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Small Company Fund
SEMI-ANNUAL REPORT
April 30, 1997
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
(unaudited)
ASSETS:
Investment in U.S. Small Company
Portfolio (the "Portfolio"), at value (Note 1).......... $ 34,399,990
------------
LIABILITIES:
Payables for:
Capital stock redeemed................................... 363,840
Expense payment fee (Note 2)............................. 12,636
Administrative fee (Note 2).............................. 3,514
------------
Total Liabilities ................................... 379,990
------------
NET ASSETS ..................................................... $ 34,020,000
============
Net Assets Consist of:
Paid-in capital............................................. $ 27,626,847
Distributions in excess of net
investment income......................................... (12,079)
Accumulated net realized gain............................... 3,786,530
Net unrealized appreciation ................................ 2,618,702
------------
Net Assets ...................................................... $ 34,020,000
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($34,020,000 / 2,412,890 shares) ........................... $14.10
======
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997
(unaudited)
INVESTMENT INCOME:
Income:
Dividend income allocated from Portfolio.................. $ 165,679
Interest income allocated from Portfolio.................. 26,582
Expenses allocated from Portfolio......................... (140,917)
----------
Total Income ......................................... 51,344
----------
Expenses:
Expense payment fee (Note 2).............................. 36,732
Administrative fee (Note 2)............................... 22,775
----------
Total Expenses ....................................... 59,507
----------
Net Investment Loss ................................. (8,163)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized gain on investments.......................... 3,823,177
Net change in unrealized appreciation on investments...... (4,267,163)
----------
Net Realized and Unrealized Loss ..................... (443,986)
----------
Net Increase in Net Assets Resulting
from Operations .................................... $ (452,149)
==========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the For the
six months ended year ended
April 30, 1997 October 31,
(unaudited) 1996
----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)................... $ (8,163) $ 26,865
Net realized gain on investments............... 3,823,177 1,591,385
Net change in unrealized appreciation
on investments............................... (4,267,163) 3,007,088
----------- ----------
Net increase (decrease) in net
assets resulting from
operations ............................... (452,149) 4,625,338
----------- ----------
Dividends and distributions declared (Note 1):
From net investment income..................... (11,286) (45,132)
From net realized gains........................ (1,445,257) --
----------- ----------
Total dividends and distributions
declared.................................. (1,456,543) (45,132)
----------- ----------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock....... 3,005,423 4,803,048
Net asset value of capital stock issued to
shareholders in reinvestment of
distributions ............................... 108,419 15,693
Net cost of capital stock redeemed............. (2,286,974) (3,705,282)
----------- ----------
Net increase in net assets
resulting from capital
stock transactions ....................... 826,868 1,113,459
----------- ----------
Total increase (decrease)
in net assets.......................... (1,081,824) 5,693,665
NET ASSETS:
Beginning of period.............................. 35,101,824 29,408,159
----------- ----------
End of period (distribution in
excess of net investment income
of $12,079 and undistributed
net investment income of $7,370)............. $34,020,000 $35,101,824
=========== ===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share
outstanding throughout each period
<TABLE>
<CAPTION>
For the six
months ended
April 30, For the years ended October 31,
1997 ---------------------------------------------------
(unaudited) 1996 1995 1994 1993 1992
----------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $14.85 $12.81 $11.54 $12.92 $10.70 $10.36
Income from investment operations:
Net investment income (loss)................ (0.01) 0.01 0.03 0.05 0.01 0.02
Net realized and unrealized gain (loss)..... (0.12) 2.05 1.31 (1.04) 2.84 0.34
Less dividends and distributions (Note 1):
From net investment income.................. (0.01) (0.02) (0.07) (0.01) (0.01) (0.02)
Net realized gains ......................... (0.61) -- -- (0.38) (0.62) --
In excess of net realized gains............. -- -- -- (0.00)(1) -- --
------ ------ ------ ------ ------ ------
Net asset value, end of period.............. $14.10 $14.85 $12.81 $11.54 $12.92 $10.70
====== ====== ====== ====== ====== ======
Total return.................................. (1.20)%(2) 16.10%(2) 11.69%(2) (7.81)%(2) 27.00%(2) 3.46%(2)
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)... $34,020 $35,102 $29,408 $39,401 $41,062 $20,504
Expenses as a percentage of
average net assets:...................... 1.10%(2,4) 1.10%(2) 1.10%(2) 1.10%(2) 1.10%(2) 1.10%(4)
Ratio of net investment income to average
net assets ............................... (0.04)%(2) 0.08%(2) 0.25%(2) 0.40%(2) 0.04%(2) 0.16%(2,4)
Portfolio turnover rate3.................... N/A N/A 16% 140% 116% 67%
Average commission rate paid per share3 .... N/A N/A $0.08% -- -- --
</TABLE>
- ----------
(1) Less than $0.01 per share.
(2) Had the expense payment agreement not been in place, the ratio of expenses
to average net assets would have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio of expenses to average
net assets.............................. 1.38%(4) 1.32% 1.27% 1.21% 1.38% 1.46%(4)
Total return.............................. (1.48)% 15.88% 11.52% (7.94)% 26.72% 3.10%(4)
</TABLE>
The expense payment agreement will terminate on July 1, 1997. At current
asset levels, management believes that the ratio of expenses to average net
assets would be at least 1.40%. Furthermore, the ratio of expenses to
average net assets for the year ended October 31, 1995 reflects fees paid
with brokerage commissions and fees reduced in connection with specific
agreements. Had these arrangements not been in place, the ratio would have
been 1.39%.
(3) Portfolio turnover and average commission paid represents the rate of
portfolio activity and average commission rate for the period while the
Fund was making investments directly in securities. The portfolio turnover
rate and average commission rate paid for the period since the Fund
transferred all of its investable assets to the Portfolio is shown in the
Portfolio's Financial Highlights which is included elsewhere in this
report.
(4) Annualized.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Organization and Significant Accounting Policies. The 59 Wall Street
Small Company Fund (the "Fund") is a separate diversified series of The 59 Wall
Street Fund, Inc. (the "Corporation") which is registered under the Investment
Company Act of 1940, as amended. The Corporation is an open-end management
investment company organized under the laws of the State of Maryland on July 16,
1990. The Fund commenced operations on April 23, 1991.
The Fund invests all of its investable assets in the U.S. Small Company
Portfolio (the "Portfolio"), a diversified, open-end management investment
company having the same investment objectives as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (approximately 77% at April 30, 1997). The performance of the Fund is
directly affected by the performance of the Portfolio. The financial statements
of the Portfolio, including the portfolio of investments, are included elsewhere
in this report and should be read in connection with the Fund's financial
statements.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles 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. Valuation of investments by the
Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial
Statements which are included elsewhere in this report.
B. Accounting for Investments. The Fund records its share of net
investment income, realized and unrealized gain and loss and adjusts its
investment in the Portfolio each day. All the net investment income and
realized and unrealized gain and loss of the Portfolio is allocated pro
rata among the Fund and other investors in the Portfolio at the time of
such determination.
C. Federal Income Taxes. It is the Corporation's policy to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
Each Fund files a tax return annually using tax accounting methods
required under provisions of the Internal Revenue Code which may differ
from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported in these financial
statements may differ from that reported on the Fund's tax return due to
certain book-to-tax differences such as losses deferred due to "wash sale"
transactions and utilization of capital loss carryforwards. These
differences may result in temporary over-distributions for financial
statement purposes. As such, the character of distributions to
shareholders reported in the Financial Highlights table may differ from
that reported to shareholders on Form 1099-DIV. These distributions do not
constitute a return of capital.
D. Dividends and Distributions to Shareholders. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
2. Transactions with Affiliates.
Administrative Fee. The Corporation has an administrative agreement with
Brown Brothers Harriman & Co. (the "Administrator") for which the Administrator
receives a fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.125% of the Fund's average daily net assets. The Administrator
has a subadministration services agreement with 59 Wall Street Administrators,
Inc. for which 59 Wall Street Administrators, Inc. receives such compensation as
is from time to time agreed upon, but not in excess of the amount paid to the
Administrator. For the six months ended April 30, 1997, the Fund incurred
$22,775 for administrative services.
<PAGE>
THE 59 WALL STREET SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
Shareholder Servicing/Eligible Institution Agreement. The Corporation has
a shareholder servicing agreement and an eligible institution agreement with
Brown Brothers Harriman & Co. for which Brown Brothers Harriman & Co. receives a
fee from the Fund calculated daily and paid monthly at an annual rate equivalent
to 0.25% of the Fund's average daily net assets.
Expense Payment Fee. 59 Wall Street Administrators, Inc. pays certain
expenses of the Fund and receives a fee from the Fund, computed and paid
monthly, such that after such fee the aggregate expenses will not exceed 1.10%
of the average daily net assets of the Fund. For the six months ended April 30,
1997, 59 Wall Street Administrators, Inc. incurred approximately $86,700 in
expenses, including shareholder servicing/eligible institution fees of $45,551,
on behalf of the Fund. The expense payment fee agreement of the Fund will
terminate on July 1, 1997.
3. Investment Transactions. Investment transactions of the Portfolio are
discussed in Note 3 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
4. Capital Stock. The Corporation is permitted to issue 2,500,000,000
shares of capital stock, par value $.001 per share, of which 25,000,000 shares
have been classified as shares of the Fund. Transactions in shares of capital
stock were as follows:
For the six months For the year ended
ended April 30, 1997 October 31, 1996
-------------------- ----------------
Capital stock sold .................... 197,600 332,761
Capital stock issued in
connection with
reinvestment of dividends
and distributions ................... 7,119 1,185
Capital stock repurchased ............. (155,790) (266,398)
-------- ---------
Net increase .......................... 48,929 67,548
======== =========
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
(unaudited)
(expressed in U.S. dollars)
Shares Value
------ ----------
COMMON STOCKS (91.7%)
COMMERCIAL SERVICES (2.9%)
11,550 Bowne & Co., Inc...................................... $ 306,075
16,720 Corrections Corp. of .................................
America*............................................ 545,490
6,400 CSS Industries, Inc.*................................. 207,200
11,055 Richfood Holdings, Inc................................ 225,246
-----------
1,284,011
-----------
CONSUMER DURABLES (4.8%)
23,200 Apogee Enterprises, Inc............................... 346,550
17,400 Beazer Homes USA, Inc.*............................... 241,425
18,800 Carlisle Companies, Inc............................... 528,750
15,600 Centex Corp........................................... 561,600
28,180 Continental Homes
Holding Corp...................................... 447,358
-----------
2,125,683
-----------
CONSUMER NON-DURABLES (4.0%)
17,700 Canandaigua Wine Co. -
Class A*............................................ 455,775
8,430 Interstate Bakeries Corp.............................. 437,306
17,900 Kellwood Co........................................... 425,125
9,150 Nautica Enterprises Inc.*............................. 201,300
9,000 Universal Corp........................................ 252,000
-----------
1,771,506
-----------
CONSUMER SERVICES (3.2%)
30,300 Homestead Village, Inc.*.............................. 522,675
70,000 Host Marriott Services Corp.* ........................ 621,250
30,300 Ryan's Family Steak
Houses, Inc.*....................................... 265,125
-----------
1,409,050
-----------
ELECTRONIC TECHNOLOGY (11.4%)
9,820 Aspect Telecommunications
Corp.*.............................................. 173,691
15,000 Comverse Technology, Inc.*............................ 592,500
6,600 Hutchinson Technology, Inc.*.......................... 178,612
38,000 Integrated Measurement
Systems, Inc.*...................................... 517,750
11,620 Komag Inc.*........................................... 326,086
5,300 Lattice Semiconductor Corp.*.......................... 296,800
11,500 Microchip Technology, Inc.*........................... 360,094
9,600 Network General Corp.*................................ 132,600
10,400 Read-Rite Corp.*...................................... 269,750
18,960 Sanmina Corp.*........................................ 949,185
6,550 SCI Systems, Inc.*.................................... 404,462
12,200 Stratus Computer, Inc.*............................... 474,275
2,110 Thermedics Detection, Inc.*........................... 20,846
21,110 Thermedics, Inc.*..................................... 353,593
-----------
5,050,244
-----------
ENERGY MINERALS (3.9%)
15,200 Devon Energy Corp..................................... 501,600
54,960 Plains Resources, Inc.*............................... 707,610
14,620 Pogo Producing Co..................................... 535,458
-----------
1,744,668
-----------
FINANCE (19.6%)
4,700 Alex. Brown, Inc...................................... 302,562
24,795 Allied Group, Inc..................................... 917,415
4,600 American Bankers Insurance
Group, Inc......................................... 242,650
10,726 Charter One Financial, Inc............................ 477,977
8,780 Deposit Guaranty Corp................................. 268,887
6,675 First Commercial Corp................................. 259,035
7,000 FirstMerit Corp....................................... 297,938
33,330 Imperial Bancorp*..................................... 783,255
10,605 Orion Capital Corp.................................... 664,138
14,610 Penncorp Financial Group, Inc......................... 502,219
63,290 Presidential Life Corp................................ 913,749
6,600 Protective Life Corp.................................. 292,050
9,325 Provident Bancorp, Inc................................ 360,178
7,900 TCF Financial Corp.................................... 322,913
20,000 UICI*................................................. 552,500
10,390 Union Planters Corp................................... 463,654
34,490 US Facilities Corp.*.................................. 629,442
3,380 Zions Bancorporation.................................. 429,260
-----------
8,679,822
----------
HEALTH SERVICES (5.8%)
7,600 Genesis Health
Ventures, Inc.*..................................... 227,050
6,210 Lincare Holdings, Inc.*............................... 242,190
15,260 Omnicare, Inc......................................... 371,963
36,360 Orthodontic Centers of
America, Inc.*...................................... 434,047
12,250 PhyCor, Inc.*......................................... 325,391
19,900 Universal Health Services,
Inc.*............................................... 753,713
9,150 Vivra, Inc.*.......................................... 236,756
----------
2,591,110
----------
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997 (continued)
(unaudited)
(expressed in U.S. dollars)
Shares Value
------ ----------
HEALTH TECHNOLOGY (3.4%)
12,400 Hologic, Inc.*........................................ $ 255,750
15,900 Medicis Pharmaceutical
Corp. - Class A*................................... 390,544
13,000 Rexall Sundown, Inc.*................................. 260,000
10,680 Sybron International Corp.*........................... 355,110
7,070 Watson Pharmaceuticals, Inc.* ........................ 252,752
-----------
1,514,156
-----------
INDUSTRIAL SERVICES (4.4%)
27,500 Noble Drilling Corp.*................................. 477,813
57,140 Pride Petroleum Services,
Inc.*............................................... 982,094
10,980 Seacor Smit, Inc.*.................................... 472,140
-----------
1,932,047
-----------
NON-ENERGY MINERALS (3.5%)
26,660 Chaparral Steel Co.................................... 313,255
5,900 Getchell Gold Corp.*.................................. 226,412
39,699 Republic Group, Inc................................... 645,109
15,180 Texas Industries, Inc................................. 349,140
-----------
1,533,916
-----------
PROCESS INDUSTRIES (2.7%)
10,900 Fuller (H.B.) Co...................................... 585,875
9,300 Guilford Mills, Inc................................... 262,725
13,900 Premark Internatioal, Inc............................. 340,550
-----------
1,189,150
-----------
PRODUCER MANUFACTURING (7.2%)
13,020 AGCO Corp............................................. 336,892
21,200 Arvin Industries, Inc................................. 551,200
6,350 Borg-Warner Automotive, Inc........................... 266,700
15,600 Manitowoc Co., Inc. (The)............................. 631,800
25,400 Miller (Herman), Inc.................................. 820,737
11,650 TJ International, Inc................................. 257,756
11,200 US Filter Corp.*...................................... 340,200
-----------
3,205,285
-----------
RETAIL TRADE (5.5%)
25,400 Burlington Coat Factory
Warehouse*.......................................... 482,600
20,200 CompUSA, Inc.*........................................ 388,850
15,500 Fred Meyer, Inc.*..................................... 637,438
33,100 Pier 1 Imports, Inc................................... 653,725
10,600 Ross Stores, Inc...................................... 299,450
-----------
2,462,063
-----------
TECHNOLOGY SERVICES (2.4%)
7,500 Keane, Inc.*.......................................... 347,813
16,200 Pioneer-Standard
Electronics, Inc.................................... 196,425
8,520 Sterling Software, Inc.*.............................. 259,860
9,800 Tech Data Corp.*...................................... 239,487
-----------
1,043,585
-----------
TRANSPORTATION (2.1%)
12,500 Airborne Freight Corp................................. 439,063
19,100 USFreightways Corp.................................... 514,506
-----------
953,569
-----------
UTILITIES (4.9%)
6,810 KN Energy, Inc........................................ 253,673
31,110 Laclede Gas Co........................................ 692,197
17,900 Northwestern Public
Service Co.......................................... 660,062
28,990 NUI Corp.............................................. 568,929
-----------
2,174,861
-----------
TOTAL COMMON STOCKS
(identified cost $34,158,007) ........................ $40,664,726
-----------
Principal
Amount
--------
TIME DEPOSITS (6.8%)
$3,000,000 State Street Bank (Cayman)
4.50%, 5/6/97
(identified cost $3,000,000).......................... $ 3,000,000
-----------
TOTAL INVESTMENTS (identified cost $37,158,007)........ 98.5% $43,664,726
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........ 1.5 680,239
----- -----------
NET ASSETS ............................................ 100.0% $44,344,965
===== ===========
- ----------
* Non-income producing security
(a) The aggregate cost for federal income tax purposes is $37,158,007, the
aggregate gross unrealized appreciation is $8,560,453, and the aggregate
gross unrealized depreciation is $2,053,734, resulting in net unrealized
appreciation of $6,506,719.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
(unaudited)
ASSETS:
Investments in securities, at value (identified
cost $37,158,007) (Note 1) .............................. $43,664,726
Cash ...................................................... 765,402
Receivables for:
Investments sold ....................................... 1,068,872
Dividends and interest receivable ...................... 17,050
Deferred organization expenses (Note 1) ................... 6,887
-----------
Total Assets ...................................... 45,522,937
-----------
LIABILITIES:
Payables for:
Investments purchased .................................. 1,100,338
Investment advisory fee ................................ 23,430
Administrative fee (Note 2) ............................ 1,262
Trustees' fee (Note 2) ................................. 324
Foreign withholding taxes .............................. 9,409
Accrued expenses and other liabilities ................. 43,209
-----------
Total Liabilities ................................. 1,177,972
-----------
NET ASSETS ................................................... $44,344,965
===========
Net Assets Consist of:
Paid-in capital ......................................... $37,838,246
Net unrealized appreciation on investments .............. 6,506,719
-----------
Net Assets ................................................... $44,344,965
===========
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997
(unaudited)
INVESTMENT INCOME:
Income:
Dividends ............................................. $ 237,998
Interest .............................................. 35,780
-----------
Total Income ...................................... 273,778
-----------
Expenses:
Investment advisory fee ............................... 177,038
Custodian fee ......................................... 12,672
Administrative fee (Note 2) ........................... 9,533
Trustees' fees and expenses (Note 2) .................. 4,290
Amortization of organization expenses ................. 1,274
Miscellaneous ......................................... 4,914
-----------
Total Expenses .................................... 209,721
-----------
Net Investment Income ............................. 64,057
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments ......................... 5,637,556
Net change in unrealized appreciation on investments ..... (5,339,052)
-----------
Net Realized and Unrealized Gain .................... 298,504
-----------
Net Increase in Net Assets Resulting from Operations ..... $ 362,561
===========
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the
six months ended For the
April 30, 1997 year ended
(unaudited) October 31, 1996
--------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................ $ 64,057 $ 144,668
Net realized gain on investments ..... 5,637,556 3,463,297
Net change in unrealized
appreciation on investments ........ (5,339,052) 4,465,593
------------ ------------
Net increase in net assets
resulting from operations ........ 362,561 8,073,558
------------ ------------
Capital transactions:
Proceeds from contributions .......... 4,181,559 4,802,410
Value of withdrawals ................. (18,133,512) (6,168,030)
------------ ------------
Net decrease in net assets
resulting from capital
stock transactions ............... (13,951,953) (1,365,620)
------------ ------------
Total increase (decrease)
in net assets .................. (13,589,392) 6,707,938
NET ASSETS:
Beginning of period ...................... 57,934,357 51,226,419
------------ ------------
End of period ............................ $ 44,344,965 $ 57,934,357
============ ============
See Notes to Financial Statements.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the period
For the January 17, 1995
six months ended For the (commencement of
April 30, 1997 year ended operations) to
(unaudited) October 31, 1996 October 31, 1995
--------------- ---------------- ----------------
<S> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)...... $44,345 $57,934 $51,226
Expenses as a percentage of average
net assets:
Expenses paid by Portfolio................... 0.83%(1) 0.77% 0.77%
Expenses paid by commissions................. -- 0.05% 0.05%
Expenses offset arrangements................. 0.02%(1) 0.08% 0.05%
----- ----- -----
Total expenses........................... 0.85%(1) 0.90% 0.87%
Ratio of net investment income to average
net assets.................................... 0.24%(1) 0.26% 0.25%
Portfolio turnover rate........................ 37% 51% 115%
Average commission rate paid per share......... $0.08 $0.08 $0.08
</TABLE>
- ----------
(1) Annualized
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 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 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.
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 six months ended
April 30, 1997, the Portfolio incurred $177,038 for advisory services.
<PAGE>
U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
(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, but not in excess of the
amount paid to the Administrator. For the six months ended April 30, 1997, the
Portfolio incurred $9,533 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, 1997, the Portfolio incurred $4,290 for Trustee fees.
3. Investment Transactions. For the six months ended April 30, 1997, the
cost of purchases and the proceeds of sales of investment securities other than
short-term investments were $17,700,432 and $39,585,130, respectively. For that
same period, the Portfolio paid brokerage commissions of $40,525 to Brown
Brothers Harriman & Co. for transactions executed on its behalf. Custody fees
for the Portfolio were reduced by $6,563 as a result of an expense offset
arrangement with the Portfolio's custodian.
<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.
6 St. James Avenue
Boston, Massachusetts 02116
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.
