Tax Free
Short/Intermediate
Fixed Income Fund
ANNUAL REPORT
June 30, 1998
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1998
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- ------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS (99.0%)
ESCROWED TO MATURITY (a) (4.1%)
$ 500,000 Chicago, Illinois......................................... 1/1/03 6.500% $ 547,810
150,000 Chicago, Illinois, Wastewater Transmission Revenue........ 11/15/98 6.700 151,733
165,000 Fairfield, Ohio, Economic Development..................... 12/1/98 10.500 169,707
200,000 Metropolitan Government, Nashville, Tennessee............. 7/1/98 6.800 200,016
2,150,000 New Jersey State Transportation Authority................. 6/15/00 6.000 2,234,495
-----------
TOTAL ESCROWED TO MATURITY ............................. $ 3,303,761
-----------
GENERAL OBLIGATIONS (11.1%)
$1,000,000 El Paso, Texas............................................ 8/15/01 7.000% $ 1,086,020
200,000 Florida State............................................. 7/1/99 6.875 206,394
1,000,000 Hawaii State.............................................. 11/1/01 5.850 1,054,620
710,000 Kentucky Infrastructure Authority......................... 8/1/99 7.625 753,132
500,000 Maryland State............................................ 7/15/99 6.400 514,280
1,000,000 Massachusetts State....................................... 11/1/01 5.500 1,046,350
585,000 New Jersey State.......................................... 9/15/99 6.250 602,778
1,000,000 Pittsburgh, Pennsylvania.................................. 3/1/03 5.000 1,032,260
2,000,000 San Antonio, Texas........................................ 8/1/02 8.000 2,284,940
275,000 Washington State.......................................... 1/1/01 6.500 291,019
-----------
TOTAL GENERAL OBLIGATIONS ............................ $ 8,871,793
-----------
PRE-REFUNDED (a) (71.9%)
$1,275,000 Akron, Ohio, Bath Copley Township Hospital................ 11/15/00 7.250% $ 1,392,797
500,000 Anchorage, Alaska Telephone Revenue....................... 11/1/00 7.100 544,345
900,000 Arizona State............................................. 7/1/02 7.000 1,003,104
500,000 Arizona State Transportation.............................. 7/1/01 6.350 539,890
515,000 Augusta, Georgia Water, and Sewer Revenue................. 5/1/02 6.500 566,083
125,000 Aurora, Illinois.......................................... 1/1/99 7.000 127,136
300,000 Austin, Texas, Utility System Revenue..................... 9/1/99 7.000 311,370
200,000 Berkeley County, South Carolina, Water & Sewer
Revenue................................................. 6/1/01 7.000 219,950
550,000 Boston, Massachusetts..................................... 2/1/00 7.375 589,847
250,000 Bucks County, Pennsylvania, Water and
Sewer Authority......................................... 12/1/02 6.750 276,628
1,000,000 Burke County, Georgia, Development Authority
Pollution Control....................................... 1/1/03 7.700 1,168,470
1,500,000 Chicago, Illinois......................................... 7/1/02 6.850 1,670,100
305,000 Convention Center Authority, Rhode Island................. 5/15/01 6.700 332,624
1,000,000 Cook County, Illinois..................................... 11/15/02 6.300 1,104,410
1,500,000 Delaware County, Pennsylvania............................. 11/15/02 6.000 1,611,135
210,000 Delaware County, Pennsylvania, Hospital Revenue........... 8/15/99 7.125 221,955
105,000 Delaware County, Pennsylvania, Hospital Revenue........... 8/15/99 7.200 111,064
20,000 Delaware Transportation Authority System Revenue.......... 7/1/98 7.500 20,302
465,000 Delaware Transportation Authority System Revenue.......... 7/1/01 6.000 491,338
1,500,000 Denver, Colorado, City and County......................... 11/15/02 7.500 1,723,470
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1998 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- ------- ------------
Pre-Refunded (continued)
<S> <C> <C> <C>
$ 525,000 District of Columbia, General Obligation.................. 12/1/98 7.750% $ 544,357
250,000 District of Columbia, General Obligation.................. 6/1/00 6.875 268,162
200,000 Downtown Savannah Authority, Georgia Revenue.............. 1/1/99 6.800 207,150
500,000 Florida State Department of National Resource
Preservation............................................ 7/1/01 6.700 546,870
1,050,000 Fort Worth, Texas......................................... 3/1/00 6.500 1,094,226
400,000 Goshen, Indiana, Middle School............................ 12/30/98 7.800 416,152
295,000 Greater Orlando, Aviation Authority, Florida Revenue...... 10/1/98 8.375 304,357
200,000 Greensburg-Salem, Pennsylvania, School District........... 1/1/99 7.100 203,516
125,000 Gwinnett County, Georgia, Water & Sewer Revenue........... 8/1/98 6.700 127,816
1,000,000 Harris County, Texas...................................... 10/1/02 5.750 1,062,520
900,000 Hawaii State.............................................. 11/1/01 6.000 961,110
1,745,000 Honolulu, Hawaii, City & County........................... 6/1/00 7.250 1,866,888
970,000 Hudson County, New Jersey, Correctional Facility.......... 12/1/98 7.600 1,005,327
590,000 Illinois Health Facility Authority........................ 4/1/99 7.375 617,789
500,000 Illinois State Sales Tax Revenue.......................... 6/15/99 6.800 524,595
415,000 Illinois State Sales Tax Revenue.......................... 6/15/01 6.000 437,958
500,000 Illinois State University Revenue......................... 10/1/99 7.400 532,145
1,007,000 Indiana Transportation Finance Authority.................. 11/1/02 6.250 1,106,492
1,000,000 Indianapolis, Indiana, Public Improvement................. 1/1/02 6.700 1,102,420
500,000 Intermountain Power Agency, Utah.......................... 7/1/99 7.200 527,120
500,000 Kentucky State Property & Building........................ 2/1/01 6.875 544,120
1,000,000 Kentucky State Turnpike Authority......................... 5/15/00 7.250 1,074,370
250,000 King County, Washington................................... 12/1/00 6.750 266,127
200,000 Maine Municipal Bond Bank................................. 11/1/98 7.850 208,758
385,000 Maine Municipal Bond Bank................................. 11/1/98 7.400 400,334
100,000 Maine Municipal Bond Bank................................. 11/1/99 7.100 104,280
1,000,000 Martinsville, Virginia, Industrial Development
Authority............................................... 1/1/01 7.000 1,068,320
500,000 Maryland State Health Facilities Authority................ 7/1/01 6.750 547,570
575,000 Maryland Water Quality Financing Authority................ 9/1/00 7.250 625,140
1,150,000 Massachusetts State Health & Education Facility........... 7/1/00 8.000 1,261,044
500,000 Massachusetts State Industrial Finance Agency
Revenue................................................. 9/1/99 7.250 529,950
155,000 Massachusetts State Water Resources Authority............. 4/1/00 7.625 167,712
100,000 Michigan State Hospital Finance Authority................. 8/15/98 8.000 102,524
230,000 Middlesex County, New Jersey, Utilities Authority
Sewer Revenue........................................... 3/15/01 6.500 248,860
655,000 Montgomery County, Maryland............................... 9/1/98 8.900 660,744
1,000,000 Myrtle Beach, South Carolina, Water & Sewer
Revenue................................................. 3/1/00 7.000 1,069,390
465,000 New York State Dormitory Authority Revenue................ 7/1/00 7.700 507,710
400,000 New York State Dormitory Authority Revenue................ 5/15/02 6.750 445,504
165,000 New York State Local Government Assistance Corp........... 4/1/01 7.250 181,929
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1998 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- ------- ------------
<S> <C> <C> <C>
Pre-Refunded (continued)
$ 140,000 New York State Medical Care Facilities Finance
Agency Revenue.......................................... 2/15/01 7.500% $ 154,609
2,145,000 Ohio State Building Authority, Correctional Facility,
Series A................................................ 8/1/99 7.350 2,270,225
200,000 Philadelphia, Pennsylvania, Gas Works Revenue............. 1/1/99 6.750 207,102
500,000 Phoenix, Arizona, General Obligation...................... 7/1/99 6.750 524,920
500,000 Price Elliot Resh Park, Arizona........................... 7/1/01 7.000 550,925
500,000 Rhode Island Depositors Economic Protection Corp.......... 8/1/01 7.500 558,850
300,000 Richland County, South Carolina........................... 10/1/00 6.500 321,738
1,000,000 Richland County, South Carolina........................... 3/1/00 6.750 1,064,210
1,000,000 Springfield, Illinois..................................... 12/1/99 6.300 1,035,540
1,000,000 Sullivan County, Tennessee, Health, Education &
Housing Facility........................................ 2/15/00 7.200 1,070,520
250,000 Swarthmore Boro Authority, Pennsylvania, College
Revenue................................................. 9/15/98 7.375 255,670
100,000 Texas State............................................... 10/1/98 6.500 100,726
115,000 Texas State............................................... 4/1/00 7.125 123,427
400,000 Texas State............................................... 10/1/00 6.500 422,016
1,900,000 Texas State............................................... 10/1/02 6.100 2,044,476
2,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.875 2,130,480
1,000,000 Tucson, Arizona, Street & Highway User Revenue............ 7/1/00 6.750 1,063,050
1,000,000 University of Arizona, Revenue Bonds...................... 6/1/00 6.900 1,073,650
755,000 University of Pittsburgh, Pennsylvania.................... 6/1/02 6.125 822,973
2,000,000 Washington State.......................................... 2/1/02 6.375 2,166,320
400,000 Washington Suburban Sanitation District, Maryland......... 6/1/01 6.900 438,784
200,000 Wisconsin Health & Educational Facility Authority
Revenue................................................. 11/15/98 7.625 206,938
100,000 Wisconsin Health & Educational Facility Authority
Revenue................................................. 8/15/99 7.400 105,994
270,000 Wisconsin Public Power System, Power Revenue.............. 7/1/00 7.400 293,034
500,000 Wisconsin State........................................... 5/1/02 6.000 533,555
555,000 Wisconsin State........................................... 5/1/02 6.300 598,101
-----------
TOTAL PRE-REFUNDED ..................................... $57,635,207
-----------
SALES TAX (2.6%)
$2,000,000 Municipal Assistance Corp., New York...................... 7/1/02 5.000% $ 2,064,340
-----------
TOTAL SALES TAX ........................................ $ 2,064,340
-----------
TRANSPORTATION ( 1.6%)
$1,300,000 Illinois State Toll Highway............................... 1/1/99 4.400% $ 1,305,266
-----------
TOTAL TRANSPORTATION ................................... $ 1,305,266
-----------
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
June 30, 1998 (continued)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
- --------- -------- ------- ------------
<S> <C> <C> <C>
UTILITIES (4.9%)
$ 740,000 Long Island, New York, Power Authority.................... 12/1/02 5.250% $ 771,228
1,000,000 Washington State Public Power Supply...................... 7/1/99 7.200 1,032,920
1,000,000 Washington State Public Power Supply...................... 7/1/01 7.625 1,095,330
1,000,000 Washington State Public Power Supply...................... 7/1/02 5.000 1,026,600
-----------
TOTAL UTILITIES .......................................... $ 3,926,078
-----------
WATER/SEWER (2.8%)
$1,000,000 Dearborn, Michigan, Sewer Disposal System............... 4/1/03 6.500% $ 1,098,080
180,000 Houston, Texas, Water & Sewer Systems..................... 12/1/99 5.250 183,496
500,000 Houston, Texas, Water & Sewer Systems..................... 12/1/01 5.600 523,685
275,000 Massachusetts State Water Resources Authority............. 12/1/01 6.300 294,382
150,000 Ocean County, New Jersey, Utilities Authority............. 1/1/01 6.125 157,502
-----------
TOTAL WATER/SEWER ........................................ $ 2,257,145
-----------
TOTAL INVESTMENTS, (identified cost $78,809,573) (b) ............................ 99.0% $79,363,590
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................................. 1.0 795,953
------ -----------
NET ASSETS ..................................................................... 100.0% $80,159,543
====== ===========
</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 orginally stated maturity date.
(b) The aggregate cost for federal income tax purposes is $78,809,573. The
aggregate gross unrealized appreciation is $568,761, and the aggregate
gross unrealized depreciation is $14,744 resulting in net unrealized
appreciation of $554,017.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $78,809,573) (Note 1)............. $79,363,590
Receivables for:
Interest............................................................................ 1,532,522
-----------
Total Assets ................................................................... $80,896,112
-----------
LIABILITIES:
Due to Bank............................................................................ 668,196
Payables for:
Fund shares repurchased.............................................................. 12,000
Investment advisory fee (Note 2)..................................................... 16,687
Administrative fee (Note 2).......................................................... 10,012
Shareholder servicing/eligible institution fee (Note 2).............................. 16,687
Accrued expenses and other liabilities............................................... 12,987
-----------
Total Liabilities .............................................................. 736,569
-----------
NET ASSETS ................................................................................ $80,159,543
===========
Net Assets Consist of:
Paid-in capital........................................................................ $79,845,411
Accumulated net realized loss on investments........................................... (239,885)
Net unrealized appreciation on investments................................................... 554,017
-----------
Net Assets ................................................................................ $80,159,543
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($80,159,543 / 7,710,620 shares) ...................................................... $10.40
======
</TABLE>
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, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................................................................. $3,266,747
----------
Expenses:
Investment advisory fee (Note 2)..................................................... 190,988
Shareholder servicing/eligible institution fees (Note 2)............................. 190,988
Administrative fee (Note 2).......................................................... 114,593
Professional fees ................................................................... 26,198
Custodian fee ....................................................................... 66,282
Trustee fees and expenses (Note 2)................................................... 6,598
Amortization of organization expenses................................................ 516
Miscellaneous expenses............................................................... 18,394
----------
Total Expenses....................................................................... 614,557
Fees paid indirectly (Note 3)................................................... (15,206)
----------
Net Expenses ................................................................... 599,351
----------
Net Investment Income .......................................................... 2,667,396
----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized loss on investments....................................................... (18,372)
Net change in unrealized appreciation on investments......................................... 401,133
----------
Net Realized and Unrealized Gain ............................................... 382,761
----------
Net Increase in Net Assets Resulting from Operations .................................. $3,050,157
==========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
year ended year ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 2,667,396 $ 1,916,749
Net realized gain (loss) on investments................... (18,372) 87,362
Net change in unrealized appreciation on investments...... 401,133 181,392
------------ ------------
Net increase in net assets resulting from operations . 3,050,157 2,185,503
------------ ------------
Dividends declared from net investment income............... (2,667,396) (1,916,749)
------------ ------------
Shares of beneficial interest transactions (Note 4):
Net proceeds from sales of shares of beneficial interest.. 70,988,470 41,560,915
Net asset value of shares of beneficial interest issued to
shareholders in reinvestment of dividends .............. 1,067,737 817,854
Net cost of shares of beneficial interest repurchased..... (47,993,037) (31,709,988)
------------ ------------
Net increase in net assets resulting from shares
of beneficial interest transactions .................. 24,063,170 10,668,781
------------ ------------
Total increase in net assets........................ 24,445,931 10,937,535
NET ASSETS:
Beginning of year........................................... 55,713,612 44,776,077
------------ ------------
End of year ................................................ $ 80,159,543 $ 55,713,612
============ ============
</TABLE>
See Notes to Financial Statements.
<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 year
<TABLE>
<CAPTION>
For the years ended June 30,
-----------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year......... $10.33 $10.26 $10.28 $10.11 $10.29
Income from investment operations:
Net investment income................... 0.36 0.37 0.37 0.37 0.34
Net realized and unrealized
gain (loss) on investments............ 0.07 0.07 (0.02) 0.17 (0.18)
Less dividends and distributions (Note 1):
Dividends to shareholders from
net investment income................. (0.36) (0.37) (0.37) (0.37) (0.34)
Dividends to shareholders from net
realized gains on investments......... -- -- -- -- (0.00)(1)
------ ------ ------ ------ ------
Net asset value, end of year............... $10.40 $10.33 $10.26 $10.28 $10.11
====== ====== ====== ====== ======
Total return ............................ 4.25% 4.34% 3.60% 5.42% 1.59%
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted).................... $80,160 $55,714 $44,776 $51,828 $67,253
Ratio of expenses to average
net assets (Note 2):
Expenses paid by the Fund.......... 0.78% 0.70%(2) 0.70%(2) 0.70%(2) 0.70%(2)
Expense offset arrangement......... 0.02% n/a n/a n/a n/a
------ ------ ------ ------ ------
Total expenses..................... 0.80% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income to
average net assets................. 3.49% 3.55% 3.51% 3.67% 3.32%
Portfolio turnover rate.............. 20% 48% 48% 39% 27%
</TABLE>
- ----------
(1) Distributions to shareholders from net realized gains were 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 and
1994, would have been 0.96%, 0.90%, 0.99%, and 1.01% , respectively. For
the same years, the total return of the Fund would have been 4.16%, 3.40%,
5.13%, and 1.28% , respectively. The expense payment agreement terminated
on July 1, 1997.
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, 1998, 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. 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.
D. 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 0.25% of the Fund's average daily net assets. For the year ended
June 30, 1998, the Fund incurred $190,988 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 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, 1998, the Fund incurred $114,593 for
administrative services.
Shareholder Servicing/Eligible Institution Agreement. The Trust has a
shareholder servicing agreement and an eligible institution 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. For the year ended June 30,
1998, the Fund incurred $190,988 for shareholder servicing/eligible institution
services.
Trustees' Fees and Expenses. Each Trustee receives an annual fee as well
as reimbursement for reasonable out-of-pocket expenses from the Fund. For the
year ended June 30, 1998, the Fund incurred $6,598 for these fees.
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 0.6% to 11.5%
of investments. At June 30, 1998, the five largest holdings by state were Texas
11.5%; Illinois 10.1%; Arizona 8.6%; Washington 7.3%; and Pennsylvania 5.9%. For
the year ended June 30, 1998, the cost of purchases and the proceeds of sales of
investment securities other than short-term investments were $42,171,705 and
$14,548,462, respectively. Custody fees for the Fund were reduced by $15,206 as
an offset arrangement with the Fund's custodian.
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, 1998 June 30, 1997
------------- ------------
<S> <C> <C>
Shares of beneficial interest sold............................... 6,840,210 4,239,232
Shares of beneficial interest issued in connection with
reinvestment of dividends..................................... 101,307 79,257
Shares of beneficial interest repurchased........................ (4,624,564) (3,287,198)
--------- ---------
Net increase..................................................... 2,316,953 1,031,291
========= =========
</TABLE>
5. Federal Income Tax Status. At June 30, 1998, the Fund had a net capital
loss carryover of approximately $220,000, which is available through June 30,
2004, 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, 1998, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended June 30, 1998 and
1997, and the financial highlights for each of the years in the five-year period
ended June 30, 1998. 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,
1998 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, 1998, 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 7, 1998
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
During the fiscal year ended June 30, 1998, strong domestic growth
overpowered the slowing effects of the Asian turmoil, and estimated U.S. real
Gross Domestic Production advanced 3.3% year-over-year. With income and wealth
levels rising, employment growth and consumer confidence high, inflation was
exceptionally well-behaved at a low 1.7%. The strong economy improved state and
local finances, with municipal credit upgrades outnumbering credit downgrades by
about 17:1. With market access improved, and as interest rates declined, the
volume of new financings soared, up 39% year-over-year. For the period, yields
fell 0.25% for 1 through 5 year maturities. As bond price increases added to
coupon interest income, the Fund produced a total return of 4.25% for its fiscal
year.
On November 18, 1997, the Fund's investment adviser anticipated that the
significant currency and equity market declines in Asia and Latin America would
weaken economic activity in those regions and lower U.S. Growth prospects by
reducing U.S. exports; a stronger U.S. dollar would reduce import prices,
helping to contain U.S. inflation; and interest rates were likely to decline. To
lock in the prevailing level of interest rates and to benefit from their
expected decline, the Fund's investment adviser extended the weighted average
maturity of the Fund from a range of 2.0 to 2.3 years to a range of 2.3 - 2.7
years.
Portfolio holdings are concentrated in municipal bonds, which are 100%
collateralized by US 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. We managed our sales transactions so as to
incur no net capital gains tax liability.
<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.
21 Milk Street
Boston, Massachusetts 02109
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.
