Tax Free
Short/Intermediate
Fixed Income Fund
ANNUAL REPORT
June 30, 1996
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
---------- ------- -------- ----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS & NOTES (98.1%)
ESCROWED TO MATURITY (a) (9.3%)
$ 100,000 Berks County, Pennsylvania, Industrial
Development Authority..................................... 4/1/98 7.250% $ 105,069
150,000 Chicago, Illinois, Public Building Community Revenue........ 1/1/97 7.450 152,693
50,000 Chicago, Illinois, Public Building Community Revenue........ 1/1/98 7.500 52,439
150,000 Chicago, Illinois, Wastewater Transmission Revenue.......... 11/15/98 6.700 158,181
15,000 Denver, Colorado, City & County
Single Family Mortgage.................................... 8/1/96 6.700 15,036
165,000 Fairfield, Ohio, Economic Development....................... 12/1/98 10.500 188,384
50,000 Gregg County, Texas, Hospital............................... 8/15/96 6.125 50,133
30,000 Illinois Educational Facility Authority Revenue............. 12/1/97 7.100 31,283
100,000 Johnson County, Kansas...................................... 9/1/96 8.900 100,831
740,000 Le Claire, Iowa, Electric Revenue........................... 9/1/96 4.125 740,318
200,000 Metropolitan Government, Nashville, Tennessee............... 7/1/98 6.800 209,888
100,000 Moore, Oklahoma, Public Works Authority
Revenue Bonds............................................. 7/1/97 8.600 104,590
2,150,000 New Jersey State Transportation Trust Fund ................. 6/15/00 6.000 2,249,631
-----------
TOTAL ESCROWED TO MATURITY ............................ $ 4,158,476
-----------
GENERAL OBLIGATIONS (3.7%)
$ 25,000 Austin, Texas, Independent School District.................. 8/1/96 6.500% $ 25,062
175,000 Delaware State.............................................. 5/1/98 6.800 182,973
500,000 Maryland State Health Facility, 2nd Series.................. 7/15/99 6.400 527,805
45,000 Massachusetts State Refunding Bonds, Series A............... 8/1/96 5.700 45,072
585,000 New Jersey State............................................ 9/15/99 6.250 615,677
75,000 Pennsylvania State.......................................... 11/1/96 7.000 75,824
85,000 Washoe County, Nevada....................................... 9/1/96 8.000 85,526
110,000 Washoe County, Nevada....................................... 9/1/97 7.200 113,667
-----------
TOTAL GENERAL OBLIGATIONS .............................. $ 1,671,606
-----------
PRE-REFUNDED (a) (75.8%)
$ 125,000 Aurora, Illinois............................................ 1/1/99 7.000% $ 132,597
300,000 Austin, Texas, Utility System Revenue....................... 9/1/99 7.000 322,302
495,000 Austin, Texas, Water, Sewer & Electric...................... 5/15/97 14.250 537,951
200,000 Berkeley County, South Carolina, Water &
Sewer Revenue ............................................ 6/1/01 7.000 222,670
130,000 Birmingham-East End, Alabama, Medical....................... 7/1/96 11.500 130,000
550,000 Boston, Massachusetts, Series A ............................ 2/1/00 7.375 607,216
35,000 Buncombe County, North Carolina............................. 2/1/98 7.100 37,243
35,000 Charleston County, South Carolina........................... 10/1/97 6.750 36,864
50,000 Cleveland, Ohio, Waterworks Revenue......................... 1/1/97 7.625 51,947
170,000 Convention Center Authority, Rhode Island, Revenue ......... 5/15/01 6.375 184,185
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
---------- ------- -------- ----------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$ 15,000 Dade County, Florida, Public Facility Revenue............... 6/1/98 7.875% $ 16,322
25,000 Dallas County, Texas, Utility & Reclamation................. 8/15/96 7.750 25,120
20,000 Delaware Transportation Authority System Revenue............ 7/1/98 7.500 21,566
80,000 District of Columbia, General Obligation.................... 6/1/97 7.750 83,774
250,000 District of Columbia, General Obligation.................... 12/1/98 7.750 273,448
200,000 Downtown Savannah, Georgia, Authority....................... 1/1/99 6.800 215,056
45,000 Duluth, Minnesota........................................... 3/1/98 10.500 49,498
200,000 East Stroudsburg, Pennsylvania, Area School District........ 12/1/97 7.000 210,174
320,000 Farmington, New Mexico, Power Revenue Bonds................. 7/1/96 14.000 320,000
1,000,000 Florence County, South Carolina, Public Facility............ 3/1/00 7.600 1,106,620
100,000 Florida State Municipal Power Agency Revenue................ 10/1/96 7.125 102,846
15,000 Fort Bend County, Texas, Municipal Utility.................. 10/1/97 12.000 16,421
1,050,000 Fort Worth, Texas........................................... 3/1/00 6.500 1,110,994
60,000 Fulton County, Georgia, School District..................... 5/1/97 7.400 63,484
50,000 Fulton County, Georgia, Water & Sewer Revenue............... 1/1/98 8.250 53,919
75,000 Galveston County, Texas, Water Authority.................... 7/10/96 13.000 75,133
110,000 Georgia Municipal Electric Authority Power Revenue.......... 1/1/98 8.000 118,227
400,000 Goshen, Indiana, Middle School.............................. 12/30/98 7.800 440,440
50,000 Grand Prairie, Texas........................................ 8/15/96 8.000 50,249
500,000 Grand Strand, South Carolina, Water & Sewer................. 6/1/99 7.000 535,130
30,000 Greater New Orleans Expressway.............................. 11/1/96 7.800 31,288
295,000 Greater Orlando, Florida, Aviation.......................... 10/1/98 8.375 325,453
125,000 Gwinnett County, Georgia, Water & Sewer Revenue............. 8/1/98 6.700 133,572
125,000 Harris County, Texas........................................ 11/1/96 9.000 127,143
65,000 Harris County, Texas........................................ 2/15/97 7.400 68,334
400,000 Harris County, Texas........................................ 2/1/98 10.375 437,300
100,000 Harris County, Texas........................................ 2/15/98 8.125 108,953
45,000 Harris County, Texas........................................ 2/15/98 8.125 49,029
125,000 Hawaii State................................................ 6/1/98 7.000 133,446
1,500,000 Hawaii State................................................ 2/1/01 6.000 1,588,350
1,745,000 Honolulu, Hawaii, City & County............................. 6/1/00 7.250 1,920,023
115,000 Houston, Texas, Water & Sewer Systems....................... 12/1/96 7.125 118,897
165,000 Houston, Texas, Water & Sewer Systems....................... 12/1/96 8.200 171,273
300,000 Houston, Texas, Water & Sewer Systems....................... 12/1/97 8.125 322,470
65,000 Hudson County, New Jersey, Correctional Facility............ 12/1/98 7.600 71,269
75,000 Illinois Health Facility Authority.......................... 5/1/97 9.625 79,909
35,000 Illinois Health Facility Authority.......................... 9/1/97 7.850 37,242
200,000 Illinois State.............................................. 6/1/98 7.750 216,590
25,000 Illinois State Sales Tax Revenue............................ 6/15/97 8.100 26,451
500,000 Illinois State Sales Tax Revenue............................ 6/15/99 6.800 540,915
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
---------- ------- -------- ----------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$ 75,000 Indianapolis, Indiana, Public Improvement................... 2/1/98 8.500% $ 81,094
100,000 Intermountain Power Agency, Utah............................ 7/1/96 7.750 102,000
85,000 Jefferson, Wisconsin, Sewer System Waterworks............... 7/1/96 9.300 86,275
1,000,000 Kentucky State Turnpike Authority........................... 5/15/00 7.250 1,101,650
250,000 King County, Washington..................................... 12/1/00 6.750 269,673
280,000 Lake County, Illinois, Forest Preservation District......... 2/1/98 6.850 296,665
155,000 Lake County, Indiana, Hospital Authority
Sisters of Mercy Health Corp.............................. 7/1/96 7.200 158,100
100,000 Luzerne County, Pennsylvania................................ 9/15/97 7.150 103,825
385,000 Maine Municipal Bond Bank................................... 11/1/98 7.400 421,175
200,000 Maine Municipal Bond Bank................................... 11/1/98 7.850 221,220
50,000 Massachusetts Bay Transportation Authority.................. 3/1/98 7.500 53,675
300,000 Massachusetts Bay Transportation Authority.................. 3/1/01 7.875 343,578
20,000 Massachusetts State Health & Education Facility ............ 7/1/96 8.625 20,400
1,150,000 Massachusetts State Health & Education Facility ............ 7/1/00 8.000 1,305,848
500,000 Massachusetts State Industrial Finance
Agency Revenue............................................ 9/1/99 7.250 550,295
100,000 Michigan City, Indiana, Area Schools........................ 6/15/98 7.875 108,652
100,000 Michigan State Hospital Finance Authority................... 8/15/98 8.000 109,444
115,000 Middlesex County, New Jersey,
Utilities Authority Sewer Revenue......................... 3/15/01 6.500 125,477
40,000 Mobile, Alabama, Water & Sewer Revenue...................... 1/1/97 7.875 41,576
1,000,000 Montgomery County, Maryland................................. 11/1/99 6.800 1,089,130
1,000,000 Myrtle Beach, South Carolina,
Water & Sewer Revenue..................................... 3/1/00 7.000 1,095,090
25,000 Naperville, Illinois........................................ 6/1/97 7.000 25,686
100,000 Nassau County, New York..................................... 8/15/97 7.400 106,770
100,000 Nevada State................................................ 8/1/96 7.000 102,253
15,000 Nevada State................................................ 10/1/97 8.000 16,005
35,000 New York State Dorm Authority Revenue....................... 7/1/97 8.125 37,120
165,000 New York State Local Government Assistance Corp............. 4/1/01 7.250 184,962
140,000 New York State Medical Care Facilities
Finance Agency Revenue.................................... 2/15/01 7.500 158,036
320,000 New York State Urban Development Corp. Revenue.............. 4/1/01 7.500 362,077
2,000,000 Ohio State Building Authority,
Correctional Facility, Series A........................... 8/1/99 7.350 2,206,020
10,000 Ohio State Water Development Authority
Revenue Bonds, Series I................................... 6/1/97 7.750 10,548
15,000 Ohio State Water Development Authority
Revenue Bonds, Series I................................... 6/1/97 7.750 15,822
30,000 Oregon State General Obligation............................. 9/1/96 12.500 31,019
25,000 Petersburg, Virginia, I.D.A. Hospital Corp.................. 11/1/96 7.300 25,296
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
---------- ------- -------- ----------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$ 35,000 Phoenix, Arizona, General Obligation........................ 7/1/97 7.375% $ 36,884
115,000 Piedmont Municipal Power Agency Revenue Bonds............... 1/1/98 7.600 123,028
150,000 Plano, Texas................................................ 9/1/97 7.300 155,809
1,000,000 Richland County, South Carolina............................. 3/1/00 6.750 1,085,000
145,000 Richmond, Virginia, Public Utility Revenue.................. 1/15/98 8.000 156,042
20,000 Salt River, Arizona, Electrical Systems Revenue............. 1/1/97 7.000 20,325
40,000 Salt River, Arizona, Electrical Systems Revenue............. 1/1/98 8.250 42,412
115,000 San Antonio, Texas, Electric & Gas Revenue.................. 2/1/98 8.000 123,843
60,000 San Antonio, Texas, Sewer Revenue........................... 5/1/97 7.900 62,828
50,000 San Antonio, Texas, Sewer Revenue........................... 5/1/97 7.900 52,357
1,000,000 Sullivan County, Tennessee, Health,
Education & Housing Facility.............................. 2/15/00 7.200 1,100,850
115,000 Swarthmore Boro Authority, Pennsylvania
College Revenue........................................... 9/15/98 7.375 124,286
125,000 Tarrant County, Texas, Health Facility...................... 10/1/96 10.875 127,141
30,000 Texarkana, Arkansas, Waterworks Facility Revenue............ 12/1/97 11.250 33,095
155,000 Texas Municipal Power Agency Revenue Bonds.................. 9/1/97 6.875 163,229
100,000 Texas State................................................. 10/1/98 6.500 104,759
180,000 Trinity River Authority, Texas.............................. 8/1/96 7.700 180,569
1,000,000 Tucson, Arizona, Street & Highway User Revenue.............. 7/1/00 6.875 1,088,580
1,000,000 Tucson, Arizona, Street & Highway User Revenue.............. 7/1/00 6.875 1,088,580
55,000 Uintah County, Utah, Pollution Control...................... 10/15/96 9.875 55,948
1,000,000 University of Arizona, Revenue Bonds........................ 6/1/00 6.900 1,096,270
210,000 University of Virginia, Hospital Revenue Bonds.............. 6/1/98 7.150 225,534
100,000 Virginia State Public School Authority...................... 1/1/97 6.300 103,225
325,000 Virginia State Public School Authority...................... 1/1/98 7.000 344,887
400,000 Virginia State Transportation Board Revenue................. 5/15/98 6.800 426,232
125,000 Washington State............................................ 9/1/96 10.000 126,256
150,000 Washington State Public Power Supply........................ 7/1/96 14.500 154,500
90,000 Washington State Public Power Supply........................ 7/1/96 15.000 92,700
500,000 Washington State Public Power Supply........................ 7/1/96 15.000 515,000
35,000 Washington State Public Power Supply........................ 7/1/97 14.500 38,548
15,000 Washington State Refunding, Series 86 D..................... 9/1/96 8.000 15,105
5,000 West Virginia State Hospital Finance Authority.............. 7/1/97 6.850 5,145
125,000 West Virginia State Water Development Authority............. 11/1/96 10.000 127,524
100,000 Woodward, Oklahoma, Municipal Authority Sales............... 11/1/97 8.000 106,062
-----------
TOTAL PRE-REFUNDED .................................... $33,928,312
-----------
SALES TAX (0.6%)
$ 250,000 Illinois State Sales Tax Revenue............................ 6/15/97 6.100% $ 254,090
-----------
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
---------- ------- -------- ----------
<C> <S> <C> <C> <C>
TRANSPORTATION (3.3%)
$ 165,000 Delaware Transportation Authority System Revenue............ 7/1/97 7.100% $ 169,595
550,000 Illinois State Toll Highway................................. 1/1/99 4.400 546,156
750,000 Illinois State Toll Highway................................. 1/1/99 4.400 745,102
10,000 Port Authority of New York & New Jersey..................... 7/15/97 5.000 10,081
-----------
TOTAL TRANSPORTATION ................................... $ 1,470,934
-----------
UTILITIES (5.2%)
$1,000,000 Washington State Public Power Supply, Project #1............ 7/1/96 4.200% $ 1,000,000
350,000 Washington State Public Power Supply, Project #2............ 7/1/96 5.800 350,000
1,000,000 Washington State Public Power Supply, Project #3............ 7/1/96 6.900 1,000,000
-----------
TOTAL UTILITIES ........................................ $ 2,350,000
-----------
WATER/SEWER (0.2%)
$ 100,000 Connecticut State Clean Water............................... 10/1/97 10.000% $ 107,252
-----------
TOTAL INVESTMENTS (identified cost $43,969,178) (b) ........................................... 98.1% $43,940,670
OTHER ASSETS IN EXCESS OF LIABILITIES ......................................................... 1.9 835,407
----- -----------
NET ASSETS .................................................................................... 100.0% $44,776,077
===== ===========
</TABLE>
(a) General obligation or revenue bonds that have been fully secured or
collateralized by an escrow fund consisting of U.S. Government obligations
that can adequately meet interest and principal payments. For pre-refunded
obligations, the stated maturity date represents the date of redemption
which, pursuant to the terms of the escrow agreement, has been accelerated
from the originally stated maturity date.
(b) The aggregate cost for federal income tax purposes is $43,969,178, the
aggregate gross unrealized appreciation is $189,534 and the aggregate gross
unrealized depreciation is $218,042, resulting in net unrealized
depreciation of $28,508.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
ASSETS:
Investments in securities, at value (identified cost
$43,969,178) (Note 1)................................... $43,940,670
Receivables for:
Interest................................................ 931,990
Fund shares sold........................................ 30,000
Deferred organization expenses (Note 1)................... 8,364
-----------
Total Assets ................................... $44,911,024
-----------
LIABILITIES:
Payable to custodian...................................... 81,230
Payables for:
Expense payment fee (Note 2)........................... 19,559
Fund shares repurchased................................ 15,000
Dividends declared (Note 1)............................ 13,665
Administrative fee (Note 2)............................ 5,493
-----------
Total Liabilities .............................. 134,947
-----------
NET ASSETS....................................................... $44,776,077
===========
Net Assets Consist of:
Paid-in capital........................................... $45,113,460
Accumulated net realized loss on investments.............. (308,875)
Net unrealized depreciation on investments....................... (28,508)
-----------
Net Assets ................................................ $44,776,077
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($44,776,077 = 4,362,376 shares) ......................... $10.26
======
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF OPERATIONS
For the year ended June 30, 1996
INVESTMENT INCOME:
Income:
Interest............................................... $ 2,073,701
-----------
Expenses:
Expense payment fee (Note 2)........................... 256,480
Administrative fee (Note 2)............................ 72,095
Amortization of organization expenses (Note 1)......... 7,869
-----------
Total Expenses ................................. 336,444
-----------
Net Investment Income .......................... 1,737,257
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments.......................... 174,311
Net change in unrealized appreciation on investments............. (234,729)
-----------
Net Realized and Unrealized Loss ............... (60,418)
-----------
Net Increase in Net Assets Resulting from Operations ..... $ 1,676,839
===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended June 30,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................................ $ 1,737,257 2,171,753
Net realized gain (loss) on investments.......................... 174,311 (401,310)
Net change in unrealized appreciation/depreciation
on investments................................................ (234,729) 1,220,494
------------ ------------
Net increase in net assets resulting from operations .......... 1,676,839 2,990,937
------------ ------------
Dividends declared from net investment income....................... (1,737,257) (2,171,753)
------------ ------------
Shares of beneficial interest transactions (Note 4):
Net proceeds from sales of shares of beneficial interest......... 15,914,850 21,229,621
Net asset value of shares of beneficial interest issued to
shareholders in reinvestment of dividends...................... 503,857 608,425
Net cost of shares of beneficial interest repurchased............ (23,410,202) (38,082,365)
------------ ------------
Net decrease in net assets resulting from shares
of beneficial interest transactions ....................... (6,991,495) (16,244,319)
------------ ------------
Total decrease in net assets............................ (7,051,913) (15,425,135)
NET ASSETS:
Beginning of year................................................... 51,827,990 67,253,125
------------ ------------
End of year ........................................................ $ 44,776,077 $ 51,827,990
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each period
For the period
July 23, 1992
For the years ended June 30, (commencement of
---------------------------------------- operations) to
1996 1995 1994 June 30, 1993
------ ------- ------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.28 $ 10.11 $ 10.29 $ 10.00
Income from investment operations:
Net investment income............................... 0.37 0.37 0.34 0.32
Net realized and unrealized
gain (loss) on investments........................ (0.02) 0.17 (0.18) 0.29
Less dividends and distributions:
Dividends to shareholders from net
investment income................................. (0.37) (0.37) (0.34) (0.32)
Distributions to shareholders from net
realized gains on investments..................... -- -- (0.00)* --
------- ------- ------- -------
Net asset value, end of period.......................... $ 10.26 $ 10.28 $ 10.11 $ 10.29
======= ======= ======= =======
Cumulative investment return***......................... 3.60% 5.42% 1.59% 6.16%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)........... $44,776 $51,828 $67,253 $33,202
Ratio of expenses to average net
assets (Note 2)***................................ 0.70% 0.70% 0.70% 0.70%**
Ratio of net investment income to
average net assets................................ 3.61% 3.67% 3.32% 3.42%**
Portfolio turnover rate............................. 48% 39% 27% 13%
</TABLE>
- --------------------
* Distributions to shareholders from net realized gains was less than $0.01
per share.
** Annualized.
*** Had the expense payment agreement not been in place, the ratio of expenses
to average net assets for the years ended June 30, 1996, 1995 and 1994, and
for the period ended June 30, 1993 would have been 0.90%, 0.99%, 1.01% and
1.25%, respectively. For the same periods, the cumulative return of the
Fund would have been 3.40%, 5.13%, 1.28% and 5.61%, respectively. The
expense payment agreement will terminate on July 1, 1997. At current asset
levels, management believes that the ratio of expenses to average net
assets would exceed 0.90%.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Accounting Policies. The 59 Wall Street Tax Free
Short/Intermediate Fixed Income Fund (the "Fund") is a separate, diversified
series of The 59 Wall Street Trust (the "Trust") which is registered under the
Investment Company Act of 1940, as amended. The Trust is an open-end management
investment company organized as a Massachusetts business trust on June 7, 1983.
The Fund commenced operations on July 23, 1992. The Declaration of Trust permits
the Trustees to create an unlimited number of series, each of which issues a
separate class of shares. The Trustees have authorized the issuance of an
unlimited number of shares of the Fund. At June 30, 1996, there were three
series of the Trust.
The following is a summary of significant accounting policies:
A. Valuation of Investments. Bonds and other fixed income securities
(other than short-term obligations but including listed issues) are valued
on the basis of valuations furnished by a pricing service, use of which has
been approved by the Board of Trustees. In making such valuations, the
pricing service utilizes both dealer-supplied valuations and electronic
data processing techniques which take into account appropriate factors such
as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and
other market data, without exclusive reliance upon quoted prices or
exchange or over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Trustees. 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 for the Fund was more than 60 days, unless this is
determined not to represent fair value by the Trustees.
B. Accounting for Investments. Investment transactions are accounted
for on the trade date. Realized gains and losses, if any, from investment
transactions are determined on the basis of identified cost. Interest
income is accrued daily and consists of interest accrued, discount earned
(including both original issue and market discount) and premium
amortization on the investments of the Fund.
C. Deferred Organization Expenses. Expenses incurred by the Fund in
connection with its organization and initial public offering of its shares
are being amortized by the Fund on a straight-line basis over a five-year
period.
D. Federal Income Taxes. Each series of the Trust is treated as a
separate entity for Federal income tax purposes. It is the Fund's policy to
comply with the requirements of the Internal Revenue Code (the "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.
E. Dividends and Distributions to Shareholders. Dividends from net
investment income are declared daily and paid monthly to shareholders.
Distributions from net capital gains, if any, are paid annually and are
recorded on the ex-dividend date. Distributions paid by the Fund from net
interest received on tax-exempt bonds are not includable by shareholders as
gross income for Federal income tax purposes because the Fund intends to
meet certain requirements of the Code applicable to regulated investment
companies which will enable the Fund to pay tax-exempt interest dividends.
2. Transactions with Affiliates.
Investment Advisory Agreement. The Trust has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which the
Adviser receives a fee calculated daily and paid monthly at an annual rate
equivalent to 0.35% of the Fund's average daily net assets. For the year ended
June 30, 1996, the Fund incurred $168,222 for advisory services.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Administrative Fee. The Trust has an administrative agreement with Brown
Brothers Harriman & Co. (the "Administrator") for which it pays the
Administrator a fee calculated daily and paid monthly at an annual rate
equivalent to 0.15% of the Fund'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 June 30, 1996, the Fund incurred $72,095 for
administrative services.
Eligible Institution Agreement. The Trust has an eligible institution
agreement with Brown Brothers Harriman & Co. for which Brown Brothers Harriman &
Co. receives a fee calculated monthly at an annual rate of 0.25% of the Fund's
average daily net assets. For the year ended June 30, 1996, the Fund incurred
$120,159 for eligible institution sevices.
Expense Payment Fee. 59 Wall Street Administrators, Inc. pays certain
expenses of the Fund and receives a fee from the Fund, computed and paid
monthly, such that after such fee the aggregate expenses will not exceed 0.70%
of the Fund's average daily net assets. For the year ended June 30, 1996, 59
Wall Street Administrators, Inc. incurred $351,536 in expenses on behalf of the
Fund, including investment advisory fees and eligible institution fees. Custody
fees for the Fund paid pursuant to the expense payment agreement were reduced by
$44,751 as a result of an expense offset arrangement with the Fund's custodian.
The expense payment agreement will terminate on July 1, 1997.
3. Investment Transactions. The Fund invests primarily in debt securities
issued by municipalities. The ability of the issuers of the debt securities to
meet their obligations may be affected by economic developments in a specific
state or municipality. The aggregate holdings by state ranged from 0.1% to 10.2%
of investments. At June 30, 1996, the five largest holdings by state were Texas,
10.2%; South Carolina, 9.4%; Hawaii, 8.1%; Washington, 8.0%; and Arizona, 7.5%.
For the year ended June 30, 1996, the cost of purchases and the proceeds of
sales of investment securities other than short-term investments were
$22,524,678 and $24,931,413, respectively.
4. Shares of Beneficial Interest. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
For the years ended June 30,
----------------------------
1996 1995
---------- ---------
<S> <C> <C>
Shares of beneficial interest sold............................ 1,540,890 2,098,487
Shares of beneficial interest issued in connection with
reinvestment of dividends and distributions............... 48,864 60,072
Shares of beneficial interest repurchased..................... (2,271,462) (3,763,896)
---------- ----------
Net decrease.................................................. (681,708) (1,605,337)
========== ==========
</TABLE>
5. Federal Income Tax Status. At June 30, 1996 the Fund had a net capital
loss carryover of approximately $307,000, of which $299,000 is available through
June 30, 2003, to offset future capital gains to the extent provided by
regulations. To the extent that this net capital loss carryover is used to
offset future capital gains, it is probable that the gains so offset will not be
distributed to shareholders since any such distributions may be taxable to
shareholders as ordinary income.
----------
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Shareholders
The 59 Wall Street Tax Free Short/Intermediate Fixed Income Fund
(a series of The 59 Wall Street Trust):
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The 59 Wall Street Tax Free
Short/Intermediate Fixed Income Fund (a series of The 59 Wall Street Trust) as
of June 30, 1996, the related statement of operations for the year then ended,
the statement of changes in net assets for the years ended June 30, 1996 and
1995, and the financial highlights for each of the years in the four-year period
ended June 30, 1996. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 June 30,
1996 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The 59 Wall Street
Tax Free Short/Intermediate Fixed Income Fund at June 30, 1996, and the results
of its operations, the changes in its net assets, and its financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
August 9, 1996
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
During the fiscal year ended June 30, 1996, slow economic growth and
falling interest rates at the end of 1995 planted the seeds for a rebounding
economy in the Spring of 1996 and heightened concerns that inflation may soon be
on the rise. The probability of a radical tax reform enactment diminished with a
January Kemp Commission report that offered few specifics, and the March
collapse of Steve Forbes' presidential bid. Municipal bond yield movements
reflected the changes in this outlook. The 5-year Aaa-rated general obligation
municipal bond yield began the fiscal year at 4.55%, declined to 4.00% in
January, and then rose to 4.65% at the end of the fiscal year; for a net rise of
0.10% during the period. Measured against U.S. Treasuries, intermediate-maturity
municipals performed well, recovering the drop they suffered in Spring, 1995 in
reaction to a variety of proposed tax reforms. The Fund produced a total return
of 3.60% for its fiscal year, as coupon interest income exceeded bond price
declines.
In August, 1995, the Fund's investment adviser anticipated that short and
intermediate interest rates were in line with underlying economic, and other,
forces, and increased the weighted average maturity of the Fund from just under
2.3 years to a range of 2.3-2.7 years. In April,1996, the Fund's investment
adviser anticipated that the higher level of interest rates represented an
excessive correction, good longer-term value, and further increased the weighted
average maturity to a range of 2.7-3.0 years.
Portfolio holdings are concentrated in municipal bonds which are 100%
collateralized by U.S. Treasuries held in escrow accounts (the highest possible
credit quality available in the municipal market). Holdings are geographically
diversified. In order to lock in a higher tax-free yield and avoid the tax
liability of market discount bonds, the portfolio is skewed toward premium
coupon bonds with call protection. The Fund has no derivative securities or
leveraged exposure in its portfolio. We managed our sales transactions so as to
incur no net capital gains tax liability.
<PAGE>
Comparative Aaa Municipal Yield Curves
[The table below was represented by a graph in the printed material]
Line graph with two axes: the X-axis represents years to maturity; the Y-axis
represents yield. The graph plots two lines: the first line represents the
weighted average yield to maturity for the Fund for the year ended June 30,
1995; the second line represents the weighted average yield to maturity for the
Fund for the year ended June 30, 1996.
Years 6/30/96 6/30/95
----- ------- -------
0 3.10% 3.80%
1 3.75% 3.75%
2 4.20% 4.00%
3 4.45% 4.20%
4 4.55% 4.40%
5 4.65% 4.55%
Tax Free Short/Intermediate Fixed Income Fund Growth of $10,000 Graph
[The table below was represented by a graph in the printed material]
Line graph with two axes: the X-axis represents years of operations; the Y-axis
represents dollar value. The graph plots four lines: the first line represents
the growth of a ten thousand dollar investment in the Fund from July 23, 1992
(inception) to June 30, 1996; the second line represents the growth of a ten
thousand dollar investment in a portfolio of securities reflecting the
composition of the Merrill Lynch 0-3 Year General Obligation Municipal Bond
Index for the same time period; the third line represents the growth of a ten
thousand dollar investment in a portfolio of securities reflecting the
composition of the Lehman 3-Year General Obligation Municipal Bond Index for the
same time period; the fourth line represents the growth of a ten thousand dollar
investment in a portfolio of securities reflecting the composition of the
IBC/Donoghue Composite Tax Free Money Market Funds Average. The graph points are
as follows:
Date Fund Merrill Lynch Lehman IBC/Donoghue
---- ---- ------------- ------ ------------
7/23/92 10,000 10,000 10,000
7/31/92 10,061 10,048 10,004
8/31/92 10,043 9,995 10,024
9/30/92 10,141 10,071 10,045
10/31/92 10,076 10,058 10,064
11/30/92 10,187 10,143 10,082
12/31/92 10,238 10,207 10,102
1/31/93 10,340 10,282 10,119
2/28/93 10,506 10,442 10,135
3/31/93 10,464 10,462 10,409 10,151
4/30/93 10,525 10,520 10,466 10,167
5/31/93 10,545 10,516 10,499 10,185
6/30/93 10,617 10,552 10,561 10,200
7/31/93 10,596 10,452 10,559 10,216
8/31/93 10,698 10,451 10,655 10,233
9/30/93 10,739 10,475 10,698 10,250
10/31/93 10,768 10,507 10,720 10,267
11/30/93 10,746 10,542 10,711 10,284
12/31/93 10,849 10,610 10,826 10,300
1/31/94 10,909 10,674 10,918 10,316
2/28/94 10,814 10,616 10,806 10,332
3/31/94 10,747 10,600 10,678 10,348
4/30/94 10,745 10,644 10,756 10,365
5/31/94 10,775 10,679 10,806 10,385
6/30/94 10,784 10,709 10,802 10,404
7/31/94 10,869 10,747 10,889 10,423
8/31/94 10,911 10,779 10,930 10,443
9/30/94 10,880 10,806 10,904 10,466
10/31/94 10,869 10,793 10,885 10,490
11/30/94 10,828 10,769 10,885 10,516
12/31/94 10,884 10,799 10,909 10,546
1/31/95 10,950 10,874 10,981 10,573
2/28/95 11,085 10,967 11,087 10,601
3/31/95 11,153 11,020 11,214 10,632
4/30/95 11,189 11,074 11,251 10,664
5/31/95 11,335 11,254 11,429 10,698
6/30/95 11,368 11,287 11,456 10,727
7/31/95 11,445 11,374 11,589 10,755
8/31/95 11,489 11,472 11,675 10,784
9/30/95 11,503 11,484 11,699 10,813
10/31/95 11,548 11,599 11,744 10,843
11/30/95 11,617 11,652 11,818 10,873
12/31/95 11,664 11,691 11,872 10,905
1/31/96 11,744 11,783 11,987 10,932
2/29/96 11,746 11,799 11,979 10,957
3/31/96 11,701 11,808 11,958 10,984
4/30/96 11,728 11,830 11,970 11,010
5/31/96 11,741 11,872 11,972 11,039
6/30/96 11,777 11,904 12,047 11,066
* Net of fees and expenses.
** The Merrill Lynch Index started 4/1/93. Therefore, for performance purposes
the starting point used is the same amount as the Fund.
Past performance is not predictive of future performance.
<PAGE>
THE 59 WALL STREET TRUST
INVESTMENT ADVISER AND
ADMINISTRATOR
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
DISTRIBUTOR
59 Wall Street Distributors, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
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
59 Wall Street Tax Free Short/Intermediate Fixed Income Fund. Such offering is
made only by prospectus, which includes details as to offering price and other
material information.
