THE 59 WALL STREET EUROPEAN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in BBH European Equity Portfolio
("Portfolio"), at value ............................. $ 147,880,736
Receivable for capital stock sold ...................... 1,045,000
-------------
Total Assets ........................................ $ 148,925,736
-------------
LIABILITIES:
Payables for:
Shareholder servicing/eligible institution fees ..... 61,694
Administrative fee .................................. 30,847
Professional fees ................................... 13,750
Board of Directors' fee ............................. 4,000
Accounting fee ...................................... 2,667
Accrued expenses and other liabilities .............. 24,251
-------------
Total Liabilities ................................ 137,209
-------------
NET ASSETS ............................................. $ 148,788,527
=============
Net Assets Consist of:
Paid-in capital ..................................... $ 108,008,362
Undistributed net investment income ................. 143,672
Accumulated net realized loss ....................... (1,626,967)
Net unrealized appreciation ......................... 42,263,460
-------------
Net Assets ................................................... $ 148,788,527
=============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($148,788,527 / 3,957,874 shares) ................... $ 37.59
=============
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET EUROPEAN EQUITY FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
Net Investment Income Allocated from Portfolio:
Dividend and other income ............................ $ 2,028,226
Expenses ............................................. (1,292,448)
------------
Net Investment Income Allocated from Portfolio .... 735,778
------------
Fund Expenses:
Shareholder servicing/eligible institution fee ....... 391,984
Administrative fee ................................... 195,992
Accounting fee ....................................... 8,000
Board of Directors' fees ............................. 17,010
Miscellaneous expenses ............................... 65,985
------------
Total Expenses .................................... 678,971
Fees paid indirectly .............................. (65,080)
------------
Net expenses ...................................... 613,891
------------
Net Investment Income ................................... 121,887
------------
NET REALIZED AND UNREALIZED GAIN ALLOCATED FROM PORTFOLIO:
Net realized gain on investments and foreign exchange
transactions 386,913
Net change in unrealized appreciation on investments
and foreign exchange
translations ......................................... 12,162,328
------------
Net Realized and Unrealized Gain .................. 12,549,241
------------
Net Increase in Net Assets Resulting from Operations .... $ 12,671,128
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET EUROPEAN EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------
2000 1999
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................................ $ 121,887 $ 353,629
Net realized gain on investments and foreign exchange transactions 386,913 17,161,319
Net change in unrealized appreciation on investments and
foreign currency translations ................................... 12,162,328 (476,200)
------------- -------------
Net increase in net assets resulting from operations ............ 12,671,128 17,038,748
------------- -------------
Dividends and distributions declared:
From net investment income ....................................... -- (2,459,709)
In excess of net investment income ............................... -- (21,160)
From net realized gains .......................................... (12,019,424) (17,676,237)
In excess of net realized gains .................................. (1,595,979) --
------------- -------------
Total dividends and distributions declared ................... (13,615,403) (20,157,106)
------------- -------------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock ......................... 69,950,545 84,815,753
Net asset value of capital stock issued to shareholders in
reinvestment of distributions ................................... 10,360,044 13,820,724
Net cost of capital stock redeemed ............................... (73,892,346) (107,760,311)
------------- -------------
Net increase (decrease) in net assets resulting from capital
stock transactions ............................................ 6,418,243 (9,123,834)
------------- -------------
Total increase (decrease) in net assets ...................... 5,473,968 (12,242,192)
NET ASSETS:
Beginning of year .................................................. 143,314,559 155,556,751
------------- -------------
End of year (including undistributed net investment income
and distributions in excess of net investment income of
$143,672 and $9,204, respectively) .............................. $ 148,788,527 $ 143,314,559
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET EUROPEAN EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding
throughout each period
<TABLE>
<CAPTION>
For the years ended October 31,
--------------------------------------------------
2000 1999 1998 1997 1996
------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................. $37.92 $39.05 $38.02 $35.02 $31.95
Income from investment operations:
Net investment income ........................... 0.03 0.09(1) 0.42 0.39 0.38(1)
Net realized and unrealized gain ................ 3.20 4.15 6.06 5.29 4.08
Less dividends and distributions:
From net investment income ...................... -- (0.65) (0.31) (0.41) --
In excess of net investment income .............. -- (0.01) -- -- --
From net realized gains ......................... (3.14) (4.71) (5.14) (2.27) (1.39)
In excess of net realized gains ................. (0.42) -- -- -- --
------ ------ ------ ------ ------
Net asset value, end of year ....................... $37.59 $37.92 $39.05 $38.02 $35.02
====== ====== ====== ====== ======
Total return ....................................... 8.26% 11.87% 19.34% 17.28% 14.63%
Ratios/Supplemental data:
Net assets, end of period (000's omitted) ....... $148,789 $143,315 $155,557 $154,179 $146,350
Expenses as a percentage of average
net assets:
Expenses paid by Fund ........................... 1.22%(4) 1.33% 1.18% 1.32% 1.23%
Expenses paid by commissions(2) ................... -- -- 0.01% 0.01% 0.01%
Expense offset arrangement ...................... 0.04%(4) -- 0.02% 0.03% 0.09%
------ ------ ------ ------ ------
Total expenses ............................... 1.26% 1.33% 1.21% 1.36% 1.33%
Ratio of net investment income to average
net assets .................................... 0.08% 0.24% 0.60% 1.02% 1.16%
Portfolio turnover rate ......................... 42%(3) 37% 56% 82% 42%
</TABLE>
-------------
(1) Calculated using average shares outstanding for the year.
(2) A portion of the Fund's securities transactions are directed to certain
unaffiliated brokers which in turn use a portion of the commissions they
receive from the Fund to pay other unaffiliated service providers on
behalf of the Fund for services provided for which the Fund would
otherwise be obligated to pay.
(3) Portfolio turnover rate is that of the Portfolio in which the Fund
invests.
(4) Includes the Fund's share of expenses paid by the Portfolio and expense
offset arrangement.
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET EUROPEAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
European Equity Fund (the "Fund") is a separate non-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-ended
management investment company organized under the laws of the State of Maryland
on July 19, 1990. The Fund commenced operations on November 1, 1990.
The Fund invests all of its investable assets in the BBH European Equity
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 56% at October 31, 2000). The performance of the Fund
is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the schedule 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 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. The Fund records its investment in the
Portfolio at fair value. Valuation of investments held by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B. Investment Income and Expenses. The Fund records its share of
income, expenses, and realized and unrealized gains and losses each day.
In addition, the Fund accrues its own expenses.
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.
The Fund files a tax return annually using tax accounting methods required
under provisions of the Internal Revenue Code which may differ from
accounting principles generally accepted in the United States of America,
the basis which these financial statements are prepared. Accordingly, the
amounts of net investment income and net realized gain reported on 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, utilization of capital loss carryforwards and
the recognition of unrealized gains or losses on open forward foreign
currency exchange contracts and passive foreign investment companies at
year-end. These differences may result in temporary over-distributions for
financial statement purposes and are classified as distributions in excess
of accumulated net realized gains or net investment income. These
distributions do not constitute a return of capital. Permanent differences
are reclassified on the statement of assets and liabilities based upon
their tax classification. 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.
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 (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 sub administration
<PAGE>
THE 59 WALL STREET EUROPEAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
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
year ended October 31, 2000, the Fund incurred $195,992 for administrative
services.
Shareholder Servicing/Eligible Institution Fee. The Corporation has a
shareholder servicing agreement and an eligible institution agreement with Brown
Brothers Harriman for which Brown Brothers Harriman 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. For the year ended October 31, 2000, the Fund
incurred $391,984 for such services.
Accounting Fee. The Corporation has a accounting agreement with Brown
Brothers Harriman (the "Accountant") for which the Accountant receives a fee
calculated and paid monthly. For the year ended October 31, 2000, the Fund
incurred $7,333 for accounting services.
Board of Directors' Fee. Each Director receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from each Fund. For the year
ended October 31, 2000, the Fund incurred $17,010 for these fees.
3. Investment Transactions. Investment transactions of the portfolio are
discussed in Note 3 of the Portfolio's Notes to Financial Statements. Custody
fees for the Fund were reduced by $65,080, as a result of the Fund directing a
portion of its portfolio transactions to certain unaffiliated brokers.
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 years ended
October 31,
------------------------
2000 1999
--------- ---------
Capital stock sold .................................. 1,761,695 2,264,288
Capital Stock issued in connection with
reinvestment of dividends and distributions ....... 267,218 391,411
Capital stock repurchased ........................... (1,849,992) (2,860,346)
---------- ----------
Net Increase (Decrease) ............................. 178,921 (204,647)
========== ==========
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The 59 Wall Street European Equity Fund (a series of The 59 Wall Street Fund,
Inc.):
We have audited the accompanying statement of assets and liabilities of
The 59 Wall Street European Equity Fund (a series of The 59 Wall Street Fund,
Inc.) as of October 31, 2000, the related statement of operations for the year
then ended, the statement of changes in net assets for the years then ended
October 31, 2000 and 1999, and the financial highlights for each of the years in
the five-year period ended October 31, 2000. These financial statements and
financial highlights are the responsibility of the Fund'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 audits 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. 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 The 59 Wall Street
European Equity Fund at October 31, 2000, 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 LLP
Boston, Massachusetts
December 22, 2000
<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,
2000.
European Equity Fund
Accelerating economic growth and a strong corporate profit environment,
coupled with the general euphoria surrounding stocks in the Telecom, Media and
Technology (TMT) sectors, sparked a rally in European equities in the early
months of the new fiscal year. That rally continued into March 2000, carrying
many issues to unsustainably high valuations. From March onwards, selective
issues in these sectors came under selling pressure as investors rotated out of
TMT issues into Financials, Healthcare and other more defensive names. In local
currency terms, the MSCI Europe Index recorded another strong year, rising 21%
in the year ending October 31, 2000. When converted back to U.S. dollars,
however, this strength is not evident. The 20% depreciation experienced by the
euro over the last twelve months translated into a very modest 0.9% return for
the dollar-adjusted Index.
The European Equity Fund realized a dollar-adjusted return of 8.3% over
this same period, well in excess of the benchmark. Outperformance can be
attributed to stock selection and to a program of systematically reducing the
portfolio's overweight in TMT stocks. Profit-taking in the outperforming telecom
equipment manufacturers began in February, as positions in stocks such as Nokia
and Ericsson were trimmed before the market began to sell off for these issues.
In recognition that economic growth in Europe peaked in the second quarter of
2000 and would grow at a more modest 3% pace in the coming year, proceeds were
reinvested in more defensive sectors such as Financials and Healthcare.
Nevertheless, the Fund remains modestly overweight in technology-oriented
sectors.
The investment strategy of the Fund continues to focus on larger
capitalization companies with leading market positions and superior growth
prospects. Moderate economic growth, an easing of interest rate pressures, and
double-digit corporate profit growth bode well for European equities in the new
fiscal year. Furthermore, the euro is expected to reverse its recent decline
against the dollar, enhancing returns for dollar-based investors.
European Equity Fund Growth of $10,000
---------------------------------------------------
Total Return
---------------------------------------------------
One Year Five Years Inception
Ended Ended 10/31/00 to 10/31/00
10/31/00 (Annualized) (Annualized)
---------------------------------------------------
8.26% 14.20% 12.06%
---------------------------------------------------
[The following information was depicted as a line chart in the printed material]
Date European Equity Fund* MSCI-Europe
---- --------------------- -----------
11/1/1990 $10,000 $10,000
(inception)
10/31/1991 $10,160 $10,694
10/31/1992 $10,960 $10,493
10/31/1993 $13,680 $13,186
10/31/1994 $14,685 $14,668
10/31/1995 $16,068 $16,608
10/31/1996 $18,418 $19,508
10/31/1997 $21,601 $24,577
10/31/1998 $25,779 $30,244
10/31/9999 $28,839 $34,031
10/31/2000 $31,221 $34,357
*net of fees and expenses
Past performance is not predictive of future performance.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000
Shares Value
------- -----------
COMMON STOCKS (96.2%)
FINLAND (3.5%)
MULTI-INDUSTRY
225,600 Nokia AB ............................................ $ 9,284,221
------------
TOTAL FINLAND ....................................... 9,284,221
------------
FRANCE (20.8%)
BANKING
88,928 BNP Paribas ......................................... 7,668,076
------------
CAPITAL EQUIPMENT
116,500 Alcatel SA .......................................... 7,109,008
------------
ELECTRONIC SEMI-CONDUCTOR
103,180 STmicroelectronics .................................. 5,358,911
------------
ENERGY
82,063 Total Fina SA ....................................... 11,742,462
------------
PHARMACEUTICALS
130,000 Aventis SA .......................................... 9,378,135
------------
SERVICES
153,700 Accor SA ............................................ 6,222,236
50,973 Suez Lyonnaise Des Eaux ............................. 7,778,289
------------
14,000,525
------------
TOTAL FRANCE ........................................ 55,257,117
------------
GERMANY (7.2%)
BANKING
109,000 Bayerische Hypo-und
Vereinsbank AG .................................... 5,985,287
45,039 Deutsche Pfandbrief-und
Hypothekenbank AG ................................. 3,317,895
17,220 Direkt Anlage Bank AG* .............................. 771,652
------------
10,074,834
------------
INSURANCE
26,744 Allianz AG Registered ............................... 9,090,402
------------
TOTAL GERMANY ....................................... 19,165,236
------------
IRELAND (4.5%)
BANKING
811,000 Allied Irish Banks, Plc. ............................ 8,259,548
------------
PHARMACEUTICALS
73,600 Elan Corp., Plc. ADR* ............................... 3,822,600
------------
TOTAL IRELAND ....................................... 12,082,148
------------
ITALY (11.3%)
FINANCE
474,000 Banca Fideuram SpA .................................. 7,289,382
490,000 Mediolanum SpA ...................................... 7,181,954
------------
14,471,336
------------
INSURANCE
141,656 Assicurazioni Generali .............................. 4,658,659
------------
TELECOMMUNICATIONS
599,200 Telecom Italia Mobile SpA ........................... 5,095,581
492,083 Telecom Italia SpA .................................. 5,700,661
------------
10,796,242
------------
TOTAL ITALY ......................................... 29,926,237
------------
NETHERLANDS (5.0%)
CONSUMER GOODS
131,402 Heineken NV ......................................... 7,137,336
------------
ELECTRIC COMPONENTS
158,500 Philips Electronics* ................................ 6,229,573
------------
TOTAL NETHERLANDS ................................... 13,366,909
------------
SPAIN (8.8%)
BANKING
834,758 Banco Santander SA .................................. 8,090,603
------------
FINANCE
630,200 Banco Bilbao Vizcaya SA ............................. 8,397,157
------------
TELECOMMUNICATIONS
363,232 Telefonica de Espana SA ............................. 6,926,939
------------
TOTAL SPAIN ......................................... 23,414,699
------------
SWEDEN (3.0%)
CAPITAL EQUIPMENT
500,000 Ericsson (LM) Telephone Co.
Class B ........................................... 6,654,459
------------
CONSUMER DURABLES
115,587 Electrolux AB ....................................... 1,457,373
------------
TOTAL SWEDEN ........................................ 8,111,832
------------
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000 (continued)
Shares Value
------- -----------
SWITZERLAND (4.4%)
PHARMACEUTICALS
7,778 Novartis AG Registered .............................. $ 11,800,716
------------
TOTAL SWITZERLAND ................................... 11,800,716
------------
UNITED KINGDOM (28.0%)
BANKING
790,000 Lloyds TSB Group, Plc. .............................. 8,046,401
------------
ENERGY
1,117,400 BP Amoco, Plc. ...................................... 9,476,122
1,055,000 Shell Transport & Trading Co., Plc. ................. 8,487,729
------------
17,963,851
------------
FOOD & BEVERAGES
798,155 Diageo, Plc. ........................................ 7,533,070
------------
LEISURE
406,194 Granada Compass ..................................... 3,500,720
------------
MEDIA
316,956 Pearson, Plc. ....................................... 8,503,023
------------
PHARMACEUTICALS
359,520 Glaxo Wellcome, Plc. ................................ 10,349,091
------------
SERVICES
409,000 BAA, Plc. ........................................... 3,400,286
------------
TELECOMMUNICATIONS
452,538 British Telecom, Plc. ............................... 5,305,226
2,342,500 Vodafone Airtouch, Plc. ............................. 9,745,868
------------
15,051,094
------------
TOTAL UNITED KINGDOM ................................ 74,347,536
------------
TOTAL INVESTMENTS (identified cost $222,010,121) (a) .. 96.5% $256,756,651
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........ 3.5 9,391,386
----- -----------
NET ASSETS ............................................ 100.0% $266,148,037
===== ===========
----------------
* Non-income producing security
(a) The aggregate cost for federal income tax purposes is $223,325,688, the
aggregate gross unrealized appreciation is $63,939,534, and the aggregate
gross unrealized depreciation is $30,508,571, resulting in net unrealized
appreciation of $33,430,963.
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
ASSETS:
Investments in securities, at value (identified
cost $223,325,688) ................................... $256,756,651
Cash ................................................... 550,476
Receivables for:
Investments sold .................................... 16,873,706
Contributions ....................................... 1,955,253
Foreign tax reclaim ................................. 187,574
Dividends ........................................... 176,833
------------
Total Assets ..................................... 276,500,493
------------
LIABILITIES:
Payables for:
Investments purchased ............................... 8,402,483
Withdrawals ......................................... 1,503,396
Investment advisory fee ............................. 289,872
Custody fee ......................................... 105,303
Administration fee .................................. 15,629
Trustee fee ......................................... 4,000
Accrued expenses and other liabilities .............. 31,773
------------
Total Liabilities ................................ 10,352,456
------------
NET ASSETS ................................................... $266,148,037
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes
of $737,771) ....................................... $ 3,571,653
------------
Expenses:
Investment advisory fee .............................. 1,738,539
Custody fee .......................................... 329,425
Administrative fee ................................... 93,629
Trustees' fees and expenses .......................... 13,988
Miscellaneous expenses ............................... 63,178
------------
Total Expenses ..................................... 2,238,759
Fees paid indirectly ............................... (48,266)
------------
Net Expenses ....................................... 2,190,493
------------
Net Investment Income ................................... 1,381,160
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments and foreign
exchange transactions ................................ 2,318,033
Net change in unrealized appreciation on investments
and foreign currency translations .................... 34,710,029
------------
Net Realized and Unrealized Gain ................... 37,028,062
------------
Net Increase in Net Assets Resulting from Operations .... $ 38,409,222
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
year ended
October 31, 2000
-----------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income ................................................... $ 1,381,160
Net realized gain on investments and foreign exchange transactions ...... 2,318,033
Net change in unrealized appreciation on investments and foreign currency
translations .......................................................... 34,710,029
-------------
Net increase in net assets resulting from operations ................... 38,409,222
-------------
Capital Transactions:
Proceeds from contributions ............................................. 373,829,857
Fair value of withdrawals ............................................... (146,091,042)
-------------
Net increase in net assets resulting from capital transactions ......... 227,738,815
-------------
Total increase in net assets .......................................... 266,148,037
NET ASSETS:
Beginning of year .......................................................... --
-------------
End of year ................................................................ $ 266,148,037
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY Portfolio
FINANCIAL highlights
For the
year ended
October 31, 2000
----------------
Total Return .......................................... 8.64%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) .......... $266,148
Expenses as a percentage of average net assets
Expenses paid by Portfolio ..................... 0.82%
Expense offset arrangement ..................... 0.02%
--------
Total Expenses ............................. 0.84%
Ratio of net investment income to average net assets 0.52%
Portfolio turnover rate ............................ 42%
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. BBH European Equity
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company which was
organized as a trust under the laws of the State of New York on June 15, 1993.
The Portfolio commenced operations on November 1, 1999. The Declaration of Trust
permits the Trustees to create an unlimited number of beneficial interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make certain estimates and assumptions at the date of the
financial statements and are based, in part, on the following accounting
policies. Actual results could differ from those estimates.
A. Valuation of Investments. (1) The value of investments listed on
either a domestic or foreign securities exchange is based on the last sale
price on that exchange prior to the time when assets are valued, or in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchange; (2) unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter
market; (3) securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Portfolio's Trustees. Such procedures include the use of independent
pricing services, which use prices based upon yields or prices of
securities of comparable quality, coupon, maturity and type; indications
as to the value from dealers; and general market conditions; (4) all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the prevailing rates of exchange available
at the time of valuation; and (5) trading in securities on most foreign
exchanges and over-the-counter markets is normally completed before the
close of the New York Stock Exchange and may also take place on days on
which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the Portfolio's Trustees.
B. Foreign Currency Translations. The accounting records of the
Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such
currency against the U.S. dollar to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Upon the purchase or sale of a
security denominated in foreign currency, the Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale, for
a fixed amount of U.S. dollars of the amount of foreign currency involved
in the underlying security transaction. The Portfolio isolates that
portion of realized gain or loss on investments resulting from changes in
foreign exchange rates on investments from the fluctuations arising from
changes in market prices of such investments. Reported net realized and
unrealized gains and losses arise from the sales of portfolio securities,
sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Portfolio's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized appreciation or
depreciation on foreign currency translations arise from changes in the
value of the assets and liabilities, excluding investments in securities,
at year ended, arising from changes in the exchange rate.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
C. Forward Foreign Currency Exchange Contracts. The Portfolio may
enter into forward foreign currency exchange contracts ("contracts") in
connection with planned purchases or sales of securities, to hedge the
U.S. dollar value of portfolio securities denominated in a particular
currency, or to increase or shift its exposure to a currency other than
U.S. dollars. The Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The
Portfolio could be exposed to risks if the counterparties to the contracts
are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably. The U.S. dollar values of foreign
currency underlying all contractual commitments held by the Portfolio are
determined using forward currency exchange rates supplied by a quotation
service.
D. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where
recovery of such taxes is not assured. Interest income is accrued daily.
E. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision
for federal income taxes is necessary.
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman (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, 2000, the Portfolio incurred $1,738,539 for advisory services.
Administrative Fee. The Portfolio has an administrative agreement with
Brown Brothers Harriman Trust Company, LLC (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 59 Wall Street
Administrators for which 59 Wall Street Administrators receives such
compensation as is from time to time agreed upon. For the year ended October 31,
2000, the Portfolio incurred $93,629 for administrative services.
Custody Agreement Fee. The Portfolio has a custody agreement with Brown
Brothers Harriman (the "Custodian") for which the Custodian receives a fee
calculated and paid monthly. For the year ended October 31, 2000, the Portfolio
incurred $329,425 for custody services. Custody fees for the Portfolio were
reduced by $48,266 as a result of an expense offset arrangement with the
Portfolio's custodian.
Board of Trustees' Fee. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses. For the year ended October
31, 2000, the Portfolio incurred $13,988 for these fees.
3. Investment Transactions. For the year ended October 31, 2000, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $216,141,243 and $100,334,091, respectively. There
were no purchases or sales of U.S. government obligations during the year.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
BBH European Equity Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of BBH European Equity Portfolio as of
October 31, 2000, and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the year then ended.
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, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
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 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 BBH European Equity
Portfolio at October 31, 2000, the results of its operations, the changes in its
net assets, and its financial highlights for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2000
<PAGE>
The 59 Wall Street Fund, Inc.
Investment Adviser and
Administrator
Brown Brothers Harriman
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
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.
European Equity Fund
ANNUAL REPORT
October 31, 2000
