U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995
(expressed in U.S. dollars)
Shares Value
------ -----
COMMON STOCKS (89.7%)
BANKS (6.3%)
13,510 CCB Financial Corp. .................................... $ 667,056
6,440 Deposit Guaranty Corp. ................................. 284,165
9,790 FirstMerit Corp. ....................................... 260,659
8,570 Keystone Financial, Inc. ............................... 280,132
10,210 ONBANcorp, Inc. ........................................ 301,195
22,800 Premier Bancorp, Inc.* ................................. 471,675
11,290 Summit Bancorporation .................................. 318,237
8,990 Union Planters Corp. ................................... 275,319
5,280 Zions Bancorporation ................................... 366,960
---------
3,225,398
---------
COMMERCIAL SERVICES (1.0%)
23,070 NFO Research, Inc.* .................................... 513,308
---------
CONSUMER DURABLES (4.8%)
28,220 Arctco, Inc. ........................................... 321,003
5,370 Broderbund Software, Inc.* ............................. 373,215
12,070 Cobra Golf, Inc.* ...................................... 316,838
19,000 Department 56, Inc.* ................................... 862,125
17,640 Thor Industries, Inc. .................................. 280,035
37,930 Winnebago Industries, Inc. ............................. 303,440
---------
2,456,656
---------
CONSUMER NON-DURABLES (5.6%)
32,300 Authentic Fitness Corp. ................................ 662,150
59,190 Hudson Foods, Inc. - Class A ........................... 836,059
26,325 Nautica Enterprises, Inc.* ............................. 904,922
16,160 Riviana Foods, Inc. .................................... 211,090
11,830 Timberland Co. - Class A* .............................. 227,728
---------
2,841,949
---------
CONSUMER SERVICES (2.4%)
22,065 Applebee's International, Inc........................... 616,441
15,370 Carmike Cinemas, Inc. - Class A* ....................... 320,849
7,500 Grand Casinos, Inc.* ................................... 298,125
---------
1,235,415
---------
ELECTRONIC TECHNOLOGY (13.2%)
35,290 Chips & Technologies, Inc.* ............................ 308,788
7,960 Cognex Corp.* .......................................... 477,600
16,440 Cypress Semiconductor Corp.* ........................... 579,510
22,700 Helix Technology Corp. ................................. 839,900
11,060 Integrated Device
Technology, Inc.* .................................... 210,831
24,140 International Rectifier Corp.* ......................... 1,089,318
9,780 Kemet Corp.* ........................................... 334,965
5,290 Maxim Integrated Products, Inc.* ....................... 395,097
8,090 Microchip Technology, Inc.* ............................ 320,566
3,720 Novellus Systems, Inc.* ................................ 255,750
10,050 Read-Rite Corp.* ....................................... 351,122
21,110 Thermedics, Inc.* ...................................... 387,896
5,360 U.S. Robotics Corp.* ................................... 498,480
12,320 Vicor Corp.* ........................................... 247,940
9,230 VLSI Technology, Inc.* ................................. 216,905
6,230 Zilog, Inc.* ........................................... 221,165
---------
6,735,833
---------
ENERGY MINERALS (1.3%)
13,060 Ashland Coal, Inc. ..................................... 310,175
54,960 Plains Resources, Inc.* ................................ 374,415
---------
684,590
---------
FINANCE (9.6%)
15,220 Charter One Financial, Inc. ............................ 430,916
18,380 Finova Group, Inc. ..................................... 831,695
8,850 First Indiana Corp. .................................... 223,463
3,942 Fund American Enterprises, Inc.* ....................... 271,988
26,690 Manufactured Home
Communities, Inc. .................................... 440,385
16,100 PHH Corp. .............................................. 704,375
9,280 Pioneer Group, Inc. .................................... 243,600
13,810 Roosevelt Financial Group, Inc. ........................ 220,960
43,376 Security Capital Industrial Trust ...................... 710,282
8,000 TCF Financial Corp. .................................... 470,000
13,706 United Companies
Financial Corp. ...................................... 385,481
---------
4,933,145
---------
HEALTH SERVICES (5.8%)
8,240 Cerner Corp.* .......................................... 212,180
6,800 Community Health Systems, Inc.* ........................ 215,900
15,210 Lincare Holdings, Inc.* ................................ 381,201
8,870 Medaphis Corp.* ........................................ 281,623
11,030 Omnicare, Inc. ......................................... 399,838
18,180 Orthodontic Centers of
America, Inc.* ....................................... 588,578
12,900 PhyCor, Inc.* .......................................... 472,463
15,715 Vencor, Inc.* .......................................... 436,091
---------
2,987,874
---------
HEALTH TECHNOLOGY (2.5%)
14,270 Idexx Laboratories, Inc.* .............................. 577,935
51,910 North American Biologicals, Inc.* ...................... 418,524
6,240 Sybron International Corp.* ............................ 265,200
---------
1,261,659
---------
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1995 (continued)
(expressed in U.S. dollars)
Shares Value
------ -----
INDUSTRIAL SERVICES (3.9%)
8,000 Granite Construction, Inc. ............................. $ 228,000
21,630 J. Ray McDermott, S.A.* ................................ 327,154
57,140 Pride Petroleum Services, Inc.* ........................ 499,975
8,310 Sonat Offshore Drilling, Inc............................ 263,843
31,390 USA Waste Services, Inc.* .............................. 659,190
-----------
1,978,162
-----------
INSURANCE (5.0%)
16,000 Allied Group, Inc. ..................................... 514,000
19,750 Commerce Group, Inc. ................................... 402,406
15,275 Orion Capital Corp. .................................... 626,275
15,700 Protective Life Corp. .................................. 447,450
29,330 US Facilities, Corp. ................................... 557,270
-----------
2,547,401
-----------
NON-ENERGY MINERALS (4.7%)
37,030 Birmingham Steel Corp. ................................. 564,708
20,620 Fibreboard Corp.* ...................................... 494,880
47,290 Kinross Gold Corp.* .................................... 342,853
10,120 Magma Copper Co.* ...................................... 169,510
36,090 Republic Gypsum Co. .................................... 424,058
18,790 Rouge Steel Co. - Class A .............................. 408,683
-----------
2,404,692
-----------
PROCESS INDUSTRIES (3.3%)
14,330 Chesapeake Corp. ....................................... 438,856
6,650 Cytec Industries, Inc.* ................................ 364,088
27,650 Mercer International, Inc. - SBI* ...................... 637,678
16,000 Northland Cranberries, Inc. ............................ 272,000
-----------
1,712,622
-----------
PRODUCER MANUFACTURING (4.4%)
6,510 AGCO Corp. ............................................. 291,323
48,970 Flow International Corp.* .............................. 538,670
31,420 Indresco, Inc.* ........................................ 538,068
18,000 Kennametal, Inc. ....................................... 560,250
40,530 Simpson Industries, Inc. ............................... 341,972
-----------
2,270,283
-----------
RETAIL TRADE (4.3%)
19,000 Eckerd Corp.* .......................................... 752,875
9,690 Fastenal Co. ................ .......................... 337,333
24,540 Sunglass Hut International, Inc.* ...................... 665,648
26,385 Williams-Sonoma, Inc.* ................................. 461,738
---------
2,217,594
---------
TECHNOLOGY SERVICES (2.8%)
6,660 America Online, Inc.* .................................. 533,216
6,850 Sterling Software, Inc.* ............................... 315,956
9,740 Sungard Data Systems, Inc.* ............................ 271,503
9,790 System Software Assoc., Inc............................. 302,878
-----------
1,423,553
-----------
TELECOMMUNICATIONS (5.5%)
28,920 Acme-Cleveland Corp. ................................... 632,625
28,000 Aspect Telecommunications
Corp.* ................................................. 969,500
39,330 Boston Technology, Inc.* ............................... 545,704
5,020 Picturetel Corp.* ...................................... 330,693
5,330 Stratacom, Inc.* ....................................... 328,461
-----------
2,806,983
-----------
TRANSPORTATION (1.8%)
15,540 Wisconsin Central
Transportation Corp.* ................................ 932,400
-----------
UTILITIES (1.5%)
9,410 KN Energy, Inc. ........................................ 241,131
22,120 Sierra Pacific Resources ............................... 517,055
-----------
758,186
-----------
TOTAL COMMON STOCKS
(identified cost $38,547,525) .......................... $45,927,703
-----------
Principal
Amount
--------
TIME DEPOSITS (10.0%)
$5,150,000 State Street Bank (Cayman)
5.50%, 11/7/95
(identified cost $5,150,000)........................ $ 5,150,000
-----------
TOTAL INVESTMENTS (identified cost $43,697,525) (a) .. 99.7% $51,077,703
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ....... 0.3 148,716
----- -----------
NET ASSETS ........................................... 100.0% $51,226,419
===== ===========
- ---------------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $43,757,733, the
aggregate gross unrealized appreciation is $9,371,269, and the aggregate
gross unrealized depreciation is $2,051,299, resulting in net unrealized
appreciation of $7,319,970.
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified cost
$43,697,525) (Note 1) ..................................... $51,077,703
Cash ........................................................ 181,010
Receivables for:
Dividends ................................................ 26,956
Interest ................................................. 787
Deferred organization expenses (Note 1) ..................... 10,708
-----------
Total Assets ........................................ 51,297,164
-----------
LIABILITIES:
Payables for:
Investment advisory fee (Note 2) ......................... 29,788
Foreign withholding taxes ................................ 6,780
Administrative fee (Note 2) .............................. 1,604
Accrued expenses and other liabilities ................... 32,573
-----------
Total Liabilities ................................... 70,745
-----------
NET ASSETS ..................................................... $51,226,419
===========
Net Assets Consist of:
Paid-in capital ............................................ 43,846,241
Net unrealized appreciation on investments ................. 7,380,178
-----------
Net Assets ..................................................... $51,226,419
===========
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS
For the period January 17, 1995 (commencement of operations) to October 31, 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $53,437) $ 365,511
Interest ............................................ 80,984
-----------
Total Income .................................... 446,495
-----------
Expenses:
Investment advisory fee (Note 2) .................... 283,032
Custodian fee (Note 3) .............................. 49,472
Administrative fee (Note 2) ......................... 15,240
Trustees' fees and expenses (Note 2) ................ 10,149
Amortization of organization expenses (Note 1) ...... 2,005
Miscellaneous ....................................... 17,932
-----------
Total Expenses ...................................... 377,830
Fees paid indirectly (Note 3) ................... (41,383)
-----------
Net Expenses .................................... 336,447
-----------
Net Investment Income ........................... 110,048
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments ....................... 2,365,906
Net change in unrealized appreciation on investments
Beginning of period .................................. --
End of period ........................................ $ 7,380,178
Less unrealized appreciation acquired in connection with
59 Wall Street Small Company Fund contribution (Note 1) (1,223,663)
-----------
Net change in unrealized appreciation on investments ... 6,156,515
-----------
Net Realized and Unrealized Gain .................. 8,522,421
-----------
Net Increase in Net Assets Resulting from Operations ... $ 8,632,469
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the period
January 17, 1995
(commencement of
operations) to
October 31, 1995
----------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income .......................................... $ 110,048
Net realized gain on investments ............................... 2,365,906
Net change in unrealized appreciation on investments ........... 6,156,515
------------
Net increase in net assets resulting from operations ....... 8,632,469
------------
Capital transactions:
Proceeds from contributions .................................... 76,125,240
Value of withdrawals ........................................... (33,631,390)
------------
Net increase in net assets resulting from capital transactions 42,493,850
------------
Total increase in net assets ........................... 51,126,319
NET ASSETS:
Beginning of period ................................................. 100,100
------------
End of period ....................................................... $ 51,226,419
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
FINANCIAL HIGHLIGHTS
(expressed in U.S. dollars)
For the period
January 17, 1995
(commencement of
operations) to
October 31, 1995
----------------
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) ............. $51,226
Expenses as a percentage of average net assets:
Expenses paid by Portfolio .......................... 0.77%
Expenses paid by commissions** ...................... 0.05%
Expenses offset arrangements ........................ 0.05%
------
Total expenses .................................. 0.87%*
Ratio of net investment income to average net assets .. 0.25%*
Portfolio turnover rate ............................... 115%
Average commission rate paid per share ................ $ 0.08
- ------------------
* Annualized.
** A portion of the Portfolio's securities transactions are directed to certain
unaffiliated brokers which in turn use a portion of the commissions they
receive from the Portfolio to pay other unaffiliated service providers on
behalf of the Portfolio for services provided for which the Portfolio would
otherwise be obligated to pay.
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Organization and Significant Accounting Policies. U.S. Small Company
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company which
was organized as a trust under the laws of the State of New York on June 15,
1993. The Portfolio commenced operations on January 17, 1995 and received a
contribution of certain assets and liabilities, including securities, with a
value of $33,464,236 (including $1,223,663 of unrealized appreciation) on that
date from The 59 Wall Street Small Company Fund in exchange for a beneficial
interest in the Portfolio. The Declaration of Trust permits the Trustees to
create an unlimited number of beneficial interests in the Portfolio.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America, and reflect the
following policies:
A. Valuation of Investments. (1) The value of investments listed on
a securities exchange is based on the last 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 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) short-term investments which mature in 60
days or less are valued at amortized cost if their original maturity was
60 days or less, or by amortizing their value on the 61st day prior to
maturity, if their original maturity when acquired by the Portfolio was
more than 60 days, unless this is determined not to represent fair value
by the Trustees.
B. 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 except that, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as the Portfolio is informed
of 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.
C. 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.
D. 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 period January 17,
1995 through October 31, 1995, the Portfolio incurred $283,032 for advisory
services.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company (Cayman) Ltd. (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 period January
17, 1995 through October 31, 1995, the Portfolio incurred $15,240 for
administrative services.
Trustee Fee. Each Trustee of the Portfolio receives an annual retainer
paid by the Portfolio. Each Trustee is also reimbursed for out-of-pocket
expenses incurred in connection with board meetings. For the period January 17,
1995 through October 31, 1995, the Portfolio incurred $10,149 for Trustees fees.
3. Investment Transactions. For the period January 17, 1995 through
October 31, 1995, the cost of purchases and the proceeds of sales of investment
securities other than short-term investments were $63,168,410 and $56,121,807,
respectively. For that same period, the Portfolio paid brokerage commissions of
$75,463 to Brown Brothers Harriman & Co. for transactions executed on its
behalf. Custody fees for the Portfolio were reduced by $21,000 as a result of
the Portfolio directing a portion of its portfolio transactions to certain
unaffiliated brokers. Additionally, custody fees for the Portfolio were further
reduced by $20,383 as a result of an expense offset arrangement with the
Portfolio's custodian.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
U.S. Small Company Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Small Company Portfolio as of
October 31, 1995, and the related statement of operations, statement of changes
in net assets, and financial highlights for the period January 17, 1995
(commencement of operations) to October 31, 1995 (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
audit.
We conducted our audit 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, 1995 by correspondence with the custodian. 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 audit provides 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 U.S. Small Company
Portfolio at October 31, 1995, and the results of its operations, the changes in
its net assets, and its financial highlights for the period January 17, 1995
(commencement of operations) to October 31, 1995 in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
December 12, 1995
