Index will be reflected in the
composition of the Fund in a reasonable period of time.
BENCHMARK
The Portfolio will use as its benchmark the Dow Jones Islamic Market
Index (SM) which it intends to track. There is no guarantee that the Portfolio
will achieve the same return as the Index. Due to the large number of stocks in
the Index, the Trustees of the Portfolio may, in the initial stages of the
Portfolio, purchase a sub-group of equities from those contained in the Index
that Brown Brothers Harriman & Co. (the "Investment Manager") believes will best
track the Index. As the assets of the Portfolio grow, it is anticipated the
holdings of the Portfolio will be increased to include more of the components of
the Index.
The approximate geographic distribution of the market capitalization of
the Index is: Americas (70%), Europe (20%), and Asia (10%).
The 600 companies whose issues compromise the Index have an average
market capitalization of US$11.7 billion and a median market capitalization of
US$2.6 billion.
The following sectors are represented in the Index: Consumer,
Non-Cyclical (28%); Technology (25%); Utilities (12%); Energy (11%) Consumer
Cyclical (9%); Industrial (8%); Basic materials (4%); Others (3%). The above
composition is estimated and will change over time.
"Dow Jones" and "Dow Jones Islamic Market IndexSM" are service marks of
Dow Jones & Company, Inc. Dow Jones has no relationship to the Trust's
Investment Adviser or Investment Manager, other than the licensing of the Dow
Jones Islamic Market Index and its service marks for use in connection with the
Trust.
Dow Jones does not:
Sponsor, endorse, sell or promote the Trust.
Recommend that any person invest in the Trust or any other securities.
Have any responsibility or liability for or make any decisions about
the timing, amount or pricing of Trust.
Have any responsibility or liability for the administration,
management or marketing of the Trust.
Consider the needs of the Trust or the owners of the Trust in
determining, composing or calculating the Dow Jones Islamic Market
IndexSM or have any obligation to do so.
Dow Jones will not have any liability in connection with the Trust.
Specifically, Dow Jones does not make any warranty, express or implied, and Dow
Jones disclaims any warranty about:
The results to be obtained by the Trust, the owner of the Trust or any other
person in connection with the use of the Dow Jones Islamic Market IndexSM and
the data included in the Dow Jones Islamic Market IndexSM;
The accuracy or completeness of the Dow Jones Islamic Market IndexSM
and its data;
The merchantability and the fitness for a particular purpose or use of the Dow
Jones Islamic Market IndexSM and its data;
Although Dow Jones uses reasonable efforts to comply with its guidelines
regarding the selection of components in the Dow Jones Islamic Market Index,
Dow Jones disclaims any warranty of compliance with Shariah law or other
Islamic principles;
Dow Jones will have no liability for any errors, omissions or interruptions
in the Dow Jones Islamic Market IndexSM or its data;
Under no circumstances will Dow Jones be liable for any lost profits or
indirect, punitive, special or consequential damages or losses, even
if Dow Jones knows that they might occur.
The licensing agreement between the Trust's Investment Adviser, Investment
Manager and Dow Jones is solely for their benefit and not for the benefit of the
owners of the Trust or any other third parties.
PRINCIPAL RISK FACTORS
The principal risks of investing in the Portfolio and the circumstances
reasonably likely to adversely affect an investment are described below. An
investor may lose money by investing in the Portfolio.
The principal risks of investing in the Portfolio are:
Market Risk.
This is the risk that the price of a security falls due to changing
economic, political or market conditions, or due to a company's individual
situation. Index Investing Risk.
Unlike other non-index investment portfolios, the Portfolio will not be
engaged in buying and selling of securities based upon economic, financial and
market analysis and investment judgement. Instead, the Portfolio will be
invested under an indexed investment approach, which attempts to approximate the
investment performance of the Index. Therefore, an investor should not expect to
achieve the potentially greater results that could be obtained by investment
portfolios that aggressively seek growth or investment portfolios that attempt
to limit losses in a falling market.
The strategy of investing in a representative sample of Index
components may result in some deviation between Portfolio performance and that
of the Index. The Portfolio's return is also likely to be lower than that of the
Index because the Portfolio incurs brokerage commissions, transaction fees and
other expenses. However, transaction costs will likely be lower than typical
stock funds because of lower portfolio turnover. In addition, the Portfolio's
ability to replicate the Index return will depend to a certain extent on cash
flow into and out of the Portfolio. Even if the Portfolio's investments were
fairly representative of the Index its return could differ because of
differences in how the Portfolio and the Index are valued. The Index is valued
by Dow Jones, which may use different closing prices, currency exchange rates or
dividend reinvestment assumptions than the Portfolio does.
Foreign Investment Risk.
Changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on the removal
of funds or assets, or imposition of (or change in) exchange control or tax
regulations may adversely affect the value of such investments. Changes in
government administrations or economic or monetary policies in the United States
or other countries could result in appreciation or depreciation of portfolio
securities and could favorably or unfavorably affect the operations of the
Portfolio. The economies of individual foreign nations differ from the U.S.
economy, whether favorably or unfavorably, in areas such as growth of gross
domestic product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. It may be more difficult to
obtain and enforce a judgment against a foreign company. Dividends paid by
foreign issuers may be subject to withholding and other foreign taxes which may
decrease the net return on foreign investments as compared to dividends paid by
domestic companies.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, foreign investments are
less liquid and their prices are more volatile than comparable investments in
securities of U.S. companies. Moreover, the settlement periods for foreign
securities, which are often longer than those for securities of U.S. companies,
may affect portfolio liquidity. In buying and selling securities on foreign
exchanges, fixed commissions are normally paid that are generally higher than
the negotiated commissions charged in the United States. In addition, there is
generally less government supervision and regulation of securities exchanges,
brokers and companies in foreign countries than in the United States.
The foreign investments made by the Portfolio are made in compliance
with the currency regulations and tax laws of the United States and foreign
governments. There may also be foreign government regulations and laws that
restrict the amounts and types of foreign investments.
Because securities in the Portfolio are denominated and pay dividends
in various currencies, and the Portfolio holds various foreign currencies from
time to time, the value of the net assets of the Portfolio as measured in U.S.
dollars is affected favorably or unfavorably by changes in exchange rates. The
Portfolio also incurs costs in connection with conversion between various
currencies.
Developing Countries Investment Risk
The Portfolio may invest its assets in securities of issuers
based in developing countries. Investments in securities of issuers in
developing countries may involve a high degree of risk and many may be
considered speculative. These investments carry all of the risks of investing in
securities of foreign issuers outlined in this section to a heightened degree.
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) the small current size of the markets for securities of issuers in
developing countries and the currently low or non-existent volume of trading
resulting in lack of liquidity and in price volatility; (iii) certain national
policies which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests; and (iv) the absence of developed legal structures governing
private or foreign investment and private property.
Non-Diversification Risk.
The Portfolio is classified as "non-diversified" under the 1940 Act,
which means that it is not limited by the 1940 Act with respect to the
proportion of its assets which may be invested in securities of a single issuer
(although certain diversification requirements are imposed by the Internal
Revenue Code of 1986, as amended).
Islamic Shari'ah Investment Risk.
It is possible that the restrictions placed on investments, in
particular the prohibition on interest bearing investments and the cost of
donations by the Portfolio of parts of dividends which are attributable to
interest related activities, may result in the Portfolio performing less well
than portfolios with similar investment objectives which are not subject to
Islamic Shari'ah restrictions.
Investments in the Portfolio are neither insured nor guaranteed by the
U.S. Government. Shares of beneficial interest of the Portfolio are not deposits
of or obligations of, or guaranteed by, Brown Brothers Harriman & Co. or any
other bank, and the shares of beneficial interest are not insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other federal,
state or other governmental agency.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
Investment Manager and Investment Adviser
The Investment Manager is Brown Brothers Harriman & Co., Private
Bankers, 59 Wall Street, New York, NY 10005, a New York limited partnership
established in 1818. The firm is subject to examination and regulation by the
Superintendent of Banks of the State of New York and by the Department of
Banking of the Commonwealth of Pennsylvania. The firm is also subject to
supervision and examination by the Commissioner of Banks of the Commonwealth of
Massachusetts.
Brown Brothers Harriman & Co. provides portfolio management services to
the Portfolio. Subject to the general supervision of the Portfolio's Trustees
and based upon advice given by Wafra Investment Advisory Group, Inc. (the
"Investment Adviser"), Brown Brothers Harriman & Co. makes the day-to-day
investment decisions for the Portfolio, places the purchase and sale orders for
portfolio transactions, and generally manages the Portfolio's investments. Brown
Brothers Harriman & Co. provides a broad range of investment management services
for customers in the United States and abroad. At December 31, 1998, it managed
total assets of approximately $32 billion.
The Portfolio is managed on a day to day basis by a team of individuals
including Mr. John A. Nielsen, Mr. Jeffrey A. Schoenfeld, Mr. Young Chin, Mr.
Vasken H. Setrakian and Mr. Gerald Lavish. Mr. Nielsen holds a B.A. from
Bucknell University, a M.B.A. from Columbia University and is a Chartered
Financial Analyst. He joined Brown Brothers Harriman & Co. in 1968. Mr.
Schoenfeld holds a B.A. from University of California, Berkeley and a M.B.A.
from the Wharton School of the University of Pennsylvania. He joined Brown
Brothers Harriman & Co. in 1984. Mr. Chin holds a B.A. and a M.B.A from
University of Chicago. He joined Brown Brothers Harriman & Co. in 1999. Mr.
Setrakian holds a B.E. from American University of Beirut and a M.B.A. from
Harvard University. He joined Brown Brothers Harriman & Co. in 1980. Mr. Lavish
holds a B.S. from Columbia University and a M.B.A. from New York University. He
joined Brown Brothers Harriman & Co. in 1998.
The Investment Adviser of the Portfolio is Wafra Investment Advisory
Group, Inc., 345 Park Avenue, New York, NY 10154, a U.S. registered investment
adviser. Founded in 1985, the Investment Adviser, with its principal place of
business in New York, together with its affiliate companies, manages in excess
of $3 billion, specialising in global fund management, securities portfolio
management, direct equity investment, real estate investment and private asset
management to major financial institutions from the Gulf as well as other
companies and high net worth individuals. The Investment Adviser acts as U.S.
investment adviser for numerous investment funds and managed accounts, including
other Islamic funds and products.
The Investment Adviser will provide investment advisory services to the
Portfolio and the Investment Manager. For performing such investment advisory
services, the Investment Adviser receives such compensation from the Investment
Manager as is from time to time agreed upon.
For the services provided and the expenses borne pursuant to the
Investment Management Agreement and the Investment Advisory Agreement, the
Investment Manager and the Investment Adviser jointly will receive from the
Portfolio as full compensation therefor an aggregate fee at an annual rate equal
to 0.40% of the Portfolio's average daily net assets. This fee will be computed
based on net assets at 4:00 P.M. New York time on each day the New York Stock
Exchange is open for trading, will be paid monthly during the succeeding
calendar month and will be shared between the Investment Manager and the
Investment Adviser as from time to time may be agreed upon by the Investment
Manager and the Investment Adviser.
ITEM 7. INVESTOR INFORMATION
The net asset value of the Portfolio is determined each day the New
York Stock Exchange is open for regular trading. This determination is made once
each business day as of 4:00 p.m. New York time.
The Portfolio determines the value of each security held by the
Portfolio with advice from the Investment Manager and Investment Adviser as to
the broadest and most representative market for such securities. Any security
for which the primary market is on a securities exchange is valued at the last
sale price on such exchange on the valuation day or, if no sale occurred on that
day, at the most recent quoted bid price on that day. Such securities as well as
other securities for which the primary market is believed to be over-the-counter
are valued at the most recent quoted bid price provided by one or more principal
market makers. Securities or other assets for which market prices are not
readily available will be valued at their fair value as determined in good faith
in accordance with the procedures adopted by the Trustees with the advice of the
Investment Manager and Investment Adviser.
Beneficial interests in the Portfolio are issued solely in private
placement transactions. Investments in the Portfolio may only be made by other
investment companies, insurance company separate accounts, common or commingled
trust funds, or similar organizations or entities which are "accredited
investors." This Registration Statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
Securities Act of 1933 (the "1933 Act").
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the
custodian of the Portfolio's account by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds within five Portfolio
business days after the reduction is effected.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted
or, if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 8. DISTRIBUTION ARRANGEMENTS.
Not applicable.
PART B
ITEM 10. COVER PAGE.
Not applicable.
TABLE OF CONTENTS. PAGE
Portfolio History . . . . . . . . . . . . . . . . . . B-1
Description of Portfolio and Its Investments and Risks B-1
Management of the Portfolio . . . . . . . . . . . . . B-4
Control Persons and Principal Holders . . . . . . . . B-5
Investment Advisory and Other Services . . . . . . . B-5
Expense Payment Agreement B-7
Brokerage Allocation and Other Practices . . . . . . B-8
Capital Stock and Other Securities . . . . . . . . . B-9
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . B-10
Tax Status . . . . . . . . . . . . . . . . . . . . . B-11
Underwriters . . . . . . . . . . . . . . . . . . . . B-12
Calculations of Performance Data . . . . . . . . . . B-12
Financial Statements . . . . . . . . . . . . . . . . B-12
ITEM 11. PORTFOLIO HISTORY.
Not applicable.
ITEM 12. DESCRIPTION OF PORTFOLIO AND ITS INVESTMENTS AND RISKS.
The investment objective of the Dow Jones Islamic Market Index
Portfolio (the "Portfolio") is to to seek long-term capital gains by matching
the performance of the Dow Jones Islamic Market Index (SM) (the "Index") - a
globally diversified compilation of equity securities considered by Dow Jones'
Shari'ah Supervisory Board to be in compliance with Shari'ah principles.
At the Portfolio's inception, the Shari'ah Supervisory Board consists
of:
Shaykh Abdul Sattar Abu Ghuddah, Senior advisor to Albaraka Investment Co. of
Syria Saudi Arabia and Syria
Shaykh Justice Muhammed Shaykh Usmani has been a member of the
Usmani, Pakistan Supreme Court of Pakistan since 1982.
He is Deputy Chairman of the Islamic Fiqh
Academy, Jeddah, and chairman or
members of more than a dozen Shari'ah
supervisory boards.
Shaykh Yaquby, Bahrain Shaykh Mizam Yaquby is a renowned Shari'ah
scholar and advisor to numerous Islamic
banks and companies, including Abu Dhabi
Islamic Bank, Islamic Investment Company of
the Gulf, Bahrain and the Arab Islamic Bank,
Bahrain. He Pursued traditional Islamic
studies in Mecca, India and Morocco under
the guidance of eminent Islamic scholars,
including Shaykh Abdullah Al-Farisi and
Shaykh Muhammad Salah Al-Abbasi. He holds a
B.A.in Economics and Comparative Religion
from McGill University, Toronto. He is a
Ph.D.candidate in Islamic Law at the
University of Wales. Shaykh Yaquby has
published several
books on Islam law and is a frequent speaker
at Islamic conferences.
Shaykh Dr. Mohamed Ali Eligari, Dr. Mohamed Ali Elgari is the director of
Saudi Arabia the Center for Research in Islamic Economics
at King Abdulaziz University in Jeddah. He
is also a member of the OIC Fiqh Council.Dr.
Elgari serves as a consultant to Islamic
banks and has served on the consulting
committee that counseled the Government of
Pakistan on the Islamization of its banking
system. Dr. Elgari holds a Ph.D.in Economics
from the University of California.
Shaykh Yusuf Tala DeLorenzo, Shaykh Yusuf Talal DeLorenzo is currently
United States a Shari'ah consultant/advisor and
translator/researcher for the
institution of Islamic Banking,
London, and PCS Inc., Reston, VA. He
holds an M.A. in Islamic Studies from
Jami'ah al Ulum al Islamiyah (Karachi)
and is a doctoral candidate at the
Hartford Seminary. Shaykh DeLorenzo
produced the first systematic academic
translation in English of legal
rulings issued by Shari'ah advisory
boards on the operations of Islamic ba
Rulings on the Operations of Islamic
Banks." He has also authored original
research in Islamic studies, including
Islamic banking and law, in English,
Arabic and Urdu.
Periodic Review
The Index is reviewed quarterly and annually by the Shari'ah Supervisory
Board and by Dow Jones for consideration of exclusion or inclusion of
components. In addition, the Index is reviewed on an on-going basis to
contemplate changes as a result of extraordinary events (e.g. delisting,
bankruptcy, merger, takeover, etc.).
The following discussion supplements the information regarding the
investment objective of the Portfolio and the policies to be employed to achieve
this objective as set forth above and in Part A.
EQUITY INVESTMENTS
Equity investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock,
usually of the same company, at specified prices within a certain period of time
and to receive interest or dividends until the holder elects to convert. The
provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holder's claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.
FOREIGN EXCHANGE CONTRACTS
Foreign exchange contracts are made with currency dealers, usually large
commercial banks and financial institutions. Although foreign exchange rates are
volatile, foreign exchange markets are generally liquid with the equivalent of
approximately $500 billion traded worldwide on a typical day.
OTHER INVESTMENT TECHNIQUES
Cash is held for the Portfolio in demand deposit accounts with Brown
Brothers Harriman & Co. as the Portfolio's custodian bank (the "Custodian").
RESTRICTED SECURITIES. Securities that have legal or contractual
restrictions on their resale may be acquired for the Portfolio. The price paid
for these securities, or received upon resale, may be lower than the price paid
or received for similar securities with a more liquid market. Accordingly, the
valuation of these securities reflects any limitation on their liquidity. (See
"Investment Restrictions".)
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Securities may be purchased
for the Portfolio on a when-issued or delayed delivery basis. For example,
delivery and payment may take place a month or more after the date of the
transaction. The purchase price and the interest rate payable on the securities,
if any, are fixed on the transaction date. The securities so purchased are
subject to market fluctuation and no income accrues to the Portfolio until
delivery and payment take place. At the time the commitment to purchase
securities on a when-issued or delayed delivery basis is made, the transaction
is recorded and thereafter the value of such securities is reflected each day in
determining the Portfolio's net asset value. The Portfolio maintains with the
Custodian a separate account with a segregated portfolio of securities in an
amount at least equal to these commitments. At the time of its acquisition, a
when-issued or delayed delivery security may be valued at less than the purchase
price. Commitments for such when-issued or delayed delivery securities are made
only when there is an intention of actually acquiring the securities. On
delivery dates for such transactions, such obligations are met from maturities
or sales of securities and/or from cash flow. If the right to acquire a when-
issued or delayed delivery security is disposed of prior to its acquisition, the
Portfolio could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. When-issued or delayed delivery
commitments for the Portfolio may not be entered into if such commitments exceed
in the aggregate 15% of the market value of its total assets, less liabilities
other than the obligations created by when-issued or delayed delivery
commitments.
INVESTMENT COMPANY SECURITIES. Subject to applicable statutory and
regulatory limitations, the assets of the Portfolio may be invested in shares of
other investment companies. Under the 1940 Act, assets of the Portfolio may be
invested in shares of other investment companies in connection with a merger,
consolidation, acquisition or reorganization or if immediately after such
investment (i) 10% or less of the market value of the Portfolio's total assets
could be so invested, (ii) 5% or less of the market value of the Portfolio's
total assets would be invested in the shares of any one such company, and (iii)
3% or less of the total outstanding voting stock of any other investment company
would be owned by the Portfolio. As a shareholder of another investment company,
the Portfolio would bear, along with other shareholders, its pro rata portion of
the other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Portfolio bears
directly in connection with its own operations.
ADDITIONAL INVESTMENT INFORMATION
In response to adverse market, economic, political or other conditions, the
Portfolio may make temporary investments that are not consistent with its
investment objective and principal investment strategies. Such investments may
prevent the Portfolio from achieving its investment objective.
INVESTMENT RESTRICTIONS
The Portfolio is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Portfolio.
As used in this Part B, the term "majority of the outstanding voting securities"
as defined in the 1940 Act currently means the vote of (i) 67% or more of the
voting securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
The Portfolio may not:
(1) borrow money or mortgage or hypothecate its assets except that in an
amount not to exceed 1/3 of the current value of its net assets and in a manner
not to contravene Islamic Shari'ah principles, it may borrow money as a
temporary measure for extraordinary or emergency purposes, and except that it
may pledge, mortgage or hypothecate not more than 1/3 of such assets to secure
such borrowings (it is intended that money will be borrowed only from banks and
only either to accommodate requests for the redemption of Fund shares or the
withdrawal of part or all of the Fund's interest in the Portfolio, as the case
may be, while effecting an orderly liquidation of portfolio securities or to
maintain liquidity in the event of an unanticipated failure to complete a
portfolio security transaction or other similar situations), and except that
assets may be pledged to secure letters of credit solely for the purpose of
participating in a captive insurance company sponsored by the Investment Company
Institute
(2) earn interest on its capital;
(3) purchase any security which is not included in the Dow Jones
Islamic Market Index (SM);
(4) hold uninvested cash in interest bearing deposits or invest such
uninvested cash in a manner that would not be in compliance with Shari'ah
principles;
(5) acquire the securities of one issuer if upon such purchase the value of
the Portfolio's holdings of such securities would exceed 10% of its net assets;
(6) invest in fixed income investments;
(7) underwrite securities issued by other persons except insofar as it may
technically be deemed an underwriter under the Securities Act of 1933, as
amended (the "1933 Act") in selling a portfolio security;
(8) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts in the
ordinary course of business (the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities is reserved);
(9) concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of its investment objective, up to 25% of
its assets, at market value at the time of each investment, may be invested in
any one industry;
(10) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder.
NON-FUNDAMENTAL RESTRICTIONS. The Portfolio may not as a matter of
operating policy: (i) purchase securities of any investment company if such
purchase at the time thereof would cause more than 10% of its total assets
(taken at the greater of cost or market value) to be invested in the securities
of such issuers or would cause more than 3% of the outstanding voting securities
of any such issuer to be held for it; (iii) knowingly invest in securities which
are subject to legal or contractual restrictions on resale if, as a result
thereof, more than 10% of its net assets (taken at market value) would be so
invested; (iv) enter into forward contracts and write, purchase or sell any put
or call option or any combination thereof, provided that this shall not prevent
the purchase, ownership, holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities; purchase any security or
evidence of interest therein on margin; or (v) make short sales of securities or
maintain a short position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short, and unless
not more than 10% of its net assets (taken at market value) is represented by
such securities, or securities convertible into or exchangeable for such
securities, at any one time (it is the present intention of management to make
such sales only for the purpose of deferring realization of gain or loss for
federal income tax purposes; such sales would not be made of securities subject
to outstanding options).
These policies are not fundamental and may be changed without investor
approval.
PERCENTAGE RESTRICTIONS. If a percentage restriction on investment or
utilization of assets set forth above or referred to in Part A is adhered to at
the time an investment is made or assets are so utilized, a later change in
percentage resulting from changes in the value of the portfolio securities of a
portfolio security is not considered a violation of policy. If investment
restrictions relating to any particular investment practice or policy are
inconsistent between the Portfolio and an investor, the Portfolio will adhere to
the more restrictive limitation.
ITEM 13. MANAGEMENT OF THE PORTFOLIO.
The Portfolio's Trustees, in addition to supervising the actions of the
Investment Adviser, Investment Manager and the Portfolio's administrator (the
"Administrator"), as set forth below, decide upon matters of general policy with
respect to the Portfolio. The Portfolio's Trustees receive no compensation for
their services.
Because of the services rendered to the Portfolio by the Investment
Adviser, Investment Manager and the Administrator, the Portfolio requires no
employees, and its officers receive no compensation from the Portfolio.
The Trustees and executive officers of the Portfolio, their business
addresses, and principal occupation during the past five years (although their
titles may have varied during the period) are:
TRUSTEES OF THE PORTFOLIO
RICHARD L. CARPENTER -- Trustee; Trustee of U.S. Money Market Portfolio,
U.S. Small Company Portfolio and International Equity Portfolio; Retired;
Director of Internal Investments, Public School Employees' Retirement System
(prior to December 1995). His business address is 12664 Lazy Acres Court, Nevada
City, CA 95959.
CLIFFORD A. CLARK -- Trustee; Trustee of U.S. Money Market Portfolio, U.S.
Small Company Portfolio and International Equity Portfolio; Retired; Director of
Schmid, Inc. (prior to July 1993); Managing Director of the Smith-Denison
Foundation . His business address is 42 Clowes Drive, Falmouth, MA 02540.
J. ANGUS IVORY -- Trustee; Director of Brown Brothers Harriman Ltd.,
subsidiary of Brown Brothers Harriman & Co.; Director of Old Daily Saddlery;
Advisor, RAF Central Fund; Committee Member, St. Thomas Hospital Pain Clinic
(since 1999)
OFFICERS OF THE PORTFOLIO
PHILIP W. COOLIDGE -- President; Chief Executive Officer and President of
Signature Financial Group, Inc. ("SFG"), 59 Wall Street Distributors, Inc. ("59
Wall Street Distributors") and 59 Wall Street Administrators, Inc. ("59 Wall
Street Administrators").
JOHN R. ELDER - Treasurer; Vice President of SFG (since April 1995);
Treasurer of Phoenix Family of Mutual Funds (prior to April 1995).
LINWOOD C. DOWNS - Assistant Treasurer; Senior Vice President of SFG;
Senior Vice President and Treasurer of SFG; Treasurer of 59 Wall Street
Distributors and 59 Wall Street Administrators.
LINDA T. GIBSON -- Secretary; Senior Vice President and Secretary, SFG;
Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.
SUSAN JAKUBOSKI -- Assistant Treasurer and Assistant Secretary of the
Portfolio; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Cayman) Limited (since August 1994); Fund Compliance
Administrator of Concord Financial Group, Inc. (from November 1990 to August
1994).
MOLLY S. MUGLER -- Assistant Secretary; Vice President and Assistant
Secretary of SFG; Assistant Secretary of 59 Wall Street Distributors and 59 Wall
Street Administrators.
CHRISTINE A. DRAPEAU -- Assistant Secretary; Vice President of SFG (since
January 1996); Paralegal and Compliance Officer, various financial companies
(July 1992 to January 1996); Graduate Student, Bentley College (prior to
December 1994).
-------------------------
The address of each officer of the Portfolio is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge, Elder and Downs, and Mss. Gibson,
Jakuboski, Mugler and Drapeau also hold similar positions with other investment
companies for which affiliates of 59 Wall Street Distributors serves as the
principal underwriter.
No Trustee of the Portfolio is an "interested person" of the Portfolio as
that term is defined in the 1940 Act.
By virtue of the responsibilities assumed by the Investment Adviser,
Investment Manager and the Administrator, the Portfolio requires no employees
other than its officers, and none of its officers devote full time to the
affairs of the Portfolio or receive any compensation from the Portfolio.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of July 31, 1999, Wafra/BBH & Co.-Dow Jones Islamic Market Index Fund
(Cayman) owned 100% of the outstanding beneficial interests in the Portfolio.
Wafra/BBH & Co.-Dow Jones Islamic Market Index Fund (Cayman) has informed
the Portfolio that whenever it is requested to vote on matters pertaining to the
Portfolio (other than a vote by the Portfolio to continue the operation of the
Portfolio upon the withdrawal of another investor in the Portfolio), it will
hold a meeting of its shareholders and will cast its vote as instructed by those
shareholders.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
Under the Investment Management Agreement with the Portfolio, subject to
the general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Brown Brothers Harriman & Co. (the "Investment
Manager") provides investment management services to the Portfolio. The
Investment Manager will make all investment decisions for the Portfolio based
upon the advice given by Wafra Investment Advisory Group, Inc. (the "Investment
Adviser") but subject to the overall direction and control of the Trustees of
the Portfolio.
The investment management services of Brown Brothers Harriman & Co. to the
Portfolio are not exclusive under the terms of the Investment Management
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
management services to others, including other registered investment companies.
The Investment Management Agreement between Brown Brothers Harriman & Co.
and the Portfolio is dated March 5, 1999 and remains in effect for two years
from such date and thereafter, but only as long as the agreement is specifically
approved at least (see "Investment Adviser") annually (i) by a vote of the
holders of a "majority of the outstanding voting securities as defined in the
1940 Act" of the Portfolio, or by the Portfolio's Trustees, and (ii) by a vote
of a majority of the Trustees of the Portfolio who are not parties to the
Investment Advisory Agreement or "interested persons" (as defined in the 1940
Act) of the Portfolio ("Independent Trustees"), cast in person at a meeting
called for the purpose of voting on such approval. The Investment Management
Agreement was most recently approved by the Independent Trustees on August 10,
1999. The Investment Management Agreement terminates automatically if assigned
and is terminable at any time without penalty by a vote of a majority of the
Trustees of the Portfolio or by a vote of the holders of a "majority of the
outstanding voting securities as defined in the 1940 Act" of the Portfolio on
three months' written notice to Brown Brothers Harriman & Co. and by Brown
Brothers Harriman & Co. on three months' written notice to the Portfolio.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting, selling or distributing securities and
from sponsoring, organizing or controlling a registered open-end investment
company continuously engaged in the issuance of its shares. There is presently
no controlling precedent prohibiting financial institutions such as Brown
Brothers Harriman & Co. from performing investment management or administrative
functions. If Brown Brothers Harriman & Co. were to terminate its Investment
Management Agreement with the Portfolio, or were prohibited from acting in such
capacity, it is expected that the Trustees of the Portfolio would recommend to
the investors that they approve a new investment manager agreement for the
Portfolio with another qualified manager.
Under its Investment Advisory Agreement with the Portfolio, subject to the
general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Wafra Investment Advisory Group, Inc. (the
"Investment Adviser") provides investment advisory services to the Portfolio.
The investment advisory services of the Investment Adviser to the Portfolio
are not exclusive under the terms of the Investment Advisory Agreement. The
Investment Adviser is free to and does render investment advisory services to
others, including other registered investment companies.
The Investment Advisory Agreement between Wafra Investment Advisory Group,
Inc. and the Portfolio is dated March 5, 1999 and remains in effect for two
years from such date and thereafter, but only as long as the agreement is
specifically approved at least annually in the same manner as the Investment
Management Agreement. The Investment Advisory Agreement was most recently
approved by the Independent Trustees on August 10, 1999. The Investment Advisory
Agreement terminates automatically if assigned and is terminable at any time
without penalty by a vote of a majority of the Trustees of the Portfolio or by a
vote of the holders of a "majority of the outstanding voting securities as
defined in the 1940 Act" of the Portfolio on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Portfolio.
ADMINISTRATOR. Brown Brothers Harriman Trust Company acts as the
Administrator of the Portfolio (the "Administrator"). Brown Brothers Harriman
Trust Company is a wholly-owned subsidiary of Brown Brothers Harriman & Co.
Brown Brothers Harriman Trust Company, in its capacity as Administrator,
administers all aspects of the Portfolio's operations subject to the supervision
of the Trustees except as set forth above under "Investment Adviser" and
"Investment Manager". In connection with its responsibilities as Administrator
and at its own expense, Brown Brothers Harriman Trust Company (i) provides the
Portfolio with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of the Portfolio, including the maintenance of certain
books and records, receiving and processing requests for increases and decreases
in the beneficial interests in the Portfolio, notification to the Investment
Adviser of available funds for investment, reconciliation of account information
and balances between the Custodian and the Investment Adviser, and processing,
investigating and responding to investor inquiries; (ii) oversees the
performance of administrative and professional services to the Portfolio by
others, including the Custodian; (iii) provides the Portfolio with adequate
office space and communications and other facilities; and (iv) prepares and/or
arranges for the preparation, but does not pay for, the periodic updating of the
Portfolio's registration statement for filing with the Securities and Exchange
Commission (the "SEC"), and the preparation of tax returns for the Portfolio and
reports to investors and the SEC.
For the services rendered to the Portfolio and related expenses borne by
Brown Brothers Harriman Trust Company as Administrator of the Portfolio, Brown
Brothers Harriman Trust Company receives from the Portfolio a fee, computed
daily and paid monthly, at an annual rate equal to 0.05% of the average daily
net assets of the Portfolio that are not in excess of $50 million and at an
annual rate equal to 0.01% of the average daily net assets of the Portfolio in
excess of $50 million. The Administrator shall receive a minimum annual fee from
the Portfolio equal to $20,000.
The Administration Agreement between the Portfolio and Brown Brothers
Harriman Trust Company (dated March 5, 1999) will remain in effect for
successive annual periods, but only so long as the agreement is specifically
approved at least annually in the same manner as the Investment Management. The
agreement will terminate automatically if assigned by either party thereto and
is terminable by the Portfolio at any time without penalty by a vote of a
majority of the Trustees of the Portfolio, or by a vote of the holders of a
"majority of the outstanding voting securities as defined in the 1940 Act" of
the Portfolio. The Portfolio's Administration Agreement is terminable by the
Trustees of the Portfolio or by investors in the Portfolio on 60 days' written
notice to Brown Brothers Harriman Trust Company. The agreement is terminable by
the Administrator on 90 days' written notice to the Portfolio.
PLACEMENT AGENT
The Portfolio has not retained the services of a principal underwriter or
distributor, since interests in the Portfolio are offered solely in private
placement transactions. 59 Wall Street Distributors, Inc. ("59 Wall Street
Distributors"), acting as agent for the Portfolio, serves as the placement agent
of interests in the Portfolio. 59 Wall Street Distributors receives no
compensation for serving as placement agent.
EXPENSE PAYMENT AGREEMENT
Under an agreement dated August 10, 1999, Brown Brothers Harriman Trust
Company pays the expenses of the Portfolio, other than fees paid to Brown
Brothers Harriman Trust Company under the Portfolio's Administration Agreement
and other than expense relating to the organization of the Portfolio. In return,
Brown Brothers Harriman Trust Company receives a fee from the Portfolio such
that after such payment the aggregate expenses of the Portfolio do not exceed an
agreed upon annual rate, currently 0.57% of the average daily net assets of the
Portfolio. Such fees are computed daily and paid monthly.
CUSTODIAN
Brown Brothers Harriman & Co., 59 Wall Street, New York, NY 10005, is the
Custodian for the Portfolio.
As Custodian, Brown Brothers Harriman & Co. is responsible for maintaining
books and records of portfolio transactions and holding the Portfolio's
securities and cash pursuant to a custodian agreement with the Portfolio. Cash
is held for the Portfolio in demand deposit accounts at the Custodian. Subject
to the supervision of the Administrator, the Custodian maintains the accounting
and portfolio transaction records for the Portfolio and each day computes the
net asset value and net income of the Portfolio.
INDEPENDENT AUDITORS
Deloitte & Touche LLP are the independent auditors of the Portfolio.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Portfolio is managed actively in pursuit of its investment
objective. Securities are not traded for short-term profits but, when
circumstances warrant, securities are sold without regard to the length of time
held. A 100% annual turnover rate would occur, for example, if all portfolio
Securities (excluding short-term obligations) were replaced once in a period of
one year. The amount of brokerage commissions and taxes on realized capital
gains to be borne by the investors tend to increase as the level of portfolio
activity increases.
In effecting securities transactions the Investment Manager seeks to
obtain the best price and execution of orders. In selecting a broker, the
Investment Manager considers a number of factors, including: the broker's
ability to execute orders without disturbing the market price; the broker's
reliability for prompt, accurate confirmations and on-time delivery of
securities; the broker's financial condition and responsibility; the research
and other information provided by the broker; and the commissions charged.
Accordingly, the commissions charged by any such broker may be greater than the
amount another firm might charge if the Investment Manager determines in good
faith that the amount of such commissions is reasonable in relation to the value
of the brokerage services and research information provided by such broker.
The Investment Manager may direct a portion of the Portfolio's
securities transactions to certain unaffiliated brokers which in turn use a
portion of the commissions they receive from the Portfolio to pay other
unaffiliated service providers on behalf of the Portfolio for services provided
for which the Portfolio would otherwise be obligated to pay. Such commissions
paid by the Portfolio are at the same rate paid to other brokers for effecting
similar transactions in listed equity securities.
Research services provided by brokers to which Brown Brothers Harriman
& Co. has allocated brokerage business in the past include economic statistics
and forecasting services, industry and company analyses, portfolio strategy
services, quantitative data, and consulting services from economists and
political analysts. Research services furnished by brokers are used for the
benefit of all the Investment Manager's clients and not solely or necessarily
for the benefit of the Portfolio. The Investment Manager believes that the value
of research services received is not determinable and such research does not
significantly reduce its expenses. The Portfolio does not reduce the fee paid to
the Investment Manager and Investment Adviser by any amount that might be
attributable to the value of such services.
Portfolio securities are not purchased from or sold to the
Administrator, Investment Manager, Investment Adviser or any "affiliated person"
(as defined in the 1940 Act) of the Administrator, Investment Manager or
Investment Adviser when such entities are acting as principals, except to the
extent permitted by law.
A committee, comprised of officers and partners of Brown Brothers
Harriman & Co. who are portfolio managers of some of Brown Brothers Harriman &
Co.'s managed accounts (the "Managed Accounts"), evaluates semi-annually the
nature and quality of the brokerage and research services provided by brokers,
and, based on this evaluation, establishes a list and projected ranking of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to such brokers. However, in any semi-annual period, brokers not on
the list may be used, and the relative amounts of brokerage commissions paid to
the brokers on the list may vary substantially from the projected rankings.
The Trustees of the Portfolio review regularly the reasonableness of
commissions and other transaction costs incurred for the Portfolio in light of
facts and circumstances deemed relevant from time to time and, in that
connection, receive reports from the Investment Manager and published data
concerning transaction costs incurred by institutional investors generally.
Over-the-counter purchases and sales are transacted directly with
principal market makers, except in those circumstances in which, in the judgment
of the Investment Manager, better prices and execution of orders can otherwise
be obtained. If the Portfolio effects a closing transaction with respect to a
futures or option contract, such transaction normally would be executed by the
same broker-dealer who executed the opening transaction. The writing of options
by the Portfolio may be subject to limitations established by each of the
exchanges governing the maximum number of options in each class which may be
written by a single investor or group of investors acting in concert, regardless
of whether the options are written on the same or different exchanges or are
held or written in one or more accounts or through one or more brokers. The
number of options which the Portfolio may write may be affected by options
written by the Investment Manager for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Portfolio. In some instances, this procedure might
adversely affect the Portfolio.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio is organized as a trust under the laws of the State of
New York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees if they choose to do so
and in such event the other investors in the Portfolio would not be able to
elect any Trustee. The Portfolio is not required and has no current intention to
hold annual meetings of investors but the Portfolio will hold special meetings
of investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. No material amendment may
be made to the Portfolio's Declaration of Trust without the affirmative majority
vote of investors (with the vote of each being in proportion to the amount of
its investment). Investors have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified percentage of the outstanding interests in the Portfolio) the right to
communicate with other investors in connection with requesting a meeting of
investors for the purpose of removing one or more Trustees. Investors also have
the right to remove one or more Trustees without a meeting by a declaration in
writing by a specified percentage of the outstanding interests in the Portfolio.
Upon liquidation of the Portfolio, investors would be entitled to share pro rata
in the net assets of the Portfolio available for distribution to investors.
The end of the Portfolio's fiscal year is December 31.
Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.
Investor inquiries may be directed to 59 Wall Street Distributors, Inc,
21 Milk Street, Boston, MA 02109, 1-800-625-5759.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to its percentage of the
beneficial interests in the Portfolio), except that if the Trustees recommend
such sale of assets, the approval by vote of a majority of the investors (with
the vote of each being in proportion to its percentage of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets if approved by
the vote of two thirds of its investors (with the vote of each being in
proportion to the amount of its investment) or (ii) by the Trustees by written
notice to its investors.
Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.
The Portfolio's Declaration of Trust further provides that obligations
of the Portfolio are not binding upon the Trustees individually but only upon
the property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio. The net asset value of the Portfolio
is determined once on each business day.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the account
of the Custodian by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each day the New York Stock Exchange is open for regular
trading. At 4:00 P.M., New York time on each such business day, the value of
each investor's beneficial interest in the Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals, which are to be
effected on that day, are then effected. The investor's percentage of the
aggregate beneficial interests in the Portfolio is then recomputed as the
percentage equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of 4:00 P.M New York time on such day
plus or minus, as the case may be, the amount of any additions to or withdrawals
from the investor's investment in the Portfolio effected on such day, and (ii)
the denominator of which is the aggregate net asset value of the Portfolio as of
4:00 P.M. New York time, on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of 4:00 P.M., New York time on the following business day of the Portfolio.
The net income and capital gains and losses, if any, of the Portfolio
are determined at 4:00 p.m., New York time on each business day. Net income for
days other than business days is determined as of 4:00 p.m., New York time on
the immediately preceding business day. All the net income, as defined below,
and capital gains and losses, if any, so determined are allocated pro rata among
the investors in the Portfolio at the time of such determination.
For this purpose the "net income" of the Portfolio (from the time of
the immediately preceding determination thereof) consists of (i) accrued
interest, accretion of discount and amortization of premium less (ii) all actual
and accrued expenses of the Portfolio (including the fees payable to the
Investment Adviser, Investment Manager and Administrator of the Portfolio).
The value of investments listed on a domestic securities exchange is
based on the last sale prices as of the regular close of the New York Stock
Exchange (which is currently 4:00 P.M New York time) or, in the absence of
recorded sales, at the average of readily available closing bid and asked prices
on such Exchange.
Unlisted securities are valued at the average of the quoted bid and
asked prices in the over-the-counter market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures established by
and under the general supervision and responsibility of the Portfolio's
Trustees. Such procedures include the use of independent pricing services, which
use prices based upon yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and general
market conditions. Short-term investments which mature in 60 days or less are
valued at amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their original
maturity when acquired was more than 60 days, unless this is determined not to
represent fair value by the Trustees of the Portfolio.
If the Portfolio determines that it would be detrimental to the best
interest of the remaining investors in the Portfolio to make payment wholly or
partly in cash, payment of the redemption price may be made in whole or in part
by a distribution in kind of securities from the Portfolio, in lieu of cash, in
conformity with the applicable rules of the Securities and Exchange Commission
(the "SEC"). If interests are redeemed in kind, the redeeming investor might
incur transaction costs in converting the assets into cash. The method of
valuing portfolio securities is described above and such valuation will be made
as of the same time the redemption price is determined.
An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
Portfolio Business Day after the reduction is effected, but in any event within
seven days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the New York Stock Exchange is restricted
or, to the extent otherwise permitted by the 1940 Act if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 19. TAX STATUS.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. However each investor in the Portfolio will be
taxable on its share (as determined in accordance with the governing instruments
of the Portfolio) of the Portfolio's ordinary income and capital gain in
determining its income tax liability. The determination of such share will be
made in accordance with the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder.
Although, as described above, the Portfolio will not be subject to
federal income tax, it will file appropriate income tax returns.
It is intended that the Portfolio's assets will be managed in such a
way that an investor in the Portfolio will be able to satisfy the requirements
of Subchapter M of the Code.
Gains or losses on sales of securities by the Portfolio will be treated
as long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where, if applicable, the Portfolio
acquires a put or writes a call thereon. Other gains or losses on the sale of
securities will be short-term capital gains or losses.
FOREIGN TAXES. The Portfolio may be subject to foreign withholding
taxes with respect to income received from sources within foreign countries.
OTHER TAXATION. The investment by an investor in the Portfolio does not
cause the investor to be liable for any income or franchise tax in the State of
New York. Investors are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in the Portfolio.
ITEM 20. UNDERWRITERS.
The placement agent for the Portfolio is 59 Wall Street Distributors,
Inc., which receives no compensation for serving in this capacity. Other
investment companies, insurance company separate accounts, common and commingled
trust funds and similar organizations and entities may continuously invest in
the Portfolio acted as placement agent for the Portfolio under the same terms
and conditions as set forth herein.
ITEM 21. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The Portfolio's Statement of Assets and Liabilities dated July 31, 1999
has been included.
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
FINANCIAL STATEMENTS
July 31, 1999
(unaudited)
In the opinion of the mangement of the Fund, these financial statements
reflect all adjustments which are necessary to a fair statement of results for
the period presented.
Dow Jones Islamic Market Index Portolio
Portfolio of Investments
(unaudited)
(expressed in U.S. dollars)
----------------------------------------------------------------------------
Shares Security Value
COMMON STOCKS (99.3%)
AUSTRALIA (0.9%)
1,910 ORICA LTD 10,198
3,210 BROKEN HILL PROPRIETARY LTD 35,510
3,120 CSR LTD ORD 8,613
5,140 NORTH LIMITED 11,573
1,540 RIO TINTO LIMITED 27,551
3,180 SANTOS LIMITED ORD 10,471
1,760 WOODSIDE PETROLEUM LTD 12,686
450 BRAMBLES INDS LTD 11,928
BELGIUM (0.2%)
290 UCB SA 12,395
30 PETROFINA SA NPV 12,389
BERMUDA (0.1%)
5,000 CHEUNG KONG INFRA HLDGS 10,307
CANADA (1.8%)
520 ALCAN ALUMINIUM LTD 15,673
910 NORANDA INC 11,962
290 SUNCOR ENERGY INC 11,821
490 TELEGLOBE INC 10,849
380 BCT TELUS COUMM A SHS NON VOTING 8,287
350 NEWBRIDGE NETWORKS CORP 9,294
1,200 NORTEL NETWORKS CORP 106,552
180 MAGNA INTL CL A 9,859
500 MACMILLAN BLOEDEL LTD 8,664
960 IMPERIAL OIL LTD 19,183
940 PETRO CANADA 13,854
810 BARRICK GOLD CORPORATION 15,030
250 CANADIAN NATIONAL RAILWAY F/PD 16,804
370 ALBERTA ENERGY LTD 11,361
CAYMAN ISLANDS (0.1%)
310 TRANSOCEAN OFFSHORE 9,513
FRANCE (3.2%)
180 ST GOBAIN 32,643
120 AIR LIQUIDE (L') 19,502
270 DASSAULT SYSTEMS SA 9,822
380 ALCATEL 58,464
120 REXEL SA 9,989
60 CASTORAMA DUBOIS INVESTISMENT 15,278
340 SCHNEIDER ELECTRIC SA 20,789
120 CAP GEMINI SA 20,414
500 SOC NATL ELF AQUITAINE 85,592
120 L'OREAL 77,932
30 ESSILOR INTL 9,790
150 VALEO 11,346
330 MICHELIN CL B REGD 13,381
1,000 VIVENDI SA 78,584
GERMANY (0.6%)
150 HENKEL KGAA PFD 10,512
120 ADIDAS SALOMON AG 10,785
1,410 BAYER AG 60,433
210 BEIRESDORF AG BEARER 13,930
GREECE (0.2%)
1,110 HELLENIC TELECOM ORGAN /GRD/ 23,352
110 TITAN CEMENT ORDINARY 11,028
HONG KONG (0.8%)
23,200 CABLE & WIRELESS HKT LTD 54,551
4,000 HENDERSON LAND DEVELOPMENT 22,624
8,000 WHEELOCK AND CO LTD 10,874
5,000 CLP HOLDINGS LIMITED 22,740
4,000 HONG KONG ELECTRIC 12,626
ITALY (1.5%)
1,560 EDISON SPA 13,436
4,670 TELECOM ITALIA SPA NON CONV 25,482
9,030 SEAT PAGINE GIALLE SPA 12,647
13,330 TELECOM ITALIA MOBILE SPA 77,156
9,840 TELECOM ITALIA SPA 97,382
JAPAN (9.6%)
1,000 DAIWA HOUSE IND CO. 10,518
1,000 KANDENKO CO 6,192
1,000 KINDEN CORP 10,552
2,000 SEKISUI HOUSE 22,500
1,000 TOTO 7,465
2,000 KYOWA HAKKO KOGYO 12,558
500 FANUC CO 29,521
100 HIROSE ELECTRIC 11,250
100 KEYENCE CORP 19,448
100 MABUCHI MOTOR CO 9,977
1,000 MATSUSHITA ELECTRIC WORKS 9,288
1,000 OMRON CORP 16,657
1,000 TOKYO ELECTRON 71,513
1,000 AJINOMOTO CO INC 12,323
2,000 DAI NIPPON PRINTING 34,099
2,000 TOPPAN PRINTING CO 23,896
1,000 EBARA CORP 12,053
5,000 ISHIKAWAJIMA HARIMA HEAVY IND 8,808
2,000 KOMATSU LTD 12,558
1,000 MORI SEIKI CO. 15,087
100 SMC 12,297
1,000 TOYODA AUTO LOOM 18,532
1,000 SUMITOMO ELECTRIC 12,593
1,000 CANON SALES 16,186
1,000 KOKUYO CO 17,085
3,000 GENERAL SEKIYU KK 9,942
2,000 TONEN CORP 14,477
1,000 BANYU PHARMACEUTICAL CO 19,622
1,000 DAIICHI PHARMACEUTICAL 16,701
1,000 EISAI CO LTD 21,279
1,000 KAO CORP 27,820
1,000 SHISEIDO CO 13,823
1,000 TAISHO PHARMACEUTICAL 38,809
1,000 YAMANOUCHI PHARMACEUTICAL CO LTD 46,309
2,000 CANON INC 63,315
2,000 DENSO CORP 44,652
2,000 HONDA MOTOR CO 86,687
7,000 TOYOTA MOTOR CORP 246,631
550 TOYOTA MOTOR CORP ADR 38,500
1,000 BRIDGESTONE CORPORATION 30,785
1,000 ONWARD KASHIYAMA 12,070
1,000 WACOAL CORP 10,570
2,000 FUKUYAMA TRANSPORTING 11,861
3,000 NIPPON EXPRESS CO. 20,276
1,000 YAMATO TRANSPORT
200 ADVANTEST CORP 25,465
3,000 ASAHI CHEMICAL INDUSTRIES 15,044
1,000 FUJISAWA PHARM CO 18,881
1,000 KOMORI CORPORATION 21,803
2,000 TAKEDA CHEMICAL INDUSTRIES 108,490
MEXICO (0.2%)
1,590 APASCO SA DE CV 8,880
5,070 KIMBERLY CLARK (SER A) 17,988
NETHERLANDS (2.1%)
610 AKZO NOBEL NV 26,073
950 TNT POST GROEP NV /NLG/ 22,920
390 STORK NV 9,597
550 BUHRMANN NV MAASTRICHT 11,180
3,890 ROYAL DUTCH PETROLEUM 243,056
NETHERLANDS ANTILLES (0.4%)
1,000 SCHLUMBERGER LTD 60,563
NEW ZEALAND (0.1%)
8,690 CARTER HOLT HARVEY LTD 10,855
NORWAY (0.3%)
820 NORSK HYDRO AS 32,032
340 NORSKE SKOGINDUSTIER A 13,560
------
45,598
PORTUGAL (0.1%)
60 TELECEL COMUNI PES /PTE/ 7,681
SINGAPORE (0.4%)
31,440 SINGAPORE TELECOMM 53,630
SOUTH AFRICA (0.4%)
470 ANGLO AMERICAN PLATINUM CORP 11,150
240 ANGLOGOLD LTD 10,243
940 DE BEERS CENTENARY LINK UNITS 23,399
1,710 SASOL LTD 12,709
SPAIN (0.4%)
1,120 AUTOPISTAS C.E.S.A. 12,438
1,810 ENDESA SA 35,593
1,500 CEPSA /COMPANIA ESPANOLA/ BEARER 18,006
SWEDEN (0.6%)
470 SANDVIK AB A FREE 11,618
900 EUROPOLITAN HOLDINGS AB 8,384
1,260 HENNES & MAURITZ B 32,835
500 ASSI DOMAN 8,372
370 MO OCH DOMJO AB SER B 10,363
500 SVENSKA CELLULOSA SER B FREE 14,491
SWITZERLAND (0.1%)
220 CIBA SPEC CHEM HLDG REGD /CHF/ 16,582
UNITED KINGDOM (8.2%)
1,780 BLUE CIRCLE INDUSTRIES ORD 12,686
650 RMC GROUP ORD 11,377
3,330 ASTRAZENECA GROUP PLC 123,914
920 BOC GROUP ORD 19,026
1,040 RAILTRACK GROUP PLC 19,114
10,260 SMITHKLINE BEECHAM PLC 126,376
940 THAMES WATER PLC ORD SHARES 14,473
11,950 BRITISH TELECOM ORD 208,199
1,320 TI GROUP PLC 9,894
7,280 INVENSYS PLC 39,408
17,890 BP AMOCO PLC 349,961
1,640 BOOTS CO ORD 20,081
3,460 SMITH & NEPHEW PLC 10,150
18,380 SHELL TRANSPORT & TRADING REGD 149,985
6,380 BG PLC .01133 38,362
1,230 BRITISH ENERGY PLC 10,426
1,260 POWERGEN PLC 1998 SHARES 12,232
910 SEVERN TRENT PLC 13,443
1,730 HAYS PLC 18,477
UNITED STATES (67.0%)
830 UNITED TECHNOLOGIES CORP 55,351
2,490 HOME DEPOT INC 158,893
190 JOHNSON CTLS INC 13,027
680 TELLABS INC 41,863
170 WRIGLEY /WILLIAM/ JR CO 13,547
240 LAFARGE CORP 7,425
510 NEWELL RUBBERMAID INC 22,058
160 SEALED AIR CORP 10,280
380 SHERWIN WILLIAMS 10,260
160 USG CORPORATION-COMMON 8,590
220 VULCAN MATERIALS 9,680
2,570 ABBOTT LABORATORIES 110,349
950 ALLIEDSIGNAL INC 61,453
520 BAXTER INTL INC 35,718
380 DOW CHEMICAL CO 47,120
1,910 DU PONT (EI) DE NEMOURS 137,639
360 ENGELHARD CORP 8,033
4,000 MERCK & CO. 270,750
690 MINNESOTA MINING & MANUFACTURING 60,677
350 PPG INDUSTRIES INC 20,869
400 ROHM & HAAS CO. 17,050
270 UNION CARBIDE CORP 12,960
190 NUCOR CORP 9,215
300 USX-US STL GROUP 7,781
480 ALLEGHENY TELEDYNE CORP 10,290
280 AMERN CORP 10,920
1,910 DELPHI AUTOMOTIVE SYSTEMS 34,380
370 DIAMOND OFFSHORE DRILLING INC 11,840
840 ELECTRONIC DATA SYS CORP 50,663
200 GALILEO INTL INC 10,238
850 HALLIBURTON CO 39,206
580 IMS HEALTH INC 16,168
310 INGRAM MICRO INC CL A 8,816
170 LEAR CORP 8,118
5,190 LUCENT TECHNOLOGIES INC 337,674
420 PIONEER HI BRED INT'L INC 16,328
350 ROCKWELL INTERNATIONAL CORP 20,584
530 SEMPRA ENERGY 11,759
420 SOLECTRON CORP 27,064
790 SPRINT CORP PCS GROUP 47,894
190 STRYKER CORP 11,590
1,850 AMERITECH CORP 135,513
5,410 AT&T CORP 280,982
3,210 BELLSOUTH CORP 154,080
3,330 SBC COMMUNICATIONS INC 190,434
260 BED BATH & BEYOND INC 8,824
670 3COM CORP 16,164
390 AMERICAN PWR CONVERSION CORP 8,093
560 CIRCUIT CITY STORES INC 26,460
430 CORNING INCORPORATED 30,100
760 EMERSON ELECTRIC CORP 45,363
200 GRAINGER W W INC 9,450
280 LINEAR TECHNOLOGY CORP 17,185
250 MAXIM INTEGRATED PRODUCTS 16,016
1,030 MOTOROLA INC 93,988
200 PE CORPORATION PE BIOSYSTEMS GRP 11,213
240 SIGMA ALDRICH CORP 8,070
340 TANDY CORP 17,446
1,400 TYCO INTL LTD 136,763
170 WHIRLPOOL CORP 12,187
5,660 INTEL CORP 390,540
1,200 ARCHER DANIELS MIDLAND 16,800
4,180 COCA COLA CO COM 252,106
2,520 PEPSICO INC 98,595
360 STARBUCKS CORP 8,370
730 INTERNATIONAL PAPER CO 37,321
220 MEAD CORP 9,020
440 DOVER CORP 17,380
320 INGERSOLL RAND 20,580
260 DANAHER CORP 14,836
200 DOW JONES & CO 9,975
450 PAYCHECX INC 12,628
650 APPLIED MATERIALS INC 46,759
230 BIOMET INC 8,366
220 COOPER INDS INC. 12,073
190 FLUOR CORP 7,612
440 ILLINOIS TOOL WORKS 32,698
450 LEGGETT & PLATT INC 11,531
240 PARKER-HANNIFIN 11,325
670 MASCO CORP 19,933
390 LIMITED INC 17,818
660 LOWES COMPANIES 34,815
180 MAYTAG CORPORATION 12,533
200 BLOCK /H & R/ INC 10,925
700 BOSTON SCIENTIFIC CORP 28,394
300 BROWNING FERRIS INDS 13,463
1,480 CHOICEPOINT INC 98,235
320 DUN & BRANDSTREET CORP DEL 10,160
750 FIRST DATA CORP 37,172
1,530 SPRINT CORPORATION 79,082
810 STAPLES INC 23,389
130 PHELPS DODGE CORP 7,711
420 BMC SOFTWARE INC 22,628
5,450 CISCO SYSTEMS INC 338,581
2,940 COMPAQ COMPUTER CORP 70,560
290 COMPUTER SCIENCES CORP 18,669
250 FISERV INC 7,453
290 GATEWAY INC 22,094
1,730 HEWLETT PACKARD CO 181,109
520 MCKESSON HBOC INC 16,153
8,690 MICROSOFT CORP 745,711
630 NOVELL INC 16,223
700 OFFICE DEPOT INC 13,125
2,480 ORACLE SYSTEMS CORP 94,395
1,320 SUN MICROSYSTEMS INC 89,595
240 SUNGARD DATA 6,870
220 AVERY DENNISON CORPORATION 13,503
920 KIMBERLY CLARK CORP 56,120
200 AMERADA HESS 11,838
230 ASHLAND INC 8,740
560 ATLANTIC RICHFIELD CO. 50,435
680 BAKER HUGHES 23,673
370 BURLINGTON RES INC 16,349
1,110 CHEVRON CORP 101,288
4,110 EXXON MOBIL CORP 326,231
200 KERR MCGEE CORP 10,300
1,320 MOBIL CORP 134,970
490 PHILLIPS PETROLEUM CO 25,143
950 TEXACO INC 59,197
580 USX-MARATHON GROUP 17,618
2,220 AMERICAN HOME PRODUCTS 113,220
880 AMGEN INC 67,650
460 AVON PRODS INC 20,930
480 BECTON DICKINSON & CO 13,170
270 BIOGEN INC 18,579
3,350 BRISTOL-MYERS SQUIBB CO 222,775
250 ECOLAB INC 10,656
1,880 ELI LILLY & CO 123,375
530 GUIDANT CORP 31,038
2,260 JOHNSON & JOHNSON 208,203
1,000 MEDTRONIC INC 72,063
10,760 PFIZER INC 365,168
2,230 PROCTOR & GAMBLE CO 201,815
2,500 SCHERING PLOUGH 122,500
370 UNITED HEALTH CARE 22,570
1,400 WARNER LAMBERT 92,400
190 CONSOLIDATED NATURAL GAS 11,899
310 AUTOZONE INC 7,653
490 CARDINAL HEALTH 33,443
390 FEDERATED DEPARTMENT STORES 20,012
230 JONES APPAREL GROUP INC 7,561
290 KOHLS CORP 22,058
570 TJX COMPANIES INC 18,846
500 TOYS R US 8,125
150 EATON CORP 14,841
1,950 FORD MOTOR CO. 94,819
330 GOODYEAR TIRE & RUBR CO 17,449
150 REYNOLDS METALS CO 8,494
230 CINTAS CORP 14,749
510 NIKE INC CL B 26,520
280 V F CORPORATION 11,060
430 CSX CORP 20,828
540 FDX CORP 24,199
280 NORDSTROM INC 8,803
450 UNION PACIFIC CORP 24,441
160 COLUMBIA ENERGY GROUP 9,520
400 CONSOLIDATED EDISON INC. 17,400
630 DUKE ENERGY CO 33,351
460 EL PASO ENERGY CORP 16,474
600 ENRON CORP 51,113
320 FPL GROUP 17,260
310 KEYSPAN CORP 8,603
400 NO STATES POWER 9,000
410 UNICOM CORP 16,093
360 ALTERA CORP 13,050
880 BURLINGTON NORTH SANTA FE CORP 28,160
660 COMPUWARE CORP 18,315
4,330 DELL COMPUTER CORP 176,989
130 DST SYSTEMS INC 8,629
190 EASTMAN CHEMICAL 9,821
3,180 MCI WORLDCOM INC 262,350
510 PEOPLESOFT INC 6,949
320 PP & L RESOURCES 9,260
360 TOSCO CORP 9,495
870 U S WEST INC 49,862
640 ALCOA INC 38,320
75 GARTNER GROUP INC CL B 1,622
230 QUINTILES TRANSNATIONAL 8,740
250 STANLEY WORKS 6,985
-----------
9,882,421
-----------
TOTAL INVESTMENTS 99.2% 14,640,458
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.8% 121,365
_____________________
NET ASSETS 100.0% 14,761,823
=========================================================================
--------------------------------------------------------------------------------
See Notes to Financial Statements
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1999
(unaudited)
[Enlarge/Download Table]
ASSETS:
Investments in securities, at value (identified cost $14,875,614) $ 14,640,458
Cash 572,102
Receivables for:
Investments sold 501,961
Dividends 6,282
--------------------
Total Assets 15,720,803
--------------------
LIABILITIES:
Payables for:
Investments purchased 951,776
Expense Payment Fee 7,204
--------------------
Total Liabilities 958,980
--------------------
--------------------
NET ASSETS $ 14,761,823
====================
Net Assets Consist of:
Paid-in capital $ 14,996,860
Net unrealized depreciation (235,037)
--------------------
--------------------
Net Assets $ 14,761,823
====================
<FN>
See Notes to Financial Statements.
</FN>
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
STATEMENT OF OPERATIONS
July 31, 1999
(unaudited)
[Enlarge/Download Table]
INVESTMENT INCOME
Income:
Dividends (net of withholding taxes of $633) $ 8,268
_____________
Total Income 8,268
_____________
Expenses:
Expense reimbursement fee 7,204
_____________
Total Expenses 7,204
_____________
Net investment income: 1,064
_____________
NET REALIZED AND UNREALIZED LOSS
Net realized loss on investments and foreign exchange transactions (4,404)
Net change in unrealized depreciation on investments and foreign exchange translations (235,037)
_____________
Net Realized and Unrealized Loss (239,441)
_____________
Net Decrease in Net Assets Resulting from Operations (238,377)
====================
<FN>
See Notes to Financial Statements.
</FN>
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
[Enlarge/Download Table]
For the
month ended
July 31, 1999
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 1,064
Net realized loss on investments and foreign exchange transactions (4,404)
Net change in unrealized depreciation on investments and foreign currency translations (235,037)
_____________
Net decrease in net assets resulting from operations (238,377)
_____________
Total Contributions 15,000,200
_____________
Total increase in net assets 14,761,823
NET ASSETS:
Beginning of year 0
_____________
End of year $ 14,761,823
<FN>
======================
See Notes to Financial Statements.
</FN>
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout
each year
For the
month ended
July 31, 1999
(unaudited)
____________
Net asset value, beginning of period $100.00
Income from investment operations:
Net investment income 0.01
Net realized and unrealized gain (1.60)
=======================
Net asset value, end of period $ 98.41
=======================
Total return (1.59)%
Ratios/Supplemental data:
Net assets, end of period (000's omitted) $14,762
Expenses as a percentage of
average net assets 0.57%
Ratio of net investment income to
average net assets 0.08%
Portfolio turnover rate 0%
_________________________________________________
1 Annualized.
See Notes to Financial Statements.
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
(unaudited)
1. Organization and Significant Accounting Policies. Dow Jones Islamic
Market Index Portfolio (the "Portfolio") was organized as a trust under the laws
of the State of New York on March 5, 1999. The Portfolio commenced operations on
July 1, 1999. The Declaration of Trust permits the Trustees to create an
unlimited number of beneficial interests in the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of the
financial statements and are based, in part, on the following accounting
policies. Actual results could differ from those estimates.
A. Valuation of Investments. (1) The value of investments
listed on either a domestic or foreign securities exchange is based on
the last sale price on that exchange prior to the time when assets are
valued, or in the absence of recorded sales, at the average of readily
available closing bid and asked prices on such exchange; (2) unlisted
securities are valued at the average of the quoted bid and asked prices
in the over-the-counter market; (3) securities or other assets for
which market quotations are not readily available are valued at fair
value in accordance with procedures established by and under the
general supervision and responsibility of the Portfolio's Trustees.
Such procedures include the use of independent pricing services, which
use prices based upon yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to the value from
dealers; and general market conditions; (4) all assets and liabilities
initially expressed in foreign currencies will be converted into U.S.
dollars at the prevailing rates of exchange available at the time of
valuation; and (5) trading in securities on most foreign exchanges and
over-the-counter markets is normally completed before the close of the
New York Stock Exchange and may also take place on days on which the
New York Stock Exchange is closed. If events materially affecting the
value of foreign securities occur between the time when the exchange on
which they are traded closes and the time when the Portfolio's net
assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the Portfolio's Trustees.
B. Foreign Currency Translations. The accounting records of the Portfolio
are maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, assets and liabilities. Purchases
and sales of securities, and income and expenses are translated at the
prevailing rate of exchange on the respective dates of such transactions. The
Portfolio does not isolates that portion of realized gain or loss on investments
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of such investments. Reported
net realized and unrealized gains and losses arise from the sales of portfolio
securities, sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest and foreign withholding
taxes recorded on the Portfolio's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized appreciation or depreciation
on foreign currency translations arise from changes in the value of the assets
and liabilities, excluding investments in securities, at fiscal year end,
arising from changes in the exchange rate.
C. Accounting for Investments. Security transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Interest income is accrued daily.
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENT (continued)
(expressed in U.S. dollars)
(unaudited)
D. Federal Income Taxes. The Portfolio will be treated as a partnership for
federal income tax purposes. As such, each investor in the Portfolio will be
subject to taxation on its share of the Portfolio's ordinary income and capital
gains. It is intended that the Portfolio's assets will be managed in such a way
that an investor in the Portfolio will be able to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies.
Accordingly, no provision for federal income taxes is necessary.
2. Transactions with Affiliates.
Investment Management and Advisory Fee. The Portfolio has an investment
management agreement with Brown Brothers Harriman & Co. (the "Manager"). The
Portfolio has an investment advisory agreement with Wafra Investment Advisory
Group, Inc. (the "Adviser"). The Manager and the Adviser jointly receive from
the portfolio calculated daily and paid monthly at an annual rate equivalent to
0.40% of the Portfolio's average daily net assets.
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company (Cayman) Limited (the "Administrator") for
which it pays the Administrator a fee calculated daily and paid monthly at an
annual rate equivalent to 0.05% of the Portfolio's average daily net assets that
are not in excess of $50 million and at an annual rate equivalent to 0.01% on
the Portfolio's average daily net assets in excess of $50 million.
Expense Reimbursement Fee. Brown Brothers Harriman Trust Company (Cayman)
Limited pays certain expenses of the Portfolio and receives a fee from the
Portfolio, computed and paid monthly, such that after such fee the aggregate
expenses will not exceed 0.57% of the Portfolio's average daily net assets. For
the month ended July 31, 1999, Brown Brothers Harriman Trust Company (Cayman)
Limited incurred $95,776, including $4,968 in investment management/advisory
fees and $632 in administration fees, in expenses on behalf of the Portfolio.
The expense reimbursement agreement will terminate when the aggregate amount of
fees received by Brown Brothers Harriman Trust Co. (Cayman) Limited thereunder
equals the aggregate amount of expenses paid by Brown Brother Harriman Trust
Company (Cayman) Limited thereunder.
3. Investment Transactions. For the month ended July 31, 1999, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $14,875,614 and $0, respectively.
PART C
ITEM 23. EXHIBITS.
1 Declaration of Trust of the Registrant (1)
2 By-Laws of the Registrant(1)
5 Form of Investment Advisory Agreement between the Registrant and Wafra
Investment Advisory Group, Inc.(1)
5(i) Form of Investment Management Agreement between the Registrant and Brown
Brothers Harriman & Co.(1)
8 Custodian Contract between the Registrant and Brown Brothers Harriman (1)
8(i) Form of Amendment to Custodian Contract between the Registrant and
Brown Brothers Harriman & Co.(1)
9(a) Form of Administration Agreement between the Registrant and Brown Brothers
Harriman Trust Company(1)
13 Form of Investment representation letters of initial investors(1)
----------------
(1) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 25. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as an Exhibit herewith.
The Trustees and officers of the Registrant are insured under an errors and
omissions liability insurance policy. The Registrant and its officers are also
insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940, as amended.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Registrant's investment adviser, Wafra Investment Advisory Group, Inc.,
a U.S. registered investment adviser, acts as investment adviser for numerous
investment funds and managed accounts, including other Islamic funds and
products.
To the knowledge of the Registrant, none of the principals or officers of
Wafra Investment Advisory Group, Inc. is engaged in any other business,
profession, vocation or employment of a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder are maintained at the offices of:
Dow Jones Islamic Market Index Portfolio
Butterfield House
Fort Street/P.O. Box 2330
George Town, Grand Cayman
Cayman Islands, B.W.I.
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment manager)
Brown Brothers Harriman Trust Company
63 Wall Street
New York, NY 10005
(administrator)
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, MA 02109
(placement agent)
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(custodian)
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, Dow
Jones Islamic Market Index Portfolio has duly caused this registration statement
on Form N-1A to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, Massachusetts on the day of [ ] August, 1999.
DOW JONES ISLAMIC MARKET INDEX PORTFOLIO
By: /s/Philip W. Coolidge
Philip W. Coolidge
President
Dates Referenced Herein and Documents Incorporated by Reference
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