THE 59 WALL STREET U.S. EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in BBH U.S. Equity Portfolio ("Portfolio"),
at value .................................................. $ 21,452,285
Receivable for capital stock sold ........................... 12,614
------------
Total Assets ......................................... $ 21,464,899
------------
LIABILITIES:
Payables for:
Professional fee .......................................... 14,025
Shareholder servicing/eligible institution fees ........... 8,794
Administrative fee ........................................ 4,397
Accounting fee ............................................ 3,333
Board of Directors' fee ................................... 2,500
Accrued expenses and other liabilities .................... 9,528
------------
Total Liabilities .................................... 42,577
------------
NET ASSETS ..................................................... $ 21,422,322
============
Net Assets Consist of:
Paid-in capital ............................................ $ 18,742,876
Accumulated net realized loss ............................... (4,787,453)
Net unrealized appreciation ................................. 7,466,899
------------
Net Assets ..................................................... $ 21,422,322
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($21,422,322 / 1,678,904 shares) ............................ $12.76
======
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
Net Investment Income Allocated from Portfolio:
Dividend income ....................................... $ 204,154
Other income .......................................... 15,237
Expenses .............................................. (193,772)
-----------
Net Investment Income Allocated from Portfolio .. 25,619
-----------
Fund Expenses:
Shareholder servicing/eligible institution fee ........ 57,326
Professional fee ...................................... 19,388
Administrative fee .................................... 28,663
Board of Directors' fees and expenses ................. 10,948
Accounting fee ........................................ 8,893
Miscellaneous expenses ................................ 40,727
-----------
Total Expenses .................................. 165,945
-----------
Net Investment Loss ...................................... (140,326)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) Allocated from Portfolio:
Net realized loss on investments ...................... (4,004,974)
Change in unrealized appreciation on investments ...... 3,993,101
-----------
Net Realized and Unrealized Loss Allocated from
Portfolio (11,873)
-----------
Net Decrease in Net Assets Resulting from Operations ..... $ (152,199)
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET U.S. 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 loss ......................................... $ (140,326) $ (59,857)
Net realized gain (loss) on investments ..................... (4,004,974) 9,448,439
Change in unrealized appreciation on investments ............ 3,993,101 (2,058,842)
------------ ------------
Net increase (decrease) in net assets resulting from operations (152,199) 7,329,740
------------ ------------
Dividends and distributions declared:
From net realized gains ..................................... (2,379,164) (18,375,827)
In excess of net realized gains ............................. (4,633,196) --
------------ ------------
Total dividends and distributions declared ............... (7,012,360) (18,468,827)
------------ ------------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock .................... 9,370,104 15,468,025
Net asset value of capital stock issued to shareholders in
reinvestment of distributions ............................ 5,568,229 15,628,940
Net cost of capital stock redeemed .......................... (11,921,202) (56,535,671)
------------ ------------
Net increase (decrease) in net assets resulting from
capital stock transactions .......................... 3,017,131 (25,438,706)
------------ ------------
Total decrease in net assets ........................... (4,147,428) (36,484,793)
NET ASSETS:
Beginning of year ............................................. 25,569,750 62,054,543
------------ ------------
End of year ................................................... $ 21,422,322 $ 25,569,750
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET U.S. 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 period.............. $17.70 $50.88 $52.73 $42.30 $36.46
Income from investment operations:
Net investment income/(loss)....................... (0.08) (0.04)(4) 0.03 0.21 0.16
Net realized and unrealized gain............... 0.16 6.30 1.24 12.22 6.75
Less dividends and distributions:
From net investment income...................... -- -- -- (0.14) (0.20)
In excess of net investment income.............. -- -- -- (0.05) --
Net realized gains.............................. (1.70) (39.44) (3.12) (1.81) (0.87)
In excess of net realized gains................. (3.32) -- -- -- --
Net asset value, end of period.................. $12.76 $17.70 $50.88 $52.73 $42.30
Total return(1).................................... (1.18)% 24.17% 2.50% 30.29% 19.32%
Ratios/Supplemental data:
Net assets, end of period (000's omitted)...... $21,422 $25,570 $62,055 $69,045 $50,773
Expenses as a percentage of average net assets:
Expenses paid by Fund(1)...................... 1.57%(3) 1.35% 1.15% 1.20% 1.20%
Expense offset................................ -- 0.05% 0.06% 0.02% n/a
Total Expenses.............................. 1.57% 1.40% 1.21% 1.22% 1.20%
Ratio of net investment income/(loss) to
average net assets........................... (0.61)% (0.22)% 0.04% 0.23% 0.40%
Portfolio turnover rate........................ 130%(2) 124% 104% 37% 42%
</TABLE>
----------
(1) Had the expense payment agreement not been in place, the ratio of expenses
to average net assets and total return would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets. n/a n/a n/a 1.16% 1.21%
Total return............................ n/a n/a n/a 30.33% 19.31%
</TABLE>
Furthermore, the ratio of expenses to average net assets for the years
ended October 31, 1997 and 1996 reflects fees paid with brokerage
commission and fees reduced in connection with specific arrangements. Had
these arrangements not been in place, this ratio would have been 1.18% and
1.30%, respectively. The expense reimbursement agreement was terminated on
July 1, 1997.
(2) Portfolio turnover rate is that of the Portfolio in which the Fund
invests.
(3) Includes the Fund's share of expenses paid by the Portfolio and expense
offset arrangement.
(4) Calculated using average shares outstanding for the year.
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
U.S. 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-end
management investment company organized under the laws of the State of Maryland
on July 16, 1990. The Fund commenced operations on July 23, 1992.
The Fund invests all of its investable assets in the BBH U.S. 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 20% 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 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 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, 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 on which these financial statements are prepared. Accordingly,
the amount 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 timing 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 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 in the statement of assets
and liabilities based upon their tax reclassification. 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 to
shareholders from net investment income are paid semi-annually and are
recorded on the ex-dividend date. Distributions from net capital gains, if
any, are paid annually and 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 it pays the
Administrator a fee 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 year ended October 31, 2000, the Fund incurred $28,663
for administrative services.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Shareholder Servicing/Eligible Institution Agreement. 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 average daily net assets of the Fund. For the year ended October 31,
2000, the Fund incurred $57,326 for shareholder servicing/eligible institution
services.
Accounting Fee. The Fund has an 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 $8,893
for accounting services.
Board of Directors' Fees. Each Director receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the year
ended October 31, 2000 the Fund incurred $10,948 for these fees.
3. Investment Transactions. Investment transactions of the Portfolio are
discussed in Note 3 of the Portfolio's Notes to Financial Statements.
4. Capital Stock. The Corporation is permitted to issue 2,500,000,000
shares of capital stock, par value $0.001 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 For the
year ended year ended
October 31, 2000 October 31, 1999
---------------- ----------------
Capital stock sold ........................ 650,865 895,268
Capital stock issued in connection with
reinvestment of dividends and
distributions ........................... 411,546 1,018,172
Capital stock repurchased ................. (828,123) (1,688,560)
-------- ----------
Net increase .............................. 234,288 224,880
======== ==========
<PAGE>
INDEPENDENT AUDITORS' REPORT
Directors and Shareholders
The 59 Wall Street U.S. 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 U.S. 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 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 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. 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
U.S. 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.
U.S. Equity Fund
The 59 Wall Street U.S. Equity Fund underperformed the S&P 500 index in
the twelve months that ended October 31, 2000. The primary reason for that
underperformance is explained below.
As the Federal Reserve embarked on its campaign to increase interest rates
to slow the U.S. economy, our working thesis had been that the Fed would be
successful in ultimately engineering a soft economic landing. This is, in fact,
exactly what happened in 1994, which was the last time the Fed felt the need to
cool the pace of economic strength. Throughout 2000, we have positioned the
portfolio to benefit from the types of industries and stocks that will benefit
from a soft landing as opposed to the harder landing alternative of a recession.
However, equity investors through most of 2000 questioned whether the Fed
may have gone too far in increasing interest rates. The result is that equity
leadership in 2000 has been dominated by the types of defensive industries and
stock in which our portfolio has been underrepresented for most of the year.
As the year closes, though, we remain confident in the Fed's ability to
coax the economy into yet another soft landing. We are encouraged that recent
trends in the equity market seem to show that investors are coming around to
this point of view. This should bode well for the portfolio in the upcoming
year.
[The following table was depicted as a line chart in the printed material]
U.S. Equity Fund Growth of $10,000
Date US Equity Fund S&P 500
--------- -------------- -------
7/31/1992 10,320 10,338
10/31/1993 11,670 11,813
10/31/1994 12,208 12,269
10/31/1995 15,321 15,509
10/31/1996 18,279 19,243
10/31/1997 23,817 25,420
10/31/1998 24,411 31,010
10/31/99 30,313 38,966
10/31/00 29,956 41,341
-------------------------------------------
Total Return
-------------------------------------------
One Year Five Years Inception
Ended Ended 10/31/00 to 10/31/00
10/31/00 (Annualized) (Annualized)
-------------------------------------------
(1.18)% 14.35% 14.18%
-------------------------------------------
* net of fees and expenses
Past performance is not predictive of future performance.
<PAGE>
BBH U.S. EQUITY Portfolio
Portfolio of Investments
October 31, 2000
Shares Value
------ -----------
COMMON STOCKS (100.1%)
BASIC MATERIALS (1.7%)
31,420 Alcoa, Inc. ................................ $ 901,361
26,080 International Paper Co. .................... 955,180
-----------
TOTAL BASIC MATERIALS ...................... 1,856,541
-----------
CAPITAL GOODS/DURABLES (8.7%)
103,260 General Electric Co. ....................... 5,659,939
23,350 Solectron Corporation* ..................... 1,027,400
26,100 Dover Corp. ................................ 1,107,619
26,280 Illinois Tool Works, Inc. .................. 1,460,183
-----------
TOTAL CAPITAL GOODS/
DURABLES .................................. 9,255,141
-----------
CONSUMER NON-DURABLES (5.5%)
20,860 Avon Products, Inc. ........................ 1,011,710
29,510 Coca Cola Co. .............................. 1,781,666
28,800 Estee Lauder Companies, Inc. ............... 1,337,400
24,350 Procter & Gamble Co. ....................... 1,739,503
-----------
TOTAL CONSUMER
NON-DURABLES .............................. 5,870,279
-----------
ENERGY (6.2%)
47,083 Exxon Mobile Corp. ......................... 4,199,215
57,540 Williams Companies, Inc. ................... 2,405,891
-----------
TOTAL ENERGY ............................... 6,605,106
-----------
FINANCE (17.5%)
23,480 American Express Co. ....................... 1,408,800
35,027 American International Group ............... 3,432,646
52,100 Bank of New York Co, Inc. .................. 2,999,006
59,423 Citigroup, Inc. ............................ 3,127,135
29,265 Fannie Mae ................................. 2,253,405
63,160 Fleetboston Financial Corp. ................ 2,400,080
29,500 Merrill Lynch & Co., Inc. .................. 2,065,000
20,830 SunTrust Banks, Inc. ....................... 1,016,764
-----------
TOTAL FINANCE .............................. 18,702,836
-----------
HEALTH CARE (11.8%)
44,255 Bristol Myers Squibb Co. ................... 2,696,789
21,350 Guidant Corp.* ............................. 1,130,216
33,650 Lilly (Eli) & Co. .......................... 3,007,469
31,360 Medtronic, Inc. ............................ 1,703,240
49,186 Pharmacia Corp. ............................ 2,705,230
11,190 PE Corp. ................................... 1,309,230
-----------
TOTAL HEALTH CARE .......................... 12,552,174
-----------
RETAIL (6.4%)
15,650 Best Buy Co, Inc.* ......................... 785,434
43,710 Costco Wholesale Corp.* .................... 1,600,879
31,400 CVS Corp. .................................. 1,662,238
31,140 Gap, Inc. .................................. 803,801
44,262 Home Depot Inc. ............................ 1,903,266
-----------
TOTAL RETAIL ............................... 6,755,618
-----------
SERVICES (12.3%)
25,970 Cox Communications, Inc.* .................. 1,144,303
31,490 New York Times Co. (Class A) ............... 1,157,258
51,170 Qwest Communications
International, Inc ......................... 2,488,141
43,510 Sprint Corp. ............................... 1,109,505
35,850 Sprint Corp. PCS Group* .................... 1,366,781
29,510 Time Warner, Inc. .......................... 2,240,104
32,024 Viacom, Inc. (Class B)* .................... 1,821,365
94,790 Mcleod, Inc.* .............................. 1,824,708
-----------
TOTAL SERVICES ............................. 13,152,165
-----------
TECHNOLOGY (29.1%)
48,690 Automatic Data Processing, Inc. ............. 3,180,066
28,520 Computer Associates
International, Inc .......................... 909,075
62,700 Microsoft Corp.* ............................ 4,318,462
72,820 Cisco Systems, Inc.* ........................ 3,923,177
36,450 Sun Microsystems, Inc.* ..................... 4,041,394
22,060 Applied Materials, Inc.* .................... 1,171,938
43,980 Intel Corp. ................................. 1,979,100
15,450 KLA Tencor Corp.* ........................... 522,403
<PAGE>
BBH U.S. EQUITY Portfolio
PORTFOLIO OF INVESTMENTS
October 31, 2000 (continued)
Shares Value
------ -----------
TECHNOLOGY (continued)
60,200 Texas Instruments, Inc. ..................... $ 2,953,563
49,180 Dell Computer Corp. ......................... 1,450,810
29,510 EMC Corp.* .................................. 2,628,234
25,910 International Business
Machines Corp .............................. 2,552,135
30,992 Nortel Networks Corp. ....................... 1,410,136
-----------
TOTAL TECHNOLOGY ............................ 31,040,493
-----------
UTILITIES (0.9%)
26,250 DQE, Inc. ................................... 917,109
-----------
TOTAL UTILITIES ............................. 917,109
-----------
TOTAL INVESTMENTS (identified cost $103,926,704) (a) ... 100.1% $ 106,707,462
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ......... (0.1) (126,573)
----- -------------
NET ASSETS ............................................. 100.0% $ 106,580,889
===== =============
----------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $106,306,713, the
aggregate gross unrealized appreciation is $12,956,779 and the aggregate
gross unrealized depreciation is $12,556,030, resulting in net unrealized
appreciation of $400,749.
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in securities, at value (identified cost
$103,926,704) ............................................. $106,707,462
Receivables for:
Investments sold .......................................... 1,696,251
Contributions ............................................. 130,060
Dividends ................................................. 48,264
Other receivables ......................................... 13,267
------------
Total Assets ........................................... $108,595,304
------------
LIABILITIES:
Payables for:
Due to bank ............................................... 138,935
Withdrawals ............................................... 1,692,906
Investment advisory fee ................................... 116,656
Professional fee .......................................... 33,707
Custody fee ............................................... 23,669
Administration fee ........................................ 6,282
Board of Trustees' fee .................................... 2,260
------------
Total Liabilities ....................................... 2,014,415
------------
NET ASSETS ..................................................... $106,580,889
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
Income:
Dividends (net of withholding tax of $184,599) ...... $ 634,275
Interest and other income ........................... 16,304
-----------
Total Income .................................. 650,579
-----------
Expenses:
Investment advisory fee ............................. 622,162
Custody fee ......................................... 74,342
Professional fee .................................... 37,099
Administrative fee .................................. 33,501
Board of Trustees' fees and expenses ................ 14,576
Miscellaneous expenses .............................. 8,653
-----------
Total Expenses ................................ 790,333
Fees paid indirectly .......................... (19,895)
-----------
Net Expenses .................................. 770,438
-----------
Net Investment Loss .................................... (119,859)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments .................... (5,104,406)
Change in unrealized appreciation on investments .... 2,780,758
-----------
Net Realized and Unrealized Loss ............... (2,323,648)
-----------
Net Decrease in Net Assets Resulting from Operations ... $(2,443,507)
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000
INCREASE IN NET ASSETS:
Operations:
Net investment loss ....................................... $ (119,859)
Net realized loss on investments .......................... (5,104,406)
Change in unrealized appreciation on investments .......... 2,780,758
-------------
Net decrease in net assets resulting from operations ... (2,443,507)
-------------
Capital Transactions:
Proceeds from contributions ............................... 169,647,677
Fair value of withdrawals ................................. (60,623,281)
-------------
Net increase in net assets resulting from capital
transactions ........................................ 109,024,396
-------------
Total increase in net assets ........................ 106,580,889
NET ASSETS:
Beginning of year ........................................... --
-------------
End of year ................................................. $ 106,580,889
=============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
For the year ended
October 31, 2000
------------------
Total Return ................................................ (0.47)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) ................ $106,581
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 ..... (0.12)%
Portfolio turnover rate .................................. 130%
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The BBH U.S. 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
a 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) 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. 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 (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 $622,162 for advisory services.
Administrative Fee. The Corporation 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, 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
Portfolio incurred $33,501 for administrative services.
<PAGE>
BBH U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS(continued)
Custody Fee. The Portfolio has a custody agreement with Brown Brothers
Harriman for which Brown Brothers Harriman receives a fee calculated and paid
monthly. For the year ended October 31, 2000, the Portfolio incurred $74,342 for
custody services. Custody fees for the Portfolio were further reduced by $19,895
as a result of an expense offset arrangement with the Portfolio's custodian.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Portfolio. For the
year ended October 31, 2000 the Portfolio incurred $14,576 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 $119,366,470 and $119,292,219 respectively. There
were no purchases or sales of U.S. government obligations during the year. For
that same period the Portfolio paid brokerage commissions of $34,458 to Brown
Brothers Harriman for transactions executed on its behalf.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
BBH U.S. Equity Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of BBH U.S. 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 audited 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
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 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 U.S. Equity
Portfolio at October 31, 2000, and 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.
U.S. Equity Fund
ANNUAL REPORT
October 31, 2000
