ANNUAL REPORT / June 30,1995
44
THE 44 WALL STREET EQUITY FUND, INC.
44
44
44
44
44
44
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================================================================================
44
September 5, 1995
Fellow Shareholders,
The optimism of our semi-annual update was validated as The 44 Wall Street
Equity Fund gained 29.3% for the period beginning January 1, 1995 to the date of
this letter. For the six month period ended June 30, 1995, the Fund gained
23.7%, and for the fiscal year ended June 30, 1995, the Fund gained 19.3%.
Despite our lackluster year in 1994, the Fund's three-year track record, as
computed by Lipper Analytical Services, shows an excellent compound annual total
return of 18.1%. Given the relatively low inflation that we have been
experiencing over the past three years, this represents a superb real return.
However, even after achieving these excellent results, we believe even better
results are possible going forward.
Our continued optimism notwithstanding, the valuation level of the stock
market is higher now than last year and it has become increasingly important to
be selective in our investments. Different market sectors have gone in and out
of favor over the past year. This has left most large capitalization and
technology stocks at high levels. Therefore, we predict a shift in buying
interest to smaller capitalization issues, in which undiscovered fast growing
companies have more unrealized potential. Accordingly, we have positioned the
portfolio to capitalize on this trend. When selecting new investments or
evaluating the merits of our current positions, the stock's price must represent
a good value based on the company's underlying business fundamentals. This value
oriented approach should limit our downside risk in a declining market.
Two examples of investments we recently made which highlight our current
approach to the market include China Industrial Corporation and United Capital
Corporation.
China Industrial (CIND) is a U.S. Corporation whose major business is buying
wool for dollars in Australia, distributing it throughout China and then
reinvesting the local currency into commodity products which can be resold
throughout Asia and Africa for dollars. As an outside investor with a minority
interest in a company doing business overseas, there is a good deal of risk
associated with this investment. However, we believe this investment has a
superb risk/reward ratio. Whereas the average stock has a price earnings
multiple of about 15, we sought out a quality company which is trading in the
over-the-counter market at only three times its earnings over the past twelve
months. China's economy has been booming and China Industrial's sales and net
income went from $179.1 million and $10.6 million in 1993 to $301.3 million and
$26.8 million in 1994. If the company can demonstrate long term sustainable
1
<PAGE>
growth, there is no reason why it couldn't trade at ten times earnings, which
would still represent a discount to the average PE multiple. If this were to
happen, shareholders would realize a gain of over 200%. On the other hand, if
the company's business declined, the stock might trade down to its book value
per share, which would cause only a 20% decline from its current price. It is
stocks like CIND that, as part of a diversified portfolio of investments, give
us confidence in our ability to earn high returns for our shareholders.
A second example of our investment strategy is United Capital Corporation, a
diversified company with extensive interests in real estate. Real estate is one
of our favorite industries. Companies with well selected properties have
appreciation potential as rents rise, and downside protection due to the fact
that real estate is a readily marketable asset. United Capital Corp. has over
200 properties, comprising over five million square feet of space, which are, on
average, leased at below market rents. This gives the portfolio upside as rents
are raised, as well as stability, since attractive rents keep tenants in place.
The current occupancy rate is virtually 100%. The company's other remaining
divisions have also been on the upswing lately and could serve as the catalyst
to push the stock from a very low $8 per share or four times estimated cash flow
per share, to $16 per share or eight times cash flow. Downside risk should not
be more than $1 per share given the value of its real estate. Again you can see
here how we try to give the fund upside potential with limited downside risk.
As I stated in our last report, we try to limit our mistakes, yet retain the
upside that induced us all to seek out higher gains through a mutual fund in the
first place. Our winners have outnumbered our losers, as evidenced by our return
since we took charge in 1988. As described in the accompanying chart, a $10,000
investment at that time is now worth $24,808, a return of 148%. We believe our
investment style engenders only moderate risk and both those invested in the
stock market and those with low risk, hence low yielding investments, should
consider investing in our Fund. Diversification and our extensive fundamental
research into our positions mitigate the risks associated with investing in
common stocks and make investing in our Fund a very wise move. Your continued
loyalty and additional investments in the Fund will help it to grow and possibly
enhance the Fund's rate of return. Thank you for your support and as always
should you have any questions or concerns, feel free to contact me at:
1-800-543-2620.
Sincerely,
Mark D. Beckerman,
President and Portfolio Manager
2
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================================================================================
MANAGEMENT DISCUSSION & ANALYSIS
For the fiscal year ended June 30, 1995, the Fund appreciated 19.3%. Net
asset value per share increased from $5.87 to a distribution adjusted $7.00
($.10 in 1994 capital gains distribution). Virtually all of our growth for the
fiscal period was attributed to both realized and unrealized appreciation.
Option income was not a significant portion of overall income but it helped the
Fund hedge against a downturn in the market. Our ability to choose investments
with excellent upside market potential at a modest price worked to our benefit
again this fiscal year. However, a large unrealized loss in Spectravision
contingent value rights due to the company's Chapter XI filing had a large
negative impact on us this year. The negative influence of the Spectravision
contingent value rights will not hurt us going forward as the investment has
been effectively written off. Large realized gains this year came from the
disposition of the following securities; Super Rite Corporation, Grand Casinos
and Trigen Energy. Again we remained concentrated in the noncyclical sectors of
the market which should keep the volatility of the fund modest during an ever
changing business cycle. Use of leverage during the year helped us as the market
has risen during 1995 but we have since paid off our bank loan and built up a
cash position. Finally, since investment income, such as dividends and interest,
is not a fundamental criterion for the determination of which issues to choose
for inclusion in our portfolio of investments and expenses are relatively fixed
in nature, we incurred a net investment loss. Our net assets have grown from
$8,200,888 to $8,993,240 which can be attributed to market appreciation and
realized gains.
Mark D. Beckerman has been the President and Portfolio Manager since
September 27, 1988. He had the exclusive authority to make strategy and
investment decisions for the Fund.
[THE FOLLOWNG DATA IS REPRESENTED BY A LINE GRAPH IN THE PRINTED DOCUMENT]
Comparison of Change in Value of $10,000 Investment
in The 44 Wall Street Equity Fund, Inc. VS. S&P-500 Index
from September 30, 1988* to June 30, 1995
Investment in Dollars
26000
24000
22000
20000
18000
16000
14000
12000
10000
9/88 12/88 6/89 12/89 6/90 12/90 6/91 12/91 6/92 12/92 6/93
12/93 6/94 12/94
44 Equity S&P -500
- --------------------------------------------------------------------------------
The Fund's one, five year and since inception of management average compound
annual return performance is as follows.
One year--19.32% Five year -- 12.67% Since inception -- 14.41%
Since inception is computed as of the last day of the first quarter ended the
month in which current management was approved by shareholders.
- --------------------------------------------------------------------------------
* MDB Asset Management Corp. became the Fund's investment advisor on
September 27, 1988.
Previous periods during which the Fund was advised by another investment
adviser are not shown.
Past performance is not predictive of future results.
3
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<TABLE>
<CAPTION>
==========================================================================================================
PORTFOLIO OF INVESTMENTS 6/30/95
==========================================================================================================
Number of
Securities Shares Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 91.96%
ASSET MANAGEMENT - .50%
KEMPER CORP. (KEM - NYSE) -- Financial service company providing asset
management, insurance and brokerage services 1,000 $46,625
---------
BEVERAGE - 2.11%
PANAMERICAN BEVERAGES, INC. (PB - NYSE) -- Largest Latin American
Coca Cola bottler 3,000 90,000
PEPSICO, INC. (PEP - NYSE)-- Operates three major businesses: soft drinks,
restaurants and snack foods 2,300 104,938
---------
194,938
---------
COMMUNICATION/BROADCASTING - 8.52%
AT&T CORP. (T- NYSE) -- A global telecommunication and information movement
organization 1,500 79,687
BELL ATLANTIC (BEL - NYSE)-- Supplier of telephone services 1 34
COMCAST UK CABLE PARTNERS LTD. ADR* (CMCAF - OTC) -- Provides cable
and telephone services to the U.K. 5,000 80,625
COMSAT CORP. (CQ - NYSE)-- Provides satellite based communications
systems outside the U.S. 2,500 49,062
JONES INTERCABLE, INC. Cl. "A" * (JOINA - OTC)-- Owner and operator of
cable T.V. systems 20,000 297,500
MCI COMMUNICATIONS CORP. (MCIC - OTC)-- Providers of local and long
distance telephone services 5,000 109,375
SPRINT CORPORATION (FON - NYSE)-- Operates the world's 2nd largest
telephone system 3,000 100,875
SPECTRAVISION, INC. CVR * (SVN'R - ASE)-- Providers of in room movies to
hotels through "Spectravision" 147,000 0
TELE-COMMUNICATIONS, INC. CL. "A" * (TCOMA - OTC)-- Largest operator of
cable T.V. systems in the U.S. 3,000 70,125
---------
787,283
---------
DAY CARE - 2.15%
KINDER-CARE LEARNING CENTERS, INC.* (KCLC - OTC) -- Operates day
care centers in 40 states including Canadian provinces 15,000 198,750
---------
DIVERSIFIED - 7.63%
CHINA INDUSTRIAL GROUP, INC.* (CIND - OTC) -- An export company with
interests in textiles, pharmaceuticals and chemicals 160,000 305,000
CULBRO CORP. * (CUC - NYSE)-- Conglomerate with businesses in plant
nurseries, distribution, packaging equipment, etc. 4,100 135,300
KANSAS CITY SOUTHERN INDUSTRIES, INC. (KSU - NYSE)-- Through its
subsidiaries, serves the transportation and financial industries 5,500 204,875
QUIXOTE - (QUIX - OTC)-- Manufactures highway safety devices, CD's and cord
equipment 5,000 60,000
---------
705,175
---------
FINANCIAL SERVICES - 12.85%
CHEMICAL BANKING CORP. (CHL - NYSE) -- Provides general and commercial
banking services 4,500 212,625
COUNTRYWIDE CREDIT INDUSTRIES, INC. (CCR - NYSE) -- Largest home
mortgage lender throughout the U.S. 2,500 52,500
DEAN WITTER DISCOVER (DWD - NYSE) -- Providers of brokerage, credit card
and asset management financial services 10,000 470,000
</TABLE>
4
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<TABLE>
<CAPTION>
==========================================================================================================
PORTFOLIO OF INVESTMENTS 6/30/95
==========================================================================================================
Number of
Securities Shares Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
FIRST CHICAGO CORP. (FNB - NYSE) -- Operates as a money center bank
providing global corporate, credit card, retail banking and venture
capital services 3,300 197,587
MELLON BANK CORP. (MEL - NYSE) -- Operates as a bank holding company
and an asset management company 3,300 137,363
STUDENT LOAN MARKETING ASSOCIATION (SLM - NYSE) -- Provides funds to
financial and educational institutions that provide federally
guaranteed student loans 2,500 117,188
---------
1,187,263
---------
FOOD/TOBACCO - 0.00%
SUPER RITE WARRANTS * (SUPR - OTC) -- Wholesaler & retailer of food products 0 4
---------
HEALTH CARE - 4.89%
AMERISOURCE HEALTHCARE * (ASHC - OTC) -- A wholesale distributor of
pharmaceutical products 1,000 22,750
CAREMARK INTERNATIONAL (CK - NYSE) -- Operates as a prescription
benefits manager 5,000 100,000
MAXXIM MEDICAL, INC. * ( MAM - NYSE) -- Manufacturer of hospital & medical
surgical supplies 10,000 150,000
REGENCY HEALTH SERVICES, INC. * (RHS - NYSE) -- Operates nursing homes 3,000 31,500
SIERRA HEALTH SERVICES (SIE - N) -- Operates an HMO in Nevada 1,500 36,750
UNITED HEALTH CARE (UNH - N) -- Provides specialty managed-care
services and owns HMO's 1,500 62,063
VALUE HEALTH * (VH - N) -- Has a drug-management-services business 1,500 48,375
---------
451,438
---------
HOTEL/GAMING - 9.84%
ANCHOR GAMING * (SLOT - OTC) -- Operates a casino in Colorado 2,500 55,313
GTECH HOLDINGS CORPORATION * (GTK - NYSE) -- Operates and supplies
computerized on-line lottery systems 20,000 585,000
HOLLYWOOD CASINO CORPORATIONS * (HWCC - OTC) -- Operates casinos
in Atlantic City and Illinois 5,000 43,750
HOST MARRIOTT * (HMT - N)-- Owns hotels under the Marriott and Courtyard
names. 5,000 53,125
SHOWBOAT, INC. (SBO - NYSE) -- Operators of a casino/hotel in Las Vegas,
Nevada and Atlantic City, N.J. 5,000 92,500
TRUMP HOTEL AND CASINO * (DJT - NYSE) -- Has casino projects in Atlantic
City and Gary, Indiana 3,000 40,125
WMS INDUSTRIES, INC. * (WMS - NYSE -- Major manufacturer of pinball machines
and producer of video arcade games 2,000 39,250
---------
909,063
---------
INDUSTRIAL - 6.34%
AMERICAN ELECTRONIC COMPONENTS, INC. (AECI - OTC) -- Manufactures
and designs specialized electronic and electrical components with both
proprietary and patented technology 12,000 90,000
BREED TECHNOLOGY (BDT - N) -- Manufactures air bag related products 15,000 360,000
PRECISION STANDARD, INC. * (PCSN - OTC) -- Maintains and modifies large
transport aircraft 15,000 29,062
SENSORMATICS (SRM - N) -- Produces theft detection devices for retailers 3,000 106,500
---------
585,562
---------
INSURANCE - 1.06%
STEWART INFORMATION SERVICES CORPORATION (STC - NYSE) -- Title
insurance provider 5,000 98,125
---------
</TABLE>
5
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<TABLE>
<CAPTION>
==========================================================================================================
PORTFOLIO OF INVESTMENTS 6/30/95
==========================================================================================================
Number of
Securities Shares Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEASING - .91%
SEA CONTAINERS LTD. CL. A (SCR' A - N) -- Leases cargo shipping containers,
provides ferry services and owns hotels 5,000 83,750
---------
PHARMACEUTICAL - 1.23%
MERCK & CO., INC. (MRK - NYSE) -- Manufacturer of human & animal health
care products & specialty chemicals 2,324 113,876
---------
REAL ESTATE - 22.13%
AMERICANA HOTEL AND REALTY CORP. * (AHR - NYSE) -- Real estate
investment trust investing in hotels 277,300 866,562
CHICAGO DOCKS AND CANAL TRUST S.B.I. (DOCKS - OTC) -- Real estate Invest-
ment trust owning developed and undeveloped property in the city of Chicago 5,000 58,125
HEALTH & RETIREMENT PROPERTIES TRUST (HRP - NYSE) -- Operates as a
real estate investment trust investing in income generating health
care properties 11,000 165,000
MARK CENTERS TRUST (MCT - NYSE) -- Real estate investment trust
investing in shopping centers 12,600 163,800
ONE LIBERTY PROPERTIES, INC. (OLP - ASE) -- Real estate investment trust
that invests in commercial real estate under long-term lease arrangements 50,000 615,625
UNITED CAPITAL CORP. * (AFP - ASE) -- Invests in & manages commercial
real estate throughout the U.S. 18,204 175,213
---------
2,044,325
---------
RESTAURANT - 2.30%
DAKA INTERNATIONAL, INC. * (DAKA - OTC) -- Owners and operators of fast
food restaurants popularly known as "Fuddruckers" 5,000 115,625
SPAGHETTI WAREHOUSE, INC. * (SWH - NYSE) -- Operates family style Italian
restaurants 18,500 97,125
---------
212,750
---------
RETAILING - .99%
PETSMART * (PETM - OTC)-- Largest retailer of products for pets 1,000 28,750
SPORT SUPPLY GROUP (GYM - N)-- Sells athletic products through mail
order catalogues 5,000 62,500
---------
91,250
---------
TECHNOLOGY - 8.51%
NATIONAL DATA CORP. (NDC - NYSE) -- Provides technology to both private
businesses and governmental agencies for the processing of medical and
pharmaceutical claims 10,000 231,250
STERLING SOFTWARE, INC. * (SSW - NYSE) -- Maintains and services computer
software primarily for mainframe computers 12,000 462,000
STRATUS COMPUTER, INC. * (SRA - NYSE) -- Provides advanced technology
enhancements for on-line systems 3,000 93,000
---------
786,250
---------
TOTAL COMMON STOCKS (COST $ 7,529,081) 8,496,427
---------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
PORTFOLIO OF INVESTMENTS 6/30/95
==========================================================================================================
Number of
Securities Shares Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS - 4.75%
LEASING - .98%
SEA CONTAINERS LTD. CL. E. (SCR.E - NYSE) -- Leases cargo shipping containers;
provides ferry and port services, as well as hotel & property development 2,000 91,000
---------
REAL ESTATE - 2.54%
ONE LIBERTY PROPERTIES, INC. $1.60
CUMULATIVE CONVERTIBLE PREFERRED (OLP pr. - ASE) -- Real estate
investment trust that invests in commercial real estate under long- term
lease arrangements 14,100 234,413
---------
RESTAURANT - 1.23%
FLAGSTAR CORP.
CUMULATIVE CONVERTIBLE PREFERRED (FLSTP - OTC) -- Operates fast food service
restaurant chains under the popular names of Hardee's, Quincy's,
Denny's and El Pollo Loco 6,000 114,000
---------
TOTAL PREFERRED STOCKS (COST $ 440,958 ) 439,413
---------
- ----------------------------------------------------------------------------------------------------------
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------------
BOND (COST $299,000) -- 3.28%
MAXXIM MEDICAL, INC. 6.75%, DUE 3/1/2003 $300,000 $303,000
COVERED PUT OPTION (COST $2,634) - .01%
Shares Subject
Common Stocks / Expiration Date / Exercise Price to put
- ------------------------------------------------ --------------
Pepsico / July / $45 2,300 1,006
TOTAL INVESTMENTS (COST $8,271,673)** 9,239,846
=========
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $8,293,132
===========================================================================================================
COVERED CALL OPTIONS WRITTEN JUNE 30, 1995
===========================================================================================================
Shares Subject
Common Stocks / Expiration Date / Exercise Price to call Value
- ------------------------------------------------ -------------- -----
AT&T / July / $50 (1,500) $4,875
First Chicago Corp. / July / $50 (800) 7,950
Merci & Co. / July / $50 (2,300) 1,438
Sensormatic Electron / July / $30 (3,000) 15,750
Stratus Computer Inc. / Oct. / $30 (1,500) 4,969
TOTAL (PREMIUMS RECEIVED $19,286) $34,981
=========
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
================================================================================
ASSETS (Note 2):
Investment in securities at value
(Cost-- $8,271,673) $9,239,846
Cash 111,992
Receivables:
Investment securities sold 151,130
Capital stock sold 2,459
Dividends, interest and other 40,079
Other assets 21,744
----------
Total Assets 9,567,250
----------
LIABILITIES:
Covered call options written at value --
premiums received $19,286 34,981
Payables:
Bank loan (Note 2) 366,000
Capital stock redeemed 115,013
Accrued expenses and other 58,016
----------
Total Liabilities 574,010
----------
NET ASSETS:
Net assets, applicable to 1,307,913 shares
outstanding (Note 4) $8,993,240
==========
Net asset value, offering and redemption
price per share $ 6.88
==========
See Notes to Financial Statements.
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
Years Ended June 30, 1995 and 1994
================================================================================
1995 1994
---- ----
Increase (Decrease) in Net Assets from:
Operations:
Net Investment loss $ (206,229) $ (241,983)
Net realized gain on
investments 438,078 1,307,224
Unrealized appreciation (depreciation)
for the year 1,252,472 (599,451)
----------- -----------
Net increase in net assets
from operations 1,484,321 465,790
Distributions to shareholders from:
Net realized gain on investments (136,528) (1,939,944)
Capital share transactions (Note 4) (555,441) 1,626,733
----------- -----------
Total increase 792,352 152,579
Net Assets:
Beginning of year 8,200,888 8,048,309
----------- -----------
End of year (including
accumulated net invest-
ment losses of $206,482 and
$241,983, respectively) $ 8,993,240 $ 8,200,888
=========== ===========
See Notes to Financial Statements.
================================================================================
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
================================================================================
Investment Loss:
Income:
Dividends $ 192,023
Interest 28,600
----------
Total Income 220,623
Expenses:
Advisory fee (Note 3) $ 82,466
Transfer agency fees 57,784
Custody fees 6,707
Professional fees and expenses 45,384
Printing and postage 16,080
Administrative and clerical 101,577
Registration and filing fees 7,603
Office facilities 38,257
Other 24,722
----------
380,580
Interest on bank loans (Note 2) 46,272
----------
Total expenses 426,852
----------
Net investment loss (206,229)
----------
Realized and unrealized gain on investments:
Net realized gain on:
Investments 432,416
Options 5,662
----------
438,078
----------
Unrealized appreciation
of investments for the year 1,252,472
----------
Net gain on investments 1,690,550
----------
Increase in Net Assets from Operations $1,484,321
==========
See Notes to Financial Statements.
8
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
================================================================================
Note 1. Significant Accounting Policies:
The Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The following is a
summary of significant accounting policies followed by the Fund in the
preparation of its financial statements.
Security Valuation -- Investments in securities are valued daily based upon
latest closing market prices for those securities traded on national securities
exchanges, or if there has been no sale that day at the mean between the last
bid and asked prices, and at the closing bid price for those securities traded
in the over-the-counter market. All other securities and assets are valued at
fair value, as determined in good faith by the Board of Directors.
Equity Option Contracts -- The Fund writes options on equity securities.
Premiums received for options written are recorded as a liability and
marked-to-market daily to reflect the current value of the option written. If
the written option is not exercised prior to expiration, the premium received is
treated as realized gain. If the written option is exercised, the premium
received is added to the sale proceeds of the underlying security.
Securities Transactions and Related Investment Income: -- Securities
transactions are accounted for on the date the securities are purchased or sold,
and dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. The cost of securities sold is determined on a
first-in, first-out basis for both financial statement and federal income tax
purposes.
Federal Income Taxes -- It is the Fund'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 shareholders.
Therefore, no provision for federal income tax is required.
Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
Note 2. Bank Loans:
The Fund has a secured line of credit with its custodian bank in the amount of
the lesser of $2,000,000 or 33-1/3% of the Fund's net assets. All advances are
payable on demand. Interest (9.4% average for the year, based on a monthly
weighted average) on such borrowings accrues at the bank's effective broker call
rate plus one-half of one percent. The Fund pledges seventy-five percent of the
value of its assets as collateral for the loans. No compensating balances are
required under the credit agreement.
Note 3. Investment Advisory Fee and Other Transactions With Affiliates:
The Fund retains MDB Asset Management Corporation ("Asset Management") as its
investment adviser for which services the Adviser receives a fee equivalent to
1% per annum of the average daily net assets of the Fund.
Beckerman and Company, Inc. ("BecCo") acts as principal underwriter for shares
of the Fund pursuant to a Principal Underwriting Agreement. Commissions paid to
BecCo for services rendered as a registered broker-dealer in executing portfolio
trades for the Fund amounted to $5,617.
9
<PAGE>
Asset Management and BecCo have agreed to reimburse the Fund if expenses
exceed those set forth in any statutory or regulatory formula prescribed by any
state in which Fund shares are registered at such time. Fund shares are not
currently registered in any state which requires the Fund to be reimbursed for
such excess expenses.
Directors who are not deemed "interested persons" were paid directors' fees
aggregating $3,000.
Note 4. Capital Stock:
As of June 30, 1995, there were 100,000,000 shares of $.001 par value capital
stock authorized and capital paid in amounted to $7,834,700. Transactions in
capital stock were as follows:
Years Ended June 30,
--------------------------------------------------------
1995 1994
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
Sold 34,909 $ 212,291 75,872 $ 502,654
Dividends reinvested 23,100 128,438 285,577 1,821,983
Redeemed (147,078) (896,170) (100,053) (697,904)
----------- ----------- ----------- -----------
Net increase (decrease) (89,069) $ (555,441) 261,396 $ 1,626,733
=========== =========== =========== ===========
Note 5. Investment Transactions:
During the year ended June 30, 1995, purchases and sales of securities other
than short-term securities aggregated $6,524,540 and $6,139,235, respectively.
Accumulated undistributed net realized gains at June 30, 1995 were $408,544.
At June 30, 1995, the aggregate gross unrealized appreciation and depreciation
of portfolio securities, based on cost for federal income tax purposes, were as
follows:
Unrealized appreciation $ 1,753,116
Unrealized depreciation (841,383)
-----------
Net unrealized appreciation $ 911,733
===========
Note 6. Financial Instruments With Off-Balance Sheet Risk:
The Fund's activity during the year in writing equity call options had
off-balance-sheet risk of accounting loss. These financial instruments involve
market risk in excess of the amount recognized in the Statement of Assets and
Liabilities. A written equity call option obligates the Fund to deliver the
underlying security upon exercise by the holder of the option. The Fund covers
options written by owning the underlying security.
A summary of the Fund's option transactions written for the year follows:
Number of
Option Premiums
Contracts Received
--------- --------
Contracts outstanding at
June 30, 1994 20 $ 1,585
----- -------
Options written 163 39,079
Options exercised (37) (7,926)
Options expired (55) (13,452)
----- -------
Contracts outstanding at
June 30, 1995 91 $19,286
===== =======
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
THE 44 WALL STREET EQUITY FUND, INC.
SELECTED FINANCIAL INFORMATION
===================================================================================================================================
Years Ended June 30,
---------------------------------------------------------------------------------------------
1995 1994 1993* 1992* 1991* 1990* 1989* 1988*+ 1987+ 1986+
---- ---- ----- ----- ----- ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per share operating perform-
ance (for a share outstanding
throughout the year)
Net asset value,
beginning of year $ 5.87 $ 7.09 $ 6.30 $ 5.80 $ 5.63 $ 5.01 $ 4.09 $ 7.21 $ 6.42 $ 4.38
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment loss (0.17) (.17) (.04) (.07) (.06) (.02) (.10) (.26) (.73) (.52)
Net realized and unrealized
gain (loss) on investments 1.28 .71 1.77 .57 .23 .64 1.02 (2.86) 1.52 2.56
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 1.11 0.54 1.73 0.50 0.17 0.62 0.92 (3.12) 0.79 2.04
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Distribution from net
realized gains (0.10) (1.76) (.94) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.10) (1.76) (.94) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year $ 6.88 $ 5.87 $ 7.09 $ 6.30 $ 5.80 $ 5.63 $ 5.01 $ 4.09 $ 7.21 $ 6.42
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return 19.32% 5.60% 28.89% 8.62% 3.02% 12.38% 22.49% (43.27%) 12.31% 46.58%
Ratios/supplemental data:
Net assets, end of year $ 8,993 $ 8,201 $ 8,048 $ 4,430 $ 4,122 $ 4,407 $ 4,341 $ 4,128 $12,089 $12,883)
(000 omitted)
Ratios to average net assets:
Expenses (excluding
interest) 4.62% 4.87% 4.27% 5.17% 4.42% 4.17% 4.19% 3.39% 2.46% 2.41%
Interest expense .56 .14 .12 .16 -- .11 .49 2.49 2.89 3.70
Net investment loss (2.50) (2.77) (.62) (1.11) (1.19) (.44) (2.13) (5.23) (4.88) (5.16)
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 72.11% 160.06% 167.27% 135.89% 87.02% 234.84% 237.54% 81.16% 97.67% 82.17%
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
(B) BANK LOANS
Amount outstanding at
end of year (000) $ 366 $ 27 $ -- $ -- $ -- $ -- $ 344 $ -- $ 5,902 $ 6,047
Average amount of bank
loans outstanding during
the year (monthly
average) (000) $ 456 $ 44 $ 49 $ 54 $ -- $ 59 $ 153 $ 1,835 $ 4,769 $ 4,483
Average number of shares
outstanding during
the year (monthly
average) (000) 1,369 1,268 773 662 758 853 912 1,215 1,842 2,198
Average amount of
debt per share
during the year $ 0.33 $ 0.03 $ 0.06 $ 0.08 $ 0.00 $ 0.07 $ .17 $ 1.51 $ 2.59 $ 2.04
* Based on average month-end shares outstanding.
+ On September 27, 1988, the investment advisor changed, and MDB Asset Management Corp. became the Fund's investment advisor.
</TABLE>
11
<PAGE>
================================================================================
INDEPENDENT AUDITOR'S REPORT
================================================================================
The Board of Directors and Shareholders
The 44 Wall Street Equity Fund, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The 44 Wall Street Equity Fund, Inc.
as of June 30, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the selected financial information for each of the ten
years in the period then ended. These financial statements and selected
financial information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information 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 as of June 30, 1995, by correspondence with the custodian. 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, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of The 44 Wall Street Equity Fund, Inc. as of June 30, 1995, the
results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with generally
accepted accounting principles.
McGladrey & Pullen LLP
New York, New York
August 10, 1995
12
<PAGE>
THE 44 WALL STREET EQUITY FUND, INC.
- ------------------------------------------
26 Broadway, New York, N.Y. 10004
1-800-543-2620 (Interstate and Intrastate)
212-248-8080 (New York City)
Price Quote Information
- -----------------------
212-248-9085 (New York City)
1-800-543-2875 (Interstate)
- --------------------------------------------------------
Past results are not necessarily indicative of future
performance. This brochure must be preceded or
accompanied by a current prospectus of
The 44 Wall StreetEquity Fund, Inc.
- --------------------------------------------------------
