U.S. MID-CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1998
(expressed in U.S. dollars)
Shares Value
------ -----
COMMON STOCKS (98.6%)
COMMERCIAL SERVICES (11.3%)
3,500 Interpublic Group
Companies, Inc. .................................... $ 204,750
9,000 Mail Well Holdings, Inc.* ............................ 117,562
17,000 Modis Professional
Services, Inc.* .................................... 299,625
3,500 Paychex, Inc. ........................................ 173,906
7,000 World Color
Press, Inc.* ......................................... 212,625
----------
1,008,468
----------
CONSUMER NON-DURABLES (5.6%)
9,000 Jones Apparel Group, Inc.* ........................... 155,250
7,000 Nautica Enterprises, Inc.* ........................... 145,250
11,000 Rexall Sundown, Inc.* ................................ 196,969
----------
497,469
----------
CONSUMER SERVICES (1.6%)
13,000 Circus Circus
Enterprises, Inc.* ................................ 145,437
----------
ELECTRONIC TECHNOLOGY (6.8%)
13,500 Cypress Semiconductor
Corp.* ............................................. 150,187
4,700 Jabil Circuit, Inc.* ................................. 217,669
3,000 Sundstrand Corp. ..................................... 140,812
9,582 Thermedics, Inc.* .................................... 103,006
----------
611,674
----------
ENERGY MINERALS (3.4%)
5,400 Apache Corp. ......................................... 152,887
6,000 Valero Energy Corp. .................................. 150,000
----------
302,887
----------
FINANCE (11.4%)
8,798 Archstone Communities Trust .......................... 177,060
6,500 Cousins Properties, Inc. ............................. 186,062
6,461 Equity Office Properties Trust ....................... 155,064
5,900 Highwoods Properties, Inc. ........................... 164,831
6,000 Hospitality Properties Trust ......................... 159,000
7,500 Liberty Property Trust ............................... 172,500
----------
1,014,517
----------
HEALTH SERVICES (5.7%)
2,200 Aetna, Inc. .......................................... 164,175
15,000 Healthsouth Corp.* ................................... 181,875
10,000 Intergrated Health
Services, Inc. ..................................... 161,875
----------
507,925
----------
INDUSTRIAL SERVICES (9.2%)
10,000 Ensco International, Inc. ............................ 134,375
10,000 Global Marine, Inc.* ................................. 123,750
8,000 Helmerich & Payne, Inc. .............................. 190,500
8,500 Nabors Industries, Inc.* ............................. 157,250
20,000 Parker Drilling Co.* ................................. 98,750
7,500 Republic Industries, Inc.* ........................... 120,469
----------
825,094
----------
NON-ENERGY MINERALS (2.1%)
5,500 Lafarge Corp. ........................................ 185,281
----------
PROCESS INDUSTRIES (1.8%)
6,765 Westvaco Corp. ....................................... 166,588
----------
PRODUCER MANUFACTURING (8.6%)
3,500 Paccar, Inc. ......................................... 152,578
5,000 Timken Co. ........................................... 89,063
8,000 Tower Automotive, Inc.* .............................. 178,000
5,700 Trinity Industries, Inc. ............................. 211,613
6,500 United Dominion
Industries, Ltd. ................................... 132,844
----------
764,098
----------
RETAIL TRADE (6.8%)
12,000 General Nutrition
Companies, Inc.* ................................... 175,125
5,000 Lands' End, Inc. ..................................... 85,313
20,000 Pier 1 Imports, Inc. ................................. 185,000
5,000 Ross Stores, Inc. .................................... 162,188
----------
607,626
----------
TECHNOLOGY SERVICES (1.5%)
6,500 PeopleSoft, Inc.* .................................... 137,516
----------
<PAGE>
U.S. MID-CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1998 (continued)
(expressed in U.S. dollars)
Shares Value
------ -----
TRANSPORTATION (12.3%)
7,500 Airborne Freight Corp. ............................... $ 175,781
5,200 Alaska Air Group, Inc.* .............................. 186,875
6,925 Alexander & Baldwin, Inc. ............................ 140,664
5,700 CNF Transportation, Inc. ............................. 172,425
4,300 Continental Airlines, Inc.* . ........................ 170,388
10,345 Stolt-Nielson SA ..................................... 117,998
4,700 Tidewater, Inc. ...................................... 133,069
----------
1,097,200
----------
UTILITIES (10.5%)
5,500 Alltel Corp. ......................................... 257,469
6,150 Equitable Resources, Inc. ............................ 171,047
5,470 Peoples Energy Corp. ................................. 201,706
3,200 Piedmont Natural Gas Co., Inc. ....................... 111,200
7,300 Washington Gas Light Co. ............................. 192,994
----------
934,416
----------
TOTAL INVESTMENTS (identified cost $10,029,568) (a) ....... 98.6 $8,806,196
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............ 1.4 128,408
----- ----------
NET ASSETS ................................................ 100.0% $8,934,604
===== ==========
----------------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $10,029,568, the
aggregate gross unrealized appreciation is $415,616, and the aggregate gross
unrealized depreciation is $1,638,988, resulting in net unrealized
depreciation of $1,223,372.
See Notes to Financial Statements.
<PAGE>
U.S. MID-CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
(expressed in U.S. dollars)
ASSETS:
Investments in securities, at value (identified cost
$10,029,568) (Note 1) ................................... $ 8,806,196
Cash ...................................................... 75,559
Receivable for contributions .............................. 62,000
Receivable from administrator ............................. 10,876
Dividends and other receivables ........................... 11,838
------------
Total Assets ...................................... 8,966,469
------------
LIABILITIES:
Payables for:
Investment advisory fee (Note 2) ....................... 4,441
Administration fee (Note 2) ............................ 239
Expense reimbursement fee (Note 2) ..................... 786
Foreign withholding taxes .............................. 26,399
------------
Total Liabilities ................................. 31,865
------------
NET ASSETS ................................................... $ 8,934,604
============
Net Assets Consist of:
Paid-in capital ......................................... $ 10,157,976
Net unrealized depreciation ............................. (1,223,372)
------------
Net Assets ................................................... $ 8,934,604
============
See Notes to Financial Statements.
<PAGE>
U.S. MID-CAP PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 1998
(expressed in U.S. dollars)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes of $26,460) $ 152,066
Interest ............................................... 6,887
-----------
Total Income ....................................... 158,953
-----------
Expenses:
Investment advisory fee (Note 2) ....................... 61,166
Expense reimbursement fee (Note 2) ..................... 10,876
Administrative fee (Note 2) ............................ 3,294
-----------
Total Expenses ..................................... 75,336
-----------
Net Investment Income .............................. 83,617
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized gain on investments .......................... 282,219
Net change in unrealized depreciation on investments ...... (1,223,372)
-----------
Net Realized and Unrealized Loss ..................... (941,153)
-----------
Net Decrease in Net Assets Resulting from Operations ...... $ (857,536)
===========
See Notes to Financial Statements.
<PAGE>
U.S. MID-CAP PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
(expressed in U.S. dollars)
For the year ended
October 31, 1998
----------------
INCREASE IN NET ASSETS:
Operations:
Net investment income ................................... $ 83,617
Net realized gain on investments ........................ 282,219
Net change in unrealized appreciation on investments .... (1,223,372)
-----------
Net decrease in net assets resulting from operations .. (857,536)
-----------
Capital transactions:
Proceeds from contributions ............................. 17,320,645
Value of withdrawals .................................... (7,528,505)
-----------
Net increase in net assets resulting from
capital transactions ............................... 9,792,140
-----------
Total increase in net assets ........................ 8,934,604
NET ASSETS:
Beginning of year ........................................... --
-----------
End of year ................................................. $ 8,934,604
===========
See Notes to Financial Statements.
<PAGE>
U.S. MID-CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
(expressed in U.S. dollars)
For the
year ended
October 31, 1998
----------------
Ratios/Supplemental Data:
Net assets, end of year (000's omitted).................. $ 8,935
Ratio of expenses to average net assets.................. 0.80%
Ratio of net investment income to average net assets..... 0.89%
Portfolio turnover rate.................................. 204%
See Notes to Financial Statements.
<PAGE>
U.S MID-CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Organization and Significant Accounting Policies. U.S. Mid-Cap
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 November 1, 1997. 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. 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.
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.
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 $61,166 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
<PAGE>
U.S MID-CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(expressed in U.S. dollars)
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 $3,294 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 0.80% of the Portfolio's average daily net assets. For
the year ended October 31, 1998, Brown Brothers Harriman Trust Company (Cayman)
Limited incurred $24,872 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.
3. Investment Transactions. For the period ended October 31, 1998, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $26,429,289 and $12,244,524, respectively. There
were no purchases or sales of U.S. government obligations during the period.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
Mid-Cap Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Mid-Cap Portfolio as of October 31,
1998, and the related statement of operations, the statement of changes in net
assets and the financial highlights for the year then ended (all expressed in
U.S. dollars). These financial statements 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 Mid-Cap 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>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The following investment management strategies and techniques have
materially affected the Fund's performance for the fiscal year ended October 31,
1998.
Mid-Cap Fund
The total return of the 59 Wall Street Mid-Cap Fund fell well below the
return of the S&P Mid-Cap 400 index over the twelve-month period ending
10/31/98. The Fund, primarily due to its portfolio construction methodology, was
not well positioned for an environment in which investors were anxious about the
global economy.
The 59 Wall Street Mid-Cap Fund is a quantitatively run fund that, as a
matter of policy, invests 40% of its assets in "value" stocks. This is done to
give the Fund diversification. However, these "value" stocks are typically very
sensitive to the economic cycle. It was that economic sensitivity that hurt the
Fund in the twelve months ending 10/31/98.
Although there were events in the summer of 1997 that warned of the coming
Asian crisis (such as the Thai baht devaluation), the U.S. stock market did not
really succumb to global economic worries until late October 1997. On October
27, 1997, the Dow Jones Industrial Average registered a 554 point decline after
the Hong Kong market plunged the previous day. It was on that day that the U.S.
equity market really began to focus on events outside of our borders.
As the Asian crisis seeped around the world, worries began to mount over
Russia, South America and other areas of the world. Those economic worries then
produced doubts concerning the robustness of U.S. corporate profit growth. Those
corporate profit-related doubts in turn resulted in a flight away from
economically sensitive stocks whose fortunes are largely tied to a healthy
global economy. Our Fund held too many of those types of companies over the last
twelve months.
The 59 Wall Street Mid-Cap Fund has been targeted to long-term investors
who want an exposure to the mid cap part of the U.S. equity market.
<PAGE>
Mid-Cap Fund Growth of $10,000
[The following information was depicted as a line graph
in the printed material]
- --------------------------------------------------------------------------------
Total Return
- --------------------------------------------------------------------------------
One Year Five Years Inception
Ended Ended to 10/31/98
10/31/98 10/31/98 (Annualized)
- --------------------------------------------------------------------------------
(9.10)% 14.37% 13.87%
- --------------------------------------------------------------------------------
Mid-Cap S&P 400
Fund Fund
- -----------------------------
23,504 25,813
21,739 23,697
20,975 21,674
24,321 26,627
27,325 27,700
27,246 27,526
28,432 28,822
28,695 28,306
26,983 27,085
25,613 25,013
26,535 25,499
26,060 24,547
25,856 24,188
26,521 25,288
24,878 23,914
24,837 23,943
23,430 21,787
23,051 21,192
21,058 19,489
20,384 18,996
20,978 19,841
21,181 20,005
20,769 19,281
20,789 19,260
19,127 18,234
19,010 18,181
18,169 17,422
16,987 16,472
18,325 17,667
19,422 17,936
19,383 17,697
18,292 17,173
18,191 16,970
17,846 16,412
17,376 16,178
17,574 16,218
16,844 15,540
17,396 15,950
17,127 15,573
16,909 15,290
15,544 14,533
14,792 13,965
14,192 13,637
13,742 13,370
13,229 13,143
12,576 12,489
12,596 12,353
12,469 12,241
12,955 12,819
12,662 12,681
12,909 12,922
12,132 12,280
11,721 11,878
12,182 12,301
12,357 12,419
12,320 12,327
12,770 12,925
12,753 13,111
12,246 12,813
11,848 12,245
12,003 12,522
11,939 12,481
11,855 12,351
11,422 11,862
11,460 11,885
11,315 11,826
10,918 11,311
11,320 11,615
10,985 11,228
11,297 11,387
11,099 11,246
10,809 10,882
10,266 10,307
9,974 10,066
9,882 9,927
10,037 10,170
9,567 9,689
9,946 9,974
9,845 9,880
10,000 10,000
- ---------------------------------------------------------------
_____ Mid-Cap Fund* - - - S & P 400 Index
- ---------------------------------------------------------------
*net of fees and expenses
Past performance is not predictive of future performance.
<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.
