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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
----------------------------------------------
Commonwealth International Series Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
5847 San Felipe, Suite 850 Houston TX 77057
- --------------------------------------------------------------------------------
(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: 10/31/2003
--------------
ITEM 1.
COMMONWEALTH INTERNATIONAL
SERIES TRUST
5847 San Felipe, Suite 850
Houston, Texas 77057
1-888-345-1898
INVESTMENT ADVISOR
FCA Corp.
5847 San Felipe, Suite 850
Houston, TX 77057 The Commonwealth International
1-713-781-2856 Series Trust
www.fcacorp.com Australia/New Zealand Fund
Japan Fund
ADMINISTRATOR & TRANSFER AGENT Global Fund
InCap Service Company
630-A Fitzwatertown Road
Willow Grove, PA 19090-1904
[LOGO]
DISTRIBUTOR
InCap Securities, Inc.
630-A Fitzwatertown Road
Willow Grove, PA 19090-1904 ANNUAL REPORT
October 31, 2003
CUSTODIAN BANK
Fifth Third Bank
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, OH 45263
INDEPENDENT AUDITORS
Briggs, Bunting & Dougherty, LLP
Two Penn Center Plaza, Suite 820
Philadelphia, PA 19102-1732
LEGAL COUNSEL
Rabil & Ropka, LLC
1010 Kings Highway, South
Building Two, Suite B
Cherry Hill, NJ 08034
[LOGO] COMMONWEALTH
INTERNATIONAL SERIES TRUST
630-A Fitzwatertown Road, Willow Grove, PA 19090 * 888.345.1898
Commonwealth Australia/New Zealand Fund (CNZLX)
Commonwealth Real Estate Securities Fund (CNREX)
Commonwealth Global Fund (CNGLX)
Commonwealth Japan Fund (CNJFX)
www.commonwealthfunds.com
Dear Shareholder:
We are pleased to present this annual report on the Commonwealth International
Series Trust's Funds for the twelve months ended October 31, 2003. The
Australia/New Zealand Fund's net asset value ("NAV") as of October 31, 2003 is
US $14.44 per share compared to US $10.39 per share on October 31, 2002, an
increase of 39.0%. The Japan Fund's NAV on October 31, 2003 is US $3.98 per
share compared to US $3.37 per share on October 31, 2002, an increase of 18.1%.
The Global Fund's NAV as of October 31, 2003 is US $11.99 per share compared to
US $10.00 per share on December 3, 2002 (the Fund's inception date), an increase
of 19.9%.
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 foreign securities traded in the local country's currency. In
addition, we also invest in foreign shares using American Depository Receipts
(ADRs), which can provide an efficient currency exchange and liquidity
management for a US dollar fund.
- -------------------------------------------------------------------------------------------------------------------
COMMONWEALTH INTERNATIONAL SERIES OCTOBER 31, 2002 - OCTOBER 31, 2003 PERFORMANCE* (%)
- -------------------------------------------------------------------------------------------------------------------
US $ CHANGE IN CHANGE IN LOCAL LOCAL CURRENCY US$ VS. LOCAL
COMMONWEALTH AUSTRALIA/NEW ZEALAND (CNZLX) NAV MARKET BENCHMARK VS. US$ CURRENCY
- ------------------------------------------------------------------------------------------------------------------
New Zealand 39.0% 15.4% 26.3% -20.8%
- ------------------------------------------------------------------------------------------------------------------
Australia 39.0% 15.3% 27.7% -20.8%
- ------------------------------------------------------------------------------------------------------------------
COMMONWEALTH GLOBAL (CNGLX)* 19.9% 19.9% -- -13.0%
- ------------------------------------------------------------------------------------------------------------------
COMMONWEALTH JAPAN (CNJFX) 18.1% 22.2% -10.2% 11.4%
- ------------------------------------------------------------------------------------------------------------------
* The Commonwealth Global Fund (CNGLX) commenced on December 3, 2002
See footnotes for additional information.
COMMONWEALTH INTERNATIONAL SERIES TRUST
GLOBAL FUND (CNGLX): The fund's benchmark, the MSCI World Index1, appreciated
19.9% over the last eleven months (12/3/02-10/31/03). During that time, the US
Dollar Index2 (which provides a general indication of the international value of
the US Dollar) fell 13.0% as investors flocked to other currencies in search of
higher yields and fears of excessive trade and budget deficits in the US. Over
the last year, the US economy showed continued signs of a recovery as consumer
and corporate spending has been boosted by tax cuts and low interest rates.
Supporting a positive outlook for equities are low interest rates, a global
economic recovery, improved corporate balance sheets, and rising earnings
expectations despite the second and third quarters' gains. We believe that
equity prices in general are below fair value in the worldwide market, including
the US, providing an opportunity for investment in fundamentally sound companies
at attractive prices.
JAPAN FUND (CNJFX): The fund's benchmark index, TOPIX3, was up in Japanese Yen
terms for the twelve month period ending October 31, 2003 by 22.2% and 36.1% in
U.S. Dollar terms. The movement of the Japanese stock market was characterized
by a strong rally from its April 12, 2003 twenty year low of 770. 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 economies in the world. 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. As evidenced in the current economic recovery, exports remain
necessary to Japan's economic expansion and may continue to increase as China
becomes the final destination for an even greater number of exports with its
robust growth in consumption for raw materials and technology. We believe the
Japanese markets still afford significant upside but are being depressed by the
country's reluctance in defining its economic direction with respect to banking
reforms, its role in the Asian markets increasingly impacted by China's
policies, and government involvement in supporting the population's standard of
living through taxation and social programs; however, it is a vibrant democratic
society and thus we expect these issues can be resolved.
AUSTRALIA/NEW ZEALAND FUND (CNZLX): The New Zealand Exchange Limited 50 Free
Float Total Return Index4 increased 15.4% in New Zealand dollar terms for the
twelve months ended October 31, 2003. New Zealand has a mixed economy that
operates on free-market principles. It has 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 15.3% in Australian dollar terms
for the twelve months ended October 31, 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.
COMMONWEALTH INTERNATIONAL SERIES TRUST
The Australian Government forecasts a 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.
Disposable income has been rising on the back of continued low levels of
unemployment, and wage inflation that has kept pace with price inflation.
CLOSING: The Commonwealth International Series Trust is pleased to announce the
Commonwealth Real Estate Securities Fund (CNREX), our fourth Fund. We thank you
for your support of the Commonwealth International Series Trust and your
continued interest. We truly value our investors and if you have questions
please feel free to contact us.
/s/ Robert W. Scharar /s/ Wesley Yuhnke
--------------------- -----------------
President and Portfolio Manager Assistant Portfolio Manager
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 U.S. Dollar Index (USDX) provides a general indication of the
international value of the U.S. Dollar. The USDX does this by averaging the
exchange rates between the U.S. Dollar and six major world currencies. The
FINEX computes this by using the rates supplied by some 500 banks. Base
date of 03/1973.
3 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.
COMMONWEALTH INTERNATIONAL SERIES TRUST
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
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN COMMONWEALTH AUSTRALIA/
NEW ZEALAND FUND AND THE NZSCI*, NZSE50FG** AND AS30*** INDICES
Commonwealth Australia/New Zealand NZSCI NZSE50FG AS30
10/31/93 10,000 10/31/93 10,000
10/31/94 9,260 10/31/94 10,228
10/31/95 10,391 10/31/95 10,831
10/31/96 12,472 10/31/96 14,853
10/31/97 11,168 10/31/97 14,113
10/31/98 7,831 10/31/98 9,994
10/31/99 9,427 10/31/99 13,698
10/31/00 7,355 10/31/00 11,301 01/05/01 10,000 10/31/00 10,000
10/31/01 8,725 10/31/01 14,937 10/31/01 10,153 10/31/01 10,108
10/31/02 10,628 10/31/02 19,098 10/31/02 12,990 10/31/02 10,982
10/31/03 14,771 10/31/03 30,742 10/31/03 18,886 10/31/03 16,149
Past performance is not predictive of future performance.
Average Annual Total Return
as of 10/31/03
--------------------------
1 Year 5 Year 10 Year
--------------------------
Commonwealth Australia/New Zealand Fund* 38.98% 13.52% 3.98%
New Zealand Small Companies Index 60.97% 25.18% 11.88%
New Zealand Limited 50 Free Float Total Return Index 45.39% - -
Australian All Ordinaries Index 47.05% - -
COMMONWEALTH INTERNATIONAL SERIES TRUST
* The Fund's performance assumes the reinvestment of all income dividends and
capital gains distributions, if any. All market indices are unmanaged. It
is not possible to invest directly in any index
** New Zealand Small Companies Index is capitalization-weighted index of all
New Zealand equities excluding those on the New Zealand Stock Exchange 40
Index and is not an investment product available for purchase.
*** The New Zealand Exchange Limited 50 Free Float Total Return Index is a
modified market capitalization weighted index. This index consists of the
top 50 companies by free float adjusted market capitalization that are
listed on the New Zealand Exchange Limited and is not an investment product
available for purchase. 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.
**** The Australian All Ordinaries Index is a capitalization-weighted index
comprised of the largest 500 companies as measured by market capitalization
that are listed on the Australian Stock Exchange and is not an investment
product available for purchase. This index is made part of the comparative
analysis due to a change in investment objective by the Fund.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN COMMONWEALTH JAPAN FUND
AND THE TOPIX***
COMMONWEALTH JAPAN FUND TOPIX
10/31/93 10,000 10/31/93 10,000
10/31/94 11,488 10/31/94 10,908
10/31/95 9,671 10/31/95 9,294
10/31/96 9,744 10/31/96 9,204
10/31/97 7,509 10/31/97 7,253
10/31/98 6,558 10/31/98 6,120
10/31/99 9,916 10/31/99 10,412
10/31/00 8,129 10/31/00 8,823
10/31/01 5,938 10/31/01 6,089
10/31/02 4,857 10/31/02 4,997
10/31/03 5,737 10/31/03 6,800
Past performance is not predictive of future performance.
Average Annual Total Return
as of 10/31/03
------------------------------
1 Year 5 Year 10 Year
------------------------------
Commonwealth Japan Fund ** 18.10%* (2.64)% (5.40)%
TOPIX 36.08% 2.13% (3.78)%
* The Fund's performance assumes the reinvestment of all income dividends and
capital gains distributions, if any. All market indices are unmanaged. It is not
possible to invest directly in any index
** 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 and is not an investment vehicle available for purchase.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN COMMONWEALTH GLOBAL
FUND AND THE MSCI WORLD INDEX**
Commonwealth Global Fund MSCI World Index
12/04/02 10,000 12/04/02 10,000
12/31/02 9,940 12/31/02 9,673
01/31/03 9,810 01/31/03 9,381
02/28/03 9,620 02/28/03 9,221
03/31/03 9,470 03/31/03 9,197
04/30/03 10,040 04/30/03 10,017
05/31/03 10,560 05/31/03 10,596
06/30/03 10,780 06/30/03 10,784
07/31/03 10,880 07/31/03 11,004
08/31/03 11,120 08/31/03 11,246
09/30/03 11,130 09/30/03 11,317
10/31/03 11,990 10/31/03 11,991
Past performance is not predictive of future performance.
Average Annual Total Return
from commencement of operations to
October 31, 2003**
----------------------------------
Commonwealth Global Fund 22.16%
MSCI World Index 22.09%
* The Fund's performance assumes the reinvestment of all income dividends and
capital gains distributions, if any. All market indices are unmanaged. It
is not possible to invest directly in any index
** The MSCI World Index is a free float-adjusted market capitalization index
that is designed to measure global developed market equity performance and
is not an investment product available for purchase. As of October 31, 2003
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.
*** The Commonwealth Global Fund commenced operations on December 3, 2002
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
AUSTRALIA (22.30%)
- ------------------
COMMON STOCK (22.30%)
ADVERTISING (1.03%)
STW Communications Group, Ltd. ................. 150,600 $ 339,820
------------
AIRLINES (1.28%)
Qantas Airways, Ltd. ........................... 165,000 422,657
------------
BANKS (1.69%)
Australia and New Zealand Banking
Group, Ltd. - ADR ............................ 8,500 559,300
------------
BEVERAGES (1.01%)
Coca-Cola Amatil, Ltd. ......................... 80,000 334,350
------------
BUILDING (3.08%)
James Hardie Industries NV ..................... 65,000 330,696
Macquarie Infrastructure Group ................. 115,000 258,675
Rinker Group, Ltd. ............................. 95,000 428,049
------------
1,017,420
------------
CONTAINERS (1.19%)
Amcor, Ltd. .................................... 65,000 392,039
------------
FINANCIAL SERVICES (1.60%)
National Australia Bank, Ltd. .................. 1,000 108,400
Perpetual Trustees Australia, Ltd. ............. 14,800 421,012
------------
529,412
------------
INSURANCE (1.37%)
AXA Asia Pacific Holdings, Ltd. ................ 50,000 86,948
QBE Insurance Group ............................ 50,000 365,430
------------
452,378
------------
MEDICAL PRODUCTS (1.15%)
Cochlear, Ltd. ................................. 17,000 379,976
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
MINING AND BUILDING MATERIALS (2.77%)
Alumina, Ltd. .................................. 79,000 $ 334,095
Rio Tinto, Ltd. ................................ 14,000 354,147
Santos, Ltd. ................................... 52,000 225,445
------------
913,687
------------
MULTIMEDIA (1.29%)
Publishing & Broadcasting, Ltd. ................ 50,000 427,517
------------
OFFICE EQUIPMENT (1.26%)
Corporate Express Australia, Ltd. .............. 100,000 414,390
------------
OIL & GAS (0.92%)
Origin Energy, Ltd. ............................ 100,000 305,116
------------
RETAIL STORES (0.82%)
Foodland Associated, Ltd. ...................... 20,000 271,766
------------
SHIPPING LOGISTICS (0.94%)
Patrick Corp., Ltd. ............................ 30,000 310,793
------------
TRANSPORT SERVICES (0.90%)
Toll Holdings, Ltd. ............................ 50,000 296,601
------------
TOTAL COMMON STOCK (Cost $6,085,949) ......... 7,367,222
------------
TOTAL AUSTRALIA (Cost $6,085,949) ............ 7,367,222
------------
NEW ZEALAND (60.48%)
- --------------------
COMMON STOCK (35.55%)
AGRICULTURE (3.18%)
Pyne Gould Guiness, Ltd. ....................... 397,000 324,450
Williams & Kettle, Ltd. ........................ 250,000 726,619
------------
1,051,069
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
AIRPORT DEVELOPMENT (1.25%)
Auckland International Airport, Ltd. ........... 102,400 $ 415,917
------------
APPLIANCES (2.81%)
Fisher & Paykel Appliances
Holdings, Ltd. ............................... 82,399 745,814
Scott Technology, Ltd. ......................... 89,996 182,492
------------
928,306
------------
AUTOMOBILE MANUFACTURERS (0.97%)
Colonial Motor Co., Ltd. ....................... 180,000 320,757
------------
CHEMICALS (0.87%)
Nuplex Industries, Ltd. ........................ 111,355 287,385
------------
COMPUTER SERVICES (0.17%)
Renaissance Corp., Ltd. ........................ 208,717 56,431
------------
DIVERSIFIED HOLDINGS (1.04%)
Hellaby Holdings, Ltd. ......................... 116,640 344,028
------------
ELECTRICAL SERVICES (2.44%)
Contact Energy, Ltd. ........................... 93,700 290,761
Powerco, Ltd. .................................. 450,000 517,083
------------
807,844
------------
FINANCIAL SERVICES (0.57%)
Hallenstein Glasson Holdings, Ltd. ............. 100,000 187,415
------------
FOREST AND PAPER PRODUCTS (2.18%)
Evergreen Forests, Ltd. * ...................... 448,500 143,308
Fletcher Challenge Forests, Ltd. * ............. 716,000 576,355
------------
719,663
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
HEALTHCARE (2.76%)
Calan Healthcare Properties Trust .............. 864,278 $ 456,728
Fisher & Paykel Healthcare Corp. ............... 30,639 227,806
Ryman Healthcare, Ltd. ......................... 50,000 63,598
Taylors Group, Ltd. ............................ 41,730 54,874
Wakefield Hospital, Ltd. ....................... 93,245 107,718
------------
910,724
------------
INVESTMENT COMPANIES (1.29%)
Infratil, Ltd. ................................. 277,729 424,939
------------
MANUFACTURING (0.66%)
Skellmax Industries ............................ 300,000 217,525
------------
PORTS (6.39%)
Northland Port Corp. NZ, Ltd. .................. 302,300 579,560
Ports of Auckland, Ltd. ........................ 74,392 377,125
Port of Tauranga, Ltd. ......................... 175,000 467,771
South Port New Zealand, Ltd. ................... 721,770 687,442
------------
2,111,898
------------
REAL ESTATE (1.04%)
Kiwi Income Property Trust ..................... 282,413 175,272
Urbus Properties, Ltd. ......................... 300,000 167,752
------------
343,024
------------
RENTAL EQUIPMENT (0.43%)
Hirequip New Zealand, Ltd. ..................... 250,000 141,330
------------
STEEL (1.03%)
Steel and Tube Holding, Ltd. ................... 140,000 339,806
------------
TELECOMMUNICATIONS (2.11%)
Telecom Corp. of New Zealand, Ltd. ............. 234,000 695,932
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
TRANSPORT SERVICES (2.32%)
Freightways, Ltd. * ............................ 150,000 $ 175,126
Mainfreight, Ltd. .............................. 512,325 437,589
Owens Group, Ltd. .............................. 225,191 154,980
------------
767,695
------------
WASTE MANAGEMENT (2.04%)
Waste Management NZ, Ltd. ...................... 282,154 672,703
------------
TOTAL COMMON STOCK (Cost $8,472,782) ......... 11,744,391
------------
PREFERRED STOCK (0.29%)
Fletcher Challenge Forests, Ltd. * ............. 50,000 40,248
Freightways Express, Ltd. ...................... 86,884 55,524
------------
TOTAL PREFERRED STOCK (Cost $85,122) 95,772
------------
BONDS (24.58%) PRINCIPAL
---------
ANZ Banking Corp., Ltd., 7.04%, due 07/23/12 # . 300,000 190,482
Coca-Cola Amatil, Ltd., 8.00%, due 06/15/05 # .. 500,000 315,350
Evergreen Forests, Ltd., zero coupon,
due 03/19/09 # ............................... 103,051 75,987
Fletcher Building, 8.60%, due 03/15/08 # ....... 775,000 495,935
Fonterra Cooperative Group, Ltd. Perpetual
Notes, 7.48%, due 11/10/50 # ................. 400,000 257,589
Global Market, Ltd., GEM Linked Notes,
zero coupon, due 01/18/08 .................... 2,700,000 1,725,452
GPG Finance, 8.70%, due 12/15/08 # ............. 1,500,000 929,182
H.J. Heinz Co., Ltd., 6.85%, due 02/15/05 # .... 1,500,000 928,988
Infratil, Ltd., 6.90%, due 03/31/04 # .......... 583,355 501,059
New Zealand Government, 8.00%, due 11/15/06 # .. 1,000,000 650,420
TCNZ Finance Ltd., 7.50%, due 09/15/06 # ....... 500,000 317,224
Trans Power Finance, 6.25%, due 02/16/04 # ..... 500,000 312,431
Urbus Properties, Ltd. Convertible Notes,
9.25%, due 03/10/07 # ........................ 350,000 191,410
Westpac Banking Corp. NZ, Ltd., 5.50%,
due 12/06/04 # ............................... 1,250,000 766,276
Westpac Banking Corp. NZ, Ltd., 6.25%,
due 10/24/05 # ............................... 750,000 460,821
------------
TOTAL BONDS (Cost $7,254,756) 8,118,606
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
SHORT TERM INVESTMENTS (0.06%)
Forsyth Barr Money Market # (Cost $20,616) ..... 35,304 $ 21,693
------------
TOTAL NEW ZEALAND (Cost $15,833,276) ......... 19,980,462
------------
UNITED STATES (16.53%)
- ----------------------
PRINCIPAL/SHARES
----------------
INVESTMENT COMPANIES (2.61%)
Aberdeen Asia Pacific Equity Fund .............. 40,000 241,200
Aberdeen Australia Equity Fund ................. 43,400 364,560
Ishares MSCI Australia Index Fund .............. 20,000 254,000
------------
TOTAL INVESTMENT COMPANIES (Cost $792,160) ... 859,760
------------
SHORT TERM INVESTMENTS (13.92%)
Fifth Third Bank, 0.44%, dated 10/31/03,
due 11/03/03, repurchase price $1,480,697
(collateralized by FNMB Pool # 50851, due
02/01/14, market value $1,525,062) ........... 1,480,643 1,480,643
Fifth Third Institutional Government Select
Money Market Fund, 0.79% ** .................. 1,559,171 1,559,171
Fifth Third U.S. Treasury Money Market
Fund, 0.84% ** .............................. 1,559,171 1,559,171
------------
TOTAL SHORT TERM INVESTMENTS (Cost $4,598,986) 4,598,985
------------
TOTAL UNITED STATES (Cost $5,391,146) ........ 5,458,745
------------
TOTAL INVESTMENTS (Cost $27,310,371) (99.31%) 32,806,429
OTHER ASSETS IN EXCESS OF LIABILITIES, NET (0.69%) 229,323
------------
NET ASSETS -- (100%) ......................... $ 33,035,752
============
* Non-income producing investment
** Variable rate security; the rate shown represents the rate at October 31,
2003.
# Principal amount shown is in New Zealand Dollars; Value shown is in U.S.
Dollars.
ADR American Depository Receipt
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCK (68.34%)
AIRLINES (0.49%)
All Nippon Airways Co., Ltd. * ................. 10,000 $ 25,743
Japan Airlines Co., Ltd. * ..................... 640 9,198
------------
34,941
------------
AUTOMOBILE MANUFACTURERS (4.44%)
Honda Motor Co., Ltd. # ........................ 6,000 120,300
Nissan Motor Co., Ltd. ......................... 3,200 72,352
Toyota Motor Corp. ............................. 2,100 121,842
------------
314,494
------------
BANKS (1.04%)
Mitsubishi Tokyo Financial Group, Inc. ......... 10,000 73,400
------------
BUILDING (0.57%)
Sanyo Industries, Ltd. ......................... 16,000 40,169
------------
BUILDING PRODUCTS (0.59%)
Nishimatsu Construction Co., Ltd. .............. 10,000 41,752
------------
DIVERERSIFIED HOLDINGS (1.03%)
Mitsubishi Corp. ............................... 7,000 72,652
------------
ELECTRONICS & ELECTRICAL EQUIPMENT (7.27%)
Alpine Electronics, Inc. ....................... 4,500 57,798
Meidensha Corp. * .............................. 38,000 91,254
Pioneer Corp. .................................. 4,000 101,000
Sony Corp. # ................................... 5,200 183,040
Yokogawa Electric Corp. ........................ 7,000 81,821
------------
514,913
------------
FINANCIAL SERVICES (1.86%)
Daiwa Securities Group, Inc. ................... 11,000 80,447
UFJ Holdings, Inc. ............................. 12 51,303
------------
131,750
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
FOOD & BEVERAGE (3.20%)
Ajinomoto Co., Inc. ............................ 5,200 $ 161,550
QP Corp. ....................................... 8,000 64,766
------------
226,316
------------
INSURANCE (4.77%)
AFLAC, Inc. # .................................. 3,700 134,976
Millea Holdings, Inc. .......................... 3,000 182,010
Sompo Japan Insurance, Inc. .................... 2,520 20,860
------------
337,846
------------
INTERNET SERVICES & SOFTWARE (0.87%)
Softbank Corp. ................................. 1,200 61,673
------------
IRON/STEEL (5.08%)
JFE Holdings, Inc. ............................. 9,000 230,045
Nippon Steel Corp. ............................. 63,000 129,513
------------
359,558
------------
LEISURE & RECREATION (0.75%)
Sankyo Co., Ltd. Gumna ......................... 1,600 53,413
------------
MANUFACTURING (2.00%)
Ishikawajima-Harima Heavy Industries
Co., Ltd. .................................... 25,000 34,111
Nidec Corp. .................................... 1,100 107,525
------------
141,636
------------
MEDICAL-DRUGS (9.35%)
Chugai Pharmaceutical Co., Ltd. ................ 8,500 121,081
Eisai Co., Ltd. ................................ 7,400 173,666
Sawai Pharmaceutical Co., Ltd. ................. 4,300 151,371
Takeda Chemical Industries, Ltd. ............... 3,800 134,461
Tanabe Seiyaku Co., Ltd. ....................... 6,000 43,935
Yamanouchi Pharmaceutical Co., Ltd. ............ 1,500 37,659
------------
662,173
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
OFFICE/BUSINESS EQUIPMENT (1.87%)
Canon, Inc. .................................... 2,700 $ 132,165
------------
PHOTOGRAPHY (0.72%)
Fuji Photo Film Co., Ltd. ...................... 1,700 51,000
------------
PRINTING (0.68%)
Tosho Printing Co., Ltd. ....................... 17,000 47,783
------------
REAL ESTATE (3.02%)
Sumitomo Realty & Development Co., Ltd. ........ 23,000 213,399
------------
RETAIL (1.30%)
Seven-Eleven Japan Co., Ltd. ................... 1,000 31,655
Yamada Denki Co., Ltd. ......................... 1,900 60,490
------------
92,145
------------
TEXTILE PRODUCTS (0.87%)
Ichikawa Co., Ltd. ............................. 25,000 61,400
------------
TIRE AND RUBBER (1.70%)
Bridgestone Corp. .............................. 2,750 72,043
Sumitomo Rubber Industries, Inc. ............... 10,000 48,483
------------
120,526
------------
TRANSPORT SERVICES (1.13%)
Yamato Transport Co., Ltd. ..................... 6,000 79,738
------------
TRANSPORTATION (5.09%)
East Japan Railway Co. ......................... 13 58,889
Hankyu Corp. ................................... 22,000 66,839
Keihin Electric Express Railway Co., Ltd. ...... 13,000 76,036
Keio Electric Railway Co., Ltd. ................ 18,000 95,129
Tobu Railway Co., Ltd. ......................... 18,000 63,037
------------
359,930
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH JAPAN FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
UTILITIES (8.65%)
Chugku Electric Power Co. ...................... 5,000 $ 81,957
Hokkaido Electric Power Co. .................... 6,000 94,529
Shikoku Electric Power Co. ..................... 1,900 31,213
Toho Gas Co., Ltd. ............................. 70,000 205,030
Tohoku Electric Power Co. ...................... 9,700 157,233
Tokyo Electric & Power Co., Inc. ............... 2,000 42,662
------------
612,624
------------
TOTAL COMMON STOCK (Cost $4,143,104) ......... 4,837,396
------------
INVESTMENT COMPANIES (22.49%)
iShares MSCI Japan Index Fund .................. 50,000 462,000
iShares S&P/TOPIX 150 Index Fund ............... 5,500 443,300
Japan Equity Fund, Inc. * ...................... 29,100 208,356
Japan OTC Equity Fund, Inc. * .................. 20,000 215,200
Morgan Stanley Asia Pacific Fund ............... 25,200 262,836
------------
TOTAL INVESTMENT COMPANIES (Cost $1,361,889) . 1,591,692
------------
SHORT TERM INVESTMENTS (3.38%)
Fifth Third Institutional Government
Money Market Fund, 0.95% **
(Cost $239,527) .............................. 239,527 $ 239,527
------------
TOTAL INVESTMENTS (Cost $5,744,520) (94.21%) . $ 6,668,615
OTHER ASSETS IN EXCESS OF LIABILITIES, NET (5.79%) 410,202
------------
NET ASSETS (100%) ............................ $ 7,078,817
============
# Call options have been written by the Fund against these positions. (Note
7)
* Non-income producing investment.
** Variable rate security; the rate shown represents the rate at October 31,
2003.
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCK (82.38%)
BRAZIL (0.88%)
Cia Vale do Rio Doce - ADR ..................... 1,800 $ 82,350
------------
CANADA (2.50%)
Biovail Corp. * ................................ 4,000 96,200
Vitran Corp., Inc. * ........................... 10,000 139,400
------------
235,600
------------
FRANCE (2.73%)
Aventis SA - ADR # ............................. 1,000 52,960
BNP Paribas - ADR .............................. 3,000 78,820
Total Fina Elf SA - ADR # ...................... 1,600 124,912
------------
256,692
------------
GERMANY (1.24%)
Bayer AG - ADR ................................. 2,600 62,322
SAP AG - ADR ................................... 1,500 54,810
------------
117,132
------------
GREAT BRITAIN (9.47%)
Anglo American Plc - ADR ....................... 4,000 81,760
British Airways Plc - ADR ...................... 2,800 99,736
GlaxoSmithKline Plc - ADR ...................... 1,500 64,935
Intercontinental Hotels Group Plc - ADR * ...... 12,979 119,666
Lloyds TSB Group Plc - ADR ..................... 4,000 112,880
Mitchells & Butlers Plc - ADR * ................ 12,999 51,996
National Grid Transco Plc - ADR ................ 3,500 113,435
Rio Tinto Plc - ADR ............................ 1,000 99,050
Tate & Lyle Plc - ADR .......................... 2,000 41,847
United Utilities - ADR ......................... 2,000 32,660
Vodafone Group Plc - ADR # ..................... 3,500 74,025
------------
891,990
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
INDIA (3.78%)
ICICI Bank Ltd. - ADR .......................... 16,500 $ 209,550
Infosys Technologies Ltd. - ADR ................ 1,200 101,532
Satyam Computer Services Ltd. - ADR ............ 2,500 45,250
------------
356,332
------------
IRELAND (0.80%)
Bank of Ireland - ADR .......................... 1,500 74,745
------------
ITALY (1.62%)
Natuzzi SpA - ADR .............................. 10,000 109,600
Telecom Italia SpA - ADR * ..................... 1,650 42,735
------------
152,335
------------
NETHERLANDS (3.83%)
Akzo Nobel NV - ADR ............................ 2,100 66,486
ING Groep NV - ADR # ........................... 8,534 177,849
Royal Dutch Petroleum Co. # .................... 1,300 57,694
Unilever NV # .................................. 1,000 58,650
------------
360,679
------------
SOUTH AFRICA (0.53%)
Anglogold Ltd. - ADR ........................... 1,300 50,232
------------
SPAIN (1.76%)
Endesa SA - ADR ................................ 5,000 79,150
Repsol YPF SA - ADR ............................ 5,000 86,850
------------
166,000
------------
SWITZERLAND (1.50%)
Nestle SA - ADR ................................ 900 49,537
UBS AG ......................................... 1,500 92,010
------------
141,547
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
UNITED STATES (51.74%)
Activision, Inc. * ............................. 9,175 $ 138,451
Advanced Marketing Services .................... 9,800 112,210
AGCO Corp. ..................................... 7,500 135,000
BJ's Wholesale Club, Inc. * .................... 2,575 66,152
Compass Bancshares, Inc. ....................... 2,650 100,117
Conmed Corp. * ................................. 5,720 116,402
Cooper Cos., Inc. .............................. 2,600 112,970
Copart, Inc. * ................................. 10,200 127,194
Datascope Corp. ................................ 3,500 116,515
Dentsply International, Inc. ................... 3,350 148,036
DST Systems, Inc. * ............................ 3,885 146,931
Greenpoint Financial Corp. # ................... 2,965 92,360
Headwaters, Inc. * ............................. 7,000 131,180
Imation Corp. .................................. 5,000 170,250
International Rectifier Corp. # * .............. 2,000 95,460
Interstate Bakeries ............................ 7,100 104,228
Investment Technology Group, Inc. .............. 7,600 150,936
Lubrizol Corp. ................................. 5,055 153,166
Manpower, Inc. ................................. 3,050 141,520
Merrill Lynch & Co., Inc. * .................... 10,000 110,500
Metris Cos., Inc. .............................. 11,000 52,030
McCormick & Co., Inc. .......................... 1,765 52,315
Michaels Stores, Inc. .......................... 1,550 73,578
Microchip Technology, Inc. # ................... 3,455 113,013
Nautilus Group, Inc. ........................... 7,700 120,197
NCO Group, Inc. * .............................. 4,350 103,530
New York Community Bancorp, Inc. ............... 3,013 109,071
Pec Solutions, Inc. * .......................... 7,700 117,194
Pentair, Inc. .................................. 3,880 159,080
Pinnacle Entertainment, Inc. * ................. 14,700 128,625
PMI Group, Inc. ................................ 3,200 122,336
Quanex Corp. ................................... 3,550 142,177
Sandisk Corp. # * .............................. 2,500 201,500
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
SCANA Corp. .................................... 3,075 $ 105,442
Six Flags, Inc. ................................ 13,900 82,288
Smith International, Inc. # * .................. 1,245 46,351
Sovereign Bancorp, Inc. ........................ 3,425 71,274
SPX Corp. * .................................... 3,405 163,849
Stein Mart, Inc * .............................. 18,800 135,172
Symantec Corp. # * ............................. 1,100 73,315
Tecumseh Products Co. * ........................ 2,300 94,254
Thoratec Corp. * ............................... 6,200 95,418
Varco International, Inc. * .................... 2,345 41,249
------------
4,872,836
------------
TOTAL COMMON STOCK (Cost $6,534,043) ......... 7,758,470
------------
INVESTMENT COMPANIES (15.31%)
Commonwealth Australia/New Zealand Fund ........ 16,874 243,664
Commonwealth Japan Fund ........................ 104,366 415,375
iShares MSCI Canada Index Fund ................. 5,000 66,100
iShares MSCI EAFE Index Fund ................... 1,700 211,820
iShares MSCI Emerging Markets Index Fund ....... 900 133,569
iShares MSCI EMU Index Fund .................... 1,600 86,528
iShares MSCI Taiwan Index Fund ................. 3,000 34,950
iShares MSCI United Kingdom Index Fund ......... 11,800 170,746
iShares S&P Latin America 40 Index Fund ........ 1,500 78,600
------------
TOTAL INVESTMENT COMPANIES (Cost $1,282,381) 1,441,352
------------
PRINCIPAL
---------
MISCELLANEOUS BONDS (1.70%)
Ford Motor Credit Co., 5.75%, 02/23/04 ......... 45,000 45,545
Household Finance Corp., 8.00%, 08/01/04 ....... 40,000 41,897
Union Carbide Corp., 6.79%, 06/01/25 ........... 75,000 72,750
------------
TOTAL MISCELLANEOUS BONDS (Cost $164,186) .... 160,192
------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
COMMONWEALTH GLOBAL FUND
SCHEDULE OF INVESTMENTS - October 31, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
PREFERRED STOCK (1.38%)
Corporate Office Properties Trust SBI MD ....... 1,000 $ 27,400
Equity Office Properties Trust ................. 1,000 49,250
Lasalle Hotel Properties ....................... 1,000 27,500
Winston Hotels, Inc. ........................... 1,000 25,500
------------
TOTAL PREFERRED STOCK (Cost $124,290) ........ 129,650
------------
PRINCIPAL
---------
REPURCHASE AGREEMENT (7.03%)
Fifth Third Bank, 0.44%, dated 10/31/03,
due 11/03/03, repurchase price $662,641
(collateralized by FHARM Pool #865586,
6.174%, due 05/01/29, market value $682,496)
(Cost $662,617) ................................ 662,617 662,617
------------
TOTAL INVESTMENTS (Cost $8,767,517) (107.80%) $ 10,152,281
LIABILITIES IN EXCESS OF OTHER ASSETS,
NET (-7.80%) ............................... (734,420)
------------
NET ASSETS (100%) ............................ $ 9,417,861
============
# 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 these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES - OCTOBER 31, 2003
- ------------------------------------------------------------------------------------------------------------------
COMMONWEALTH
AUSTRALIA/ NEW COMMONWEALTH COMMONWEALTH
ZEALAND FUND JAPAN FUND GLOBAL FUND
------------ ---------- -----------
ASSETS:
Investments, at market (identified cost
$27,310,371, $5,744,520 and $8,767,517, respectively) $ 32,806,429 $ 6,668,615 $ 10,152,281
Foreign currency, at value (identified cost
$754,627, $0 and $0, respectively) 759,859 -- --
Receivables:
Dividends and interest 112,248 13,096 7,225
Fund shares sold 402,314 435,000 --
Investments sold 280,402 110,157 --
Prepaid expenses 37,501 15,746 15,464
------------ ----------- ------------
Total assets 34,398,753 7,242,614 10,174,970
------------ ----------- ------------
LIABILITIES:
Payables:
Accrued 12b-1 fees 13,254 5,673 1,789
Due to advisor 18,534 4,827 5,219
Fund shares redeemed 26,672 113,940 --
Investments purchased 1,251,727 -- 651,509
Accrued expenses 52,814 16,907 13,104
Covered call options written, at value (premiums
received $0, $14,603 and $38,264, respectively) -- 22,450 85,488
------------ ----------- ------------
Total liabilities 1,363,001 163,797 757,109
------------ ----------- ------------
NET ASSETS $ 33,035,752 $ 7,078,817 $ 9,417,861
============ =========== ============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(2,288,463, 1,779,783 and 785,613 shares of beneficial
interest outstanding, respectively, par value
.01, unlimited shares authorized) $ 14.44 $ 3.98 $ 11.99
============ =========== ============
SOURCE OF NET ASSETS:
Paid-in capital 26,331,772 7,135,961 8,147,599
Accumulated net realized gain (loss) on
investments and foreign currency 819,735 (971,724) (67,278)
Undistributed net investment income (loss) 379,265 -- --
Net unrealized appreciation on
investments and foreign currency 5,504,980 914,580 1,337,540
------------ ----------- ------------
$ 33,035,752 $ 7,078,817 $ 9,417,861
============ =========== ============
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2003
- --------------------------------------------------------------------------------------------------------------------
COMMONWEALTH
AUSTRALIA/ NEW COMMONWEALTH COMMONWEALTH
ZEALAND FUND JAPAN FUND GLOBAL FUND
------------ ---------- -----------
INVESTMENT INCOME:
Interest (net of foreign taxes withheld of $30,437,
$0 and $0, respectively) $ 271,381 $ 6,353 $ 9,557
Dividends (net of foreign taxes withheld of $144,396,
$7,478 and $33, respectively) 619,692 39,069 52,806
------------ ------------ ------------
Total investment income 891,073 45,422 62,363
------------ ------------ ------------
EXPENSES:
Management fees 151,377 38,501 25,771
Administration fees 73,773 71,004 55,000
Custodian fees 59,347 11,182 4,500
Distribution fees 50,459 12,936 8,604
Insurance 37,455 20,739 6,920
Trustee fees and expenses 18,574 17,066 12,577
Audit fees 24,259 6,523 4,744
Legal fees 44,117 28,482 27,811
Registration fees 19,304 18,336 11,740
Reports to shareholders 7,078 3,301 2,115
Miscellaneous expense 26,065 16,324 14,194
------------ ------------ ------------
Total expenses 511,808 244,394 173,976
------------ ------------ ------------
Net investment income (loss) 379,265 (198,972) (111,613)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments 1,068,339 (52,618) (75,434)
Option contracts written -- 11,346 8,156
Foreign currency transactions 161,853 3,196 --
Net unrealized appreciation (depreciation)
during the year on:
Investments 5,219,918 1,454,593 1,337,540
Foreign currency transactions 8,921 (1,668) --
------------ ------------ ------------
Net gain on investments and foreign currency 6,459,031 1,414,849 1,270,262
------------ ------------ ------------
Net increase in net assets resulting from operations $ 6,838,296 $ 1,215,877 $ 1,158,649
============ ============ ============
* The Commonwealth Global Fund commenced operations on December 3, 2002.
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------
COMMONWEALTH AUSTRALIA/ NEW ZEALAND FUND
----------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ----------------
OPERATIONS:
Net investment income (loss) $ 379,265 $ (30,385)
Net realized gain (loss) on:
Investments 1,068,339 (68,916)
Foreign currency transactions 161,853 (22,894)
Net unrealized appreciation during the
period on investments and foreign currency 5,228,839 1,079,892
------------ ------------
Net increase in net assets resulting from operations 6,838,296 957,697
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 19,333,561 1,372,538
------------ ------------
Increase in net assets 26,171,857 2,330,235
NET ASSETS:
Beginning of year 6,863,895 4,533,660
------------ ------------
End of year $ 33,035,752 $ 6,863,895
============ ============
COMMONWEALTH JAPAN FUND
-----------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ----------------
OPERATIONS:
Net investment loss $ (198,972) $ (214,653)
Net realized gain (loss) on:
Investments (41,272) 11,103
Foreign currency transactions 3,196 338
Net unrealized appreciation (depreciation) during the
period on investments and foreign currency 1,452,925 (437,943)
------------ ------------
Net increase (decrease) in net assets resulting from operations 1,215,877 (641,155)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 2,252,328 844,097
------------ ------------
Increase in net assets 3,468,205 202,942
NET ASSETS:
Beginning of year 3,610,612 3,407,670
------------ ------------
End of year $ 7,078,817 $ 3,610,612
============ ============
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
COMMONWEALTH GLOBAL FUND
------------------------
FOR THE PERIOD
ENDED
OCTOBER 31, 2003*
-----------------
OPERATIONS:
Net investment loss $ (111,613)
Net realized loss on:
Investments (67,278)
Foreign currency transactions --
Net unrealized appreciation during the
period on investments and foreign currency 1,337,540
------------
Net increase in net assets resulting from operations 1,158,649
------------
CAPITAL SHARE TRANSACTIONS:
Increase in net assets from Fund share transactions 8,259,212
------------
Increase in net assets 9,417,861
NET ASSETS:
Beginning of year --
------------
End of year $ 9,417,861
============
* The Commonwealth Global Fund commenced operations on December 3, 2002.
The accompanying notes are an integral part of these 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
-------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
-------------------------------------------------------------------------
2003 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) 0.17 (0.05) -- 0.03 0.13
Net realized and unrealized gain (loss)
on investments 3.88 1.91 1.34 (2.05) 1.44
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.05 1.86 1.34 (2.02) 1.57
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS FROM:
Net investment income -- -- -- (0.06) (0.03)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 14.44 $ 10.39 $ 8.53 $ 7.19 $ 9.27
========== ========== ========== ========== ==========
TOTAL RETURN 38.98% 21.81% 18.64% (21.98)% 20.38%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 33,036 $ 6,864 $ 4,534 $ 3,485 $ 4,349
Ratio of expenses to average net assets
before reimbursements and waivers
of expenses 2.53% 5.63% 5.74% 4.75% 4.14%
after reimbursements and waivers of
expenses 2.53% 5.63% 5.74% 4.75% 4.14%
Ratio of net investment income
before reimbursements and waivers
of expenses 1.87% (0.56)% (0.18)% 0.39% 1.42%
after reimbursements and waivers of
expenses 1.87% (0.56)% (0.18)% 0.39% 1.42%
Portfolio turnover rate 78% 28% 28% 15% 8%
1 Annualized
The accompanying notes are an integral part of these 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 JAPAN FUND
-------------------------------------------------------------------------
YEARS ENDED OCTOBER 31,
-------------------------------------------------------------------------
2003 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 (0.11) (0.20) -- (0.14) (0.21)
Net realized and unrealized gain (loss)
on investments 0.72 (0.55) (1.52) (1.10) 2.54
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.61 (0.75) (1.52) (1.24) 2.33
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS FROM:
Net investment income -- -- -- -- --
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 3.98 $ 3.37 $ 4.12 $ 5.64 $ 6.88
========== ========== ========== ========== ==========
TOTAL RETURN 18.10% (18.20)% (26.95)% (18.02)% 51.21%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 7,079 $ 3,611 $ 3,408 $ 6,282 $ 5,305
Ratio of expenses to average net assets
before reimbursements and waivers
of expenses 4.78% 6.94% 5.57% 3.84% 4.61%
after reimbursements and waivers of
expenses 4.78% 6.94% 5.57% 3.84% 4.61%
Ratio of net investment loss
before reimbursements and waivers
of expenses (3.89)% (6.03)% (3.97)% (3.08)% (3.94)%
after reimbursements and waivers of
expenses (3.89)% (6.03)% (3.97)% (3.08)% (3.94)%
Portfolio turnover rate 28% 5% 51% 14% 17%
The accompanying notes are an integral part of these 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
OCTOBER 31,2003*
----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
----------
INVESTMENT OPERATIONS:
Net investment loss (0.14)
Net realized and unrealized gain on
investments 2.13
----------
Total from investment operations 1.99
----------
DISTRIBUTIONS FROM:
Net investment income --
----------
NET ASSET VALUE, END OF PERIOD $ 11.99
==========
TOTAL RETURN 19.90% 2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 9,418
Ratio of expenses to average net assets
before reimbursements and waivers of expenses 4.62% 1
after reimbursements and waivers of expenses 4.62% 1
Ratio of net investment loss
before reimbursements and waivers of expenses (2.96)% 1
after reimbursements and waivers of expenses (2.96)% 1
Portfolio turnover rate 11%
* The Commonwealth Global Fund commenced operations on December 3, 2002.
1 Annualized
2 Aggregate total return, not annualized
The accompanying notes are an integral part of these financial statements.
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003
- --------------------------------------------------------------------------------
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 October 15, 2002 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
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
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.
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.
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.
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
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 and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations 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 Trust on behalf of its series has contracted with InCap Service Company
("ISC") to perform specified administrative, accounting, and transfer agent
services for the Funds.
During the year ended October 31, 2003, ISC received fees of $73,773,
$71,004 and $55,000 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 year ended October
31, 2003, the Australia/ New Zealand Fund and the Japan Fund incurred $50,459
and $12,936, respectively. For the period ended October 31, 2003, the Global
Fund incurred $8,604 in 12b-1 fees.
The Global Fund invests a portion of its assets in both the Australia/New
Zealand and Japan Funds. When computing both the Advisory Fee and the 12b-1 fee
for the Global Fund, average daily net assets are reduced by Fund assets
invested in the Australia/New Zealand Fund and the Japan Fund.
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
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 year ended October 31, 2003, directors of
the Funds who are not "interested persons" received directors' fees of $38,775.
NOTE 5 - CAPITAL STOCK
At October 31, 2003 there were shares outstanding of 2,288,463, 1,779,783
and 785,613, 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
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ----------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
Shares sold 21,722,143 $ 273,840,292 1,529,390 $ 15,266,300
Shares redeemed (20,094,363) (254,506,731) (1,400,188) (13,893,762)
-------------- -------------- ------------- --------------
Net Increase 1,627,780 $ 19,333,561 129,202 $ 1,372,538
============== ============== ============= ==============
COMMONWEALTH JAPAN FUND
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
---------------- ----------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
Shares sold 40,234,402 $ 141,049,183 7,626,964 $ 27,831,507
Shares redeemed (39,524,827) (138,796,855) (7,383,299) (26,987,410)
-------------- -------------- ------------- --------------
Net Increase 709,575 $ 2,252,328 243,665 $ 844,097
============== ============== ============= ==============
COMMONWEALTH GLOBAL FUND
PERIOD ENDED
OCTOBER 31, 2003
----------------
SHARES DOLLARS
------ -------
Shares sold 936,629 $ 9,898,108
Shares redeemed (151,016) (1,638,896)
------------ ------------
Net Increase 785,613 $ 8,259,212
============ ============
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
NOTE 6 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities) by the Funds for the year from November 1, 2002 to October 31, 2003
for the Australia/New Zealand Fund and the Japan Fund and for the period from
December 3, 2002 to October 31, 2003 for the Global Fund were as follows:
PURCHASES SALES
--------- -----
Australia/ New Zealand Fund $ 30,669,404 $ 13,565,231
Japan Fund 2,988,862 1,129,220
Global Fund 9,017,043 412,518
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 October 31, 2003.
COMMONWEALTH JAPAN FUND
-----------------------
PREMIUM MARKET UNREALIZED
CALL OPTIONS ON RECEIVED VALUE APPRECIATION
--------------- -------- ----- ------------
3,700 shs AFLAC, Inc. ADR @ 35 exp
February 21, 2004 $ 4,509 $ 9,250 $ (4,741)
6,000 shs Honda Motor Co., Ltd. @ 20 exp
January 17, 2004 6,529 6,000 529
3,000 shs Sony Corp. @ 35 exp
January 17, 2004 3,565 7,200 (3,635)
-------- -------- --------
Total $ 14,603 $ 22,450 $ (7,847)
======== ======== ========
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
COMMONWEALTH GLOBAL FUND
------------------------
UNREALIZED
PREMIUM MARKET APPRECIATION/
CALL OPTIONS ON RECEIVED VALUE (DEPRECIATION)
--------------- -------- ----- --------------
1,000 shs Aventis SA ADR @ 60 exp
January 17, 2004 $ 1,415 $ 500 $ 915
1,650 shs Greenpoint Financial Corp. ADR @ 55
exp January 17, 2004 2,382 248 2,134
4,000 shs ING Groep NV @ 20 exp
January 17, 2004 4,275 6,000 (1,725)
2,000 shs International Rectifier Corp. ADR @ 35
exp January 17, 2004 2,655 26,600 (23,945)
1,700 shs Microchip Technology, Inc. ADR @ 30 exp
January 17, 2004 2,154 6,800 (4,646)
800 shs Royal Dutch Petroleum Co. @ 47.5 exp
January 17, 2004 771 240 531
1,200 shs Sandisk Corp. ADR @ 100 exp
January 17, 2004 6,474 12,360 (5,886)
1,300 shs Sandisk Corp. ADR @ 75 exp
January 17, 2004 5,676 12,740 (7,064)
1,200 shs Smith International, Inc. ADR @ 40 exp
January 17, 2004 3,319 1,080 2,239
1,100 shs Symantec Corp. ADR @ 50 exp
January 17, 2004 4,472 17,710 (13,238)
800 shs Total SA @ 85 exp
February 21, 2004 2,051 960 1,091
1,000 shs Unilever NV ADR @ 70 exp
January 17, 2004 2,620 250 2,370
-------- -------- --------
Total $ 38,264 $ 85,488 $(47,224)
======== ======== ========
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
The aggregate market value at October 31, 2003 of securities subject to
call options is $360,876 or approximately 5.10% of net assets for the Japan Fund
and $814,886 or approximately 8.65% of net assets for the Global Fund. Written
option activity for the year ended October 31, 2003 was as follows:
COMMONWEALTH JAPAN FUND
-----------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUM
------- -------
Options outstanding at October 31, 2002 47 $ 6,681
Options written 154 19,269
Options expired (74) (11,347)
Options covered 0 0
---------- ----------
Options outstanding at October 31, 2003 127 $ 14,603
========== ==========
COMMONWEALTH GLOBAL FUND
------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUM
------- -------
Options outstanding at October 31, 2002 -- $ --
Options written 459 82,544
Options expired (97) (15,485)
Options covered (184) (28,795)
---------- ----------
Options outstanding at October 31, 2003 178 $ 38,264
========== ==========
NOTE 8 - TAX MATTERS
As of October 31, 2003, the components of distributable earnings on a tax
basis for the Funds were as follows:
UNDISTRIBUTED SHORT- UNDISTRIBUTED UNREALIZED
UNDISTRIBUTED TERM CAPITAL GAINS/ LONG-TERM CAPITAL APPRECIATION/
ORDINARY INCOME (LOSSES) GAINS/(LOSSES) (DEPRECIATION)
--------------- -------- -------------- --------------
Australia/New Zealand Fund $ 541,118 $ 674,789 -- $5,479,151
Japan Fund -- -- -- 924,095
Global Fund -- -- -- 1,384,764
The difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales. The difference between book basis undistributed net investment income and
tax basis undistributed ordinary income and between book basis accumulated net
realized gain on investments and tax basis undistributed short term capital
gains is attributable primarily to differing book/tax treatment of foreign
currency gains.
COMMONWEALTH INTERNATIONAL SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - October 31, 2003 (continued)
- --------------------------------------------------------------------------------
As of October 31, 2003, the Funds had capital loss carryforwards and loss
deferrals available for federal income tax purposes as follows:
CAPITAL LOSS CARRYFORWARDS EXPIRING
OCTOBER 31,
-----------
DEFERRED FOR
2005 2006 2009 2011 TOTAL TAX PURPOSES
---- ---- ---- ---- ----- ------------
Australia/New Zealand Fund $ -- $ -- $ -- $ -- $ -- $ 16,907
Japan Fund 420,940 244,983 261,843 43,958 971,724 --
Global Fund -- -- -- 67,278 67,278 --
The losses deferred for tax purposes consist of losses deferred on wash
sales.
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, 2003 for each fund:
GROSS NET APPRECIATION/
COST GROSS APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------------ ------------ --------------
Australia/ New Zealand Fund $ 27,327,278 $ 5,482,876 $ (3,725) $ 5,479,151
Japan Fund 5,744,520 1,119,686 (195,591) 924,095
Global Fund 8,767,517 1,440,760 (55,996) 1,384,764
NOTE 9 - RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Japan and Global Funds
have recorded reclassifications in the capital accounts. These reclassifications
have no impact on the net asset value of the Funds and are designed generally to
present undistributed net investment income and capital gains/(accumulated
losses) during the period on a tax basis which is considered to be more
informative to the shareholder. As of October 31, 2003, the Funds recorded the
following reclassifications to increase (decrease) the capital accounts listed
below:
UNDISTRIBUTED NET NET REALIZED GAIN
INVESTMENT INCOME (ACCUMULATED LOSSES) PAID-IN CAPITAL
----------------- -------------------- ---------------
Japan Fund $ 113,613 $ -- $ (113,613)
Global Fund 198,972 (3,196) (195,776)
COMMONWEALTH INTERNATIONAL SERIES TRUST
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
COMMONWEALTH INTERNATIONAL SERIES TRUST
We have audited the accompanying statements of assets and liabilities of
Commonwealth International Series Trust (comprising the Commonwealth
Australia/New Zealand Fund, Japan Fund, and Global Fund), including the
schedules of investments, as of October 31, 2003, the related statements of
operations for the year or period then ended, the statements of changes in net
assets for each of the years or period in the two year period then ended, and
the financial highlights for each of the years or period in the five year period
then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds of the Commonwealth International Series Trust as of
October 31, 2003, the results of their operations for the year or period then
ended, the changes in their net assets for each of the years or period in the
two year period then ended, and the financial highlights for each of the years
or period in the five year period then ended in conformity with accounting
principles generally accepted in the United States of America.
BRIGGS, BUNTING & DOUGHERTY, LLP
PHILADELPHIA, PENNSYLVANIA
DECEMBER 22, 2003
COMMONWEALTH INTERNATIONAL SERIES TRUST
TRUSTEES AND OFFICERS (unaudited)
- --------------------------------------------------------------------------------
==================================================================================================================================
TRUSTEES AND OFFICERS
NUMBER OF
TERM OF PORTFOLIOS OTHER
OFFICE AND IN COMPLEX DIRECTORSHIPS
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) FOR THE LAST OVERSEEN BY HELD BY
NAME, AGE AND ADDRESS WITH FUND TIME SERVED FIVE YEARS TRUSTEE/OFFICER TRUSTEE/OFFICER
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
- ----------------------------------------------------------------------------------------------------------------------------------
Robert Scharar(1), 55 President, Indefinite Investment manager/Attorney/CPA; 4 United
5847 San Felipe Interested until President, FCA Corp. Dominion
Suite 850 Trustee successor Realty Trust
Houston, TX 77057 elected and
qualified; 3
years.
- ----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
- ----------------------------------------------------------------------------------------------------------------------------------
John Akard, Jr., 37 Independent Indefinite Attorney/CPA 4 None
5847 San Felipe Trustee until
Suite 850 successor
Houston, TX 77057 elected and
qualified; 3
years.
- ----------------------------------------------------------------------------------------------------------------------------------
Kathleen Kelly, 51 Independent Indefinite Consultant 4 None
5847 San Felipe Trustee until
Suite 850 successor
Houston, TX 77057 elected and
qualified; 3
years.
- ----------------------------------------------------------------------------------------------------------------------------------
Jack Ewing, 63 Independent Indefinite Professor 4 None
5847 San Felipe Trustee until
Suite 850 successor
Houston, TX 77057 elected and
qualified; 3
years.
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Robert Scharar is considered an "interested person" of the Funds because of
his affiliation with the Fund's Investment Advisor as the sole shareholder
of that Advisor.
COMMONWEALTH INTERNATIONAL SERIES TRUST
TRUSTEES AND OFFICERS (unaduited)(continued)
- --------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS OTHER
OFFICE AND IN COMPLEX DIRECTORSHIPS
POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) FOR THE LAST OVERSEEN BY HELD BY
NAME, AGE AND ADDRESS WITH FUND TIME SERVED FIVE YEARS TRUSTEE/OFFICER TRUSTEE/OFFICER
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICERS:
- ----------------------------------------------------------------------------------------------------------------------------------
Larry E. Beaver, Jr., 34 Treasurer 2003-current Manager Fund Accounting, InCap 4 None
630-A Fitzwatertown Rd. Service Co., May 2003 to present;
Willow Grove, PA 19090 Supervisor Fund Accounting, InCap
Service Co., October 2001 to April
2003; Accountant, PFPC, Inc., March
1998 to September 2001.
- ----------------------------------------------------------------------------------------------------------------------------------
Charles R. Ropka, 40 Secretary 2003-current Attorney, Rabil & Ropka, LLC 4 None
1010 Kings Hwy. S.
Building 2, Suite B
Cherry Hill, NJ 08034
- ----------------------------------------------------------------------------------------------------------------------------------
David F. Ganley, 55 Assistant 2003-current Managing Director, InCap Group, Inc.; 4 Officer,
630-A Fitzwatertown Rd. Secretary Chief Admin. Officer, InCap Service Capstone Funds
Willow Grove, PA 19090 Co.; President & Treasurer, InCap
Securities, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Bonnie Bingham, 54 Assistant 2003-current Administrator & Private Coordinator, 4 None
5847 San Felipe Secretary FCA Corp.
Suite 850
Houston, TX 77057
- ----------------------------------------------------------------------------------------------------------------------------------
COMMONWEALTH INTERNATIONAL SERIES TRUST
NOTICE TO SHAREHOLDERS (Unaudited)
- --------------------------------------------------------------------------------
For the fiscal year ended October 31, 2003, certain dividends paid by the
Australia/New Zealand Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003 ("the
Act"). The Fund intends to designate up to the maximum amount of such dividends
allowable under the Act. Complete information will be reported in conjunction
with your 2003 Form 1099-DIV.
ITEM 2. CODE OF ETHICS.
Form N-CSR
October 31, 2003
Item 2
Although contemplated during the last fiscal year and discussed amongst the
Board, it was not until this fiscal year that a Code of ethics was adopted. As
of the date of the filing of this report, the registrant has adopted a Code of
Ethics that applies to the registrant's principal executive officer and
principal financial officer. A copy of this Code of Ethics is available free of
charge, upon request, by contacting the fund directly.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Form N-CSR
October 31, 2003
Item 3
The fund's financial expert is John Akard, Jr. and he is independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Commonwealth International Series Trust
N-CSR
October 31, 2003
Item 4
2003 2002
--------------------------
A Audit Fees 30,000 20,000
B Audit Related Fees -- --
C Tax Fees 4,500 3,000
D All Other Fees -- --
E Commonwealth International Series Trust does have a pre-approval policies
and procedures. 100% of service described in b through d were pre-approved
by the audit committee
F Not applicable - All work performed by BBD's principal employees
G Not applicable
H Not applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
Controls and Procedures
(a) The registrant's principal executive office and principal financial
officer has concluded that the registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940, as amended (the "1940 Act") are effective based on their
evaluation of these controls and procedures as of a date within 90
days of the filing date of this document.
(b) There were so significant changes in the registrant's internal
controls or in other factors that could affect these controls
subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
ITEM 10. EXHIBITS
(a) Code of Ethics for the Board of Trustees of the Fund intended to satisfy the
item 2 requirement is filed herewith.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) are filed herewith.
SIGNATURES
Pursuant to the requirement 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, hereunder duly authorized.
(Registrant) The Commonwealth International Series Trust
-------------------------------------------
By: /s/ Robert W. Scharar
-----------------------
Robert W. Scharar, President
Date January 12, 2004
-----------------------
Pursuant to the requirement 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: /s/ Robert W. Scharar
-----------------------
Robert W. Scharar, President
Date January 12, 2004
-----------------------
By: /s/ Larry E. Beaver Jr.
-----------------------
Larry E. Beaver Jr., Treasurer
Date January 12, 2004
-----------------------