Tax Free
Short/Intermediate
Fixed Income Fund
ANNUAL REPORT
June 30, 1997
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENT
June 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT DATE RATE VALUE
------ ---- ---- -----
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (94.8%)
ESCROWED TO MATURITY (a) (5.5%)
$ 100,000 Berks County, Pennsylvania, Industrial
Development Authority..................................... 4/1/98 7.250% $ 102,418
50,000 Chicago, Illinois, Public Building Community Revenue...... 1/1/98 7.500 50,882
150,000 Chicago, Illinois, Wastewater Transmission Revenue........ 11/15/98 6.700 155,001
165,000 Fairfield, Ohio, Economic Development..................... 12/1/98 10.500 179,299
30,000 Illinois Educational Facility............................. 12/1/97 7.100 30,403
200,000 Metropolitan Government, Nashville, Tennessee............. 7/1/98 6.800 205,484
100,000 Moore, Oklahoma, Public Works Authority
Revenue Bonds........................................... 7/1/97 8.600 100,000
2,150,000 New Jersey State Transportation Authority ................ 6/15/00 6.000 2,249,588
-----------
TOTAL ESCROWED TO MATURITY .............................. $ 3,073,075
-----------
GENERAL OBLIGATIONS (4.0%)
$ 175,000 Delaware State............................................ 5/1/98 6.800% $ 179,240
150,000 Ocean County, New Jersey.................................. 1/1/01 6.125 157,800
500,000 Maryland State............................................ 7/15/99 6.400 521,710
360,000 New Hampshire State ...................................... 9/1/97 4.500 360,432
585,000 New Jersey State.......................................... 9/15/99 6.250 610,529
275,000 Washington State.......................................... 1/1/01 6.500 292,690
110,000 Washoe County, Nevada..................................... 9/1/97 7.200 110,582
-----------
TOTAL GENERAL OBLIGATIONS ............................. $ 2,232,983
-----------
PRE-REFUNDED (a) (82.7%)
$ 500,000 Anchorage, Alaska Telephone Revenue....................... 11/1/00 7.100% $ 549,810
515,000 Augusta, Georgia Water and Sewer Revenue.................. 5/1/02 6.500 566,098
125,000 Aurora, Illinois.......................................... 1/1/99 7.000 130,091
300,000 Austin, Texas, Utility System Revenue..................... 9/1/99 7.000 317,094
200,000 Berkeley County, South Carolina, Water & Sewer
Revenue ................................................ 6/1/01 7.000 221,784
550,000 Boston, Massachusetts .................................... 2/1/00 7.375 599,830
35,000 Buncombe County, North Carolina........................... 2/1/98 7.100 36,325
35,000 Charleston County, South Carolina, Hospital Facilities.... 10/1/97 6.750 35,945
15,000 Dade County, Florida, Public Facility Revenue............. 6/1/98 7.875 15,830
210,000 Delaware County, Pennsylvania, Hospital Revenue........... 8/15/99 7.125 226,328
105,000 Delaware County, Pennsylvania, Hospital Revenue........... 8/15/99 7.200 113,321
165,000 Delaware Transportation Authority System Revenue.......... 7/1/97 7.100 165,000
20,000 Delaware Transportation Authority System Revenue.......... 7/2/98 7.500 21,002
465,000 Delaware Transportation Authority System Revenue.......... 7/1/01 6.000 491,802
250,000 District of Columbia, General Obligation.................. 6/1/00 6.875 270,338
525,000 District of Columbia, General Obligation.................. 12/1/98 7.750 559,325
200,000 Downtown Savannah Authority, Georgia Revenue ............. 1/1/99 6.800 211,484
45,000 Duluth, Minnesota ........................................ 3/1/98 10.500 46,912
200,000 East Stroudsburg, Pennsylvania, Area School District ..... 12/1/97 7.000 204,574
1,000,000 Florence County, South Carolina, Public Facility.......... 3/1/00 7.600 1,090,720
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENT
June 30, 1997 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT DATE RATE VALUE
------ ---- ---- -----
<S> <C> <C> <C> <C>
PRE-REFUNDED (continued)
$ 200,000 Florida State Department of Transportation................ 7/1/99 6.875% $ 210,406
15,000 Fort Bend County, Texas, Municipal Utility................ 10/1/97 12.000 15,291
1,050,000 Fort Worth, Texas......................................... 3/1/00 6.500 1,104,453
50,000 Fulton County, Georgia, Water & Sewer Revenue............. 1/1/98 8.250 52,058
110,000 Georgia Municipal Electric Authority Power Revenue........ 1/1/98 8.000 114,395
400,000 Goshen, Indiana, Middle School Building Corp. ............ 12/30/98 7.800 428,368
295,000 Greater Orlando, Aviation Authority, Florida Revenue ..... 10/1/98 8.375 315,128
200,000 Greensburg-Salem, Pennsylvania, School District........... 1/1/99 7.100 208,434
125,000 Gwinnett County, Georgia, Water & Sewer Revenue........... 8/1/98 6.700 130,901
1,000,000 Harris County, Texas...................................... 10/1/98 5.750 1,022,190
400,000 Harris County, Texas...................................... 2/1/98 10.375 414,604
100,000 Harris County, Texas...................................... 2/15/98 8.125 105,497
45,000 Harris County, Texas...................................... 2/15/98 8.125 47,474
125,000 Hawaii State.............................................. 6/1/98 7.000 130,400
1,745,000 Honolulu, Hawaii, City & County........................... 6/1/00 7.250 1,899,258
180,000 Houston, Texas, Water & Sewer Systems..................... 12/1/99 5.250 182,880
300,000 Houston, Texas, Water & Sewer Systems..................... 12/1/97 8.125 311,175
970,000 Hudson County, New Jersey, Correctional Facility.......... 12/1/98 7.600 1,034,902
35,000 Illinois Health Facility Authority........................ 9/1/97 7.850 35,919
590,000 Illinois Health Facility Authority........................ 4/1/99 7.375 632,527
200,000 Illinois State............................................ 6/1/98 7.750 210,658
1,225,000 Illinois State Sales Tax Revenue.......................... 6/15/98 7.625 1,291,199
500,000 Illinois State Sales Tax Revenue.......................... 6/15/99 6.800 533,205
500,000 Illinois State University Revenue......................... 10/1/99 7.400 541,755
75,000 Indianapolis, Indiana, Public Improvement................. 2/1/98 8.500 78,410
500,000 Intermountian Power Agency, Utah ......................... 7/1/99 7.200 537,515
710,000 Kentucky Infrastructure Authority......................... 8/1/99 7.625 769,995
500,000 Kentucky State Property & Building ....................... 2/1/01 6.875 548,040
1,000,000 Kentucky State Turnpike Authority......................... 5/15/00 7.250 1,090,270
250,000 King County, Washington .................................. 12/1/00 6.750 267,918
280,000 Lake County, Illinois, Forest Preservation District....... 2/1/98 6.850 290,119
100,000 Luzerne County, Pennsylvania ............................. 9/15/97 7.150 100,656
385,000 Maine Municipal Bond Bank................................. 11/1/98 7.400 410,941
200,000 Maine Municipal Bond Bank................................. 11/1/98 7.850 215,100
100,000 Maine Municipal Bond Bank................................. 11/1/99 7.100 106,199
500,000 Maryland State Health Facilities Authority ............... 7/1/01 6.750 550,820
575,000 Maryland Water Quality Financing Authority ............... 9/1/00 7.250 633,558
50,000 Massachusetts Bay Transportation Authority................ 3/1/98 7.500 52,165
1,150,000 Massachusetts State Health & Education Facility .......... 7/1/00 8.000 1,286,528
500,000 Massachusetts State Industrial Finance
Agency Revenue ......................................... 9/1/99 7.250 540,725
155,000 Massachusetts State Water Reserves........................ 4/1/00 7.625 170,908
100,000 Michigan City, Indiana, Area Schools...................... 6/15/98 7.875 105,586
100,000 Michigan State Hospital Finance Authority................. 8/15/98 8.000 106,164
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENT
June 30, 1997 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT DATE RATE VALUE
------ ---- ---- -----
<S> <C> <C> <C> <C>
PRE-REFUNDED (continued)
$ 230,000 Middlesex County, New Jersey,
Utilities Authority Sewer Revenue ...................... 3/15/01 6.500% $ 250,553
290,000 Montgomery County, Maryland............................... 4/1/98 7.100 302,551
320,000 Montgomery County, Maryland............................... 6/1/98 7.000 329,040
655,000 Montgomery County, Maryland............................... 9/1/98 8.900 689,774
1,000,000 Myrtle Beach, South Carolina, Water & Sewer Revenue ...... 3/1/00 7.000 1,084,720
100,000 Nassau County, New York................................... 8/15/97 7.400 103,403
15,000 Nevada State.............................................. 10/1/97 8.000 15,449
465,000 New York State Dormitory Authority Revenue................ 7/1/00 7.700 516,327
35,000 New York State Dormitory Authority Revenue................ 7/1/97 8.125 35,700
165,000 New York State Local Government Assistance Corp. ......... 4/1/01 7.250 183,798
140,000 New York State Medical Care Facilities....................
Finance Agency Revenue ................................. 2/15/01 7.500 156,696
145,000 Ohio State Building Authority,............................
Correctional Facility, Series A......................... 8/1/99 7.350 156,922
2,000,000 Ohio State Building Authority,............................
Correctional Facility, Series A......................... 8/1/99 7.350 2,164,440
100,000 Pennsylvania State ....................................... 2/1/98 7.250 103,381
200,000 Philadelphia, Pennsylvania, Gas Works Revenue ............ 1/1/99 6.750 211,190
35,000 Phoenix, Arizona, General Obligation...................... 7/1/97 7.375 35,700
500,000 Phoenix, Arizona, General Obligation...................... 7/1/99 6.750 533,750
115,000 Piedmont Municipal Power Agency Revenue Bonds............. 1/1/98 7.600 119,371
150,000 Plano, Texas.............................................. 9/1/97 7.300 150,828
500,000 Price Elliot Resh Park Arizona........................... 7/1/01 7.000 556,325
1,000,000 Richland County, South Carolina........................... 3/1/00 6.750 1,077,190
300,000 Richland County. South Carolina........................... 10/1/00 6.500 323,943
145,000 Richmond, Virginia, Public Utility Revenue................ 1/15/98 8.000 151,094
240,000 Salt River, Arizona, Electrical Systems Revenue........... 1/1/98 8.250 245,227
115,000 San Antonio, Texas, Electric & Gas Revenue................ 2/1/98 8.000 119,938
1,000,000 Springfield, Illinois..................................... 12/1/99 6.300 1,045,060
1,000,000 Sullivan County, Tennessee, Health,.......................
Education & Housing Facility ........................... 2/15/00 7.200 1,088,610
250,000 Swarthmore Boro Authority, Pennsylvania,
College Revenue......................................... 9/15/98 7.375 263,163
30,000 Texarkana, Arkansas, Waterworks Facility Revenue.......... 12/1/97 11.250 31,053
155,000 Texas Municipal Power Agency Revenue Bonds................ 9/1/97 6.875 158,832
115,000 Texas State............................................... 4/1/00 7.125 125,173
400,000 Texas State............................................... 10/1/00 6.500 424,360
100,000 Texas State............................................... 10/1/98 6.500 102,801
1,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.875 1,078,670
1,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.875 1,078,670
1,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.750 1,075,200
1,000,000 University of Arizona, Revenue Bonds...................... 6/1/00 6.900 1,087,760
945,000 University of Texas, Permanent University Funds .......... 7/1/98 6.000 964,533
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENT
June 30, 1997 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT DATE RATE VALUE
------ ---- ---- -----
<S> <C> <C> <C> <C>
PRE-REFUNDED (continued)
$ 210,000 University of Virginia, Hospital Revenue Bonds............ 6/1/98 7.150% $ 220,269
325,000 Virginia State Public School Authority.................... 1/1/98 7.000 336,408
400,000 Virginia State Transportation Board Revenue............... 5/15/98 6.800 417,640
35,000 Washington State Public Power Supply...................... 7/1/97 14.500 35,000
1,000,000 Washington State Public Power Supply...................... 7/1/99 7.200 1,048,220
400,000 Washington Suburban Sanitation District, Maryland ........ 6/1/01 6.900 442,144
5,000 West Virginia State Hospital Finance Authority............ 7/1/97 6.850 5,000
270,000 Wisconsin Public Power System, Power Revenue.............. 7/1/00 7.400 297,152
200,000 Wisconsin Health & Educational Facility
Authority Revenue ...................................... 11/15/98 7.625 213,018
100,000 Wisconsin Health & Educational Facility
Authority Revenue ...................................... 8/15/99 7.400 108,220
100,000 Woodward, Oklahoma, Municipal Authority Sales............. 11/1/97 8.000 102,343
------------
TOTAL PRE-REFUNDED ...................................... $46,074,916
-----------
TRANSPORTATION (2.4%)
$ 550,000 Illinois State Toll Highway............................... 1/1/99 4.400% 550,231
750,000 Illinois State Toll Highway............................... 1/1/99 4.400 751,500
10,000 Port Authority of New York & New Jersey................... 7/15/97 5.000 10,003
-----------
TOTAL TRANSPORTATION ................................... $ 1,311,734
-----------
WATER/SEWER (0.2%)
$ 100,000 Connecticut State Clean Water............................. 10/1/97 10.000% $ 101,442
-----------
TOTAL INVESTMENTS, (IDENTIFIED COST $52,641,266) (B) ............................ 94.8% $ 52,794,150
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................................. 5.2 2,919,462
------- ------------
NET ASSETS ..................................................................... 100.0% $55,713,612
======= ============
</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 $52,641,266 the
aggregate gross unrealized appreciation is $178,661, and the aggregate gross
unrealized depreciation is $25,777 resulting in net unrealized appreciation
of $152,884.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
ASSETS:
Investments in securities, at value (identified cost
$52,641,266) (Note 1) ................................. $ 52,794,150
Cash .................................................... 417,107
Receivables for:
Interest ............................................. 1,046,616
Fund shares sold ..................................... 1,675,000
Deferred organization expenses (Note 1) ................. 516
------------
TOTAL ASSETS ..................................... 55,933,389
------------
LIABILITIES:
Payables for:
Investments purchased ................................. 157,851
Expense payment fee (Note 2) .......................... 23,247
Fund shares purchased ................................. 29,000
Administrative fee (Note 2) ........................... 7,174
Dividends declared .................................... 2,505
------------
TOTAL LIABILITIES ................................ 219,777
------------
NET ASSETS .................................................... $ 55,713,612
============
Net Assets Consist of:
Paid-in capital ......................................... $ 55,782,241
Accumulated net realized loss on investments ............ (221,513)
Net unrealized appreciation on investments .................... 152,884
------------
Net Assets .................................................... $ 55,713,612
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($55,713,612 / 5,393,667 shares) ........................ $10.33
======
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, 1997
INVESTMENT INCOME:
INCOME:
Interest ................................................ $2,294,434
----------
EXPENSES:
Expense payment fee (Note 2) ............................ 288,374
Administrative fee (Note 2) ............................. 81,463
Amortization of organization expenses (Note 1) .......... 7,848
----------
TOTAL EXPENSES ..................................... 377,685
----------
NET INVESTMENT INCOME .............................. 1,916,749
----------
NET REALIZED AND UNREALIZED GAIN (NOTES 1 AND 3):
Net realized gain on investments .......................... 87,362
Net change in unrealized depreciation on investments ............ 181,392
----------
NET REALIZED AND UNREALIZED GAIN ................... 268,754
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $2,185,503
==========
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 For the
year ended year ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 1,916,749 $ 1,737,257
Net realized gain on investments.......................... 87,362 174,311
Net change in unrealized appreciation (depreciation)
on investments........................................ 181,392 (234,729)
--------------- -------------
Net increase in net assets resulting from operations . 2,185,503 1,676,839
--------------- -------------
Dividends declared from net investment income (Note 1)...... (1,916,749) (1,737,257)
--------------- -------------
Shares of beneficial interest transactions (Note 4):
Net proceeds from sales of shares of beneficial interest.. 41,560,915 15,914,850
Net asset value of shares of beneficial interest issued to
shareholders in reinvestment of dividends .............. 817,854 503,857
Net cost of shares of beneficial interest repurchased..... (31,709,988) (23,410,202)
--------------- -------------
Net increase (decrease) in net assets resulting from
shares of beneficial interest transactions ........... 10,668,781 (6,991,495)
--------------- -------------
Total increase (decrease) in net assets............. 10,937,535 (7,051,913)
NET ASSETS:
Beginning of period......................................... 44,776,077 51,827,990
--------------- -------------
END OF PERIOD .............................................. $ 55,713,612 $ 44,776,077
=============== =============
See Notes to Financial Statements.
</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 For the period
<TABLE>
<CAPTION>
July 23, 1992
For the years ended June 30, (commencement of
---------------------------------------------- operations) to
1997 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................... 0.37 0.37 0.37 0.34 0.32
Net realized and unrealized
gain (loss) on investments............ 0.07 (0.02) 0.17 (0.18) 0.29
Less dividends and distribution (Note 1):
From net investment income.............. (0.37) (0.37) (0.37) (0.34) (0.32)
From net realized gains
on investments........................ -- -- -- (0.00)(1) --
------ ------ ------ ------ ------
Net asset value, end of period............. $10.33 $10.26 $10.28 $10.11 $10.29
====== ====== ====== ====== ======
Total return (2) ........................ 4.34% 3.60% 5.42% 1.59% 6.16%
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted).................... $55,714 $44,776 $51,828 $67,253 $33,202
Ratio of expenses to average
net assets (Note 2) (2) ........... 0.70% 0.70% 0.70% 0.70% 0.70%(3)
Ratio of net investment income
to average net assets.............. 3.55% 3.51% 3.67% 3.32% 3.42%(3)
Portfolio turnover rate.............. 48% 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 years ended June 30, 1997, 1996, 1995, 1994,
and for the period ended June 30, 1993 would have been 0.96%, 0.90%, 0.99%,
1.01% and 1.25%, respectively. For the same periods, the total return of
the Fund would have been 4.16%, 3.40%, 5.13%, 1.28% and 5.61%,
respectively. The expense payment agreement terminated on July 1, 1997.
(3) Annualized.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
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 June 30, 1997, 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 year ended
June 30, 1997, the Fund incurred $188,843 for advisory services. On July 1,
1997, the investment advisory fee was reduced to 0.25% of the Fund's average
daily net assets.
<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 services agreement with 59 Wall Street Administrators,
Inc. for which 59 Wall Street Administrators, Inc. receives such compensation as
is from time to time agreed upon, but not in excess of the amount paid to the
Administrator. For the year ended June 30, 1997, the Fund incurred $81,463 for
administrative services.
Shareholder Servicing/Eligible Institution 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.
The Trust has entered into an eligible institution agreement with a
financial institution (the "Institution") for which it pays the Institution 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 year ended June 30, 1997,
the Fund paid Brown Brothers Harriman & Co. $134,858 for shareholder
servicing/eligible institution services.
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, 1997, 59
Wall Street Administrators, Inc. incurred $391,186 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 $38,980 as a result of an expense offset arrangement with the Fund's
custodian. The expense payment fee agreement terminated 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 11.8%
of investments. At June 30, 1997, the five largest holdings by state were
Illinois 11.8%; Arizona 10.8%; Texas 10.5%; New Jersey 8.2%; and South Carolina
7.3%. For the year ended June 30, 1997, the cost of purchases and the proceeds
of sales of investment securities other than short-term investments were
$33,996,069 and $24,329,264, respectively.
4. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
For the For the
year ended year ended
June 30, 1997 June 30, 1996
----------------- -------------
<S> <C> <C>
Shares of beneficial interest sold............................... 4,239,232 1,540,890
Shares of beneficial interest issued in connection with
reinvestment of dividends..................................... 79,257 48,864
Shares of beneficial interest repurchased........................ (3,287,198) (2,271,462)
--------- ---------
Net increase (decrease).......................................... 1,031,291 (681,708)
========= =========
</TABLE>
5. FEDERAL INCOME TAX STATUS. At June 30, 1997, the Fund had a net capital
loss carryover of approximately $220,000, which 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, 1997, the related statement of operations for the year then ended,
the statement of changes in net assets for the years ended June 30, 1997 and
1996, and the financial highlights for each of the years in the five-year period
ended June 30, 1997. 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,
1997 by correspondence with the custodian and brokers. 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, 1997, the results of
its operations, the changes in its net assets, and its financial highlights for
respective stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
August 15, 1997
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The following investment management strategies and techniques have
materially affected the Fund's performance for the fiscal year ended June 30,
1997.
Tax Free Short/Intermediate Fixed Income Fund
During the fiscal year ended June 30, 1997, the U.S. economy proved
surprisingly robust although reported inflation remained tame. As a precaution,
the Fed tightened monetary policy in March with a 0.25% increase in the federal
funds rate. Subsequently, slower economic growth, progress towards a balanced
budget, and continued benign inflation gradually alleviated investor
expectations of higher yields. As bond price increases added to coupon interest
income, the Fund produced a total return of 4.34% for its fiscal year.
On December 5, 1996, the Fund's investment advisor anticipated that a
strong rally had left interest rates little room to fall further and, to protect
the gains achieved, reduced the weighted average maturity of the Fund from just
under 3.0 years to a weighted average maturity range of 2.3 - 2.7 years. On
March 5, 1997, the Fund's investment advisor further reduced the weighted
average maturity of the Fund to a range of 2.0 - 2.3 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
leverage exposure in its portfolio. Sales transactions were completed without
net capital gains tax liability.
<PAGE>
Comparative Aaa Municipal Yield Curves
The following data represent the graph that appears in the printed matter.
Years 6/30/94 6/30/95
----- ------- -------
0 3.1% 4.1%
1 3.75% 3.75%
2 4.2% 4.%
3 4.45% 4.2%
4 4.55% 4.4%
5 4.65% 4.55%
Tax Free Short / Intermediate Fixed Income Fund Growth of $10,000
The following data represent the graph that appears in the printed matter.
Tax Free Merrill Lynch 0-3 IBC/Donoghue Composite
Short/Intermediate Year General Obligation Tax Free Money Market
Fixed Income Fund Municipal Bond Indez Funds Average
----------------- -------------------- -------------
$10,000 $10,000
$10,061
$10,043 $10,024
$10,141 $10,045
$10,076 $10,064
$10,187 $10,082
$10,238 $10,102
$10,340 $10,119
$10,506 $10,135
$10,464 $10,151
$10,525 $10,520 $10,167
$10,545 $10,516 $10,185
$10,617 $10,552 $10,200
$10,596 $10,452 $10,216
$10,698 $10,451 $10,233
$10,739 $10,475 $10,250
$10,765 $10,507 $10,267
$10,744 $10,542 $10,284
$10,848 $10,610 $10,300
$10,907 $10,674 $10,316
$10,812 $10,616 $10,332
$10,746 $10,600 $10,348
$10,743 $10,644 $10,365
$10,774 $10,679 $10,385
$10,784 $10,709 $10,404
$10,867 $10,747 $10,423
$10,911 $10,779 $10,443
$10,880 $10,806 $10,466
$10,869 $10,793 $10,490
$10,827 $10,769 $10,516
$10,884 $10,799 $10,546
$10,948 $10,874 $10,573
$11,083 $10,967 $10,601
$11,150 $11,020 $10,632
$11,186 $11,074 $10,664
$11,331 $11,254 $10,698
$11,364 $11,287 $10,727
$11,445 $11,374 $10,755
$11,489 $11,472 $10,784
$11,503 $11,484 $10,813
$11,548 $11,599 $10,843
$11,617 $11,652 $10,873
$11,664 $11,691 $10,905
$11,744 $11,783 $10,932
$11,746 $11,799 $10,957
$11,701 $11,808 $10,984
$11,728 $11,830 $11,010
$11,741 $11,872 $11,039
$11,777 $11,904 $11,066
$11,846 $11,961 $11,092
$11,858 $11,961 $11,119
$11,928 $12,027 $11,147
$11,985 $12,090 $11,175
$12,080 $12,146 $11,203
$12,080 $12,173 $11,232
$12,124 $12,217 $11,260
$12,174 $12,268 $11,285
$12,114 $12,229 $11,311
$12,140 $12,264 $11,340
$12,235 $12,345 $11,373
$12,283 $12,410 $11,404
* 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
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.
