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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4665
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Commonwealth International Series Trust
---------------------------------------
(Exact name of registrant as specified in charter)
5847 San Felipe, Suite 850 Houston TX 77057
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(Address of principal executive offices) (Zip code)
InCap Service Company, Willow Grove, PA 19090
---------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-713-781-2856
Date of fiscal year end: 10/31/2003
------------
Date of reporting period: 04/30/2003
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[LOGO]
COMMONWEALTH
INTERNATIONAL SERIES TRUST
630 Fitzwatertown Road, Willow Grove, PA 19090 * 888.345.1898
Commonwealth Australia/New Zealand Fund (CNZLX)
Commonwealth Global Fund (CNGLX)
Commonwealth Japan Fund (CNJFX)
www.commonwealthfunds.com
Dear Shareholder:
We are pleased to present this semi-annual report on the Commonwealth
International Series Trust's Funds for the six months ended April 30, 2003. The
Australia/New Zealand Fund's net asset value ("NAV") as of April 30, 2003 is
U.S. $11.97 per share compared to U.S. $10.39 per share on October 31, 2002, an
increase of 15.2%. The Japan Fund's NAV on April 30, 2003 is U.S. $3.29 per
share compared to U.S. $3.37 per share on October 31, 2002, a decrease of 2.4%.
The Global Fund's NAV as of April 30, 2003 is U.S. $10.04 per share compared to
U.S. $10.00 per share on October 31, 2002, an increase of 0.4%.
FUNDS' COMPARATIVE PERFORMANCE
The three funds' objective is to own a diversified portfolio of stocks that
provide current income through dividends as well as the potential for long-term
capital appreciation, and fixed income instruments with attractive yields. Our
portfolios include securities traded in the local country and American
Depository Receipts (ADRs) because they can provide an efficient currency
exchange and liquidity management for a U.S. dollar fund.
- ------------------------------------------------------------------------------------------------------------------
COMMONWEALTH FUNDS OCTOBER 31, 2002 - APRIL 30, 2003 PERFORMANCE (%)
- ------------------------------------------------------------------------------------------------------------------
US $ CHANGE IN LOCAL MARKET LOCAL CURRENCY US$ VS. LOCAL
NAV BENCHMARK VS. US$ CURRENCY
-------------------------------------------------------------------
COMMONWEALTH AUSTRALIA/NEW ZEALAND (CNZLX)
New Zealand 15.2% 4.5% 15.7% -13.5%
Australia 15.2% 1.7% 13.3% -11.8%
COMMONWEALTH JAPAN (CNJFX) -2.4% -7.1% -3.3% 3.5%
COMMONWEALTH GLOBAL (CNGLX) 0.4% 3.8% -- -8.9%
GLOBAL FUND (CNGLX): The past six months proved to be turbulent times for
investors as fears of global deflation, economic stagnation, war, and the deadly
SARS virus took center stage. While the uncertainty around the Iraq conflict and
SARS outbreak have somewhat abated, uncertainties surrounding the economic
recovery remain prevalent. Even
against this backdrop of uncertainties, the MSCI World Index1 posted a 3.8%
increase over the last six months. During that time, the U.S. dollar trade
weighted index fell 8.9% as investors flocked to other currencies in search of
higher yields and over fears of excessive trade and budget deficits in the U.S.
Inflation and interest rates have declined globally, providing a foundation for
growth and high real returns on investments. We believe that equity prices in
particular are depressed in the worldwide market including the U.S., which
provides an opportunity for investment in fundamentally sound companies at
attractive prices.
JAPAN FUND (CNJFX): The fund's benchmark index, TOPIX2, was down in Japanese Yen
terms for the six month period ending April 30, 2003 by 7.1%. Japan's strong
work ethic, mastery of high technology, and a comparatively small defense
allocation of GDP expenditures helped Japan advance with extraordinary rapidity
to one of the most technologically powerful economy in the world. Japan's
economy is most noted for its manufacturers, suppliers, and distributors who
work closely together in close-knit groups called keiretsu. With a view of
overcoming domestic deflation, Japanese firms have sought to expand overseas and
develop multinational operations in areas in which they expect demand to be
stronger. Our view of the Japanese equity market is that it may continue to
languish near term, but will ultimately provide attractive returns, probably
sooner than most investors expect.
AUSTRALIA/NEW ZEALAND FUND (CNZLX): The New Zealand Small Companies Index3
increased 4.5% in New Zealand dollar terms for the six months ended April 30,
2003. In the future, the fund will begin using the New Zealand Exchange Limited
50 Free Float Total Return Index4 as the benchmark for New Zealand. New Zealand
has a mixed economy that operates on free-market principles. It has a sizeable
service and manufacturing sectors complementing a large agriculture sector. Over
the past three decades, the New Zealand economy has undergone significant
structural changes marked by a diversification of exports, a shift away from
pastoral agriculture, and significant growth in the services sector.
Macroeconomic policies have been directed at achieving low inflation and fiscal
balance, and have fostered efficient operation of markets. Policy-making has
also shifted from short-term to medium-term objectives designed to provide a
more stable and predictable environment for private sector decision-making.
Principal reforms have included: the removal of controls on prices, interest
rates and wages, floating of the exchange rate, abolition of all agricultural
subsidies and price supports, liberalization of banking, deregulation of
financial markets, privatization of some state-owned
enterprises, elimination of most import controls and reduction of tariffs,
implementation of free trade with Australia, and widespread reform of the public
service sector.
The Australian All Ordinaries Index5 increased 1.7% in Australian dollar
terms for the six months ended April 30, 2003. We believe that Australia has a
relatively high-growth, low inflation, low-interest rate economy and that there
is an efficient government sector, a flexible labor market and a competitive
business sector. The Australian Government is forecasting 3.25% growth in GDP
for the 2003-2004 fiscal year, accompanied by relatively low inflation. If the
global economy improves, the Australian economy will likely continue to grow
strongly as the benefits of the Government's tax reform package flow through to
the community. Negotiations between the U.S. and Australia on a free-trade
agreement could be fast-tracked as a result of Australia's military and
political support during the Iraq conflict. Disposable income has been rising on
the back of continued low levels of unemployment, wage inflation that has kept
pace with price inflation, and falling interest rates with more expected. These
feed through quickly to disposable income due to the prevalence of floating rate
home mortgages.
Sincerely,
Robert W. Scharar Wesley Yuhnke Ian Winlof, CFA
- --------------------------------- --------------------------------- ---------------------------------
Robert W. Scharar Wesley Yuhnke Ian Winlof, CFA
President and Portfolio Manager Assistant Portfolio Manager Assistant Portfolio Manager
Commonwealth International Series Commonwealth International Series Commonwealth International Series
This report is intended for the fund's shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus which may be obtained at www.commonwealthfunds.com
(1) The MSCI World Index is a free float-adjusted market capitalization
index that is designed to measure global developed market equity
performance. As of April 2002 the MSCI World Index consisted of the
following 23 developed market country indices: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong,
Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, the United Kingdom and the
United States.
(2) The TOPIX, also known as the Tokyo Price Index, is a
capitalization-weighted index of all the companies listed on the First
Section of the Tokyo Stock Exchange. The index is supplemented by the
sub-indices of the 33 industry sectors and developed with a base index
value of 100 as of January 4, 1968. The index calculation excludes
temporary issues and preferred stocks.
(3) The New Zealand Small Companies Index is a capitalization-weighted
index of all New Zealand equities excluding those on the NZSX 40
Index. The index has a base value of 1000 as of July 1, 1986.
(4) The New Zealand Exchange Limited 50 Free Float Total Return Index is a
modified market capitalization weighted index. The index consists of
the top 50 companies by free float adjusted market capitalization that
is listed on the New Zealand Exchange Limited. The New Zealand Stock
Exchange launched the new headline index, NZSX 50, to bring its
primary benchmark index in line with international best practice, and
to better reflect the performance and returns to shareholders, derived
from investment in securities on the New Zealand Stock Exchange. The
existing sector indices calculated by the New Zealand Stock Exchange
will be discontinued and new sector indices based on global criteria
(such as the Global Industry Classification System) will be introduced
to allow comparability to overseas exchange. Because of these
improvements in performance measurements, the fund will begin using
the New Zealand Stock Exchange Limited 50 Free Float Total Return
Index.
(5) The Australian All Ordinaries Index is a cap-weighted index. The index
is made up of the largest 500 companies as measured by market cap that
are listed on the Australian Stock Exchange. The index was developed
with a base value of 500 as of 1979.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
AUSTRALIA (30.59%)
- ------------------
COMMON STOCK (27.56%)
ADVERTISING (1.58%)
STW Communications Group, Ltd. 150,600 $ 277,912
------------
BANKS (0.83%)
Australia and New Zealand Banking Group, Ltd., ADR 2,500 145,900
------------
BEVERAGES (2.24%)
Coco-Cola Amatil, Ltd. 71,700 255,206
Neverfail Springwater, Ltd. 90,647 137,791
------------
392,997
------------
BUILDING (3.72%)
CSR, Ltd. 70,000 77,943
James Hardie Industries NV 88,600 363,578
Rinker Group, Ltd. 70,000 212,811
------------
654,332
------------
CHEMICALS (1.13%)
Wesfarmers, Ltd. 13,000 199,237
------------
CONTAINERS (2.90%)
Amcor, Ltd. 97,984 509,350
------------
DIVERSIFIED HOLDINGS (1.58%)
Brambles Industries, Ltd. 86,000 277,055
------------
FINANCIAL SERVICES (1.65%)
Perpetual Trustees Australia, Ltd. 14,800 289,779
------------
INSURANCE (1.79%)
AXA Asia Pacific Holdings, Ltd. 25,000 31,184
QBE Insurance Group 53,000 283,135
------------
314,319
------------
MINING AND BUILDING MATERIALS (0.32%)
BHP Billiton, Ltd., ADR 5,000 55,750
------------
MULTIMEDIA (1.85%)
Publishing & Broadcasting, Ltd. 58,700 324,234
------------
OFFICE EQUIPMENT (1.20%)
Corporate Express Australia, Ltd. 77,049 210,142
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
OIL & GAS (2.18%)
Origin Energy, Ltd. 111,144 $ 312,171
Woodside Petroleum, Ltd. 10,000 71,688
------------
383,859
------------
RETAIL STORES (1.33%)
Foodland Associated, Ltd. 19,000 234,142
------------
SHIPPING LOGISTICS (1.78%)
Patrick Corporation, Ltd. 38,500 312,846
------------
TRANSPORT SERVICES (1.48%)
Toll Holdings, Ltd. 59,000 260,566
------------
TOTAL COMMON STOCK (COST $4,263,447) 4,842,420
------------
MISCELLANEOUS INVESTMENTS (3.03%)
Ishares MSCI Australia Index Fund
(COST $501,660) 52,000 531,960
------------
TOTAL AUSTRALIA (COST $4,765,107) 5,374,380
------------
NEW ZEALAND (57.37%)
- --------------------
COMMON STOCK (34.21%)
AGRICULTURE (5.41%)
Allied Farmers, Ltd. NPV 156,056 179,816
Pyne Gould Guiness, Ltd. 397,000 239,826
Williams & Kettle, Ltd. 250,000 531,379
------------
951,021
------------
AIRPORT DEVELOPMENT (1.24%)
Auckland International Airport, Ltd. 75,400 218,465
------------
APPLIANCES (2.09%)
Fisher & Pakel Appliances Holdings, Ltd. 37,399 223,833
Scott Technology, Ltd. 89,996 142,963
------------
366,796
------------
AUTOMOBILE MANUFACTURERS (1.89%)
Colonial Motor Co., Ltd. 180,000 332,252
------------
CHEMICALS (0.77%)
Nuplex Industries, Ltd. 71,355 135,302
------------
DIVERSIFIED HOLDINGS (1.31%)
Hellaby Holdings, Ltd. 116,640 230,305
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
ELECTRICAL SERVICES (2.25%)
Powerco, Ltd. 450,000 $ 395,178
------------
FINANCIAL SERVICES (1.26%)
Hallenstein Glasson Holdings, Ltd. 100,000 156,617
Tower, Ltd. 51,473 64,205
------------
220,822
------------
FOREST AND PAPER PRODUCTS (1.69%)
Carter Holt Harvey, Ltd. 250,000 227,934
Evergreen Forests, Ltd. * 213,500 68,070
------------
296,004
------------
HEALTHCARE (1.26%)
Fisher & Paykel Healthcare Corp. 30,639 184,232
Wakefield Hospital, Ltd. 49,304 37,230
------------
221,462
------------
INVESTMENT COMPANIES (1.61%)
Infratil, Ltd. 277,729 282,731
------------
MANUFACTURING (0.71%)
Skellmax Industries 200,000 125,294
------------
OIL & GAS (0.69%)
New Zealand Refining Co., Ltd. 13,647 121,371
------------
PORTS (6.23%)
Lyttleton Port Co., Ltd. 200,000 178,991
Northland Port Corp. NZ, Ltd. 302,300 475,144
Ports of Auckland, Ltd. 16,000 61,752
South Port New Zealand, Ltd. 457,933 379,092
------------
1,094,979
------------
REAL ESTATE (0.50%)
Southern Capital, Ltd. * 250,000 88,097
------------
RESTAURANTS (0.74%)
Restaurant Brands, Ltd. 160,000 129,768
------------
RETAIL STORES (0.36%)
The Warehouse Group, Ltd. 20,000 62,647
------------
STEEL (0.74%)
Steel and Tube Holding, Ltd. 70,000 129,209
------------
TELECOMMUNICATIONS (0.65%)
Telecom Corp. of New Zealand, Ltd. 42,589 114,108
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
TRANSPORT SERVICES (1.50%)
Mainfreight, Ltd. 265,375 $ 191,483
Owens Group, Ltd. 155,191 72,917
------------
264,400
------------
WASTE MANAGEMENT (1.31%)
Waste Management NZ, Ltd. 122,154 230,943
------------
TOTAL COMMON STOCK (COST $4,885,296) 6,011,154
------------
BONDS (16.27%) PRINCIPAL
---------
ANZ Banking Corp., Ltd., 7.04%, due 07/23/12 300,000 176,865
Coca-Cola Amatil, Ltd., 8.00%, due 6/15/05 500,000 291,512
Evergreen Forests, Ltd., zero coupon, due 03/19/09 87,051 63,786
Fletcher Building, 8.60%, due 3/15/08 775,000 454,353
Fonterra Cooperative Group, Ltd. Perpetual Notes,
7.48%, due 11/10/50 400,000 237,163
H J Heinz Co., Ltd., 6.85%, due 2/15/05 500,000 284,162
Infratil, Ltd., 6.90%, due 03/31/04 312,793 243,966
Kiwi Income Property Trust, 9.00%, due 09/30/03 240,000 163,777
Meridian Centre, 10.50%, due 10/15/05 150,000 86,278
TCNZ Finance Ltd., 7.50%, due 09/15/06 500,000 291,867
Trans Power Finance, 6.25%, due 2/16/04 500,000 285,435
Westpac Banking Corp. NZ, Ltd., 5.50%, due 12/06/04 500,000 279,766
------------
TOTAL BONDS (COST $2,607,669) 2,858,930
------------
PRINCIPAL/SHARES
MISCELLANEOUS INVESTMENTS (6.89%) ----------------
Aberdeen Australia Equity Fund 16,000 101,920
Forsythe Barr Money Market 397,314 222,236
Global Market, Ltd., GEM Linked Notes 1,600,000 886,005
------------
TOTAL MISCELLANEOUS INVESTMENTS (COST $1,149,562) 1,210,161
------------
TOTAL NEW ZEALAND (COST $8,642,527) 10,080,245
------------
PRINCIPAL
REPURCHASE AGREEMENT (16.11%) ---------
Fifth Third Bank, 0.75%, dated 04/30/03, due
05/01/03, repurchase price $2,831,003
(collateralized by FNMB Pool # 303815, due
03/01/16, market value $2,915,872)
(COST $ 2,830,944) 2,830,944 2,830,944
------------
TOTAL INVESTMENTS (COST $16,238,578) (104.07%) $ 18,285,569
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (-4.07%) (714,115)
------------
NET ASSETS -- (100%) $ 17,571,454
============
* Non-income producing investment
ADR American Depository Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCK (79.11%)
AIRLINES (0.61%)
All Nippon Airways Co., Ltd. * 10,000 $ 16,770
Japan Airlines Co., Ltd. * 640 5,688
------------
22,458
------------
AUTOMOBILE MANUFACTURERS (5.41%)
Honda Motor Co., Ltd. 6,000 100,080
Nissan Motor Co., Ltd. 3,200 49,088
Toyota Motor Corp. 1,100 49,808
------------
198,976
------------
BUILDING (1.16%)
Sanyo Industries, Ltd. 16,000 42,529
------------
BUILDING PRODUCTS (0.77%)
Nishimatsu Construction Co., Ltd. 10,000 28,174
------------
CHEMICALS (1.32%)
Showa Denko KK 32,000 48,566
------------
ELECTRONICS & ELECTRICAL EQUIPMENT (14.82%)
Chugoku Electric Power Co., Inc. 5,000 80,454
Hokkaido Electric Power Co., Inc. 6,000 87,288
Meidensha Corp. * 38,000 43,971
Shikoku Electric Power Co., Inc. 1,900 31,784
Tohoku Electric Power Co., Inc. 9,700 154,455
Tokyo Electric Power Co., Inc. 2,000 40,584
Yokogawa Electric Corp. 15,000 106,909
------------
545,445
------------
FINANCIAL SERVICES (0.81%)
Nomura Holdings, Inc. 3,000 29,708
------------
FOOD & BEVERAGE (5.06%)
Ajinomoto Co., Inc. 1,200 121,751
QP Corp. 8,000 64,397
------------
186,148
------------
GAS (5.28%)
Toho Gas Co. Ltd. 70,000 194,281
------------
HOME FURNISHINGS (1.34%)
Sony Corp. 2,000 49,480
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
INSURANCE (3.25%)
AFLAC, Inc. # 2,700 $ 88,317
Millea Holdings, Inc. 600 19,734
Sompo Japan Insurance, Inc. 2,520 11,516
------------
119,567
------------
INTERNET SERVICES & SOFTWARE (0.37%)
Softbank Corp. 1,200 13,453
------------
IRON/STEEL (4.86%)
JFE Holdings, Inc. 9,000 108,444
Nippon Steel Corp. 63,000 70,258
------------
178,702
------------
MEDICAL-DRUGS (11.21%)
Chugai Pharmaceutical Co., Ltd. 5,000 52,407
Eisai Co., Ltd. 7,400 130,614
Sawai Pharmaceutical Co., Ltd. 2,500 60,372
Takeda Chemical Industries, Ltd. 2,500 91,607
Tanabe Seiyaku Co., Ltd. 6,000 39,443
Yamanouchi Pharmaceutical Co., Ltd. 1,500 37,858
------------
412,301
------------
MISCELLANEOUS MANUFACTURING (0.62%)
Ishikawajima-Harima Heavy Industries Co., Ltd. 25,000 22,849
------------
OFFICE/BUSINESS EQUIPMENT (2.94%)
Canon, Inc. 2,700 108,297
------------
REAL ESTATE (2.04%)
Sumitomo Realty & Development Co., Ltd. 23,000 75,214
------------
RETAIL (1.64%)
Seven-Eleven Japan Co., Ltd. 1,000 23,814
Yamada Denki Co., Ltd. 1,900 36,643
------------
60,457
------------
TELECOMMUNICATIONS (1.40%)
NTT Docomo, Inc. 25 51,568
------------
TEXTILE PRODUCTS (2.84%)
Ichikawa Co., Ltd. 25,000 58,486
Nippon Felt Co., Ltd. 16,000 45,883
------------
104,369
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
TIRE AND RUBBER (2.89%)
Bridgestone Corp. 2,750 $ 62,397
Sumitomo Rubber Industries, Inc. 10,000 44,022
------------
106,419
------------
TRANSPORT SERVICES (1.52%)
Yamato Transport Co., Ltd. 5,000 55,928
------------
TRANSPORTATION (6.95%)
Hankyu Corp. 22,000 55,710
Keihin Electric Express Railway Co., Ltd. 13,000 62,242
Keio Electric Railway Co., Ltd. 18,000 87,389
Tobu Railway Co., Ltd. 18,000 50,411
------------
255,752
------------
TOTAL COMMON STOCK (COST $3,330,260) 2,910,641
------------
MISCELLANEOUS ASSETS (13.18%)
iShares MSCI Japan Index Fund 23,000 147,430
iShares S&P/TOPIX 150 Index Fund 2,500 140,625
Japan Equity Fund, Inc. * 11,100 49,395
Japan OTC Equity Fund, Inc. * 22,500 147,600
------------
TOTAL MISCELLANEOUS ASSETS (COST $552,322) 485,050
------------
PRINCIPAL
REPURCHASE AGREEMENT (22.73%) ---------
Fifth Third Bank, 0.75%, dated 04/30/03,due
05/01/03, repurchase price $836,183 (collateralized
by FGCI Pool #E92588, 5.00%, due 11/01/17, market
value $861,252) (COST $836,166) 836,166 836,166
------------
TOTAL INVESTMENTS (Cost $4,718,748) (115.02%) $ 4,231,857
OTHER ASSETS & LIABILITIES, NET (-15.02%) (552,517)
------------
NET ASSETS (100%) $ 3,679,340
============
# Call options have been written by the Fund against these positions.
(Note 7)
* Non-income producing investment.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCK (65.75%)
BRITAIN (8.48%)
British Airways Plc 2,800 $ 57,008
Intercontinental Hotels Group Plc. * 6,779 43,386
Lloyds TSB Group Plc 3,000 79,920
Mitchells & Butlers Plc. * 6,779 24,404
National Grid Transco Plc 1,500 49,260
Vodafone Group Plc. # 2,500 49,400
------------
303,378
------------
FRANCE (4.84%)
Aventis SA 1,000 50,340
BNP Paribas 3,000 70,410
Total SA 800 52,560
------------
173,310
------------
ISRAEL (3.39%)
Teva Pharmaceutical Industries # 2,600 121,420
------------
NETHERLANDS (4.92%)
Akzo Nobel NV 100 2,225
ING Groep NV 6,800 110,976
Unilever NV # 1,000 62,970
------------
176,171
------------
SPAIN (1.99%)
Endesa SA. # 5,000 71,250
------------
SWITZERLAND (1.28%)
Nestle SA 900 45,871
------------
UNITED STATES (40.85%)
Activision, Inc. * 3,250 49,725
BJ's Wholesale Club, Inc. * 2,575 36,359
Compass Bancshares, Inc. 1,250 42,150
Conmed Corp. * 2,720 47,382
Copart, Inc. * 5,500 46,420
Dentsply International, Inc. 1,175 44,004
DST Systems, Inc. * 1,585 48,659
Greenpoint Financial Corp. # 910 43,462
Imation Corp. 1,200 41,160
International Rectifier Corp. # * 2,000 45,240
Interstate Bakeries 4,400 46,068
Investment Technology Group, Inc. 3,200 45,728
Lubrizol Corp. 1,355 42,832
Manpower, Inc. 1,175 38,634
McCormick & Co., Inc. 1,765 43,754
Michaels Stores, Inc. 1,200 37,488
Microchip Technology, Inc. # 1,755 36,486
NCO Group, Inc. * 1,500 25,125
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
New York Community Bancorp, Inc. 1,360 $ 47,219
Pec Solutions, Inc. * 4,400 64,988
Pentair, Inc. 1,080 41,623
PMI Group, Inc. 1,400 43,148
Quanex Corp. 1,320 37,963
Sandisk Corp. # * 2,500 60,500
SCANA Corp. 1,450 46,023
Six Flags, Inc. 8,700 51,156
Smith International, Inc. # 1,245 44,272
Sovereign Bancorp, Inc. 2,925 45,191
SPX Corp. 1,405 47,489
Symantec Corp. # * 1,100 48,345
Tecumseh Products Co. * 925 37,222
Thoratec Corp. * 3,300 45,375
Varco International, Inc. # * 2,345 41,249
------------
1,462,439
------------
TOTAL COMMON STOCK (COST $2,213,454) 2,353,839
------------
MUTUAL FUNDS (8.71%)
Commonwealth Australia/New Zealand Fund 14,549 174,148
Commonwealth Japan Fund 41,852 137,694
------------
TOTAL MUTUAL FUNDS (COST $312,460) 311,842
------------
MISCELLANEOUS ASSETS (4.45%)
iShares MSCI Canada Index Fund 5,000 52,500
iShares MSCI EMU Index Fund 1,000 45,420
iShares MSCI United Kingdom Index Fund 5,000 61,600
------------
TOTAL MISCELLANEOUS ASSETS (COST $155,230) 159,520
------------
PRINCIPAL
MISCELLANEOUS BONDS (4.56%) ---------
Ford Motor Credit Co., 5.75%, 02/23/04 45,000 45,786
Household Financial Corp., 8.00%, 08/01/04 40,000 42,860
Union Carbide Corp., 6.79%, 2025 75,000 74,425
------------
TOTAL MISCELLANEOUS BONDS (COST $165,393) 163,071
------------
PREFERRED STOCK (4.21%)
Corporate Office Properties Trust SBI MD 1,000 27,500
Equity Office Properties Trust 1,000 47,500
Health Care REIT, Inc. 1,000 25,200
Lasalle Hotel 1,000 26,700
Winston Hotels, Inc. 1,000 23,810
------------
TOTAL PREFERRED STOCK (COST $149,490) 150,710
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - APRIL 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
PRINCIPAL
REPURCHASE AGREEMENT (17.13%) ---------
Fifth Third Bank, 0.75%, dated 04/30/03, due
05/01/03, repurchase price $613,091 (collateralized
by FGLMC Pool #C69555, 6.50%, due 07/01/32, market
value $631,471) (COST $613,078) 613,078 $ 613,078
------------
TOTAL INVESTMENTS (Cost $3,609,105) (104.81%) $ 3,752,060
LIABILITIES IN EXCESS OF OTHER ASSETS, NET (-4.81%) (172,155)
------------
NET ASSETS (100%) $ 3,579,905
============
# Call options have been written by the Fund against these positions.
(Note 7)
* Non-income producing investment
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMONWEALTH
AUSTRALIA/ COMMONWEALTH COMMONWEALTH
NEW ZEALAND FUND JAPAN FUND GLOBAL FUND
---------------- ---------- -----------
ASSETS:
Investments, at market (identified cost $16,238,578,
$4,718,748 and $3,609,105, respectively) $ 18,285,569 $ 4,231,857 $ 3,752,060
Foreign currency, at value (identified cost
$1,303,757, $160,083 and $0, respectively) 1,325,900 161,939 --
Receivables:
Dividends and interest 41,797 14,390 8,907
Fund shares sold 196,879 -- 209,179
Investments sold 165,875 72,757 --
Prepaid expenses 19,538 17,748 18,801
------------ ------------ ------------
Total assets 20,035,558 4,498,691 3,988,947
------------ ------------ ------------
LIABILITIES:
Payables:
Accrued 12b-1 -- 2,283 223
Due to advisor 9,661 2,440 1,775
Fund shares redeemed 2,359,929 794,985 --
Investments purchased 70,176 -- 344,829
Accrued expenses 24,338 19,238 12,280
Covered call options written, at value (premiums
received $0, $4,666 and $37,283, respectively) -- 405 49,935
------------ ------------ ------------
Total liabilities 2,464,104 819,351 409,042
------------ ------------ ------------
NET ASSETS $ 17,571,454 $ 3,679,340 $ 3,579,905
============ ============ ============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(1,468,324, 1,118,677 and 356,597 shares of
beneficial interest outstanding, respectively) $ 11.97 $ 3.29 $ 10.04
============ ============ ============
SOURCE OF NET ASSETS:
Paid-in capital 15,897,691 5,256,699 3,489,372
Accumulated net realized gain (loss) on investments (480,807) (993,772) 14,699
Undistributed net investment income (loss) 85,435 (102,812) (54,468)
Net unrealized appreciation (depreciation) on
investments and foreign currency 2,069,135 (480,775) 130,302
------------ ------------ ------------
$ 17,571,454 $ 3,679,340 $ 3,579,905
============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMONWEALTH
AUSTRALIA/ COMMONWEALTH COMMONWEALTH
NEW ZEALAND FUND JAPAN FUND GLOBAL FUND
---------------- ---------- -----------
INVESTMENT INCOME:
Interest (net of foreign taxes withheld of
$10,131, $0 and $0, respectively) $ 86,745 $ 2,661 $ 3,464
Dividends (net of foreign taxes withheld
of $45,591, $3,851 and $33, respectively) 192,584 18,533 10,852
------------ ------------ ------------
Total investment income 279,329 21,194 14,316
------------ ------------ ------------
EXPENSES:
Management fees 47,375 15,362 5,649
Administration fees 38,271 35,502 24,726
Custodian fees 18,565 4,466 990
Distribution fees 15,792 5,223 1,896
Insurance 14,027 10,291 1,379
Trustee expense 11,850 10,339 450
Audit fees 5,167 5,193 4,667
Legal fees 17,074 15,981 17,113
Registration fees 9,115 9,025 2,087
Reports to shareholders 4,567 2,475 530
Miscellaneous expense 12,091 10,149 9,297
------------ ------------ ------------
Total expenses 193,894 124,006 68,784
------------ ------------ ------------
Net investment gain(loss) 85,435 (102,812) (54,468)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments (114,276) (70,020) 6,543
Option contracts written -- 6,681 8,156
Foreign currency transactions 43,926 19 --
Net unrealized appreciation during the year on
investments and foreign currency 1,792,994 57,570 130,302
------------ ------------ ------------
1,722,644 (5,750) 145,001
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,808,079 $ (108,562) $ 90,533
============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
COMMONWEALTH AUSTRALIA/ NEW ZEALAND FUND
----------------------------------------
FOR THE PERIOD FOR THE YEAR
ENDED ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment gain (loss) $ 85,435 $ (30,385)
Net realized gain (loss) on:
Investments (114,276) (68,916)
Foreign currency transactions 43,926 (22,894)
Net unrealized appreciation during the
period on investments and foreign currency 1,792,994 1,079,892
------------ ------------
Net increase in net assets resulting from operations 1,808,079 957,697
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 8,899,480 1,372,538
------------ ------------
Increase in net assets 10,707,559 2,330,235
NET ASSETS:
Beginning of year 6,863,895 4,533,660
------------ ------------
End of year $ 17,571,454 $ 6,863,895
============ ============
COMMONWEALTH JAPAN FUND
-----------------------
FOR THE PERIOD FOR THE YEAR
ENDED ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------- ----------------
(UNAUDITED)
OPERATIONS:
Net investment loss $ (102,812) $ (214,653)
Net realized gain (loss) on:
Investments (63,339) 11,103
Foreign currency transactions 19 338
Net unrealized appreciation (depreciation) during the
period on investments and foreign currency 57,570 (437,943)
------------ ------------
Net decrease in net assets resulting from operations (108,562) (641,155)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 177,290 844,097
------------ ------------
Increase in net assets 68,728 202,942
NET ASSETS:
Beginning of year 3,610,612 3,407,670
------------ ------------
End of year $ 3,679,340 $ 3,610,612
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
COMMONWEALTH GLOBAL FUND
------------------------
FOR THE PERIOD
ENDED
4/30/2003*
--------------
(UNAUDITED)
OPERATIONS:
Net investment loss $ (54,468)
Net realized gain on:
Investments 14,699
Foreign currency transactions --
Net unrealized appreciation during the
period on investments and foreign currency 130,302
------------
Net increase in net assets resulting from operations 90,533
------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 3,489,372
------------
Increase in net assets 3,579,905
NET ASSETS:
Beginning of year --
------------
End of year $ 3,579,905
============
* The Commonwealth Global Fund commenced operations on December 3, 2002.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following tables set forth the per share operating performance data for a
share of capital stock outstanding, total return ratios to average net assets
and other supplemental data for each year indicated.
COMMONWEALTH AUSTRALIA/ NEW ZEALAND FUND
----------------------------------------------------------------------
FOR THE PERIOD
ENDED
APRIL,30,2003 YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 8.53 $ 7.19 $ 9.27 $ 7.73
---------- ---------- ---------- ---------- ----------
INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 (0.05) -- 0.03 0.13
Net realized and unrealized gain (loss) on
investments 1.52 1.91 1.34 (2.05) 1.44
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.58 1.86 1.34 (2.02) 1.57
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS FROM:
Net investment income -- -- -- (0.06) (0.03)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.97 $ 10.39 $ 8.53 $ 7.19 $ 9.27
========== ========== ========== ========== ==========
TOTAL RETURN 15.21% 21.81% 18.64% (21.98)% 20.38%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 17,571 $ 6,864 $ 4,534 $ 3,485 $ 4,349
Ratio of expenses to average net assets
before reimbursements and waivers of expenses 3.05%1 5.63% 5.74% 4.75% 4.14%
after reimbursements and waivers of expenses 3.05%1 5.63% 5.74% 4.75% 4.14%
Ratio of net investment income
before reimbursements and waivers of expenses 1.34%1 (0.56)% (0.18)% 0.39% 1.42%
after reimbursements and waivers of expenses 1.34%1 (0.56)% (0.18)% 0.39% 1.42%
Portfolio turnover rate 12% 28% 28% 15% 8%
1 Annualized
COMMONWEALTH JAPAN FUND
----------------------------------------------------------------------
FOR THE PERIOD
ENDED
APRIL,30,2003 YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 3.37 $ 4.12 $ 5.64 $ 6.88 $ 4.55
---------- ---------- ---------- ---------- ----------
INVESTMENT OPERATIONS:
Net investment loss (0.09) (0.20) -- (0.14) (0.21)
Net realized and unrealized gain (loss) on
investments 0.01 (0.55) (1.52) (1.10) 2.54
---------- ---------- ---------- ---------- ----------
Total from investment operations (0.08) (0.75) (1.52) (1.24) 2.33
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS FROM:
Net investment income -- -- -- -- --
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 3.29 $ 3.37 $ 4.12 $ 5.64 $ 6.88
========== ========== ========== ========== ==========
TOTAL RETURN (2.37)% (18.20)% (26.95)% (18.02)% 51.21%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 3,679 $ 3,611 $ 3,408 $ 6,282 $ 5,305
Ratio of expenses to average net assets
before reimbursements and waivers of expenses 6.13%1 6.94% 5.57% 3.84% 4.61%
after reimbursements and waivers of expenses 6.13%1 6.94% 5.57% 3.84% 4.61%
Ratio of net investment loss
before reimbursements and waivers of expenses -5.09%1 (6.03)% (3.97)% (3.08)% (3.94)%
after reimbursements and waivers of expenses -5.09%1 (6.03)% (3.97)% (3.08)% (3.94)%
Portfolio turnover rate 10% 5% 51% 14% 17%
1 Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following tables set forth the per share operating performance data for a
share of capital stock outstanding, total return ratios to average net assets
and other supplemental data for each year indicated.
COMMONWEALTH GLOBAL FUND
------------------------
FOR THE PERIOD
ENDED
APRIL,30,2003*
--------------
(UNAUDITED)
----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
----------
INVESTMENT OPERATIONS:
Net investment loss (0.15)
Net realized and unrealized gain on
investments 0.19
----------
Total from investment operations 0.04
----------
DISTRIBUTIONS FROM:
Net investment income --
----------
NET ASSET VALUE, END OF PERIOD $ 10.04
==========
TOTAL RETURN 0.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 3,580
Ratio of expenses to average net assets
before reimbursements and waivers of expenses 10.03%1
after reimbursements and waivers of expenses 10.03%1
Ratio of net investment loss
before reimbursements and waivers of expenses (7.94)%1
after reimbursements and waivers of expenses (7.94)%1
Portfolio turnover rate 16%
* The Commonwealth Global Fund commenced operations on December 3, 2002.
1 Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
COMMONWEALTH INTERNATIONAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Commonwealth International Series Trust (the "Trust") is registered under
the Investment Company Act of 1940 (the "Act"), as a diversified open-end
management investment company. The Trust currently consists of three diversified
series: the Australia/New Zealand Fund, the Japan Fund and the Global Fund (each
a "Fund" and collectively the "Funds"). The Global Fund became effective with
the SEC on December 14, 2001 and commenced operations on December 3, 2002.
NOTE 2 - INVESTMENT OBJECTIVES
The Australia/New Zealand Fund's investment objective is to seek long-term
capital appreciation and current income by investing in equity securities, debt
securities, and securities convertible into common stock of Australia and New
Zealand issuers.
The Japan Fund's investment objective is to seek long-term capital
appreciation and income using a research oriented approach.
The Global Fund's investment objective is to seek long-term capital
appreciation and current income by investing in U.S. and foreign equity
securities, debt securities and securities convertible into common stock with a
general focus on established companies in countries with developed economies.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of its financial statements.
A) VALUATION OF SECURITIES - Portfolio securities which are traded on
securities exchanges are valued at the last sales price on that exchange prior
to the relevant closing or, if there is no recent last sales price available, at
the last current bid quotation. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Fixed income securities are valued using
market quotations or pricing services. In the absence of any applicable price,
securities will be valued at a fair value as determined in good faith in
accordance with procedures established by the Board of Trustees.
B) CURRENCY TRANSLATION - For purposes of determining the Funds' net asset
value, all assets and liabilities initially expressed in foreign currency values
are converted into U.S. dollar values at the prevailing market rate at 14:00 GMT
on each U.S. business day, as established by the Board of Trustees. The cost of
securities is determined by using historical exchange rates. Income is
translated at approximate rates prevailing when accrued. The Funds do not
isolate that portion of gains and losses on investments which is due to changes
in foreign exchange rates from that which is due to changes in the market prices
of the investments. Such fluctuations are included with the net realized and
unrealized gains and losses from investments.
C) ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date. Realized gains and losses on security transactions are based on the
identified cost basis for both financial statement and Federal income tax
purposes. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Discounts and premiums on bonds purchased are amortized over
the life of the bonds. Interest income and estimated expenses are accrued daily.
D) FEDERAL INCOME TAXES - No provision has been made for Federal income taxes
since it is the policy of the Funds to continue to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income and realized capital
gains, to relieve it from all, or substantially all, such taxes.
At October 31, 2002, the Australia/New Zealand Fund had capital loss
carryovers of $410,457 of which $73,404 expires in 2006, $268,137 expires in
2009, and $68,916 expires in 2010. Under the United States-New Zealand tax
treaty, New Zealand imposes a withholding tax on dividends (15%) and interest
(10%) received by the Fund. There is currently no New Zealand tax on capital
gains.
At October 31, 2002, the Japan Fund had capital loss carryovers of $927,766
of which $420,940 expires in 2005, $244,983 expires in 2006 and $261,843 expires
in 2009. The Fund elected to defer net capital losses of $2,686. Under the
United States-Japan tax treaty, Japan imposes a withholding tax of 15% on the
dividends received by the Fund. There is currently no Japanese tax on capital
gains.
E) DISTRIBUTIONS TO SHAREHOLDERS - The Funds distribute net investment income,
if any, and net realized gains (net of any capital loss carryovers) annually.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from accounting principles generally accepted
in the United States of America. These differences are primarily due to
differing treatments for foreign currency transactions and capital loss
carryovers.
F) OPTION ACCOUNTING PRINCIPLES - When the Funds sell an option, an amount
equal to the premium received by the Funds is recorded as a liability. The
amount of the liability is marked-to-market to reflect the current market value
of the options written. The current market value of a traded option is the last
sale price and options not traded that day are valued at the prevailing quoted
bid price. When an option expires on its stipulated expiration date or the Fund
enters into a closing purchase transaction, the Funds realize a gain (or loss,
if the cost of a closing purchase transaction exceeds the premium received when
the option was sold) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a call option is exercised, the premium is added to the proceeds from the
sale of the underlying security in determining whether the Fund has a realized
gain or loss.
G) FORWARD CURRENCY CONTRACTS - Forward currency transactions are undertaken
to hedge against possible variations in the foreign exchange rates between the
United States Dollar and foreign currency. A forward currency contract is an
agreement between two parties to buy or sell a currency at a set price on a
future date. Forward contracts are marked-to-market daily and the change in the
market value is recorded by the Fund as an unrealized gain or loss. When a
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The Funds could be exposed to risk if the
counterparties are unable to meet the terms of the contracts or if the value of
the currency changes unfavorably.
H) REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, it is the Funds' policy that their custodian bank take possession of
the underlying collateral securities, the fair value of which must be equal to
the principal amount of the repurchase agreement including accrued interest
throughout the term of the repurchase agreement. If the seller defaults and the
fair value of the collateral declines, realization of the collateral by the
Funds may be delayed or limited.
I) USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
NOTE 4 - INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS
WITH AFFILIATES
The Funds retain FCA Corp, ("FCA") as its Investment Adviser. Under the
Investment Advisory Agreement (the "Agreement"), the Adviser is paid a monthly
fee based on the average daily net assets at the annual rate of .75%.
The Company on behalf of its series has contracted with InCap Service
Company, Inc. ("ISC") to perform specified administrative, accounting, and
transfer agent services for the Funds.
During the period ended April 30, 2003, InCap Service Company received fees
of $38,271, $35,502 and $24,726 from the Australia/ New Zealand Fund, the Japan
Fund and the Global Fund, respectively.
InCap Securities, Inc. an affiliate of the Transfer Agent serves as
Distributor of the Fund's shares.
The Funds have adopted a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act whereby Fund assets are used to reimburse
the Distributor for costs and expenses incurred with the distribution and
marketing of shares of the Funds and servicing of Fund shareholders.
Distribution and marketing expenses include, among other things, printing of
prospectuses, advertising literature, and costs of personnel involved with the
promotion and distribution of the Fund's shares. Under the Plan, the Fund pays
the Distributor an amount computed at an annual rate of up to 0.25% of the
Fund's average net assets (including reinvested dividends paid with respect to
those assets). Of this amount, the Distributor may reallocate to securities
dealers (which may include the Distributor itself) and other financial
institutions and organizations (collectively, "Service Organizations") amounts
based on the Fund's average net assets owned by stockholders for whom the
Service Organizations have a servicing relationship. For the period ended April
30, 2003, the Australia/ New Zealand Fund, the Japan Fund and the Global Fund
incurred $15,792, $5,223 and $1,896 in 12b-1 fees, respectively.
Certain officers and directors of the Funds, who are also officers and
directors of the Adviser, the Administrator, or Distributor, received no
compensation from the Funds. For the period ended April 30, 2003, directors of
the Funds who are not "interested persons" received directors' fees of $16,500.
NOTE 5 - CAPITAL STOCK
At April 30, 2003 there were shares outstanding of 1,468,324, 1,118,677 and
356,597, for the Australia/New Zealand Fund , the Japan Fund and the Global
Fund, respectively. Transactions in capital stock were as follows:
COMMONWEALTH AUSTRALIA/ NEW ZEALAND FUND
PERIOD ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------- ----------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
Shares sold 4,712,613 $ 52,787,433 1,529,390 $ 15,266,300
Shares redeemed (3,904,972) (43,887,953) (1,400,188) (13,893,762)
------------ ------------ ------------ ------------
Net Increase 807,641 $ 8,899,480 129,202 $ 1,372,538
============ ============ ============ ============
COMMONWEALTH JAPAN FUND
PERIOD ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
-------------- ----------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
Shares sold 13,059,483 $ 43,738,278 7,626,964 $ 27,831,507
Shares redeemed (13,011,013) (43,560,988) (7,383,299) (26,987,410)
------------ ------------ ------------ ------------
Net Increase 48,470 $ 177,290 243,665 $ 844,097
============ ============ ============ ============
COMMONWEALTH GLOBAL FUND
PERIOD ENDED
APRIL 30, 2003
--------------
SHARES DOLLARS
------ -------
Shares sold 388,143 $ 3,800,349
Shares redeemed (31,546) (310,977)
------------ ------------
Net Increase 356,597 $ 3,489,372
============ ============
NOTE 6 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) by the Funds for the period from November 1, 2002 to April 30, 2003
were as follows:
PURCHASES SALES
--------- -----
Australia/ New Zealand Fund $ 9,216,085 $ 1,222,749
Japan Fund 629,040 374,396
Global Fund 3,783,588 283,685
For U.S. federal income tax purposes, the cost of securities owned, gross
appreciation, gross depreciation and net unrealized appreciation/(depreciation)
of investments at October 31, 2002 for each fund:
Net
Gross Gross Appreciation/
Cost Appreciation Depreciation (Depreciation)
---- ------------ ------------ --------------
Australia/ New Zealand Fund $6,413,606 $ 882,229 $ (607,269) $ 274,960
Japan Fund 4,136,760 152,335 (699,145) (546,810)
NOTE 7 - OPTIONS WRITTEN BY THE JAPAN FUND AND THE GLOBAL FUND
A call option gives the holder the right to buy the underlying stock from
the writer (the Funds) at a specified price within a fixed period of time.
Therefore, the securities held by the Funds against which options are written
may not be traded and are held in escrow by the custodian.
The following table sets forth the outstanding call options written by the Japan
Fund and the Global Fund as of April 30, 2003.
COMMONWEALTH JAPAN FUND
CALL OPTIONS ON PREMIUM MARKET UNREALIZED
--------------- RECEIVED VALUE APPRECIATION
-------- ----- ------------
2,700 shs AFLAC, Inc. ADR @ 35
exp May 15, 2003 $ 4,666 $ 405 $ 4,261
======== ======== ========
COMMONWEALTH GLOBAL FUND
CALL OPTIONS ON UNREALIZED
--------------- PREMIUM MARKET APPRECIATION/
RECEIVED VALUE (DEPRECIATION)
-------- ----- --------------
5.000 shs Endesa SA ADR @ 12.5
exp June 15, 2003 $ 5,444 $ 8,750 $ (3,306)
900 shs Greenpoint Financial Corp. ADR @ 50
exp July 19, 2003 1,084 990 94
2,000 shs International Rectifier Corp. ADR @ 35
exp January 17, 2004 2,655 1,900 755
1,700 shs Microchip Technology, Inc. ADR @ 30
exp July 19, 2003 2,426 340 2,086
2,500 shs Sandisk Corp. ADR @ 25
exp January 17, 2004 3,945 10,500 (6,555)
1,200 shs Smith International, Inc. ADR @ 40
exp January 17, 2004 3,319 2,820 499
800 shs Symantec Corp. ADR @ 50
exp July 19, 2003 2,523 760 1,763
2,600 shs Teva Pharmaceutical Industries ADR @ 40
exp September 20, 2003 7,223 20,800 (13,577)
1,000 shs Unilever NV ADR @ 70
exp January 17, 2004 2,620 1,300 1,320
2,500 shs Vodaphone Group Plc. ADR @ 22.5
exp July 19, 2003 3,220 625 2,595
2,300 shs Varco International, Inc. ADR @ 20
exp August 16, 2003 2,824 1,150 1,674
-------- -------- --------
Total $ 37,283 $ 49,935 $(12,652)
======== ======== ========
The aggregate market value at April 30, 2003 of securities subject to call
options is $88,317 or approximately 2.40% of net assets for the Japan Fund and
$572,236 or approximately 15.98% of net assets for the Global Fund. Written
option activity for the period ended April 30, 2003 was as follows:
COMMONWEALTH JAPAN FUND
NUMBER OF AMOUNT OF
OPTIONS PREMIUM
------- -------
Options outstanding at October 31, 2002 47 $ 6,681
Options written 27 4,666
Options expired (47) (6,681)
Options covered 0 0
------- -------
Options outstanding at April 30, 2003 27 $ 4,666
======= =======
COMMONWEALTH GLOBAL FUND
NUMBER OF AMOUNT OF
OPTIONS PREMIUM
------- -------
Options outstanding at October 31, 2002 -- $ --
Options written 303 47,280
Options expired -- --
Options covered (78) (9,997)
------- -------
Options outstanding at April 30, 2003 225 $37,283
======= =======
NOTE 7 - TAX MATTERS
As of October 31, 2002, the components of distributable earnings on a tax
basis for the Funds were as follows:
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Undistributed Short- Undistributed Long- Unrealized
Undistributed Term Capital Gains / Term Capital Gains / Appreciation /
Ordinary Income (Losses) (Losses) (Depreciation)
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Australia/New Zealand Fund -- -- -- $ 274,960
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Japan Fund -- -- -- (546,810)
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The difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Commonwealth International Series Trust
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By (Signature and Title)* Robert W. Scharar, President
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Date July 14, 2003
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* Larry E. Beaver, Jr., Treasurer
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Date July 14, 2003
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By (Signature and Title)* Robert W. Scharar, President
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Date July 14, 2003
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* Print the name and title of each signing officer under his or her signature.