[LOGO]
Tax Free
Short/Intermediate
Fixed Income Fund
SEMI-ANNUAL REPORT
December 31, 1996
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (92.4%)
ESCROWED TO MATURITY (a) (5.9%)
$ 100,000 Berks County, Pennsylvania, Industrial
Development Authority................................... 4/1/98 7.250% $ 103,872
150,000 Chicago, Illinois, Public Building Community Revenue...... 1/1/97 7.450 150,000
50,000 Chicago, Illinois, Public Building Community Revenue...... 1/1/98 7.500 51,823
150,000 Chicago, Illinois, Wastewater Transmission Revenue........ 11/15/98 6.700 156,900
165,000 Fairfield, Ohio, Economic Development..................... 12/1/98 10.500 184,127
30,000 Illinois Educational Facility Authority Revenue........... 12/1/97 7.100 30,936
200,000 Metropolitan Government, Nashville, Tennessee............. 7/1/98 6.800 208,028
100,000 Moore, Oklahoma, Public Works Authority
Revenue Bonds........................................... 7/1/97 8.600 102,484
2,150,000 New Jersey State Transportation Authority ................ 6/15/00 6.000 2,265,691
-----------
TOTAL ESCROWED TO MATURITY ............................ $ 3,253,861
-----------
GENERAL OBLIGATIONS (3.2%)
$ 175,000 Delaware State............................................ 5/1/98 6.800% $ 181,405
500,000 Maryland State Health Facility, 2nd Series................ 7/15/99 6.400 527,310
360,000 New Hampshire State ...................................... 9/1/97 4.500 361,800
585,000 New Jersey State.......................................... 9/15/99 6.250 617,157
110,000 Washoe County, Nevada..................................... 9/1/97 7.200 112,603
-----------
TOTAL GENERAL OBLIGATIONS .............................. $ 1,800,275
-----------
PRE-REFUNDED (a) (79.9%)
$ 125,000 Aurora, Illinois.......................................... 1/1/99 7.000% $ 131,724
300,000 Austin, Texas, Utility System Revenue..................... 9/1/99 7.000 320,856
495,000 Austin, Texas, Water, Sewer & Electric.................... 5/15/97 14.250 513,706
200,000 Berkeley County, South Carolina,
Water & Sewer Revenue .................................. 6/1/01 7.000 223,472
550,000 Boston, Massachusetts, Series A .......................... 2/1/00 7.375 606,936
35,000 Buncombe County, North Carolina........................... 2/1/98 7.100 36,908
35,000 Charleston County, South Carolina......................... 10/1/97 6.750 36,499
50,000 Cleveland, Ohio, Waterworks Revenue....................... 1/1/97 7.625 51,000
1,750,000 Convention Center Authority, Rhode Island, Revenue ....... 5/15/01 6.375 1,907,255
15,000 Dade County, Florida, Public Facility Revenue............. 6/1/98 7.875 16,090
210,000 Delaware County, Pennsylvania, Hospital Revenue........... 8/15/99 7.125 229,053
20,000 Delaware Transportation Authority System Revenue.......... 7/2/98 7.500 21,313
445,000 Delaware Transportation Authority System Revenue.......... 7/1/01 6.000 472,764
80,000 District of Columbia, General Obligation.................. 6/1/97 7.750 82,492
525,000 District of Columbia, General Obligation.................. 12/1/98 7.750 567,908
200,000 Downtown Savannah, Georgia, Authority .................... 1/1/99 6.800 213,888
45,000 Duluth, Minnesota ........................................ 3/1/98 10.500 48,232
200,000 East Stroudsburg, Pennsylvania, Area School District ..... 12/1/97 7.000 208,004
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$1,000,000 Florence County, South Carolina, Public Facility.......... 3/1/00 7.600% $ 1,104,990
15,000 Fort Bend County, Texas, Municipal Utility................ 10/1/97 12.000 15,894
1,050,000 Fort Worth, Texas......................................... 3/1/00 6.500 1,114,176
60,000 Fulton County, Georgia, School District................... 5/1/97 7.400 62,540
50,000 Fulton County, Georgia, Water & Sewer Revenue............. 1/1/98 8.250 53,147
110,000 Georgia Municipal Electric Authority Power Revenue........ 1/1/98 8.000 116,659
400,000 Goshen, Indiana, Middle School............................ 12/30/98 7.800 435,292
500,000 Grand Strand, South Carolina, Water & Sewer............... 6/1/99 7.000 532,240
295,000 Greater Orlando, Florida, Aviation........................ 10/1/98 8.375 320,612
200,000 Greensburg-Salem, Pennsylvania, School District........... 1/1/99 7.100 211,134
125,000 Gwinnett County, Georgia, Water & Sewer Revenue........... 8/1/98 6.700 132,527
65,000 Harris County, Texas...................................... 2/15/97 7.400 67,220
400,000 Harris County, Texas...................................... 2/1/98 10.375 427,284
100,000 Harris County, Texas...................................... 2/15/98 8.125 107,579
45,000 Harris County, Texas...................................... 2/15/98 8.125 48,411
125,000 Hawaii State.............................................. 6/1/98 7.000 132,098
1,500,000 Hawaii State ............................................. 2/1/01 6.000 1,598,145
1,745,000 Honolulu, Hawaii, City & County........................... 6/1/00 7.250 1,921,332
300,000 Houston, Texas, Water & Sewer Systems..................... 12/1/97 8.125 317,745
970,000 Hudson County, New Jersey, Correctional Facility.......... 12/1/98 7.600 1,051,305
75,000 Illinois Health Facility Authority........................ 5/1/97 9.625 77,932
35,000 Illinois Health Facility Authority........................ 9/1/97 7.850 36,679
590,000 Illinois Health Facility Authority........................ 4/1/99 7.375 640,280
200,000 Illinois State............................................ 6/1/98 7.750 213,904
25,000 Illinois State Sales Tax Revenue.......................... 6/15/97 8.100 25,996
225,000 Illinois State Sales Tax Revenue.......................... 6/15/98 7.625 240,721
500,000 Illinois State Sales Tax Revenue.......................... 6/15/99 6.800 538,885
75,000 Indianapolis, Indiana, Public Improvement................. 2/1/98 8.500 79,974
500,000 Intermountian Power Agency, Utah ......................... 7/1/99 7.200 544,075
500,000 Kentucky State Property & Building ....................... 2/1/01 6.875 552,030
1,000,000 Kentucky State Turnpike Authority......................... 5/15/00 7.250 1,102,610
250,000 King County, Washington .................................. 12/1/00 6.750 270,842
280,000 Lake County, Illinois, Forest Preservation District....... 2/1/98 6.850 294,386
100,000 Luzerne County, Pennsylvania ............................. 9/15/97 7.150 102,535
385,000 Maine Municipal Bond Bank................................. 11/1/98 7.400 416,855
200,000 Maine Municipal Bond Bank................................. 11/1/98 7.850 218,574
500,000 Maryland State Health & Higher Education ................. 7/1/01 6.750 554,505
50,000 Massachusetts Bay Transportation Authority................ 3/1/98 7.500 52,963
1,150,000 Massachusetts State Health & Education Facility .......... 7/1/00 8.000 1,304,203
500,000 Massachusetts State Industrial
Finance Agency Revenue ................................. 9/1/99 7.250 547,485
100,000 Michigan City, Indiana, Area Schools...................... 6/15/98 7.875 107,261
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$ 100,000 Michigan State Hospital Finance Authority................. 8/15/98 8.000% $ 108,041
230,000 Middlesex County, New Jersey,
Utilities Authority Sewer Revenue ...................... 3/15/01 6.500 252,119
40,000 Mobile, Alabama, Water & Sewer Revenue.................... 1/1/97 7.875 40,800
1,000,000 Montgomery County, Maryland............................... 11/1/99 6.800 1,086,160
290,000 Montgomery County, Maryland............................... 4/1/98 7.100 306,597
320,000 Montgomery County, Maryland............................... 6/1/98 7.000 333,395
655,000 Montgomery County, Maryland............................... 9/1/98 8.900 704,682
1,000,000 Myrtle Beach, South Carolina,
Water & Sewer Revenue .................................. 3/1/00 7.000 1,096,220
25,000 Naperville, Illinois...................................... 6/1/97 7.000 25,350
100,000 Nassau County, New York................................... 8/15/97 7.400 105,353
15,000 Nevada State.............................................. 10/1/97 8.000 15,766
35,000 New York State Dorm Authority Revenue..................... 7/1/97 8.125 36,479
165,000 New York State Local Government Assistance Corp.......... 4/1/01 7.250 185,381
140,000 New York State Medical Care Facilities
Finance Agency Revenue ................................. 2/15/01 7.500 158,199
1,000,000 New York State Urban Development Corp. Revenue ........... 4/1/01 7.500 1,133,070
145,000 Ohio State Building Authority,
Correctional Facility, Series A......................... 8/1/99 7.350 158,988
2,000,000 Ohio State Building Authority,
Correctional Facility, Series A......................... 8/1/99 7.350 2,192,940
10,000 Ohio State Water Development Authority
Revenue Bonds, Series I................................. 6/1/97 7.750 10,373
15,000 Ohio State Water Development Authority
Revenue Bonds, Series I................................. 6/1/97 7.750 15,560
100,000 Pennsylvania State ....................................... 2/1/98 7.250 105,127
200,000 Philadelphia, Pennsylvania, Gas Works Revenue ............ 1/1/99 6.750 213,500
35,000 Phoenix, Arizona, General Obligation...................... 7/1/97 7.375 36,362
500,000 Phoenix, Arizona, General Obligation...................... 7/1/99 6.750 539,430
115,000 Piedmont Municipal Power Agency Revenue Bonds............. 1/1/98 7.600 121,578
150,000 Plano, Texas.............................................. 9/1/97 7.300 153,735
1,000,000 Richland County, South Carolina........................... 3/1/00 6.750 1,087,380
145,000 Richmond, Virginia, Public Utility Revenue................ 1/15/98 8.000 154,005
20,000 Salt River, Arizona, Electrical Systems Revenue........... 1/1/97 7.000 20,000
240,000 Salt River, Arizona, Electrical Systems Revenue........... 1/1/98 8.250 250,594
115,000 San Antonio, Texas, Electric & Gas Revenue................ 2/1/98 8.000 122,282
865,000 San Antonio, Texas, Electric & Gas Revenue................ 2/1/99 7.000 924,391
60,000 San Antonio, Texas, Sewer Revenue......................... 5/1/97 7.900 61,734
50,000 San Antonio, Texas, Sewer Revenue......................... 5/1/97 7.900 51,445
1,000,000 Sullivan County, Tennessee, Health,
Education & Housing Facility ........................... 2/15/00 7.200 1,100,990
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
PRE-REFUNDED (continued)
$ 250,000 Swarthmore Boro Authority, Pennsylvania,
College Revenue......................................... 9/15/98 7.375% $ 267,367
30,000 Texarkana, Arkansas, Waterworks Facility Revenue.......... 12/1/97 11.250 32,164
155,000 Texas Municipal Power Agency Revenue Bonds................ 9/1/97 6.875 161,471
100,000 Texas State............................................... 10/1/98 6.500 103,974
2,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.875 2,182,300
1,000,000 University of Arizona, Revenue Bonds...................... 6/1/00 6.900 1,098,740
945,000 University of Texas, Permanent University Funds .......... 7/1/98 6.000 972,689
970,000 University of Texas, University Revenue .................. 8/15/01 7.000 1,085,653
210,000 University of Virginia, Hospital Revenue Bonds............ 6/1/98 7.150 223,196
100,000 Virginia State Public School Authority.................... 1/1/97 6.300 102,000
325,000 Virginia State Public School Authority.................... 1/1/98 7.000 341,721
400,000 Virginia State Transportation Board Revenue............... 5/15/98 6.800 422,492
35,000 Washington State Public Power Supply...................... 7/1/97 14.500 36,830
400,000 Washington Suburban Sanitation District .................. 6/1/01 6.900 445,360
5,000 West Virginia State Hospital Finance Authority............ 7/1/97 6.850 5,082
200,000 Wisconsin Health & Educational
Facility Authority Revenue ............................. 11/15/98 7.625 216,372
100,000 Wisconsin Health & Educational
Facility Authority Revenue ............................. 8/15/99 7.400 109,616
100,000 Woodward, Oklahoma, Municipal Authority Sales............. 11/1/97 8.000 104,484
-----------
TOTAL PRE-REFUNDED .................................... $44,200,662
-----------
SALES TAX (0.5%)
$ 250,000 Illinois State Sales Tax Revenue ......................... 6/15/97 6.100% $ 252,185
-----------
TRANSPORTATION (2.7%)
$ 165,000 Delaware Transportation Authority System Revenue.......... 7/1/97 7.100% $ 167,459
550,000 Illinois State Toll Highway............................... 1/1/99 4.400 549,373
750,000 Illinois State Toll Highway............................... 1/1/99 4.400 749,992
10,000 Port Authority of New York & New Jersey................... 7/15/97 5.000 10,060
-----------
TOTAL TRANSPORTATION .................................. $ 1,476,884
-----------
WATER/SEWER (0.2%)
$ 100,000 Connecticut State Clean Water............................. 10/1/97 10.000% $ 104,492
-----------
TOTAL MUNICIPAL BONDS (identified
cost $50,805,424) .................................... $51,088,359
-----------
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- ----------- -------- -------- ------------
<C> <S> <C> <C> <C>
VARIABLE & FLOATING RATE INSTRUMENTS (b) (5.0%)
$ 600,000 Grapevine, Texas, Industrial Development Corp. ........... 1/2/97 3.400% $ 600,000
500,000 New York City, New York, General Obligation .............. 1/2/97 3.100 500,000
1,700,000 New York City, New York, General Obligation .............. 1/2/97 3.650 1,700,000
-----------
TOTAL VARIABLE & FLOATING RATE INSTRUMENTS
(identified cost $2,800,000) .......................... $ 2,800,000
-----------
TOTAL INVESTMENTS, (identified cost $53,605,424) (c) ............................ 97.4% $53,888,359
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................................. 2.6 1,412,626
----- -----------
NET ASSETS ..................................................................... 100.0% $55,300,985
===== ===========
</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) Secured by a bank letter of credit with Morgan Guaranty Trust.
(c) The aggregate cost for federal income tax purposes is $53,605,424 the
aggregate gross unrealized appreciation is $318,995, and the aggregate
gross unrealized depreciation is $36,060 resulting in net unrealized
depreciation of $282,935.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
(unaudited)
ASSETS:
Investments in securities, at value (identified
cost $53,605,424) (Note 1)........................... $53,888,359
Cash..................................................... 767,984
Receivables for:
Interest.............................................. 992,021
Fund shares sold...................................... 250,069
Deferred organization expenses (Note 1).................. 4,408
-----------
Total Assets ..................................... 55,902,841
-----------
LIABILITIES:
Payables for:
Fund shares repurchased................................ 554,921
Expense payment fee (Note 2)........................... 35,718
Administrative fee (Note 2)............................ 11,217
-----------
Total Liabilities ................................ 601,856
-----------
NET ASSETS .................................................. $55,300,985
===========
Net Assets Consist of:
Paid-in capital.......................................... $55,272,285
Accumulated net realized loss on investments............. (254,235)
Net unrealized appreciation on investments..................... 282,935
-----------
Net Assets .................................................. $55,300,985
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($55,300,985 / 5,348,391 shares) ........................ $10.34
======
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF OPERATIONS
For the six months ended December 31, 1996
(unaudited)
NET INVESTMENT INCOME:
Income:
Interest................................................. $1,069,191
----------
Expenses:
Expense payment fee (Note 2)............................. 135,750
Administrative fee (Note 2).............................. 38,104
Amortization of organization expenses (Note 1)........... 3,956
----------
Total Expenses ..................................... 177,810
----------
Net Investment Income .............................. 891,381
----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments........................... 54,640
Net change in unrealized depreciation on investments............. 311,443
----------
Net Realized and Unrealized Gain ................... 366,083
----------
Net Increase in Net Assets Resulting from Operations ...... $1,257,464
==========
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
six months ended For the
December 31, 1996 year ended
(unaudited) June 30, 1996
------------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 891,381 $ 1,737,257
Net realized gain on investments.......................... 54,640 174,311
Net change in unrealized depreciation/appreciation
on investments........................................ 311,443 (234,729)
------------ ------------
Net increase in net assets resulting from operations . 1,257,464 1,676,839
------------ ------------
Dividends declared from net investment income (Note 1)...... (891,381) (1,737,257)
------------ ------------
Shares of beneficial interest transactions (Note 4):
Net proceeds from sales of shares of beneficial interest.. 25,531,366 15,914,850
Net asset value of shares of beneficial interest issued to
shareholders in reinvestment of dividends .............. 367,341 503,857
Net cost of shares of beneficial interest repurchased..... (15,739,882) (23,410,202)
------------ ------------
Net increase (decrease) in net assets resulting from
shares of beneficial interest transactions ........... 10,158,825 (6,991,495)
------------ ------------
Total increase (decrease) in net assets............. 10,524,908 (7,051,913)
NET ASSETS:
Beginning of period......................................... 44,776,077 51,827,990
------------ ------------
End of period .............................................. $ 55,300,985 $ 44,776,077
============ ============
</TABLE>
<PAGE>
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
<TABLE>
<CAPTION>
For the period
For the July 23, 1992
six months ended For the years ended June 30, (commencement of
December 31, 1996 ------------------------------------ operations) to
(unaudited) 1996 1995 1994 June 30, 1993
---------------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $10.26 $10.28 $10.11 $10.29 $10.00
Income from investment operations:
Net investment income............... 0.19 0.37 0.37 0.34 0.32
Net realized and unrealized
gain (loss) on investments........ 0.08 (0.02) 0.17 (0.18) 0.29
Less dividends and distribution (Note 1):
From net investment income.......... (0.19) (0.37) (0.37) (0.34) (0.32)
From net realized gains
on investments.................... -- -- -- (0.00)(1) --
------ ------ ------ ------ ------
Net asset value, end of period......... $10.34 $10.26 $10.28 $10.11 $10.29
====== ====== ====== ====== ======
Total return (2) ................... 2.62% 3.60% 5.42% 1.59% 6.16%
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted)............... $55,301 $44,776 $51,828 $67,253 $33,202
Ratio of expenses to average
net assets (Note 2) (2) ...... 0.70%(3) 0.70% 0.70% 0.70% 0.70%(3)
Ratio of net investment income
to average net assets......... 3.51%(3) 3.61% 3.67% 3.32% 3.42%(3)
Portfolio turnover rate......... 26% 48% 39% 27% 13%
</TABLE>
- ----------
(1) The distribution to shareholders from net realized gains was less than
$0.01 per share.
(2) Had the expense payment agreement not been in place, the ratio of expenses
to average net assets for the six months ended December 31, 1996, and for
the years ended June 30, 1996, 1995, 1994, and for the period ended June
30, 1993 would have been 0.85%, 0.90%, 0.99%, 1.01% and 1.25%,
respectively. For the same periods, the total return of the Fund would have
been 2.39%, 3.40%, 5.13%, 1.28% and 5.61%, respectively. The expense
payment agreement will terminate on July 1, 1997. At the current asset
levels, management believes that the ratio of expenses to average net
assets would be at least 0.85%. Furthermore, the ratio of expenses to
average net assets for the period ended December 31, 1996 and the year
ended June 30, 1996, reflect fees reduced in connection with specific
agreements. Had these arrangements not been in place, these ratios would
have been 0.92%, and 0.99%, respectively.
(3) Annualized.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Organization and Significant 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 December 31, 1996,
there were three series of the Trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles, which require management to make certain
estimates and assumptions at the date of the financial statements and are based,
in part, on the following accounting policies. Actual results could differ from
those estimates.
A. Valuation of Investments. 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. Such procedures include the use of independent pricing services,
which use prices based upon yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to the value from
dealers; and general market conditions. Short-term investments which mature
in 60 days or less are valued at amortized cost if their original maturity
was 60 days or less, or by amortizing their value on the 61st day prior to
maturity, if their original maturity when acquired by the 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 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 provisions 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 to
shareholders from net investment income are declared daily and paid
monthly. 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 Fee. The Trust has an investment advisory agreement
with Brown Brothers Harriman & Co. (the "Adviser") for which the Adviser
receives a fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.35% of the Fund's average daily net assets. For the six months
ended December 31, 1996, the Fund incurred $88,910 for advisory services.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 services agreement with 59 Wall Street Administrators,
Inc. for which 59 Wall Street Administrators, Inc. receives such compensation as
is from time to time agreed upon, but not in excess of the amount paid to the
Administrator. For the six months ended December 31, 1996, the Fund incurred
$38,104 for administrative services.
Shareholder Servicing Agreement. The Trust has a shareholder servicing
agreement with Brown Brothers Harriman & Co. for which Brown Brothers Harriman &
Co. receives a fee from the Fund calculated daily and paid monthly at an annual
rate equivalent to 0.25% of the average daily net assets of the Fund represented
by shares owned during the period for which payment was being made by
shareholders who did not hold their shares with an eligible institution. For the
six months ended December 31, 1996, the Fund incurred no fees for shareholder
servicing.
Eligible Institution Agreement. The Trust has entered into an eligible
institution agreement with financial institutions (the "Institutions") for which
it pays the Institutions a fee calculated daily and paid monthly at an annual
rate equivalent to 0.25% of the average daily net assets of the Fund represented
by shares owned during the period for which payment was being made by customers
for whom the financial institution was the holder or agent of record. For the
six months ended December 31, 1996, the Fund paid Brown Brothers Harriman & Co.
$63,507 as an eligible institution.
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 six months ended December 31,
1996, 59 Wall Street Administrators, Inc. incurred $173,565 in expenses,
including investment advisory fees and shareholder servicing/eligible
institution fees. Custody fees for the Fund paid pursuant to the expense payment
agreement were reduced by $19,315 as a result of an expense offset arrangement
with the Fund's custodian. The expense payment fee 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 obligation may be affected by economic developments in a specific
state or municipality. The aggregate holdings by state ranged from 0.1% to 12.9%
of investments. At December 31, 1996, the five largest holdings by state were
Texas 12.9%; South Carolina, 7.6%; New Jersey, 7.5%; Illinois, 7.5%; and
Arizona, 7.4%. For the six months ended December 31, 1996, the cost of purchases
and the proceeds of sales of investment securities other than short-term
investments were $19,366,884 and $12,117,165, respectively.
4. Shares of Beneficial Interest. Transactions in shares of beneficial
interest were as follows:
For the For the
six months ended year ended
December 31, 1996 June 30, 1996
----------------- -------------
Shares of beneficial interest sold.......... 2,474,810 1,540,890
Shares of beneficial interest issued in
connection with reinvestment of dividends... 35,587 48,864
Shares of beneficial interest repurchased... (1,524,382) (2,271,462)
---------- ----------
Net increase (decrease)..................... 986,015 (681,708)
========== ==========
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>
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
Shareholder Servicing Agent
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(800) 625-5759
This report is submitted for the general information of
shareholders and is not authorized for distribution to
prospective investors unless preceded or accompanied by
an effective prospectus. Nothing herein contained is to be
considered an offer of sale or a solicitation of an offer to buy
shares of The 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.
