THE
WALL
STREET
FUND inc.
SEMI-ANNUAL REPORT
June 30, 2000
A diversified mutual fund that
invests in common stocks of
growth-oriented companies.
<PAGE>
<TABLE>
<CAPTION>
THE WALL STREET FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 -- (UNAUDITED)
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 95.93%
AEROSPACE - 1.03%
<C> <S> <C>
5,000 Lockheed Martin Corp. ........................... $ 124,062
1,500+ L-3 Communications .............................. 85,652
1,000 Northrop Grumman ................................ 66,250
-----------
275,964
-----------
AUDIO/VIDEO EQUIPMENT - 0.95%
1,000+ Matsushita Electric Industrial Co. Ltd. ADR ..... 257,000
-----------
BANKS - 0.46%
5,000 Summit Bancorp .................................. 123,125
-----------
BIOTECHNOLOGY - 13.10%
8,000+ Biochem Pharma Inc. ............................. 196,750
8,000+ Chiron Corp. .................................... 380,000
5,000+ Corixa Corp. .................................... 215,000
8,000+ Elan Corp. PLC-ADR .............................. 387,500
3,000+ Gene Logic Inc. ................................. 107,156
8,000+ Genzyme Corp. ................................... 476,250
1,000+ Human Genome Sciences Inc. ...................... 133,344
2,000+ Immunex Corp. ................................... 98,938
3,000+ Incyte Pharmaceutics Inc. ....................... 246,469
10,000+ Martek Biosciences Corp. ........................ 185,937
5,000+ Sepracor Inc. ................................... 603,125
4,000+ Transkaryotic Therapies Inc. .................... 146,875
5,000+ Trimeris Inc. ................................... 349,844
-----------
3,527,188
-----------
COMMUNICATION EQUIPMENT - 2.06%
3,000+ DSP Group Inc. .................................. 169,687
1,500+ Juniper Networks Inc. ........................... 218,297
1,500+ Sycamore Networks ............................... 165,609
-----------
553,593
-----------
COMPUTER HARDWARE - 0.94%
1,000+ Hitachi Ltd. ADR ................................ 144,125
1,200+ Sun Microsystems ................................ 109,163
-----------
253,288
-----------
CONGLOMERATES - 0.57%
8,000 Raytheon Company Class B ........................ 154,000
-----------
DRUGS - 0.53%
3,000 Pfizer Inc. ..................................... 144,000
-----------
ELECTRONICS - 0.53%
5,000 Frequency Electronics Inc. ...................... 143,125
-----------
ENERGY - 1.27%
20,000+ Petroleum Geo- ADR .............................. 341,250
-----------
ENTERTAINMENT - 1.18%
6,000+ Pixar ........................................... 211,688
8,000+ Zomax Inc. ...................................... 104,750
-----------
316,438
-----------
FINANCIAL SERVICES - 1.23%
2,000+ CMGI Inc. ....................................... 91,562
3,200+ Orix Corporation ................................ 240,600
-----------
332,162
-----------
FOOD SERVICES - 1.25%
8,000 Sysco Corp. ..................................... 337,000
-----------
HEALTH CARE - 4.08%
25,000+ Caremark RX Inc. ................................ 170,312
5,000+ First Health Group Corp. ........................ 165,000
2,000 Johnson & Johnson ............................... 203,750
5,000+ Millennium Pharmaceuticals Inc. ................. 559,219
-----------
1,098,281
-----------
INSURANCE - 0.87%
2,000 American International Group Inc. ............... 235,000
-----------
METALS & MINING - 0.40%
5,000 Newmont Mining .................................. 108,125
-----------
MACHINERY - 2.24%
60,000+ Flow Intl. Corp. ................................ 603,750
-----------
MEDICAL TECHNOLOGY - 1.10%
5,000+ Alza Corp. ...................................... 295,625
-----------
OFFICE EQUIPMENT - 3.53%
5,000 Dell Computers Corp. ............................ 246,719
6,000+ EMC Corp. ....................................... 461,625
3,000+ Network Appliance Inc. .......................... 241,406
-----------
949,750
-----------
PHOTOGRAPHY - 0.94%
2,500+ Canon Inc. ADR .................................. 126,406
3,000+ Fuji Photo Film ADR ............................. 127,125
-----------
253,531
-----------
PUBLISHING/ VIDEO/ BROADCAST - 2.65%
5,000 Comcast Corp - Class A Special .................. 202,656
10,000+ Infinity Broadcast Corp. ........................ 364,375
3,000 The EW Scrips, Class A .......................... 147,750
-----------
714,781
-----------
RETAIL - 5.06%
4,000+ Bed Bath & Beyond Inc. .......................... 144,875
11,000 Home Depot Inc. ................................. 549,313
7,500 Tiffany & Co. ................................... 506,250
5,000 Walgreen Co. .................................... 160,938
-----------
1,361,376
-----------
SEMICONDUCTORS - 18.12%
6,000+ Analog Devices Inc. ............................. 456,000
500+ Broadcom Corp. Cl A ............................. 109,469
4,000 Intel Corp. ..................................... 534,625
1,000+ Kyocera Corp. ADR ............................... 171,812
10,000+ Rambus Inc. ..................................... 1,030,000
5,000+ RF Micro Devices Inc. ........................... 437,813
1,000+ SDL Inc. ........................................ 285,219
5,000+ Taiwan Semiconductors Mfg Co. ADR ............... 193,750
6,000 Texas Instruments Inc. .......................... 412,125
9,000+ Transwitch Corp. ................................ 694,969
7,500+ Vitesse Semi-Conductor Corp. .................... 551,953
-----------
4,877,735
-----------
SERVICES - 6.64%
8,000 America Online Inc. ............................. 422,000
10,000+ CCC Information Services Group Inc. ............. 105,625
10,500 Cintas Corp. .................................... 383,906
2,000+ Lernout & Hauspie Speech ........................ 88,062
Page 1
See notes to financial statements.
<PAGE>
THE WALL STREET FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 -- (UNAUDITED)
MARKET
SHARES VALUE
------ -----
10,000+ Marchfirst Inc. ................................. $ 182,813
30,000+ Spacehab Inc. ................................... 140,625
10,000+ V-ONE Corporation ............................... 49,531
5,000+ Worldcom Inc. ................................... 229,531
1,500+ Yahoo Inc. ...................................... 185,859
-----------
1,787,952
-----------
SOFTWARE - 18.67%
25,000+ Aremissoft Corp. ................................ 777,344
1,000+ Ariba Inc. ...................................... 98,062
25,000+ Avant Corp. ..................................... 467,187
4,000+ Bea Systems ..................................... 197,625
10,000+ Bottomline Technologies ......................... 339,375
12,000+ EPIQ Systems Inc. ............................... 128,250
20,000+ Excelon Corporation ............................. 158,437
1,000+ Inktomi Corp. ................................... 118,281
5,000+ Mapinfo Corp. ................................... 205,000
7,000+ New Era of Networks Inc. ........................ 297,281
6,000+ Rational Software Corp. ......................... 557,438
7,500+ RSA Security Inc. ............................... 520,781
2,000+ Siebel Systems Inc. ............................. 327,188
3,225+ Verisign Inc. ................................... 568,709
7,000+ Verity Inc. ..................................... 266,000
-----------
5,026,958
-----------
TELECOMMUNICATIONS - 6.53%
1,500+ China Telecom ADR ............................... 266,719
3,000+ Ciena Corp. ..................................... 499,969
5,500+ Cisco Systems Inc. .............................. 349,422
6,000+ Nextel Communications Inc. ...................... 366,938
1,200+ Proxim Inc. ..................................... 119,025
5,000+ Telaxis Communications Corp. .................... 156,094
-----------
1,758,167
-----------
TOTAL COMMON STOCKS
(Cost $14,316,419) .............................. 25,829,164
-----------
Principal Market
Amount Value
------ -----
CONVERTIBLE BONDS - 2.23%
$800,000 Executone Information Systems, 7.50%, 03/15/2011
(Cost $348,464) .............................. 600,000
-----------
TOTAL INVESTMENTS
(Cost $14,664,883) ............ 98.16% ....... 26,429,164
OTHER ASSETS LESS LIABILITIES ... 1.84% ....... 495,549
------ -----------
TOTAL NET ASSETS ................ 100.00% ....... $26,924,713
====== ===========
At June 30, 2000, the cost for federal tax purposes is $14,686,967.
Gross unrealized appreciation and depreciation of securities are as follows:
Gross unrealized appreciation ................... $ 12,069,367
Gross unrealized depreciation ................... (327,170)
------------
Net unrealized appreciation ..................... $ 11,742,197
============
+ Non-income producing security.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE WALL STREET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 -- (UNAUDITED)
ASSETS:
Investments in securities, at value
<S> <C>
(cost $14,664,883) (Note 1) ..................... $ 26,429,164
Cash ..................................................... 689,321
Receivables:
Investment securities sold ...........$ 397,414
Fund shares sold ..................... 4,192
Interest and dividends ............... 23,867
------------
425,473
Other assets ............................................. 15,143
------------
Total Assets ..................................... 27,559,101
LIABILITIES:
Payables:
Investment advisory fee .............. 16,443
Investment securities purchased ...... 602,228
Accrued expenses ..................... 15,717
------------
Total Liabilities ................................ 634,388
------------
Net Assets ............................... $ 26,924,713
============
Net Assets Consist of:
Paid in capital .................................. $ 10,181,121
Unrealized appreciation on
investments .............................. 11,764,281
Accumulated net realized gain
on investments ........................... 5,069,793
Accumulated net investment loss .................. (90,482)
------------
Net Assets ............................... $ 26,924,713
============
Net asset value and
redemption price per share
($26,924,713/1,772,504 shares
outstanding) (Note 4) ............................ $ 15.19
============
Maximum offering price per share
(100/96 of $15.19) ............................... $ 15.82
============
</TABLE>
See notes to financial statements.
Page 2
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<TABLE>
<CAPTION>
THE WALL STREET FUND, INC.
STATEMENT OF OPERATIONS
JUNE 30, 2000 -- (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
INVESTMENT INCOME:
Income:
<S> <C>
Dividends ........................................... $ 37,690
Interest ............................................ 60,944
-----------
Total income ................................................ 98,634
-----------
Expenses:
Investment adviser fees (Note 3) .................... 96,950
Accounting services (Note 3) ........................ 24,500
Professional fees ................................... 12,116
Directors fees and expenses ......................... 15,064
Transfer agent fees and
dividend paying expenses (Note 3) ........... 14,088
Custodian fees ...................................... 8,629
Registration fees ................................... 7,000
Reports to shareholders ............................. 5,283
Miscellaneous ....................................... 5,486
-----------
Total Expenses .............................................. 189,116
-----------
Net investment loss ......................................... (90,482)
-----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gains from
investment transactions ............................. 5,097,981
Net decrease in unrealized
appreciation of investments ......................... (113,478)
-----------
Net realized and unrealized gains
on investments ...................................... 4,984,503
-----------
Net increase in net assets
resulting from operations ........................... $ 4,894,021
===========
</TABLE>
<TABLE>
<CAPTION>
THE WALL STREET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the For the
six months ended year ended
June 30, 2000 December 31, 1999
------------- -----------------
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C> <C>
Net investment loss ........................ $ (90,482) $ (184,522)
Net realized gains from
investment transactions ............ 5,097,981 3,928,244
Net increase (decrease) in unrealized
appreciation of investments ........ (113,478) 5,284,830
------------ ------------
Net increase in net assets
resulting from operations .......... 4,894,021 9,028,552
Distributions to shareholders from:
Net realized gains from
investment transactions
($0.00 and $2.59 per share,
respectively) ...................... 0 (3,751,785)
Net capital share transactions
(Note 4) ........................... (87,361) (1,478,136)
------------ ------------
Total increase in net assets ............... 4,806,660 3,798,631
NET ASSETS:
Beginning of period ........................ 22,118,053 18,319,422
------------ ------------
End of period .............................. $ 26,924,713 $ 22,118,053
============ ============
</TABLE>
See notes to financial statements.
Page 3
<PAGE>
THE WALL STREET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 -- (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The primary objective of
the Fund is growth of capital. To achieve this objective the Fund normally
invests in common stocks, which, in the opinion of the investment adviser offer
prospects of sustained growth. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements. These policies are in conformity with generally accepted
accounting principles for investment companies. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(A) SECURITIES VALUATIONS - The fair value of investments is based on the
published last sale prices on national securities exchanges, or, in the absence
of recorded sales, at the mean between the closing bid and asked prices on such
exchanges or over-the-counter. When market quotations are not readily available
securities will be valued at fair value as determined in good faith by the
Fund's Board of Directors.
(B) FEDERAL INCOME TAXES - No provision for federal income taxes has been made
in the accompanying financial statements, since the Fund intends to continue to
comply with the provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute to its shareholders substantially all of
its net investment income and net realized gains on investments.
(C) OTHER - Security transactions are accounted for on the date securities are
purchased or sold. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. The net realized gains and losses are
determined on the identified cost basis. The Fund may periodically make
reclassifications among certain of its capital accounts as a result of the
timing and characterization of certain income and capital gains distributions
determined annually in accordance with federal tax regulations which may differ
from generally accepted accounting principles.
(2) PURCHASES AND SALES OF SECURITIES:
Purchases and sales of investment securities, other than short-terms, during the
six months ended June 30, 2000 aggregated $14,162,819 and $14,785,986,
respectively.
(3) INVESTMENT ADVISORY FEES AND OTHER:
The advisory agreement provides for advisory fees of 1/16 of 1% monthly
(equivalent to 3/4 of 1% per annum) of the first $125,000,000 of average net
assets of the Fund. The present advisory agreement also provides for the adviser
to reimburse the Fund for any expenses (including the advisory fee but excluding
taxes, interest and brokerage fees and extraordinary expenses incurred in
connection with any matter not in the ordinary course of business of the Fund)
over 2% of the first $10,000,000, 1 1/2% of the next $20,000,000 and 1% of any
balance of the average daily net asset value.
For the six months ended June 30, 2000, Wall Street Management Corporation
(WSMC) earned investment advisory fees of $96,950 with no reimbursment to the
Fund for expenses.
The adviser also serves as the Fund's principal underwriter. For the six months
ended June 30, 2000, WSMC received $81 as its portion of the sales charge on
sales of shares of the Fund. Certain of the officers and directors of the Fund
are officers and directors of WSMC.
The Fund has arranged for American Data Services, Inc., of which the Fund's
Secretary and Treasurer is an officer, to prepare the accounting records and
perform administrative and transfer agent services for the Fund. Costs incurred
totaled $38,588 for the six months ended June 30, 2000.
(4) CAPITAL STOCK:
At June 30, 2000, there were 5,000,000 shares of $1 par value capital stock
authorized. Transactions in capital stock during the six months ended June 30,
2000 and the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
For the six months ended
June 30, 2000 1999
------------------------ ----------------------
(Unaudited)
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ............. 74,864 1,113,209 130,096 $ 1,390,145
Shares issued for
reinvestment of
distribution from
realized gains .. 0 0 321,220 3,610,507
Shares redeemed ......... (81,499) (1,200,570) (622,149) (6,478,788)
------- ---------- -------- -----------
Net (decrease) .......... (6,635) (87,361) (170,833) ($1,478,136)
======= ========== ======== ===========
</TABLE>
Page 4
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Six months ended Year Ended December 31,
June 30, ------------------------------------------------------------------
2000 1999 1998 1997 1996 1995 1994
---------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $12.43 $ 9.39 $ 7.34 $ 7.96 $ 8.19 $ 7.42 $ 8.03
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (loss) ...................... (0.05) (0.10) (0.11) (0.08) (0.06) (0.03) (0.02)
Net realized and unrealized gains
(losses) on investments ................... 2.81 5.73 2.39 (0.13) 0.98 2.60 (0.38)
------ ------ ------ ------ ------ ------ ------
Total from investment operations .................. 2.76 5.63 2.28 (0.21) 0.92 2.57 (0.40)
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income .............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distribution from realized gains
from security transactions ................ 0.00 (2.59) (0.23) (0.41) (1.15) (1.80) (0.21)
Return of capital distribution .................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------
Total distributions ............................... 0.00 (2.59) (0.23) (0.41) (1.15) (1.80) (0.21)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period .................... $15.19 $12.43 $ 9.39 $ 7.34 $ 7.96 $ 8.19 $ 7.42
====== ====== ====== ====== ====== ====== ======
Total return** .................................... 22.20% 62.88% 31.40% (2.37%) 11.45% 36.50% (4.86%)
Ratios/supplemental data
Net assets, end of period (in 000's) .............. 26,925 22,118 18,319 15,577 15,939 14,383 11,080
Ratio of expenses to average net assets ........... 1.49%^ 1.92% 1.89% 1.82% 1.84% 2.02% 2.12%
Ratio of expenses to average net assets,
net of reimbursement ...................... 1.49%^ 1.80%* 1.89%* 1.82% 1.82% 1.90% 1.96%
Ratio of net investment income (loss) to
average net assets (0.71%)^ (1.23%) (1.33%) (0.96%) (0.70%) (0.50%) (0.47%)
Ratio of net investment income (loss)
to average net assets, net of reimbursement (0.71%)^ (1.11%)* (1.33%)* (0.96%) (0.68%) (0.38%) (0.31%)
Portfolio turnover rate ........................... 58.11% 104.18% 165.84% 121.12% 142.11% 143.27% 89.01%
1993 1992 1991
Net asset value, beginning of period .............. $ 7.60 $ 7.27 $ 5.54
------ ------ ------
Income from investment operations
Net investment income (loss) ...................... (0.02) 0.01 0.03
Net realized and unrealized gains
(losses) on investments ................... 1.00 0.54 2.95
------ ------ ------
Total from investment operations .................. 0.98 0.55 2.98
------ ------ ------
Less distributions
Dividends from net investment income .............. 0.00 (0.01) (0.03)
Distribution from realized gains
from security transactions ................ (0.55) (0.21) (1.21)
Return of capital distribution .................... 0.00 (0.01) (0.01)
Total distributions ............................... (0.55) (0.22) (1.25)
------ ------ ------
Net asset value, end of period .................... $ 8.03 $ 7.60 $ 7.27
====== ====== ======
Total return** .................................... 13.17% 7.61% 54.36%
Ratios/supplemental data
Net assets, end of period (in 000's) .............. 11,561 11,202 11,032
Ratio of expenses to average net assets ........... 2.04% 2.15% 2.10%
Ratio of expenses to average net assets,
net of reimbursement ...................... 1.96% 1.97% 1.98%
Ratio of net investment income (loss) to
average net assets (0.31%) (0.08%) 0.30%
Ratio of net investment income (loss)
to average net assets, net of reimbursement (0.23%) 0.09% 0.43%
Portfolio turnover rate ........................... 107.22% 112.47% 159.52%
<FN>
^ Annualized.
* These ratios would have been .09% lower with the reimbursement of 1998
expenses included therein.
** These returns do not include the effect of the Fund's sales charge.
</FN>
</TABLE>
See notes to financial statements.
Page 5
<PAGE>
Dear Shareholders,
We are pleased to report a total return of 22.2% for the first six months of
2000. Your fund continues to be ranked among the best performing mutual funds by
numerous services. This was achieved during a period of poor performance by most
indexes. Our diversification and high degree of selectivity are important
elements that contribute to the superior returns you enjoy.
And all I ask is a Tall Ship and a star to steer her by...
-John Masefield, Sea Fever, 1902
While watching the majestic Tall Ships Parade, we marveled at the serenity with
which these noble vessels made their way into New York Harbor. These ships, that
had braved ocean storms, often with inexperienced cadet crews, now awaited the
direction of a breeze to send them on their grand tour of the harbor in view of
the eager throngs of observers who had gathered along the waterfront. Likewise,
the market, having weathered the ocean storms at the hands of the modern day
Aeolus, Fed Chairman Greenspan, now awaits a fresh breeze to return to its base
course of steady gains. We believe that the bulk of the Federal Reserve's work
of pre-emptive tightening is behind us. The withdrawal of 1999's excess
liquidity, of which we have written previously, is complete, and monetary growth
is resuming its stable upward trend. We believe that the visibility of strong
earnings growth being reported as we write this letter, coupled with a greater
acceptance of the completeness and the efficacy of the Fed's actions, will
provide the breeze that should propel the market towards steady, albeit modest
gains for the balance of the year.
Summary statistics for the quarter just ended reveal only part of the storm
damage of late. The DJIA declined 4.3% and the S&P 500 lost 2.9% in the three
months ended in June. The Russell 2000 index of smaller company stocks slipped
3.8%, while the NASDAQ composite lost a staggering 13.3%, led by concerns over
the Microsoft court rulings. Other than the NASDAQ, these statistics do not
reveal the intermediate corrections of over 10% experienced by all of the major
indices during the period. Fifty-seven percent of NYSE issues are down more than
20% from their highs as of the end of June; seventy-six percent of NASDAQ issues
are likewise off more than 20% from 52-week highs. The overall first half
performance for the major indices is the worst since 1994, with the DJIA down
9.1%, the NASDAQ giving up 2.5% and the S&P 500 off 1.0%. The Lehman Bond Index
showed promise during the period, advancing 1.7% in the quarter and 3.2%
year-to- date. A further bright note was the year-to-date performance of the
Russell 2000, up 2.5%, indicative of a nascent broadening trend in the market.
The "Perfect Storm" of the first half has had some salutary effects on the
overall market. Speculative excesses, previously evidenced by a frothy new-issue
market, heavily margined day-trading and leveraged hedge-fund activities, and
the unquestioned viability granted to many of the "dot-coms", have all been
challenged, curtailed or severely reduced. We are in a more sober, nervous and
conservative environment now. Breadth has improved, as evidenced by the
cumulative advance/decline ratio, as well as the observation that 44% of the S&P
500 constituents outpaced the average in the six month period, up from only 31%
in 1999. Valuation on all but a handful of bellwether stocks has moderated
significantly. All of this bodes well for the eventual resumption of a sustained
advance.
The political-economic situation is most intriguing. Our contacts at the OMB
assure us that there is no budget surplus; creative accounting using the Social
Security current account balance does make for a more palatable story. The
Treasury is retiring long term debt, but in reality is using short term paper to
fund these purchases. Small wonder that the yield curve remains both inverted
and distorted. We think that given the current and anticipated extent of
economic activity and inflation, the general level of interest rates is some
measure too high. The cumulative impact of higher gasoline prices, higher short
term rates and Federal Reserve commentary will continue to have a dampening
effect on near term economic vigor. Imagine the average consumer who is paying
more to his bank on his adjustable rate mortgage and to Exxon/Mobil to keep his
SUV topped off, and one can readily forecast a slowdown in retail sales, travel
and other consumer-led economic data series. An election year generally means
little in the way of dramatic moves by the Federal Reserve as voting day
approaches. Take this with little in the way of dramatic moves by either of the
two major party candidates, and one can posit a very quiet summer and fall as a
likely scenario.
To return to our opening stanza for a moment, the star that guides the market,
in our opinion, continues to be earnings growth. The successful search for
predictable, visible, sustainable earnings growth, we believe, is the key to
investment success. This effort, while obvious, is fraught with dangerous
Page 6
<PAGE>
shoals. While last year, according to DLJ, NASDAQ companies without profits led
the way, returning an average 115%, versus 50% for profit driven concerns. This
year, realistic business models rule, and profitable entities are up an average
of 10%, while loss-ridden companies are down an average of 11%. Past performance
is truly no guarantee of future success. Many old-line NYSE names such as
Procter and Gamble, AT&T and Gillette have failed to keep sufficient headway to
maintain steerage.
Our daily search for new ideas brings us back constantly to the fundamental
success of the United States economy, our ability to generate profitable
ventures based on applied intellectual capital. It is for this reason that our
portfolios have such high concentrations in such areas as technology and
biotechnology. While we have said this before, we believe that the ability to
identify unassailable earnings growth and unassailable value in our investment
opportunities will be the greatest challenge and the greatest contribution we
make to the management of our clients' irreplaceable assets. The star we steer
by will lead us to new and exciting technologies, to varying places on the
capitalization spectrum, and even to revisit old ports-of-call that have
successfully adapted to the new environment of fast paced, e-lectronically
delivered change. We wish you an enjoyable summer, and invite you to call on us
at anytime to further discuss our investment outlook.
Sincerely,
/s/ ROBERT P. MORSE
-------------------
Robert P. Morse
President
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT CHANGES
For the six months ended June 30, 2000
NEW POSITIONS
Ariba, Inc., DSP Group, Inc., Fuji Photo Film ADR, Hitachi Ltd. ADR, Orix
Corporation ADR, Juniper Networks, Inc., Mapinfo Corp., Matsushita Electric
Industrial Co. Ltd. ADR, Marchfirst, Inc., RSA Security, Inc., Raytheon Company
Class B, Sycamore Networks, Inc., SDL, Inc., Summit Bancorp, Telaxis
Communications Corp., V-ONE Corporation, VeriSign, Inc.
ELIMINATIONS
Adobe Systems, Inc., AFLAC, Inc., Answerthink Consulting Group, Anadarko
Petroleum Corp., At Home Corp. Series A, American Express Co., Boeing Co.,
Biogen, Inc., Blyth Industries, Sierracities.com, Inc., Cendant Corp.,
Claimsnet.com, Inc., Compaq Computer Corp., Gilead Sciences, Inc., Gap, Inc.,
Healtheon/Webmd Corp., Inamed Corp., ISIS Pharmaceuticals, Liposome Company,
Inc., Leap Wireless, Inc., Lynx Therapeutics, Inc., Microsoft, Inc., Network
Solutions, Inc. Open Text Corp., Parametric Technologies, Peoplesoft, Inc.,
Qualcomm, Inc., Renaissance Worldwide, Inc., Sap Ag-Sponsored ADR, Sterling
Commerce, Synopsys, Inc., Security First Technologies Corp., Spyglass, Inc.,
USWeb Corp., Wal-Mart Stores, Inc.
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DIRECTORS
Clifton H.W. Maloney
Edward J. McCann
Robert P. Morse, Chairman
Sharon A. Queeney
Harlan K. Ullman
OFFICERS
Robert P. Morse, President
Laurence R. Golding, Vice President
Michael R. Linburn, Vice President
Jian H. Wang, Vice President
Michael Miola, Secretary, Treasurer
INVESTMENT ADVISER
WALL STREET MANAGEMENT CORPORATION
230 Park Avenue
New York, New York 10169
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street, 11th Floor
New York, New York 10286
TRANSFER AGENT AMERICAN DATA SERVICES
150 Motor Parkway
Hauppauge, New York 11788
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of Americas
New York, New York 10036
THE WALL STREET FUND, INC.
230 Park Avenue, Suite 1635
New York, New York 10169
(212) 856-8250
1-800-443-4693
http://www.thewallstreetfund.com
e-mail: [email protected]
