U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1998
(unaudited)
(expressed in U.S. dollars)
Shares Value
- ------ -----------
COMMON STOCKS (93.9%)
COMMERCIAL SERVICES (6.7%)
15,900 Advo, Inc. .............................................. $ 455,137
6,650 Bowne & Co., Inc. ....................................... 274,728
7,000 Consolidated Graphics, Inc.*............................. 403,812
17,000 Ha-Lo Industries, Inc.*.................................. 570,562
10,800 Richfood Holdings, Inc. ................................. 296,325
15,300 Romac International, Inc.*............................... 407,362
8,900 Sylvan Learning Systems, Inc.* .......................... 438,603
9,100 Valassis Communications, Inc. ........................... 357,175
-----------
3,203,704
-----------
CONSUMER DURABLES (6.6%)
25,600 Centex Corp. ............................................ 889,600
9,100 Ethan Allen Interiors, Inc. ............................. 463,531
9,900 Fleetwood Enterprises, Inc. ............................. 457,256
16,200 Mohawk Industries, Inc.*................................. 500,175
11,600 Sola International, Inc.*................................ 493,000
8,100 U.S. Home Corp. *........................................ 336,150
-----------
3,139,712
-----------
CONSUMER NON-DURABLES (3.4%)
12,100 Blyth Industries, Inc.*.................................. 443,919
6,300 Canandaigua Brands, Inc.*................................ 328,781
8,900 Nautica Enterprises, Inc.*............................... 221,109
8,500 Smithfield Foods, Inc.*.................................. 257,125
9,900 Universal Corp. ......................................... 370,631
-----------
1,621,565
-----------
CONSUMER SERVICES (5.3%)
21,400 Brinker International, Inc.*............................. 513,600
8,360 CKE Restaurants, Inc..................................... 289,465
16,000 Fingerhut Companies, Inc. .............................. 474,000
21,400 Grand Casinos, Inc.*..................................... 375,837
16,000 Landry's Seafood Restaurants, Inc.* ..................... 452,000
7,500 Metris Companies, Inc. .................................. 429,141
-----------
2,534,043
-----------
ELECTRONIC TECHNOLOGY (11.1%)
11,300 Aspect Telecommunications Corp.* ........................ 324,169
15,000 Comverse Technology, Inc. *.............................. 711,094
6,200 Dallas Semiconductor Corp. .............................. 239,087
32,600 HMT Technology Corp.*.................................... 421,762
14,200 Micrel, Inc.*............................................ 560,900
11,500 Microchip Technology, Inc.*.............................. 325,594
23,200 National Computer Systems, Inc. ......................... 581,450
5,000 Novellus Systems, Inc.*.................................. 239,062
14,600 Orbital Sciences Corp.*.................................. 648,787
10,900 SCI Systems, Inc.*....................................... 448,944
9,100 Technitrol, Inc. ........................................ 371,962
8,200 Vitesse Semiconductor Corp.*............................. 472,269
-----------
5,345,080
-----------
ENERGY MINERALS (0.6%)
15,500 Vintage Petroleum, Inc. ................................. 302,250
-----------
FINANCE (15.7%)
9,400 Amerus Life Holdings, Inc. .............................. 300,800
2,700 CCB Financial Corp. ..................................... 293,625
6,500 Centura Banks, Inc. ..................................... 468,000
5,700 CMAC Investment Corp. ................................... 368,006
9,500 Commerce Group, Inc. .................................... 358,625
6,500 Financial Security Assurance Holdings., Ltd. ............ 389,187
7,007 First Commercial Corp. (Rights) ......................... 518,080
14,000 FirstMerit Corp. ........................................ 396,375
5,086 Fleet Financial Group, Inc. ............................. 439,334
8,200 Fremont General Corp. ................................... 457,150
11,800 Keystone Financial, Inc. ................................ 461,675
6,700 Legg Mason, Inc. ........................................ 395,300
8,300 Magna Group, Inc. ....................................... 490,737
6,300 Orion Capital Corp. ..................................... 351,225
13,200 Protective Life Corp. ................................... 490,050
9,325 Provident Financial Group, Inc. ......................... 494,516
26,700 Relaince Group Holdings, Inc. ........................... 462,244
21,120 Sovereign Bancorp, Inc. ................................. 399,300
-----------
7,534,229
-----------
HEALTH SERVICES (3.8%)
6,210 Lincare Holdings, Inc.*.................................. 502,622
10,260 Orthodontic Centers of America, Inc.* ................... 219,308
12,250 PhyCor, Inc.*............................................ 277,539
12,700 Trigon Healthcare, Inc.*................................. 385,763
7,200 Universal Health Services, Inc.* ........................ 414,450
-----------
1,799,682
-----------
HEALTH TECHNOLOGY (1.8%)
10,600 Barr Laboratories, Inc.*................................. 429,963
7,700 Steris Corp.*............................................ 452,856
-----------
882,819
-----------
INDUSTRIAL SERVICES (2.8%)
8,500 Camco International, Inc. ............................... 576,938
8,900 Cliffs Drilling Co.*..................................... 438,881
33,700 Parker Drilling Co.*..................................... 345,425
-----------
1,361,244
-----------
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1998 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
- ------ -----------
NON-ENERGY MINERALS (2.7%)
65,100 Armco, Inc. ............................................. $ 447,563
11,200 Centex Construction Products, Inc. ...................... 411,600
7,000 Texas Industries, Inc. .................................. 451,063
-----------
1,310,226
-----------
PROCESS INDUSTRIES (4.1%)
26,700 Burlington Industries, Inc.*............................. 467,250
8,200 Corn Products International, Inc.* ...................... 292,125
8,300 Dexter Corp. ............................................ 342,894
14,100 Guilford Mills, Inc. .................................... 398,325
23,700 Jefferson Smurfit Corp.*................................. 488,072
-----------
1,988,666
-----------
PRODUCER MANUFACTURING (7.7%)
7,000 Borg-Warner Automotive, Inc. ............................ 435,312
9,900 General Cable Corp. ..................................... 448,594
8,300 Kuhlman Corp. ........................................... 406,700
14,800 Meritor Automotive, Inc. ................................ 382,025
13,400 Miller (Herman), Inc. ................................... 404,094
25,900 Navistar International Corp.*............................ 773,763
6,400 Precision Castparts Corp. ............................... 397,600
7,200 SPS Technologies, Inc.*.................................. 445,050
-----------
3,693,138
-----------
RETAIL TRADE (7.0%)
4,295 CVS Corp. ............................................... 316,756
9,700 Fred Meyer, Inc.*........................................ 435,288
9,700 Goody's Family Clothing, Inc.* .......................... 477,119
24,300 OfficeMax, Inc.*......................................... 457,144
10,500 Pacific Sunwear of California* .......................... 463,641
10,600 Ross Stores, Inc. ....................................... 490,581
5,900 Williams-Sonoma, Inc.*................................... 324,684
12,500 Zale Corp.*.............................................. 376,563
-----------
3,341,776
-----------
TECHNOLOGY SERVICES (6.0%)
14,400 Ciber, Inc.*............................................. 468,000
15,000 Keane, Inc.*............................................. 753,750
14,800 Renaissance Worldwide, Inc.*............................. 265,475
17,040 Sterling Software, Inc.*................................. 450,495
15,500 Symantec Corp.*.......................................... 449,984
9,800 Tech Data Corp.*......................................... 488,163
-----------
2,875,867
-----------
TRANSPORTATION (3.8%)
4,100 Airbourne Freight Corp. ................................. 162,463
2,800 Alaska Air Group, Inc. .................................. 157,150
10,200 American West Holdings Corp.*............................ 308,550
9,800 Coach USA, Inc. *........................................ 464,888
16,950 Comair Holdings, Inc. ................................... 462,417
7,200 USFreightways Corp. ..................................... 256,950
-----------
1,812,418
-----------
UTILITIES (4.8%)
6,810 KN Energy, Inc. ......................................... 399,662
28,990 NUI Corp. ............................................... 742,869
35,800 Northwestern Public Services Co. ........................ 796,550
14,800 Tel-Save Holdings, Inc.*................................. 337,163
-----------
2,276,244
-----------
TOTAL COMMON STOCKS
(identified cost $36,589,333) ........................... $45,022,663
-----------
Principal
Amount
- ---------
$1,000,000 TIME DEPOSIT (2.1%)
State Street Bank (Cayman)
4.50%, 05/01/98 (identified cost $1,000,000)............ $ 1,000,000
-----------
TOTAL INVESTMENTS (identified cost $37,589,333)...... 96.0% $46,022,663
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ...... 4.0 1,934,756
----- -----------
NET ASSETS .......................................... 100.0% $47,987,419
===== ===========
- ----------
* Non-income producing security
(a) The aggregate cost for federal income tax purposes is $37,589,333, the
aggregate gross unrealized appreciation is $9,247,498, and the aggregate
gross unrealized depreciation is $814,168, resulting in net unrealized
appreciation of $8,433,330.
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(unaudited)
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified
cost $37,589,333) (Note 1) ............................. $46,022,663
Cash ...................................................... 2,071,355
Receivables for:
Margin variation on futures ............................ 45,000
Dividends and other receivables ........................ 13,248
-----------
Total Assets ...................................... 48,152,266
-----------
LIABILITIES:
Payables for:
Withdrawals ............................................ 111,185
Investment advisory fee (Note 2) ....................... 25,481
Trustees' fee (Note 2) ................................. 3,105
Administrative fee (Note 2) ............................ 1,372
Accrued expenses and other liabilities ................. 37,223
Foreign withholding taxes .............................. 16,481
-----------
Total Liabilities ................................. 194,847
-----------
NET ASSETS ................................................... $47,957,419
===========
Net Assets Consist of:
Paid-in capital ........................................... $39,487,690
Net unrealized appreciation ............................... 8,469,729
-----------
Net Assets ................................................... $47,957,419
===========
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998
(unaudited)
(expressed in U.S. dollars)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding
taxes of $6,929) ..................................... $ 160,017
Interest ................................................ 19,333
------------
Total Income ........................................ 179,350
------------
Expenses:
Investment advisory fee (Note 2) ........................ 146,180
Custody fee (Note 3) .................................... 23,068
Administrative fee (Note 2) ............................. 7,871
Professional fees ....................................... 12,605
Trustees' fees and expenses (Note 2) .................... 3,105
Amortization of organization expenses (Note 1) .......... 1,260
Miscellaneous ........................................... 1,967
------------
Total Expenses .......................................... 196,056
Fees paid indirectly (Note 3) ....................... (20,884)
------------
Net Expenses ........................................ 175,172
------------
Net Investment Income ............................... 4,178
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized gain on investments ........................... 10,970,771
Net change in unrealized appreciation on investments ....... (4,712,445)
------------
Net Realized and Unrealized Gain ........................ 6,258,326
------------
Net Increase in Net Assets Resulting from Operations ....... $ 6,262,504
============
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
For the
six months ended For the
April 30, 1998 year ended
(unaudited) October 31, 1997
---------------- ----------------
INCREASE IN NET ASSETS:
Operations:
Net investment income .............. $ 4,178 $ 49,182
Net realized gain on
investments ...................... 10,970,771 8,634,544
Net change in unrealized
appreciation on investments ...... (4,712,445) 1,336,403
------------ ------------
Net increase in net assets
resulting from operations ...... 6,262,504 10,020,129
------------ ------------
Capital transactions:
Proceeds from contributions ........ 2,452,804 7,097,111
Value of withdrawals ............... (5,208,225) (30,601,261)
------------ ------------
Net decrease in net assets
resulting from capital
stock transactions ............. (2,755,421) (23,504,150)
------------ ------------
Total increase (decrease)
in net assets ................ 3,507,083 (13,484,021)
NET ASSETS:
Beginning of period .................... 44,450,336 57,934,357
------------ ------------
End of period .......................... $ 47,957,419 $ 44,450,336
============ ============
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
FINANCIAL HIGHLIGHTS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the period
For the For the years January 17, 1995
six months ended ended October 31, (commencement of
April 30, 1998 ----------------------- operations) to
(unaudited) 1997 1996 October 31, 1995
------------- -------- -------- ---------------
<S> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted)..................... $47,957 $44,450 $57,934 $51,226
Ratios as a percentage of average
net assets:
Expenses paid by Portfolio.......... 0.78%* 0.77% 0.77% 0.77%*
Expenses paid by commissions**...... -- -- 0.05% 0.05%*
Expenses offset arrangements........ 0.09%* 0.09% 0.08% 0.05%*
------- ------- ------- -------
Total expenses.................. 0.87%* 0.86% 0.90% 0.87%*
======= ======= ======= =======
Ratio of net investment income to
average net assets................... 0.02%* 0.10% 0.26% 0.25%*
Portfolio turnover rate............... 74% 63% 51% 115%
Average commission rate
paid per share....................... $0.0600 $0.0771 $0.0800 $0.0800
</TABLE>
- ----------
* Annualized
** A portion of the Portfolio's security transactions are directed to certain
unaffiliated brokers which in turn use a portion ofthe commissions they
received 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
(unaudited)
(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 an 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 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 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
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. Futures Contracts. To hedge against anticipated future changes in
interest rates or securities prices, U.S. Small Company Portfolio may
enter into financial futures contracts for the delayed delivery of
securities or contracts based on financial indices at a fixed price on a
future date. The Portfolio is required to deposit either in cash or
securities an amount equal to a certain percentage of the contract amount.
Subsequent payments are made or received by the Portfolio each day,
dependent on the daily fluctuations in the value of the underlying
security or securities or index, and are recorded for financial statement
purposes as unrealized gains or losses by the Portfolio. The Portfolio
recognizes a realized gain or loss when the contract is closed or expires.
Should interest rates or securities prices move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial
futures contracts and may realize a loss.
If forecasts of interest rates and other market factors are
incorrect, investment performance will diminish compared to what
performance would have been if these investment techniques were not used.
Even if the forecasts are correct, there is risk that the positions may
correlate imperfectly with the asset or liability being hedged. Other
risks of entering into these transactions are that a liquid secondary
market may not always exist, or that another party to a transaction may
not perform.
C. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where
recovery of such taxes is not assured. Interest income is accrued daily.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
(expressed in U.S. dollars)
D. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provisions
for federal income taxes is necessary.
E. 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 six months ended
April 30, 1998, the Portfolio incurred $146,180 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 April
30, 1998, the Portfolio incurred $7,871 for administrative services.
Trustees' 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 six months ended
April 30, 1998, the Portfolio incurred $3,105 for Trustee fees.
3. Investment Transactions. For the six months ended April 30, 1998, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $31,318,930 and $35,396,324, respectively. For that
same period, the portfolio paid brokerage commissions of $35,558 to Brown
Brothers Harriman & Co. for transactions executed on its behalf. Custody fees
for the portfolio were reduced by $20,884 as a result of an expense offset
arrangement with the Portfolio's custodian.
4. Financial Futures Contracts. As of April 30, 1998, U.S. Small Company
Portfolio held open futures contracts. The contractual amount of a futures
contract represents the investment the Portfolio has in a particular contract
and does not necessarily represent the amounts potentially subject to risk. The
measurements of futures contracts is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under open
futures contracts at April 30,1998 is as follows:
Unrealized
Position Contracts Index Depreciation
------- --------- ----- ------------
Long 10 Russell 2000 $36,399
As of April 30, 1998, the Portfolio had segregated sufficient cash and/or
securities to cover margin requirements on open futures contracts.
