INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1998
(expressed in U.S. dollars)
Shares Value
- ---------- -----------
COMMON STOCKS AND WARRANTS (99.3%)
FINLAND (2.5%)
MULTI-INDUSTRY
18,180 Nokia AB ............................................. $ 1,654,532
-----------
TOTAL FINLAND ........................................ 1,654,532
-----------
FRANCE (11.8%)
BANKING
19,480 Banque National de Paris CI .......................... 1,233,826
-----------
CAPITAL EQUIPMENT
15,985 Alcatel Alsthom SA ................................... 1,780,938
-----------
ENERGY
10,400 Elf Aquitaine SA ..................................... 1,203,621
11,500 Total SA ............................................. 1,326,788
-----------
2,530,409
-----------
MEDIA
5,240 Canal Plus ........................................... 1,271,355
-----------
SERVICES
4,995 Accor SA ............................................. 1,049,185
-----------
TOTAL FRANCE ......................................... 7,865,713
-----------
GERMANY (4.8%)
BANKING
12,410 Deutsche Pfandbrief-und
Hypothekenbank AG................................... 996,396
-----------
CAPITAL EQUIPMENT
19,200 SAP AG ADR ........................................... 810,000
-----------
INSURANCE
4,092 Allianz AG Registered ................................ 1,404,348
-----------
TOTAL GERMANY ........................................ 3,210,744
-----------
INDIA (0.0%)
FINANCE
550 Industrial Credit & Investment Corp. ................. 524
-----------
MATERIALS
2,100 Reliance Industries, Ltd. GDR ........................ 5,436
-----------
TOTAL INDIA .......................................... 5,960
-----------
IRELAND (3.1%)
BANKING
50,000 Allied Irish Banks, Plc .............................. 722,139
-----------
CONSUMER NON-DURABLES
607,000 Waterford Wedgewood, Plc ............................. 547,211
-----------
PHARMACEUTICALS
11,100 Elan Corp., Plc. ADR* ................................ 777,694
-----------
TOTAL IRELAND ........................................ 2,047,044
-----------
ITALY (11.2%)
ENERGY
235,600 Ente Nazionale Idrocarbun
SpA (ENI) .......................................... 1,403,785
-----------
INSURANCE
62,000 Assicurazioni Generali ............................... 2,209,318
-----------
TELECOMMUNICATIONS
239,100 Telecom Italia SpA ................................... 1,727,534
368,100 Telecom Italia Mobile SpA ............................ 2,137,138
----------
3,864,672
-----------
TOTAL ITALY .......................................... 7,477,775
-----------
JAPAN (17.0%)
CHEMICALS
28,000 Shin-Etsu Chemical Co. ............................... 557,214
100 Shin-Etsu Chemical Co.
(Warrants)* ........................................ 122,500
-----------
679,714
-----------
COMPUTER SOFTWARE
11,300 Meitec Corp. ......................................... 218,091
-----------
CONSUMER DURABLES
46,000 Makita Corp. ......................................... 486,121
-----------
CONSUMER ELECTRONICS
23,000 Canon, Inc. .......................................... 435,023
5,000 Sony Corp. ........................................... 317,379
----------
752,402
-----------
CONSUMER GOODS
16,000 Honda Motor Co., Ltd. ................................ 480,357
59,000 Kirin Brewery Co., Ltd. .............................. 642,735
59,000 Suzuki Motor Corp. ................................... 678,667
----------
1,801,759
-----------
CONSUMER NON-DURABLES
15,000 Fuji Photo Film Co., Ltd. ............................ 549,408
6,000 Nintendo Co., Ltd. ................................... 507,463
----------
1,056,871
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1998 (continued)
(expressed in U.S. dollars)
Shares Value
---------- -----------
JAPAN (continued)
ELECTRIC COMPONENTS
53,000 Minebea Co., Ltd. .................................... $ 497,813
5,000 Rohm Co., Ltd. ....................................... 441,757
8,000 TDK Corp. ............................................ 527,020
----------
1,466,590
-----------
ELECTRONIC TECHNOLOGY
11,000 Tokyo Electron, Ltd. ................................. 357,608
-----------
FINANCE
90 Merrill Lynch & Co., Inc.
International (Warrants)* .......................... 74,250
4,900 Orix Corp. ........................................... 350,961
-----------
425,211
-----------
MATERIALS
23,000 Bridgestone Corp. .................................... 506,047
22,000 Kurita Water Industries, Ltd. ........................ 292,503
-----------
798,550
-----------
MULTI-INDUSTRY
178,274 Prospect Japan Fund* ................................. 588,304
-----------
PHARMACEUTICALS
23,000 Santen Pharmaceutical
Co., Ltd. .......................................... 394,382
10,000 Yamanouchi Pharmaceutical
Co., Ltd. .......................................... 286,499
38 Yamanouchi Pharmaceutical
Co., Ltd. (Warrants)* .............................. 56,050
-----------
736,931
-----------
REAL ESTATE
2,000 Oriental Land Co., Ltd. .............................. 79,941
-----------
RETAIL
11,000 Ito-Yokato Co., Ltd. ................................. 641,619
-----------
SERVICES
8,600 Benesse Corp. ........................................ 394,665
3,000 Credit Saison Co., Ltd. .............................. 70,638
110 Credit Saison Co., Ltd.
(Warrants)* ........................................ 154,000
82,000 Daikin Industries, Ltd. .............................. 647,813
-----------
1,267,116
-----------
TOTAL JAPAN .......................................... 11,356,828
-----------
NETHERLANDS (7.0%)
CONSUMER GOODS
37,837 Heineken NV .......................................... 2,014,922
-----------
FINANCE
28,000 Fortis Amev NV ....................................... 1,817,763
-----------
SERVICES
24,300 Ahold (Kon)NV ........................................ 807,637
-----------
TOTAL NETHERLANDS .................................... 4,640,322
-----------
SPAIN (8.1%)
ENERGY
25,300 Repsol SA ............................................ 1,269,849
-----------
FINANCE
110,650 Banco Bilbao Vizcaya SA .............................. 1,492,510
45,961 Banco Santander SA ................................... 841,824
-----------
2,334,334
-----------
UTILITIES
39,859 Telefonica de Espana SA .............................. 1,799,682
-----------
TOTAL SPAIN .......................................... 5,403,865
-----------
SWEDEN (5.8%)
CAPITAL EQUIPMENT
66,720 Atlas Copco .......................................... 1,555,603
62,600 Ericsson (LM) Telephone
Co. Class `B' ...................................... 1,411,427
-----------
2,967,030
-----------
CONSUMER DURABLES
60,600 Electrolux AB ........................................ 912,183
-----------
TOTAL SWEDEN ......................................... 3,879,213
-----------
SWITZERLAND (8.3%)
BANKING
6,150 Union Bank of Switzerland AG ......................... 1,685,771
-----------
CONSUMER NON-DURABLES
558 Nestle AG Registered ................................. 1,185,745
-----------
PHARMACEUTICALS
1,492 Novartis AG Bearer ................................... 2,683,905
-----------
TOTAL SWITZERLAND .................................... 5,555,421
-----------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1998 (continued)
(expressed in U.S. dollars)
Shares Value
-------- -----------
UNITED KINGDOM (19.7%)
BANKING
35,800 Barclays, Plc ........................................ $ 771,150
-----------
CONSUMER GOODS
84,000 Smithkline Beecham, Plc .............................. 1,050,213
-----------
ENERGY
99,500 Britsh Petroleum Co., Plc ............................ 1,460,495
79,000 PowerGen, Plc ........................................ 1,117,278
-----------
2,577,773
-----------
FOOD & BEVERAGES
92,500 Diageo, Plc .......................................... 998,571
-----------
PHARMACEUTICALS
34,000 Glaxo Wellcome, Plc .................................. 1,056,171
-----------
REAL ESTATE
119,000 British Land Co., Plc. (The) ......................... 956,017
75,000 Land Securities, Plc ................................. 1,057,568
-----------
2,013,585
-----------
SERVICES
96,000 BAA, Plc ............................................. 1,080,540
81,000 Granada Group, Plc ................................... 1,220,804
50,000 Railtrack Group, Plc ................................. 1,343,143
-----------
3,644,487
-----------
TELECOMMUNICATIONS
76,500 British Telecom, Plc ................................. 988,453
-----------
TOTAL UNITED KINGDOM ................................. 13,100,403
-----------
TOTAL COMMON STOCKS
AND WARRANTS
(identified cost $60,079,355) ...................... 66,197,820
-----------
TIME DEPOSIT (5.2%)
3,434,000 State Street Bank
(Cayman) 4.75%, 11/2/98
identified cost $3,434,000) ........................ 3,434,000
-----------
TOTAL INVESTMENTS (identified cost $63,513,355) (a) ...... 104.5% $69,631,820
CASH AND OTHER ASSETS LESS LIABILITIES ................... (4.5) (2,999,239)
----- -----------
NET ASSETS ............................................... 100.0% $66,632,581
===== ===========
- -------------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $64,028,898, the
aggregate gross unrealized appreciation is $8,023,429, and the aggregate
gross unrealized depreciation is $2,420,507, resulting in net unrealized
appreciation of $5,602,922.
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified
cost $63,513,355) (Note 1) ............................... $69,631,820
Cash (including $5,386 in foreign currency) ................ 6,032
Receivables for:
For investments sold .................................... 92,300
For capital stock sold .................................. 86,840
Dividends and other receivables ............................ 147,857
Deferred organizational expense ............................ 1,259
-----------
Total Assets ....................................... 69,966,108
-----------
LIABILITIES:
Payables for:
Investments purchased ................................... 1,690,918
Forward foreign exchange contracts sold (Note 4) ........ 1,588,928
Investment advisory fee (Note 2) ........................ 34,593
Administrative fee (Note 2) ............................. 1,872
Expense reimbursement fee (Note 2) ...................... 3,992
Foreign withholding taxes ............................... 13,224
-----------
Total Liabilities .................................. 3,333,527
-----------
NET ASSETS .................................................... $66,632,581
===========
Net Assets Consist of:
Paid-in capital .......................................... $62,098,849
Net unrealized appreciation .............................. 4,533,732
-----------
Net Assets .................................................... $66,632,581
===========
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 1998
(expressed in U.S. dollars)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $247,609) .. $ 850,915
Interest ................................................ 65,651
----------
Total Income ........................................ 916,566
----------
Expenses:
Investment advisory fee (Note 2) ........................ 448,851
Expense reimbursement fee (Note 2) ...................... 58,943
Administrative fee (Note 2) ............................. 23,282
Amortization of organization expenses (Note 1) .......... 887
----------
Total Expenses ...................................... 531,963
----------
Net Investment Income ............................... 384,603
----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments and foreign exchange
transactions ............................................ 933,148
Net change in unrealized appreciation on investments
and foreign currency transactions ....................... 4,125,305
----------
Net Realized and Unrealized Gain ........................ 5,058,453
----------
Net Increase in Net Assets Resulting from Operations ....... $5,443,056
==========
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income ................................ $ 384,603 $ 287,078
Net realized gain on investments and foreign
exchange transactions ............................. 933,148 1,141,921
Net change in unrealized appreciation (depreciation)
on investments and foreign currency translations .. 4,125,305 (619,599)
------------ ------------
Net increase in net assets resulting from operations 5,443,056 809,400
------------ ------------
Capital transactions:
Proceeds from contributions .......................... 35,422,813 10,305,094
Value of withdrawals ................................. (20,271,095) (4,561,135)
------------ ------------
Net increase in net assets resulting from
capital transactions ............................ 15,151,718 5,743,959
------------ ------------
Total increase in net assets ..................... 20,594,774 6,553,959
NET ASSETS:
Beginning of year ........................................ 46,037,807 39,484,448
------------ ------------
End of year .............................................. $ 66,632,581 $ 46,037,807
============ ============
</TABLE>
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding
throughout each period
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the period
April 1, 1995
For the years ended October 31, (commencement of
---------------------------------- operations) to
1998 1997 1996 October 31, 1995
--------- --------- --------- --------------
<S> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)...... $66,633 $46,038 $39,484 $28,191
Expenses as a percentage of average
net assets................................ 0.76% 0.90% 0.90% 0.90%*
Ratio of net investment income to average
net assets................................ 0.56% 0.63% 0.68% 1.25%*
Portfolio turnover rate..................... 89% 85% 56% 23%
</TABLE>
- ---------------
* Annualized
See Notes to Financial Statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Organization and Significant Accounting Policies. International Equity
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company which was
organized as a trust under the laws of the State of New York on August 15, 1994.
The Portfolio commenced operations on April 1, 1995. The Declaration of Trust
permits the Trustees to create an unlimited number of beneficial interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of the
financial statements and are based, in part, on the following accounting
policies. Actual results could differ from those estimates.
A. Valuation of Investments. (1) The value of investments listed on
either a domestic or foreign securities exchange is based on the last sale
price on that exchange prior to the time when assets are valued, or in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchange; (2) unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter
market; (3) securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Portfolio's Trustees. Such procedures include the use of independent
pricing services, which use prices based upon yields or prices of
securities of comparable quality, coupon, maturity and type; indications
as to the value from dealers; and general market conditions; (4) all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the prevailing rates of exchange available
at the time of valuation; and (5) trading in securities on most foreign
exchanges and over-the-counter markets is normally completed before the
close of the New York Stock Exchange and may also take place on days on
which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the Portfolio's Trustees.
B. Foreign Currency Translations. The accounting records of the
Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such
currency against the U.S. dollar to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Upon the purchase or sale of a
security denominated in foreign currency, the Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale, for
a fixed amount of U.S. dollars of the amount of foreign currency involved
in the underlying security transaction. The Portfolio isolates that
portion of realized gain or loss on investments resulting from changes in
foreign exchange rates on investments from the fluctuations arising from
changes in market prices of such investments. Reported net realized and
unrealized gains and losses arise from the sales of portfolio securities,
sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Portfolio's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized appreciation or
depreciation on foreign currency translations arise from changes in the
value of the assets and liabilities, excluding investments in securities,
at fiscal year end, arising from changes in the exchange rate.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
C. Forward Foreign Currency Exchange Contracts. The Portfolio may
enter into forward foreign currency exchange contracts ("contracts") in
connection with planned purchases or sales of securities, to hedge the
U.S. dollar value of portfolio securities denominated in a particular
currency, or to increase or shift its exposure to a currency other than
U.S. dollars. The Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The
Portfolio could be exposed to risks if the counterparties to the contracts
are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably. The U.S. dollar values of foreign
currency underlying all contractual commitments held by the Portfolio are
determined using forward currency exchange rates supplied by a quotation
service.
D. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where
recovery of such taxes is not assured. Interest income is accrued daily.
E. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision
for federal income taxes is necessary.
F. Deferred Organization Expenses. Expenses incurred by the
Portfolio in connection with its organization are being amortized on a
straight-line basis over a five-year period.
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which it pays
the Adviser a fee calculated daily and paid monthly at an annual rate equivalent
to 0.65% of the Portfolio's average daily net assets. For the year ended October
31, 1998, the Portfolio incurred $448,851 for advisory services.
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company (Cayman) Limited (the "Administrator") for
which it pays the Administrator a fee calculated daily and paid monthly at an
annual rate equivalent to 0.035% of the Portfolio's average daily net assets.
The Administrator has a subadministration agreement with Signature Financial
Group (Cayman) Ltd. for which Signature Financial Group (Cayman) Ltd. receives
such compensation as is from time to time agreed upon. For the year ended
October 31, 1998, the Portfolio incurred $23,282 for administrative services.
Expense Reimbursement Fee. Brown Brothers Harriman Trust Company (Cayman)
Limited pays certain expenses of the Portfolio and receives a fee from the
Portfolio, computed and paid monthly, such that after such fee the aggregate
expenses will not exceed 0.76% of the Portfolio's average daily net assets. For
the year ended October 31, 1998, Brown Brothers Harriman Trust Company (Cayman)
Limited incurred $100,625 in expenses on behalf of the Portfolio. The expense
reimbursement agreement will terminate when the aggregate amount of fees
received by Brown Brothers Harriman Trust Co. (Cayman) Limited thereunder equals
the aggregate amount of expenses paid by Brown Brother Harriman Trust Company
(Cayman) Limited thereunder.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
3. Investment Transactions. For the year ended October 31, 1998, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $55,419,909 and $71,977,145, respectively. There
were no purchases or sales of U.S. government obligations during the period.
4. Financial Instruments with Off-Balance Sheet Risk. At October 31, 1998
the International Equity Portfolio had outstanding forward foreign currency
exchange contracts as a hedge to protect against possible changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Forward contracts involve elements of market
risk in excess of the amount reflected in the Statement of Assets and
Liabilities. The Funds bear the risk of an unfavorable change in the foreign
exchange rate underlying the forward contracts.
Forward foreign currency exchange contracts open at October 31, 1998:
Contracts In Exchage Deliver Unrealized
to deliver For Date Depreciation
------------- ---------- ------- -------------
JPY* 1,566,000,000 $11,939,616 12/17/98 $1,588,928
* Japanese Yen.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
International Equity Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of International Equity Portfolio as of
October 31, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended October 31,
1998 and 1997 and the financial highlights for each of the years in the
four-year period ended October 31, 1998 (all expressed in U.S. dollars). These
financial statements and financial highlights are the responsibility of the
Portfolio'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 at October 31, 1998 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of International Equity
Portfolio at October 31, 1998, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
December 11, 1998
<PAGE>
The 59 Wall Street Fund, Inc.
Investment Adviser and
Administrator
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Distributor
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, Massachusetts 02109
Shareholder Servicing Agent
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(800) 625-5759
This report is submitted for the general information of
shareholders and is not authorized for distribution to
prospective investors unless preceded or accompanied by
an effective prospectus. Nothing herein contained is to
be considered an offer of sale or a solicitation of an
offer to buy shares of the Funds. Such offering is made
only by prospectus, which includes details as to
offering price and other material information.
